Investor-State Dispute Resolution as an Issue in Transatlantic Trade Negotiations: Lessons from NAFTA. Jean Monnet/Robert Schuman Paper Series Vol. 15 No. 3, August 2015

A major issue in the ongoing Transatlantic Trade and Investment Partnership (TTIP) negotiations is investor-state dispute resolution as it relates to foreign investments. The United States would like to have strong investor protections similar to those of the North American Free Trade Agreement (NAFTA) included in the TTIP agreement. Civil society groups on both sides of the Atlantic object to binding arbitration of investment disputes, fearing that arbitration awards could endanger environmental and other types of regulations. This paper examines the experience with investor-state dispute resolution under NAFTA to determine whether judgments rendered in these cases have had adverse effects.

Approximation to EU Technical Standards with and without the Promise of Membership: the Cases of Slovakia and Ukraine. EU Diplomacy Paper 02/2013

This paper aims to identify the extent to which the non-promise of membership of the European Union (EU) precludes the motivation of Ukraine as European Neighbourhood Policy country to adopt EU policies in the field of market access, namely technical standards and regulations. Its approximation approach is compared to the fast-tracked accession of Slovakia, which was driven by a clear-cut membership promise. Furthermore, the paper elaborates whether the conclusion of an Association Agreement between the EU and Ukraine, including a Deep and Comprehensive Free Trade Agreement, provides sufficient incentives for Ukraine to continue reforming its quality infrastructure in order to gain access to the Single European Market. Finally, scenarios of possible developments of EU-Ukraine relations are deliberated in the context of the EU-Ukraine-Russia triangle. The paper argues that market access provides sufficient stimulus for third countries to adhere to EU technical standards – even in the absence of a clear and credible promise of future EU membership. Yet, in the case of Ukraine, the country’s relations with Russia appear to compete with its EU approximation process, resulting for the time being in Ukraine attempting to pursue a balanced dual cooperation with both the EU and Russia.

Rulemaking in Super-RTAs: Implications for China and India. Bruegel Working Paper 2014/03, March 2014

The faltering Doha round has led to a renewed focus on large regional trade agreements. There are two super-RTAs in the making in the Asia-Pacific and one in the Atlantic, all with rather ambitious negotiation targets, and presented as alternate means to reset global trade rules and take the multilateral trade liberalisation agenda forward. So what does this development mean for large emerging markets such as China and India that are on the fringes of these regional trade negotiations? Can these agreements become alternate means of pressuring these Asian economies to follow new trade rules set by industrialised countries, especially given the progressive erosion of the policy dominance of industrialised countries and the strong dissenting voice of developing countries in the Doha Round? This paper examines how super-RTAs may emerge as game changers in the multilateral trading system as promulgated by the WTO, and the implications for China and India. The paper analyses the new economic governance system that is likely to emerge given the renewed interest in regionalism, and argues that while the super-RTAs will not be entirely benign in their impact on China and India, rather than forcing these economies to accept the higher new regulatory standards enshrined in the super-RTAs, a distinct possibility in the medium-term is the emergence and entrenchment of a dual regulatory regime in these economies.

The Impact of TTIP: The underlying economic model and comparisons. CEPS Special Report No. 93/13 October 2014. [TTIP Series No. 1]

What are the economic and other impacts of the Transatlantic Trade and Investment Partnership? At the request of the European Parliament, CEPS has provided an appraisal of the TTIP Impact Assessment carried out by the European Commission, with special elaboration of the underlying economic model. The methodology applied by the Centre for Economic Policy Research (CEPR) for this economic modelling is analysed in depth, together with the assumptions used to make TTIP amenable to an economic appraisal. The research paper also compares the IA on TTIP with selected previous empirical economic assessments of EU trade agreements and with a set of alternative studies on TTIP itself. In reading our findings, two central caveats should be kept in mind that affect any analysis of the CGE model included in the European Commission’s Impact Assessment. First, TTIP is a rather unusual bilateral trade agreement; and second, TTIP is so wide-ranging that an alternative approach, such as the so-called ‘partial’ (equilibrium) approach – already a second-best solution – would be totally inappropriate to the case under examination.

Ukraine and the EU: turning the Association Agreement into a success story1. EPC Policy Brief, 23 April 2014

It is paradoxical and symbolic that it has taken Ukraine two waves of mass protests to conclude a new agreement with the EU. As a result, the political and geopolitical implications of the Association Agreement between the EU and Ukraine are very high. This means that it cannot be regarded merely as one of many trade agreements signed by the EU with its numerous trading partners. More attention needs to be paid to the role and impact of the Association Agreement on Ukraine. This requires screening, prioritising and sequencing of the approximation process at the national, sectoral and regional levels. Implementing the Agreement in a cost-effective way will allow Ukraine to derive benefits in the short-to-medium term, at the very time when Russia is sparing no efforts to inflict harm on the Ukrainian economy to punish the country for its European orientation.

Transnistria – Where to? EPC Policy Brief, 13 March 2014

At the Vilnius summit of the Eastern Partnership in November 2013, Moldova initialled its Association Agreement with the EU, including a Deep and Comprehensive Free Trade Area (DCFTA) agreement, and is expected to sign the documents before the end of August 2014. Meanwhile, Russia has increased its presence and pressure in the region, as a consequence of which Armenia declined the AA and DCFTA with the EU and Ukraine, after months of protests and political paralysis, now has part of its territory occupied by Russia. Moldova is no exception to Russian pressure. As the country gets closer to upgrading relations with the EU, Russia has increased its activities in Moldova, including in the autonomous region of Gagauzia and in the breakaway region of Transnistria. Even though the “5+2” negotiations for the settlement of the Transnistria conflict continue, the number of incidents in and around this region have increased. The window of opportunity created by the involvement of Germany in the settlement of the conflict and the restart of the “5+2” negotiations in late 2011 seems to have closed. Given the recent events in the region and in Moldova/Transnistria, including the potential impact of DCFTA and visa liberalisation, Chisinau finds it increasingly difficult to manage the juggling act between its EU commitment and dialogue with Tiraspol. This Policy Brief presents the background, state of play and prospects of the Transnistria conflict while also focusing on the potential impact of Moldova’s Association Agreement with the EU on the settlement of the conflict.

Moldova – Heading into a hot autumn. EPC Policy Brief, 6 October 2014

After four years of negotiations, Moldova signed an Association Agreement (AA) including a Deep and Comprehensive Free Trade Area (DCFTA) Agreement with the European Union (EU) on 27 June 2014. Ratified in the Moldovan Parliament on 2 July it came into provisional application on 1 September. While this development represents an important milestone in Moldova’s relations with the EU, the journey has not been easy. Russia has increased its presence and pressure in the region, as the country gets closer to bettering relations with the EU, Russia has increased its activities in Moldova, including in the autonomous region of Gagauzia and in the breakaway region of Transnistria. Alongside pressure from Russia, the next few months will be very politically challenging for Moldova, with internal and external developments continuing to shape Moldova’s future. Not only will Chisinau need to move ahead with the difficult and expensive implementation of the DCFTA, the ruling coalition simultaneously needs to campaign for the elections with very importantly, a united front. In this Policy Brief, Amanda Paul presents the state of play and the prospects of Moldova since signing the Association Agreement with the EU and explores the effects of Russian bans on exports and services, access to energy and trade as well as the role of the EU

Helping Moldova stay on the EU course. Proposals for a real 'more for more' approach. EPC Policy Brief, 11 December 2013

At the Vilnius Eastern Partnership (EaP) Summit in November, Moldova initialled its Association Agreement including a Deep and Comprehensive Free Trade Area (DCFTA) with the EU and became the first EaP country to meet all the requirements of their Visa Liberalisation Action Plan. 2014 may prove to be a make or break year for Moldova, with Chisinau facing a number of serious challenges. From the EU’s point of view, it could also prove to be a make or break year for the Eastern Partnership. The period following Vilnius should be a soul-searching time for the EU. Of the three pillars (AA, DCFTA, visa regime) of the Eastern Partnership, two are now being openly challenged by Russia. While the EU should not engage in a populist competition with Russia, it does need to adapt its actions to the realities on the ground. In this Policy Brief, Cristian Ghinea, Amanda Paul and Victor Chirila argue that the EU should work for greater visibility, better public diplomacy and deliver visible, tangible benefits to the Moldovan population as rapidly as possible. Not only will this help counter Russian activities, but it will also help shore up support for pro-EU reformers in the country.

Taking its place in Europe – Iceland’s long road to its EU application. Jean Monnet Occasional Paper 03/2013

Iceland applied for EU membership in 2009. Before that it had sought to alleviate pressures on her to fully integrate with Europe firstly by pursuing limited integration through membership of the European Free Trade Association (EFTA) and later by joining the European Economic Area (EEA). This paper traces the steps taken by this peripheral European country from its struggle of independence from Denmark, through World War II, American occupation, the founding of a republic, NATO membership and the Cod Wars with Britain. The paper analyses the various phases of the debate on the ties to the European institutions leading to EEA and Schengen membership, the “miraculous economic success“ which ended in the epic crash of 2008 which precipitated a much contested EU application.

Russia goes on the offensive ahead of the Eastern Partnership summit in Vilnius. OSW Commentary No. 115, 30.09.2013

In recent weeks, Russia has stepped up its efforts to prevent a group of former Soviet republics from tightening their relations with the European Union. The intensification of these efforts comes ahead of the upcoming Eastern Partnership summit, scheduled to take place in Vilnius on 28-29 November. It is expected that during the summit Kiev will sign the EU-Ukraine Association Agreement (AA) initialled in March 2012, including an agreement for a Deep and Comprehensive Free Trade Area (DCFTA). Meanwhile, Moldova, Armenia and Georgia are expected to initial similar documents, effectively accepting their terms and conditions, and paving the way for their official signing in the near future. Moscow has always viewed the relations between the EU and the post-Soviet states as a threat to its own influence in the region. Consequently, any attempts to tighten these relations have been actively opposed by Russia. The EU’s Eastern Partnership programme, launched in 2009, has posed a particular challenge to Moscow’s policies in the region.. Russia responded by rolling out a Eurasian integration project, which began in 2010 with the establishment of the Customs Union of Russia, Kazakhstan and Belarus, and is expected to culminate in the establishment of the Eurasian Economic Union by 2015. Moscow’s overarching objective has been to persuade the countries in the region, especially Ukraine, to adopt an unambiguously pro-Russian geopolitical stance and to join the integration project proposed by the Kremlin. The Russian government hopes that this would permanently place these states in Moscow’s sphere of influence and at the same time prevent them from developing closer relations with Brussels. Russia has regularly taken actions aimed at showcasing the benefits of integration with the Customs Union (particularly, by promising preferential pricing of Russian energy resources) and at the same time it has adopted measures highlighting the pitfalls of retaining a pro-European orientation (mainly by imposing occasional trade sanctions). The upcoming summit in Vilnius, during which Ukraine, Moldova, Armenia and Georgia could lock themselves on to a pro-European course, has spurred Moscow to intensify its efforts to torpedo a successful outcome of the Vilnius meeting, with a view to slowing down or even blocking the possibility of closer cooperation between the EU and the former Soviet republics.

Triangular Geopolitics in Europe’s Eastern Neighbourhood. CEPS Commentary, 2 December 2014

Over the last few months, Russia has employed a number of economic and security measures to derail the Deep and Comprehensive Free Trade Agreement (DCFTA) between the EU and Ukraine. Russia’s opposition to the Agreement was based on the argument that it would damage its economy and weaken its trade ties with Ukraine. Russia’s actions ultimately led to war in Ukraine, but did not succeed in reversing Ukraine’s EU integration policies; instead there are now trilateral negotiations between the EU, Ukraine and Russia on mere technical trade aspects of the DCFTA. The Kremlin is using similar rhetoric and, to some extent, similar coercive measures against the DCFTAs with Moldova and Georgia. But the small scale of Moldovan and Georgian trade with Russia is not a legitimate reason for the EU to replicate the Ukraine ‘trialogue’ on the DCFTAs in these countries. Instead, Moldova’s heavy dependence on Russia’s energy and the former’s transit role for the EU offers a greater possibility to set up trilateral negotiations, similar to the recently finalised gas trialogue between the EU, Ukraine and Russia.

Reforms in Moldova: Moderate progress and an uncertain outlook for the future. OSW Commentary No. 100, 2013-01-22

After coming to power in September 2009, the Alliance for European Integration (AIE)1 coalition began implementing a wide-ranging programme of reforms, with a view to bringing Moldova closer to the European Union, and ultimately to ensure the country’s full membership of the EU. Today, Moldova is considered a clear leader in European integration among the members of the EU’s Eastern Partnership programme. This, however, has less to do with the concrete reforms introduced by the Moldovan government, and more to do with, on the one hand, Chișinău’s excellent public relations with Brussels, achieved through effective diplomacy; and on the other hand, the growing disillusionment with the lack of progress in other Eastern Partnership countries, particularly in Ukraine. Attempts to evaluate Moldova’s reforms have proven rather problematic. On the one hand, the ruling coalition has managed to make significant progress in the areas of civil liberties, human rights and electoral reform. The government has also successfully implemented regulations which have brought Moldova closer to signing a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, and it has made headway in talks on visa liberalisation with Brussels. On the other hand, Chișinău has still not carried out the structural and economic reforms without which real change in the country will be impossible. No reforms have been introduced in the Ministry of the Interior, the Moldovan police force, or the judiciary. The AIE has also failed to decentralise governance and has had no real success in reducing corruption; its attempts to rebuild the country’s financial institutions have proved equally unsuccessful. The main reasons for this poor performance include mutual mistrust and conflicting interests among the coalition members, a shortage of financial resources, strong resistance to change by public administration staff, and significant pressure from those political and business groups whose interests could suffer as a result of the proposed reforms. It should also be noted that since the AIE took power, the international context of the reform efforts has undergone significant changes. On the one hand, the EU has been facing an economic crisis, which has had a negative impact on Moldovan exports and contributed to the worsening of the economic situation in the country; and on the other hand, Moldova has been offered membership of the Customs Union as a viable alternative to EU membership.

Germany and the Eastern Partnership. OSW Commentary No. 37, 2010-06-17

Germany perceives the Eastern Partnership as an initiative that is conducive to German interests, but at the same time as one that could undermine them. Berlin would like the Eastern Partnership to be an instrument that brings the partner countries closer to the EU economically but not politically. Germany has opted for a tightening of the economic cooperation with the partner countries, by signing deals on deep free trade areas and harmonising part of the legislation of these countries with the acquis communautaire. On the other hand, Germany does not want the Eastern Partnership to evolve and turn into an initiative that offers the partner countries prospects of membership and antagonises Russia. Therefore Germany is trying to counteract any elements of the Eastern Partnership that would help it develop in the aforementioned direction. Moreover, Germany has set its own bilateral cooperation with partner countries in the east above the joint projects of the Eastern Partnership. In doing so, Berlin’s guiding principle is that German money allocated for the projects on development cooperation in the east should bring political and economic benefits first of all to Germany.

Tug-of-war over EU's policy towards its neighbours. OSW Commentary No. 49, 2011-03-09

The revolutions in North Africa, the approaching end of the ‘strategic review’ of the European Neighbourhood Policy (ENP) initiated by the European Commission, and the beginning of negotiations on the European Union’s new financial perspective, have intensified the debate among the member states and EU institutions on what policy the EU will adopt towards its neighbourhood in the future. The discussion concerns not only the shape of the ENP but also non-ENPI foreign policy instruments which Brussels applies towards neighbouring countries, such as the thematic instruments and loan support. Serious differences of opinion have emerged among the member states. The countries located in the southern part of the EU want Brussels to boost its policy towards North Africa, even at the expense of engagement in Eastern Europe and the Southern Caucasus. Meanwhile Central European countries, including Germany, favour a more balanced approach towards both directions. The future shape of the ENP, as well as the EU’s other foreign policy instruments, will have a strong impact on the approach the EU adopts towards its Eastern neighbourhood. If some of the proposals are realised, especially the southern member states’ request to transfer some of the funds from the Eastern to the Southern neighbourhood, the chances of meeting the Eastern Partnership goals, such as the association of the partner countries with the EU and the creation of deep and comprehensive free trade areas, could be reduced.

From stabilisation to stagnation. Viktor Yanukovych's reforms. OSW Point of View Number 32, March 2013

After winning the 2010 presidential election, Viktor Yanukovych and his government developed an ambitious and comprehensive programme of reforms across key areas of social and political life. The return to a presidential system of government created the ideal conditions for the introduction of deep reforms: it allowed Viktor Yanukovych to consolidate more power than any other Ukrainian president before him.The authorities launched an overhaul of the tax and the pension systems, and of the Ukrainian gas sector. Kyiv also completed its negotiations on an Association Agreement with the EU and on a Deep and Comprehensive Free Trade Area. However, the reformist zeal of Ukraine’s political elite progressively diminished as the parliamentary election approached, the economy slowed down, and the polls showed a decline in support for the ruling Party of Regions. Many of the reforms still remain in the planning stages, and in many areas the government has moved backwards. Viktor Yanukovych has proved unable to make systemic changes, and has increasingly used his powers to crush political opposition in Ukraine. The outcome of the latest parliamentary elections prevents the formation of a stable parliamentary majority, which in turn, removes any chance of reform before the 2015 presidential ballot.