Macron win bolsters European moves on globalisation, eurozone

The European Commission will consider additional actions to defend European investment abroad and call for higher levels of social protection to minimise negative consequences of global trade.

The victory of Emmanuel Macron in the French presidential elections has given the EU a boost, with Macron obtaining a strong mandate from French citizens to defend the euro and globalisation – both of which were campaign battlefronts with his rival, the National Front’s Marine Le Pen. Macron also enjoyed the support of 66% of voters, temporarily shutting down Le Pen’s populist anti-EU and anti-globalisation messages.

His victory is widely expected to provide fresh impetus to the Commission’s proposals to reap the benefits of globalisation and progress eurozone integration.

The Commission’s reflection paper, defending the benefits of free and fair trade, will be published tomorrow. The executive will outline its views for the future of the Economic and Monetary Union later this month.

Commission reflection papers were already planned as part of the process launched in March to forge a new vision for Europe for the next decade.

But EU officials consulted by EURACTIV admitted Macron’s victory provided new momentum given the candidate’s views were closely aligned with Commission proposals.

Despite warnings about the negative impact of globalisation on Western society’s middle class and citizens’ concerns due over job losses, the Commission stands firm: globalisation has benefited both Europe and the world.

In order to counter criticisms over inequality, the executive points to the GINI coefficient and trade flows to prove that member states which are more open to foreign trade are far from being the most unequal societies in Europe, as the Nordic countries show.

Protectionism vs. resilient societies

The Commission wants to use the example of countries like Sweden or Denmark to illustrate that closing borders is not a solution to protecting citizens. Rather, building up resilient societies is the best form of ‘ defense’.

To that end, the Commission is calling for a strategy based on three pillars: flexible labour markets, high levels of social protection and high quality education, given human capital is Europe’s greatest added value.

Globalisation, together with the digital revolution, will have a disruptive impact on various sectors, and certain types of jobs will be lost. However, Europe can cope with the fast-changing global environment if citizens are well prepared to transit between old and new positions with the right skills; flexible labour markets are used to create jobs as needs and opportunities emerge; and a robust safety net supports workers when they lose their jobs or job-seekers need to accquire new skills.

“We need to shape globalisation, not sit idly by and let it pass like a storm,” Commission President Jean-Claude Juncker said yesterday in Berlin.

While the EU is empowered to sign trade deals, EU institutions barely have competences with respect to labour market policies, social protection or education.

Officials admitted that the EU was positioning itself to make the case for ‘more Europe’ in these areas in order to better address the challenges posed by globalisation and the accompanying digital revolution.

Against unfair practices

Europe not only wants to build more resilient societies and better distribute the benefits of globalisation, it’s also seeking to strengthen its arsenal to better protect member states against unfair practices witnessed over recent years, particularly with respect to China.

In the past, we were a bit “naive” in our trade relations, an official admitted on condition of anonymity.

In order to level the playing field, Europe will carefully assess restrictions imposed on European companies when they want to invest in foreign countries like China.

The Commission is ready to take “appropriate actions” at a European level in cases in which third countries maintain unfair trade policies and limit the scope of action of European firms, according to a draft of the reflection paper seen by EURACTIV.

Given the different sensitivities seen among member states when it comes to trade issues, the executive wants to first agree on a set of principles that could help capitals decide when to act at a European level against third countries’ unfair practices.

The dispute over the modernisation of trade defence instruments, another tool included in the proposal, underlined the difficulties between some EU partners in finding common ground when addressing trade relations with foreign nations.

The reflection paper on globalisation will be the only one of a series of planned documents that will not include a set of scenarios. Despite containing a clear message, the paper will not be prescriptive nor will it be accompanied by legislative proposals.

Ambitions for the eurozone

Meanwhile, the EMU paper – still in the process of finalisation – will outline options for bolstering the eurozone, reflecting differing levels of ambition.

One of the most far-reaching proposals would be setting up a fiscal mechanism that would help support countries facing a crisis or sudden shocks.

This new instrument, understood to be the long-awaited budget for the eurozone, could take the shape of a European unemployment guarantee scheme or a new investment vehicle, alongside the Juncker plan.

Officials explained that the final design could combine both options.

But in order to benefit from a common pool of resources, countries would have to limit their risks, through debt reduction, for example.

EU sources were pleased with the level of engagement seen amongst national governments in preparing the proposal, as many provided submissions over recent days.

But a real debate on deepening eurozone collaboration isn’t expected until after the September German elections.

Before then, the Commission would like to agree on a common definition for some of the ideas floated in the context of deepening the eurozone, including an eurozone finance minister or a European Monetary Fund.

“People talk about the same concepts, but for many they have different meanings”, an official explained.

Although the EU executive is cautious in pushing for further eurozone integration at this stage, it believes Macron’s victory could help it to do exactly that.

Macron “now has a mandate and this mandate is to propose to our European partners a deeper integration and especially a deepening of the eurozone,” said commissioner for Economic Affairs Pierre Moscovici in an interview yesterday (8 May).

“We need to give a new impetus, a new strength to the eurozone,” Moscovici urged.