The Judicial Dimension of the European Neighbourhood Policy. EU Diplomacy Paper 08/2013, November 2013

In this paper, the expression “neighbourhood policy” of the European Union (EU) is understood in a broad way which includes the members of the European Free Trade Association (EFTA) contracting parties to the European Economic Area (EEA), the EFTA State Switzerland, candidate states, the countries of the European Neighbour-hood Policy (ENP), and Russia. The European Court of Justice (ECJ) is the centre of gravity in the judicial dimension of this policy. The innermost circle of integration after the EU itself comprises the EFTA States who are party to the European Economic Area. With the EFTA Court, they have their own common court. The existence of two courts – the ECJ and the EFTA Court – raises the question of homogeneity of the case law. The EEA homogeneity rules resemble the ones of the Lugano Convention. The EFTA Court is basically obliged to follow or take into account relevant ECJ case law. But even if the ECJ has gone first, there may be constellations where the EFTA Court comes to the conclusion that it must go its own way. Such constellations may be given if there is new scientific evidence, if the ECJ has left certain questions open, where there is relevant case law of the European Court of Human Rights or where, in light of the specific circumstances of the case, there is room for “creative homogeneity”. However, in the majority of its cases the EFTA Court is faced with novel legal questions. In such cases, the ECJ, its Advocates General and the Court of First Instance make reference to the EFTA Court’s case law. The question may be posed whether the EEA could serve as a model for other regional associations. For the ENP states, candidate States and Russia this is hard to imagine. Their courts will to varying degrees look to the ECJ when giving interpretation to the relevant agreements. The Swiss Government is – at least for the time being – unwilling to make a second attempt to join the EEA. The European Commission has therefore proposed to the Swiss to dock their sectoral agreements with the EU to the institutions of the EFTA pillar, the EFTA Surveillance Authority (ESA) and the EFTA Court. Switzerland would then negotiate the right to nominate a member of the ESA College and of the EFTA Court. The Swiss Government has, however, opted for another model. Swiss courts would continue to look to the ECJ, as they did in the past, and conflicts should also in the future be resolved by diplomatic means. But the ECJ would play a decisive role in dispute settlement. It would, upon unilateral request of one side, give an “authoritative” interpretation of EU law as incorporated into the relevant bilateral agreement. In a “Non-Paper” which was drafted by the chief negotiators, the interpretations of the ECJ are even characterised as binding. The decision-making power would, however, remain with the Joint Committees where Switzerland could say no. The Swiss Government assumes that after a negative decision by the ECJ it would be able to negotiate a compromise solution with the Commission without the ECJ being able to express itself on the outcome. The Government has therefore not tried to emphasise that the ECJ would not be a foreign court. Whether the ECJ would accept its intended role, is an open question. And if it would, the Swiss Government would have to explain to its voters that Switzerland retains the freedom to disregard such a binding decision and that for this reason the ECJ is not only no foreign court, but no adjudicating court at all.

Trade policy issues in the Wider Europe – that led to war and not yet to peace. CEPS Working Document No. 398, July 2014

This paper looks at the trade policy landscape of the EU and the wider Europe, with a focus on issues arising from the signature on 27 June 2014 of Deep and Comprehensive Free Trade Agreements (DCFTAs) between the EU and three East European countries (Georgia, Moldova and Ukraine), and actual or prospective issues relating to the customs union of Belarus, Russia and Kazakhstan (BRK), and the Eurasian Economic Union whose founding treaty was signed on 29 May 2014. The huge expansion of intercontinental free trade area negotiations currently underway, in which the EU is an active participant alongside much of the Americas and Asia, stands in contrast with Russia’s choice to restrict itself to the Eurasian Economic Union, which is only a marginal extension of its own economy. Alone among the major economies in the world, Russia does not seek to integrate economically with any major economic bloc, which should be a matter of serious concern for Moscow. Within the wider Europe, the EU’s DCFTAs with Ukraine, Moldova and Georgia are a major new development, but Russia now threatens trade sanctions against Ukraine in particular, the economic case for which seems unfounded and whose unilateral application would also impair the customs union. The Belarus-Russia-Kazakhstan customs union itself poses several issues of compatibility with the rules of the WTO, which in turn are viewed by the EU as an impediment to discussing possible free trade scenarios with the customs union, although currently there are far more fundamental political impediments to any consideration of such ideas. Nonetheless, this paper looks at various long-term scenarios, if only as a reminder that there could be much better alternatives to the present context of conflict around Ukraine.

Russia’s Punitive Trade Policy Measures towards Ukraine, Moldova and Georgia. CEPS Working Document No. 400, September 2014

While EU and US sanctions against Russia over its aggression in Ukraine, and Russia’s counter-sanctions, are much discussed due to their evident political significance, less attention has been given to Russia’s punitive sanctions against the three Eastern European states – Ukraine, Moldova and Georgia – that have signed with the EU Association Agreements (AA), which include Deep and Comprehensive Free Trade Area (DCFTA) provisions. This paper therefore documents these trade policy restrictions and embargoes imposed by Russia, and provides some first indications of their impact. The immediate impact on trade flows, especially for agri-food products, has been substantial, albeit with some leakage through Belarus. The main instrument for the Russian measures has been allegations of non-conformity with Russian technical standards, although the correlation of these allegations with movements in Russia’s geopolitical postures makes it obvious that the Russian technical agencies are following political guidelines dressed up as scientific evidence. These measures also push the three states into diversifying their trade marketing efforts in favour of the EU and other world markets, with Georgia already having taken significant steps in this direction, since in its case the Russian sanctions date back to 2006. In the case of Ukraine, Russia’s threat to cancel CIS free trade preferences infiltrated trilateral talks between the EU, Ukraine and Russia, leading on 12 September to their proposed postponement until the end of 2015 of the ‘provisional’ implementation of a large part of the AA/DCFTA. This was immediately followed on 16 September by ratification of the AA/DCFTA by both the Rada in Kyiv and the European Parliament, which will lead to its full and definitive entry into force when the 28 EU member states have also ratified it. However Putin followed the day after with a letter to Poroshenko making an abusive interpretation of the 12 September understanding.

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.

The Transatlantic Trade and Investment Partnership: A long hard road to multilateralism? EPC Commentary, 26 September 2014

The seventh round of the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the European Union and the United States will take place in Washington on 29 September. If concluded successfully, the TTIP would become the world’s largest free trade pact. The EU and the US account for nearly half of the world’s GDP and 30% of world trade with exchanges of goods and services worth around €723 billion a year and €1.8 billion a day. The Partnership, unprecedented in its scope and ambition, has generated great expectations which will be hard to meet in reality. It could however have a beneficial effect on trade multilateralism, provided that it is the result of an open negotiating process.

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.

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.

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.

Could Transnistria block Moldova's integration with the EU? OSW Commentary No. 95, 2012-10-23

Moldova’s progress in its negotiations on an Association Agreement with the European Union, with a Deep and Comprehensive Free Trade Area (DCFTA) as its key element, has become a source of tension between Chisinau and the breakaway Republic of Transnistria. An almost certain refusal by Transnistria to join the DCFTA, will deprive the region of the benefits it currently enjoys under the EU Autonomous Trade Preferences (ATP) worsening its already precarious economic situation. It is to be expected that the issue will become an additional source of tension between the two sides of the Transnistrian conflict, and might also have a negative impact on the EU–Russia relationship. The signing of the Association Agreement, which is scheduled for the autumn of 2013, will be an important step towards Moldova’s integration with the EU. Both sides assign great importance to the speediest possible finalisation of the Agreement, and so far the negotiations have been described as progressing very smoothly. Transnistria’s highly sceptical attitude towards its possible accession to the DCFTA, however, is consistent with the interests of its main ally, Moscow. It is highly probable that Russia intends to thwart Moldova’s EU association process. Moscow’s objective seems to be to draw Moldova permanently into its own sphere of influence, and therefore it perceives Chisinau’s movement towards the EU as a transgression against its geopolitical interests. Consequently, in order to hinder this process, Russia may instrumentally exploit its extensive influence over Transnistria to provoke a crisis between Tiraspol and Chisinau. An apparent increase in Russian presence in the region over the last few months (including tighter control over Transnistria’s KGB and the Ministry of Information) may suggest that the Kremlin is preparing to implement such a scenario.

No Move without Free Movement: The EU-Swiss controversy over quotas for free movement of persons. CEPS Policy Brief No. 331, 23 April 2015

The focus of this Policy Brief is the Swiss referendum of 2014 against ‘mass immigration’ in Switzerland. It identifies the challenges that a quota on EU citizens’ free movement rights to Switzerland would pose to EU-Swiss relations, considering: i) the value of freedom of movement in the EU and its indivisibility from the internal market and other economic freedoms; ii) the specificity of the EU legal system following the Lisbon Treaty that established democratic and judicial accountability mechanisms; iii) the lack of supranational judicial oversight of the EU-Switzerland agreements framework; and iv) the existence of the so-called guillotine mechanism, according to which the termination of the Free Movement Agreement would entail the automatic termination of the other agreements with the EU. The authors set out a number of options and consider their implications for EU-Swiss relations.

Georgia and the EU – maintaining the momentum. EPC Commentary, 1 July 2016

The Association Agreement (AA) between Georgia and the European Union (EU), signed in June 2014, will enter into force on 1 July 2016 after having been ratified by the parliaments of the 28 member states. The AA, with its Deep and Comprehensive Free Trade Area (DCFTA), foresees far-reaching political and economic integration with the EU by significantly deepening political and economic ties. Many provisions of the agreement have already begun to be implemented, and some are even beginning to give tangible results, such as the opening up of European markets to Georgian exports. Yet this benchmark moment was somehow overshadowed by the EU’s failure to extend visa free travel to Georgians, as had been expected, despite acknowledging that Georgia had fulfilled all the criteria that had been set. Whilst this was quickly explained by the EU as being only a temporary setback, based on reasons more related to other countries, such as Turkey and Ukraine, with which similar arrangements were being negotiated, it exposed the fragility of maintaining the necessary momentum in Georgia-EU relations.

Innovation and Development in the Age of Climate Change Adaptation: Open or Closed?

Change Adaptation: Open or Closed? Paper read at the Second African International Economic Law Network Conference, 7-8 March 2013, Wits School of Law, Johannesburg, South Africa. In a time of rapid convergence of technologies, goods, services, hardware, software, the traditional classifications that informed past treaties fail to remove legal uncertainty, or advance welfare and innovation. As a result, we turn our attention to the role and needs of the public domain at the interface of existing intellectual property rights and new modes of creation, production and distribution of goods and services. The concept of open culture would have it that knowledge should be spread freely and its growth should come from further developing existing works on the basis of sharing and collaboration without the shackles of intellectual property. Intellectual property clauses find their way into regional, multilateral, bilateral and free trade agreements more often than not, and can cause public discontent and incite unrest. Many of these intellectual property clauses raise the bar on protection beyond the clauses found in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In this paper we address the question of the protection and development of the public domain in service of open innovation in accord with Article 15 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) in light of the Objectives (Article 7) and Principles (Article 8) set forth in TRIPS. Once areas of divergence and reinforcement between the intellectual property regime and human rights have been discussed, we will enter into options that allow for innovation and prosperity in the global south. We then conclude by discussing possible policy developments.

Toward alignment of carbon standards under the Transatlantic Trade and Investment Partnership

With its wide coverage of economic spheres and the variety of trade and investment measures currently under negotiation, the Transatlantic Trade and Investment Partnership (TTIP) opens windows of opportunity for climate change mitigation and adaptation. The paper examines the possible avenues and the WTO law implications for the alignment of emissions standards between the European Union (EU) and United States of America (US). Looking particularly at the automobile sector, it argues that TTIP negotiators should strive for the mutual recognition of equivalence of EU and US car emissions standards, while pursuing full harmonisation in the long term. It concludes that the preferential trade agreement (PTA) status of TTIP would not be able to exempt measures taken for regulatory convergence from compliance with applicable WTO rules, particularly the rules of the WTO’s Agreement on Technical Barriers to Trade (TBT). Furthermore, the EU and the US would not be able to ignore requests for the recognition of equivalence of third countries’ standards and would need to provide the grounds upon which they assess third countries’ standards as not adequately fulfilling the objectives of their own regulations and therefore rejecting them.

Trade policy in a dynamic Heckscher-Ohlin model

The Import Substitution Process in Latin Amer ica was an attempt to enhance GDP growth and productivity by rising trade barriers upon capital-intensive products. Our main goal is to analyze how an increase in import tariff on a particular type of good affects the production choices and trade pattern of an economy. We develop an extension of the dynamic Heckscher-Ohlin model – a combination of a static two goods, two-factor Heckscher-Ohlin model and a two-sector growth model – allowing for import tariff. We then calibrate the closed economy model to the US. The results show that the economy will produce less of both consumption and investment goods under autarky for low and high levels of capital stock per worker. We also find that total GDP may be lower under free trade in comparison to autarky.