EU-Mercosur trade relations: impacts of exchange rate misalignments on tariffs. CEPS Working Document No. 372, February 2013

The issue of “trade and exchange rate misalignments” is being discussed at the G20, IMF and WTO, following an initiative by Brazil. The main purpose of this paper is to apply the methodology developed by the authors to exam the impacts of misalignment on tariffs in order to analyse the impacts of misalignments on the trade relations between two customs unions – the EU and Mercosur, as well as to explain how tariff barriers are affected. It is divided into several sections: the first summarises the debate on exchange rates at the WTO; the second explains the methodology used to determine exchange rate misalignments; the third and fourth summarises the methodology applied to calculate the impacts of exchange rate misalignments on the level of tariff protection through an exercise of ‘misalignment tariffication’; the fifth reviews the effects of exchange rate misalignments on tariffs and its consequences for the trade negotiations between the two areas; and the last concludes and suggests a way to move the debate forward in the context of regional arrangements.

Prospects and challenges of a Pan-European post-trade infrastructure. ECMI Policy Brief No. 20, 8 November 2012

After more than a decade of indecision, the EU is finally now set to implement a consistent regulatory architecture for clearing and settlement. Following the agreement on a European market infrastructure Regulation (EMIR), the European Commission has proposed harmonised rules for centralised settlement depositaries (CSDs), while the European Central Bank is moving forward with its plans for a central eurozone settlement engine. This paper analyses three components of the new post-trade infrastructure measures: 1) the regulatory framework for and supervision of central counterparties under the new EMIR legislation, 2) the authorisation requirements of trade repositories and 3) the draft CSD Regulation and the progress with the ECB’s Target 2 Securities project. It then discusses the impact of the new rules, and argues that, analogous to the unexpected impact of MiFID on trading infrastructures, a similar EMIR revolution may be on its way.

Europe’s New Post-Trade Infrastructure Rules. ECMI Policy Brief No. 20, 8 November 2012

After more than a decade of indecision, the EU is finally now set to implement a consistent regulatory architecture for clearing and settlement. Following the agreement on a European market infrastructure Regulation (EMIR), the European Commission has proposed harmonised rules for centralised settlement depositaries (CSDs), while the European Central Bank is moving forward with its plans for a central eurozone settlement engine. This paper analyses three components of the new post-trade infrastructure measures: 1) the regulatory framework for and supervision of central counterparties under the new EMIR legislation, 2) the authorisation requirements of trade repositories and 3) the draft CSD Regulation and the progress with the ECB’s Target 2 Securities project. It then discusses the impact of the new rules, and argues that, analogous to the unexpected impact of MiFID on trading infrastructures, a similar EMIR revolution may be on its way.

The Mercosur-EU preferential trade agreement. A view from Europe. CEPS Working Document No. 377, February 2013

This paper first aims at assessing the economic and political importance of Mercosur for the EU’s interests in the short and medium run – say for the one or two coming decades or so. As Mercosur’s size is largely determined by Brazil’s size, this paper focuses on Brazil – although the paper assumes that, from Brazil’s perspective, a Brazil–EU preferential trade agreement (PTA) is a non-starter. It then aims at positioning the Mercosur–EU (MEU) PTA in the context of the EU’s current trade policy. In particular, it tries to assess, once one takes into account all the crucial goals to be met by the EU, whether the EU is likely to find the time and the resources necessary for dealing properly with a MEU PTA; this effort is notably complicated by the very divergent views on the role of trade between Brazil on the one hand, and Argentina and Venezuela, on the other hand. Finally, the paper examines the PTA options that can be seen as reasonably feasible. It suggests that, unless there are dramatic changes in Mercosur’s present trajectory, the goal of negotiating a fully-fledged MEU PTA should be set aside for some time – at least a decade or so. This does not mean leaving the negotiating table, but rather focusing on negotiating topics that remain attractive to both sides in the current context, and manageable and flexible enough to overcome the broad general problems confronted by Mercosur and the EU.

Will the Transatlantic Trade and Investment Partnership be a game-changer? EU Centre Singapore Policy Brief No. 5, April 2013

In February 2013, US President Barrack Obama, European Council President Herman Van Rompuy and President of the European Commission José Manuel Barroso announced the decision to go for an ambitious and comprehensive trade and investment agreement between the US and the EU. To be called the Transatlantic Trade and Investment Partnership (TTIP), this agreement would lead to a new stage in the transatlantic relationship and be a much needed boost to the lacklustre economic recovery so far. Some analysts have even argued that TTIP would be a “game changer” – besides the economic gains, it would serve a bigger strategic purpose of promoting EU-US common objective to set higher standards of trade liberalisation, and thereby level the playing field in China and other key emerging markets. This policy brief examines the reasons behind the current push towards TTIP and the possible contents of such an agreement. It also discusses the possible obstacles to the realisation of TTIP, and at the same time, looks into what a successful conclusion of TTIP would mean for Asia and beyond.

EU Trade Actors after Lisbon: Enhanced Negotiations or Business as Usual? Brugges Political Research Paper No. 32, November 2013

As seen by the launching of trade negotiations with Japan and the United States, the European Union has shifted gears in order to achieve amplified benefits in bilateral trade agreements. The entry into force of the Lisbon Treaty brought the European Parliament and the European External Action Service into the picture as new actors in trade negotiations. The question arises if the new framework of trade negotiations is better off than the pre-Lisbon era. By applying Veto Players theory to the Central American Association Agreement and Principal-Agent theory to the Ukrainian Association Agreement, two results were concluded. First, the participation of the European Parliament as a veto player has decreased the effectiveness of trade negotiation. Second, the participation of the European External Action Service has shown the contrary, namely an increase of effectiveness in trade negotiations.

Determinants of Growth and Inflation in Southern Mediterranean Countries. MEDPRO Technical Report No. 10/March 2012

Despite significant economic reforms in many Southern Mediterranean EU neighbour countries, their growth performance has on average been subdued. This study analyses the differences in growth performance and macroeconomic stability across Mediterranean countries, to draw lessons for the future. The main findings are that Southern Mediterranean countries should benefit from closer ties with the EU that result in higher levels of trade and FDI inflows, once the turbulence of the ‘Arab Spring’ is resolved, and from the development of financial markets and infrastructure. They will also benefit in keeping inflation under control, which will depend in great part on their ability to maintain fiscal discipline and sustainable current accounts. One of the main challenges for the region will be to implement structural reforms that can help them absorb a large pool of unemployed without creating upward risks to inflation.

Divided but United: European Trade Policy & EC-U.S. Agricultural Negotiations in the Uruguay Round. CES Germany & Europe Working Papers, No. 07.3, 1996

How has the integration of trade policy and negotiating authority in Europe affected the external bargaining capabilities of the European Community (EC)? This paper analyzes the bargaining constraints and opportunities for the EC created by the obligation to negotiate as a single entity. The nature of demands in external~ the voting rules at the EC level, and the amount of autonomy exercised by EC negotiators contribute to explaining, this paper argues, whether the EC gains some external bargaining clout from its internal divisions and whether the final international agreement reflects the position of the median or the extreme countries in the Community. The Uruguay Round agricultural negotiations illustrate the consequences of the EC's institutional structure on its external bargaining capabilities. Negotiations between the EC and the U.S. were deadlocked for six years because the wide gap among the positions of the member states at the start of the Uruguay Round had prevented the EC from making sufficient concessions. The combination of a weakened unanimity rule and greater autonomy seized by Commission negotiators after the May 1992 reform of the Common Agricultural Policy made possible the conclusion of an EC-U.S. agricultural agreement. Although the majority of member states supported the Blair House agreement, the reinstating of the veto power in the EC and the tighter member states' control over the Commission eventually resulted in a renegotiation of the U.S.-EC agreement tilted in favor of France, the most recalcitrant country.

The Political Response of Firms to the 1992 Single Market Program: The Case of the German Automobile Industry Pamela Camer. CES Germany & Europe Working Papers, No. 03.1, 1994

This paper examines the political responses of German automobile firms to the 1992 Single Market initiative. I argue that the decision by firms to try to influence EC policies depends on the perceived economic impact of the single market and ,the market alternative open to firms, while the decision on how to lobby depends on the size of the finn and the institutional and strategic environment in which a firm operates. I use this framework to explain why German automobile firms were slow in responding the single market initiative and why, when they did choose to lobby, the firms pursued different political strategies. The research suggests that we should not limit our studies to the political activity of trade associations and sectors, but should also examine the political strategies and activities of individual firms. It also suggests that, as integration efforts in Europe proceed, there is likely to be increased activity by individual firms and national associations because European trade associations may not be able to agree on specific EC policy proposals.

The challenge of freedom in the Southeastern Europe. OSW Report, July 2015

Over the past few decades substantial progress has been achieved in the democratisation and modernisation of the countries of Southeastern Europe. The formal democratic institutions were introduced, a liberalisation of trade resulted in the reintegration of the region into the global economy and some of them successfully applied to join the EU and NATO. But the transformation process is far from over. In the past years the achievements of the political and economic transformation have been rolled back and the quality of governance has declined in many countries. To avoid a further deterioration of the situation in the region the new impulse for institutional transformation and a change of the development model are needed. This report is the outcome of a discussion held during the conference “The Freedom Challenge in Southeastern Europe – Implications for Poland”. This joint event was developed by the Centre for Eastern Studies and Ideas Lab – the President’s Expert Programme at the Chancellery of the President of the Republic of Poland. The chapters of the report reflect the main three subjects debated during the conference. In the first chapter Spasimir Domaradzki assesses the rule of law and its influence on the consolidation of democracy in the region. In the second chapter Marta Szpala focuses on economic development in Southeastern Europe. The third chapter is written by Adam Balcer and analyses the key instruments Russia is using to build influence in this region.

The European Pharmaceutical Industry in a Global Economy: what drives EU exports of pharmaceuticals?. Bruges European Economic Research Papers (BEER) 31/2015.

The pharmaceutical industry is one of the most competitive sectors in the European Union. With its substantial investments in research and development, this industry represents a key asset for the European economy and a major source of growth and employment. However, despite the importance of the pharmaceutical sector for the European Union, few researchers have attempted to assess the determinants of the EU exports of pharmaceuticals. This paper aims at filling the aforementioned gap by examining what drives EU exports of pharmaceuticals. In order to tackle this question, this paper has derived hypotheses from the Gravity Model of Trade and the relevant academic literature on pharmaceuticals. Based on an econometric analysis, the research sheds light on the complex interaction of factors influencing the EU exports of pharmaceuticals. The paper finds that the protection of intellectual property in the receiving countries, their economic size, the importance of their health sector, and the quality of infrastructures constitute major drivers to the EU exports of pharmaceuticals. On the contrary, the research shows that transports costs as well as tariff barriers and non-tariff barriers tend to hinder the EU exports of pharmaceuticals.

TTIP and Public Procurement: Going beyond the tip of the iceberg. CEPS Policy Brief No. 339, March 2016

Trade negotiations involving international public procurement rules are on the rise, stimulating a growing interest in having a clear picture of the economic stakes involved, including the current level of international openness. A recent paper published by the European Centre for International Political Economy (Messerlin, 2016) made an attempt to provide a range of estimates for the EU and the US and found relatively low rates of import penetration. This analytical approach, however, looked only at the ‘tip of the procurement iceberg’, as the data used covered primarily only one modality of international procurement (direct cross-border), which is not the main avenue for international government procurement. Other modalities, such as procurement from foreign subsidiaries established in Europe, account for much more. Such an approach therefore ignores the main modalities through which foreign firms win EU contracts. Once these other main procurement modalities are taken into account, EU openness in procurement is much higher. Comparable data across all modalities do not yet exist for the US, but we do have clear evidence that the US has introduced the largest number of protectionist procurement measures since 2008 affecting all modalities for international procurement. Against this background, this Policy Brief makes four basic points: i. Public procurement is a key area of trade negotiations, and TTIP is no exception to this rule. ii. The existing levels of openness in procurement markets need to be assessed across all three main procurement modalities and not based only on direct cross-border procurement, which is not the main procurement avenue. According to this comprehensive metric, the EU market already has a high foreign participation rate, including by US companies. iii. Unfortunately, similar data do not exist for the US market. But there is growing evidence of discriminatory measures introduced in recent years, which impede the ability of EU firms to compete on a level-playing field in US procurement markets. iv. The importance of procurement as a key negotiating area requires better data and a greater analytical engagement.

The role of Central Europe in the German economy. The political consequences. OSW Report June 2016

Recent publications allow us to conclude that the economic relations between Germany and Central Europe have come to the ‘end of history’, and nothing new will happen. However, a deeper analysis of these relationships reveals interesting new trends. Since joining the European Union the states of Central Europe have not settled for maintaining the average level of economic development, but have continued to narrow the distance between them and Western Europe, something which the global financial crisis did not prevent. Their improved economic situation also affected their relations with Germany. The latest results from the Visegrád Group states show them to be Germany’s most important trading partner, and their balance of trade in goods is in a state of equilibrium, while many euro area countries have recorded high trade deficits with Germany. The aim of this report is to display the trends in trade and investment between Germany and Central Europe, based on the example of the Visegrád Group. The author will also attempt to answer the question of whether the advancing economic cooperation between Germany and the V4 countries will lead to the further modernisation of those countries’ economies, or whether it will run the risk of leaving them in the ‘middle income trap’.