The digital platform economy has exploded in the last few years.
According to European Commission figures, over 28 million people in the EU work through digital labor platforms today. By 2025, their number is expected to reach 43 million.
Workforce digitalization, which accelerated during the COVID-19 pandemic, has radically changed the European labor market.For some people, that means insecure contracts and stressful working conditions. While others are fortunate enough to freely embrace platform work as a way of escaping the 9-to-5 and increasing economic opportunities.
It’s a really complicated issue, and these are the treacherous waters European policymakers are navigating with a new Directive on “improving working conditions in platform work”.
There is a common saying that the road to hell is paved with good intentions. While we support the overarching mission of the Directive, there is a dangerous trade-off taking place within the legal text.
While aiming to protect the vulnerable from exploitation– a cause we could not be more supportive of– the new laws will counter-intuitively reduce economic opportunities for workers, prevent people from entering the workforce and harm SMEs, startups and entrepreneurs of all stripes.
Why? Because the proposal has been drafted without consulting the most important stakeholders of all: freelancers and platform workers.
That has to change.
For workers’ rights to be truly protected, it’s vital that we have a dynamic legal framework in place that supports individual needs and preferences.
The key issue pertains to what legally defines a freelancer. Please bear with us…
As it stands, regulators have proposed a set of five criteria to determine the employment status of a worker. The checklist includes things like ‘supervision of performance and quality’ and ‘the employer setting the level of remuneration’. If just two of the criteria are met, the worker will legally be classed as an employee.
While that may sound like a good idea, freelancers and business owners know that it would actually limit opportunity and innovation, rather than protect workers. For example, setting prices for services and ensuring quality services are essential elements of any successful commercial relationship. Coupling them with a presumption of employment creates all kinds of problems.
The proposal shows a lack of understanding of freelancing as well as the European labor market of today.
When it comes to the debate around the platform economy, there is an understandable focus on ride-hailing and courier businesses, but the reality is that gig work and freelancing are infinitely broader than this.
Many technologists, designers, lawyers, architects, musicians, teachers, builders, healthcare professionals, beauticians, hairdressers and models—to name just a selection—are all freelancers and independent contractors.
We interviewed thousands of gig workers across Europe, of which 80% reported that freelance work is a lifestyle choice bringing them freedom, flexibility, and the “opportunity to create something.”
Furthermore, findings from the study show that 90% of the sample population are happy being a freelancer (the full report will be released in Autumn 2022).
Of course, a lot more research is needed on this complex issue. But our data strongly indicates that a significant number of people and their livelihoods will be stifled by the current proposal.
We believe, therefore, that the legislation should be amended to apply those measures only when the worker ‘opts in’ to them. This would provide workers with the choice of being classed as an employee, as opposed to it being automatically enforced.
Additionally, the criterion of “effectively determining, or setting upper limits for the level of remuneration” should be removed. It’s standard practice in B2B relationships that a price for services can be set between commercial partners. There is no reason this path should be departed from when it comes to the digital sector.
European labor markets need to adapt to the evolving needs and demands of workers. The lines between traditional, full-time, and freelancing work will continue to blur. The result is a blended workforce which will need to be facilitated legally, technologically and at the level of policy.
The Directive on “improving working conditions in platform work” is an important building block toward a healthy, inclusive and sustainable future of work. We strongly believe that protection is needed for many workers, and implementing these safeguards is our moral responsibility as a society.
However, it’s vital that freelancing be allowed to flourish at the same time, and not strangled by an outdated set of misjudged rules.
It would be short-sighted to ignore the needs of freelancers today. The knowledge work economy is expanding at a rapid pace. In the not-too-distant future, this issue will be of importance to a vast segment of the population, and not just a relatively privileged group.
As the European Parliament’s Employment committee returns after its summer break and picks its way through the huge number of amendments to the current text on platform worker rights, we’re urging MEPs to take these points to heart.
Flexible workers all over Europe, now and in future, are counting on them.
This article first appeared in TNW - a Financial Times company - as an Opinion Piece authored by Glen Hodgson, CEO of the think tank Free Trade Europa & Secretary General of Freelance Movement and
Ben Marks, campaigner, impact entrepreneur and writer, currently serving as the Founder & Executive Director of the #WorkAnywhere Campaign.
Even a "good" thing can become "bad" if done to excess. By way of an example, up to 60% of the human body is made up of water, and it is universally agreed that staying hydrated is important for our health. Yet while drinking water has health benefits, drinking too much water over short periods can lead to water intoxication. By the same token, the watchword from legislators, opinion-formers and companies should always be everything in moderation. Equally importantly it should be to create a light-touch policy and regulatory framework which allows room for personal choice and common sense.
Over the past two years, however, the COVID-19 pandemic has led to authorities deciding every aspect of what is best for the general public, from where we can go, what we can do and what is best for us. This is a worrying trend and excessive nannying will lead to the opposite effect in the long term as people will not follow overly prescriptive rules: particularly when they are deemed to be nonsensical, ineffective and limiting personal choice.
Everything in moderation
The European Union (EU) approach on cancer is a perfect example of this. While the aims are commendable the substance often goes too far as, it tends to favour zero-risk language and prohibitive measures over the tenets of moderation and personal responsibility. The dossier “Strengthening Europe in the fight against cancer - towards a comprehensive and coordinated strategy” was adopted on in the European Parliament on 16th February, and “everything in moderation” was at least partially in their minds as they cast their final votes.
To take the example of alcohol, the majority of adults can enjoy it responsibly and in moderation. While zero risk is impossible with everything we do and consume, alcohol can be part of a balanced and healthy lifestyle. Moreover, studies (including those funded by the World Health Organisation and European Commission) show that rates of heavy and binge drinking (heavy episodic drinking) are down, as is underage drinking and drink-driving. Positive messages and fact-based guidance are found across the internet and social media. In addition the number of teenagers and twenty-somethings who are adopting teetotal lifestyles is growing and this is increasingly seen as a trendy choice in real life as well as across social media platforms such as Instagram, Snapchat and TikTok.
In the Harry Potter series of books Professor Dumbledore states that humans have a knack of choosing precisely those things that are worst for them. While there may be a grain of truth in this on occasions, it is widely accepted that personal freedom, choice and the ability to make up your own mind are vital elements of a free, democratic and sustainable society. Exerting too much control and nannying the population will be counter-intuitive and only lead people down the wrong path to outcomes that are not desirable for decision-makers.
Legislators should acknowledge and address harmful levels of consumption - for alcohol, sugar, trans fats etc. - but stop nannying and scaring people unnecessarily. Sensationalist coverage is guilty of this in the search for eyeballs and clicks, but politicians and lawmakers should distance themselves from this disease which is sadly as prevalent and destructive as the one they are aiming to defeat.
The American entrepreneur Jim Rohn once said that it is important to count the cost first before doing anything. This watchword has not been followed by politicians during the COVID-19 pandemic and the policies that have been enacted have had huge implications for the economy and public health as well as freedom and personal choice.
Nothing is as permanent as a temporary measure
As many countries have realized that a zero-COVID strategy is impossible to achieve, and begin to roll back restrictions, societies begin to count the full cost of the pandemic. As the dust starts to settle we are starting to see how truly damaging the pandemic has been from an economic, personal freedom and even – perversely – a public health perspective.
In the UK, for example, the National Health Service has reported a 77% increase in the number of children needing treatment for severe mental health issues – including suicidal thoughts, self-harm and chronic depression – during the pandemic. These alarming figures are tragically mirrored around the globe.
On the economic front, the impact has been equally brutal. Global GDP has taken a pounding while many businesses have gone to the wall. At the same time, government debt-to-GDP ratio has soared on the back of furlough schemes and more people claiming unemployment benefits.
From a personal freedom perspective, COVID-19 lockdowns have been no less devastating. People across the world have been told where they can go, what they can do and who they can meet. The range of new powers that have been brought in by authorities to ostensibly protect society is terrifying. It is of little surprise that people from Australia to the Netherlands have been protesting and fighting back against the rapid erosion of personal liberty.
Equally worrying is the treatment of the few who went against the grain. While the Swedish approach to dealing with the COVID-19 pandemic – led by the Swedish Public Health Authority (Folkhälsomyndigheten) – has been vindicated, Sweden has endured a tough time. Sweden’s chief epidemiologist Anders Tegnell was a voice of reason but treated as crazy for suggesting we need to learn to live with the disease by protecting the vulnerable while allowing society to remain open. Sweden was also repeatedly bullied on the global stage while being ridiculed and attacked from all sides for its response to the pandemic.
The mask is slipping
Our view is echoed by a recent study by Johns Hopkins University which concluded that lockdowns are ill-founded and should be rejected as a pandemic policy instrument. The study, titled “A Literature Review and Meta-Analysis of the Effects of Lockdowns on COVID-19 Mortality,” said lockdowns in Europe and the U.S. reduced COVID-19 deaths by a mere 0.2 percent.
The draconian lockdowns that were forced on societies across the world over the past two years have been shown to have had little impact on the spread of the virus, but there are still countries that push forward with their wrong-headed zero-Covid approach. Despite the strategy of governments like New Zealand seeming increasingly ridiculous, they have invested so much in their erroneous plan of action that they cannot backtrack and are therefore forced to double down.
Politicians however need to face voters who have effectively been robbed of two years of their lives while businesses collapsed, children were not being educated and mental health issues have soared. There is a saying that people who do bad things cover their faces with masks so that they cannot be judged. When it comes to the elected politicians who instigated crippling lockdowns on their populations, however, there is nowhere to hide.
This article first appeared as an op-ed in the leading EU newspaper New Europe in February 2022.
Free Trade Europa board member, Toronto resident and Canadian citizen, George Bothwell unpicks the current crisis in Canada which has moved from truckers and the mandate of COVID-19 vaccines to worsening pre-existing divisions in society.
As truckers parked their rigs in front of Canada’s Parliament buildings in Ottawa demanding “freedom” the world’s media were transfixed. The truckers’ demonstration spawned similar protests in Europe and the United States. Who would have thought that this was possible, especially in Ottawa? Other than perhaps a visit by Queen Elizabeth, Canada has gone decades without attracting much global attention.
How is it that a country known as peaceful and democratic could become the global flashpoint for the Covid confrontation? In part, it is because Canada is dealing with a social phenomenon that it has never before confronted.
Despite Canada’s successes, it has always had divisions that risked pulling the country apart. Pre-Confederation, the Protestant-Catholic issues were always a complication. The current Province of Ontario taxpayer supported Catholic school system is a very real vestige of this issue.
The French-English divide is a reality to this day. While in cities like Toronto or Vancouver where dozens of languages are spoken, many now view the relationship of two very similar languages as nothing more than an incomprehensible house squabble.
Regional differences such as Quebec separatism or Western alienation have posed real yet not fatal threats.
Given the social complexities of other countries, the media outside Canada never found any of these controversies particularly alluring. Indeed, it is likely that most countries would have happily traded their divisions for the type that Canada had.
So what happened?
Covid came to Canada.
Like the host rats that carried a pandemic to the world 600 years ago, Covid also brought a deadly companion as well - pernicious class animosity.
Canada was particularly vulnerable to this new pathogen. Unlike most societies, social class was never a large preoccupation for Canada. In part, this can be attributed to the fact that many people emigrated to Canada to escape class-driven societies. What all Canada’s divisions held in common were that they were based on groups. One was part of the Catholic faith, a francophone or from Alberta. While at times emotional, the divisions were largely abstract and not personal. They were never really deemed to suggest that anyone personally was inferior to somebody else.
Yet a class divide has been metastasizing for a generation.
The Government Class Versus The Hourly Class
This class divide has developed over the last several decades that, while not unique to Canada, is new to this country. It might have taken years for the class divide to become fully apparent if Covid had not proven to be the vectoring accelerant. A crisis that might have taken 20 years to emerge took only two years.
There is now in Canada a “Government Class” who live a cozy life of guaranteed employment, generous employee benefits, gold-plated pensions, pleasant work conditions and respectable social standing. The Government Class is not limited to only government employees. It also includes those working in government sanctioned cartels such as broadcasting, telecommunications, banking, law, teaching and medicine.
On the other side is the “Hourly Class”. It is literally an hourly class. They are paid for each hour they work. If they do not work the next hour, they are not paid. They do not receive vacation pay, dental benefits or pensions. Often they have no certainty of being paid the next day. They are the restaurant workers, store clerks, people who put advertising flyers in mail boxes. They are the small business like the pet groomer, yoga studio or confection store. And yes, they are the truck drivers. They are the indispensable, invisible, ignored, source of services and comfort for the Government Class.
One brave, dissenting Liberal Member of Parliament, Joël Lightbound, captured the difference succinctly when he said; !Not everyone can earn a living on a MacBook at a cottage.”
It is not a phenomenon unique to Canada. This new class divide has emerged throughout the post welfare-state western world.
Winners and Losers
Covid brought into stark relief who the winners and losers were in this new global reality of Government Class versus Hourly Class. How many government employees were furloughed or laid off because of Covid? Were hours curtailed in any of the government protected industries? Did the executives of the government employee pension funds that own many of Canada’s shopping malls reduce their pay while the malls’ store clerks were dismissed on a day’s notice?
In the standard Ontario strip mall during the lockdown, the government services centres were closed to the public but the employees were “redeployed” while the yoga studio beside it was forced out of business. The family run restaurant was forever shutdown but the governmentowned liquor store remained open. In office building food courts, all the food service vendors were closed leaving open only the government-operated lottery kiosk.
While public transit ridership on buses and subways dropped dramatically, government transit operators were not deprived of any pay and benefits. Meanwhile, the family owned airport limousine service that was built over decades was left with little help and less income.
Parents who can only make ends meet with two incomes were told that schools were closed and it was up to them to figure out who would take care of the their children during the day.
In a charitable moment, political elites proudly announced temporary payments of a couple of thousand dollars per month to the displaced. While most of the political class make six figure incomes, not one volunteered to reduce their pay to $2000 per month for the duration of the lockdown.
Predictable Backlash and Appalling Response
If the Covid lockdowns and mandates had gone on for only a few weeks or even months, the newfound class fault lines might not have emerged so starkly. Instead, for two grinding years the desperate and forgotten were subject to sanctimonious, finger-wagging lectures from public health officials. They were repeatedly reminded that; “we were all in this together”.
Predictably, fear, worry and frustration turned into anger. Anger turned into striking back. That is when the rubber hit the road. The truck convoys began and the lamentable collided with the tragic.
You would think that even cynical self-interest would result in a communications strategy of at least appearing to acknowledge, sympathize and appease the truckers. Not just to mollify the truckers but everyone else in the “hourly class” who was rooting for them. Instead, the desperate protesters were demonized as “terrorists”, “racist”, “NAZI’s” and a long list of other derogatory epithets. The mayor of Ottawa announced that he was deeply disturbed upon seeing the children"s bouncy castle that the supposedly violent truckers had set up in front of the Parliament Buildings.
It seemed as if the objective was not to just dismiss but to dehumanize the demonstrators. How often in history has the ruling class done that to their perceived social inferiors?
Historically, Canadians have proudly held to the right of the people to speak, assemble, petition and be heard by their government. In the case of the truckers, the Prime Minister deemed their views “unacceptable” and refused to meet them. One wonders if the protesters had been part of the Government Class, such as teachers, if the Prime Minister would have been so callously dismissive?
Given the solitary and self-reliant lifestyle of the truckers, they did not slink away with a tug of the forelock to their masters. Instead they stayed for weeks. To the outrage of those who claimed that the truckers and their supporters were bent on violence, the street where the trucks were parked became a Canadian winter street party. They set up a hot tub and playground for the their children along side the bouncy castle. Worst of all, some of the truckers were seen in public to be smoking cigars.
The Hammer Blow
This seems to be the point where the government determined that the country was on the verge of an apprehended insurrection and invoked the Emergency Act. The Emergencies Act is successor legislation to the War Measures Act that the Prime Minister’s father had enacted over 50 years ago in the face of a series of kidnappings of a British diplomat and Quebec cabinet minister who was subsequently murdered by the kidnappers.
The act gives the government powers, such as imposing special restrictions on public assembly and travel, assuming federal jurisdiction over local and provincial police. The government can regulate the distribution of essential goods, decide what are essential services, and impose fines on violations of the act.
Banks and financial institutions were instructed to freeze the accounts of those suspected of supporting, directly or indirectly, the blockades, without obtaining a court order or any due process, to which the banks speedily complied with alacrity in an act of class solidarity. In a moment of unbridled enthusiasm, the Canadian Minister of Justice said; "Well, I think if you are a member of a pro-Trump movement who's donating hundreds of thousands of dollars and millions of dollars to this kind of thing, then you oughta be worried.” Presumably singling to leftwing organizations that they had no need for worry.
The insurance on vehicles being used in the protests were suspended. All crowdfunding platforms and payment providing funds to the truckers were ordered to register with Canada's antimoney laundering agency.
In perhaps the greatest provocation to the truckers, the emergency measures also allowed the government commandeer tow trucks and order the tow truck drivers to provide their services to clear blockades. The towing companies had previously refused to remove any of the trucks. The precedent of a democratic government having the power to force anyone they designated to undertake work against their will seemed of little concern.
All this was done without Parliament voting its approval. Who needs a Parliament?
The End of Covid, The End Of The Trouble?
If the Covid pandemic ends, do the problems exemplified by the truckers end?
That seems unlikely. The Covid mandates are not the cause but the symptom of the malady. At its core, it is not the Covid mandates to which the truckers object. After all 90% of Canadian truckers are fully vaccinated. It is the apparent injustice that one class of people appear to have actually benefited from Covid policies while another class have disproportionately carried the burden. Exacerbating the divide is what appears to be the Government Class’s contempt for the overburdened class. Indeed, the Hourly Class no longer demands anything from government. Their demand for “Freedom” is simply a desire to be left alone to live their lives.
If Covid seemed to drive this class divide, it will seem insignificant compared to what the growing global inflation rates will do. The prospect of 10% or 15% annual inflation rates in Canada or Europe will surely harm those living an hourly existence far more than those with inflation-adjusted salaries and indexed pensions. The cure to inflation, large interests rate increases, will be a killer to these hourly people. Those losing their homes because they cannot afford increased mortgage rates or having the family business bankrupted by unaffordable business loans will not be protesting by setting up bouncy castle.
From this side of the Atlantic, the circumstances in Europe do not look very different. The French Gilets Jaunes set an example for the movement in Canada. The truck convoy in Brussels was inspired by what happened in Ottawa.
Now is the time to reach out to this struggling, neglected class. The actions taken by the Canadian government was not a slippery slope, it was a cliff. European governments need to learn the lessons from Canada. The Hourly Class must be listen to and not lectured, supported rather than bullied. They deserve respect not contempt.
To repeat the mistakes of Canada’s Covid policies would be the unkindest jab of all.
Lessons from King Cnut
Cnut the Great was a King of England, Denmark and Norway in the 11th Century who famously attempted to hold back the tide by commanding the rising sea to retreat. As he sat on the sea-shore water continued to rise until it covered his feet and shins. At this point he jumped up realising that some things are out of the control of even Kings.
This analogy could equally be applied to the Platform Economy which is growing at exponential rates across Europe and whose development has been fueled by the COVID-19 pandemic. Many left-wing politicians and media channels paint a picture of doom and gloom: a dystopian nightmare where workers have less freedom, less options and less money. However, the reality could not be further from the truth, in fact. In this article we look at a few examples of the positive impact that the Platform Economy is having.
A force for good
Self-employment companies help people to work, carry out tasks for others and send invoices without the need, expense and bureaucracy of setting up a company. Workers benefit while ensuring that taxes and social contributions are covered while they are paid a salary. In addition, companies are increasingly making use of these platforms to take care of payroll, integrate freelancers and ensure legal and fiscal compliance. Cool Company, Gigger, Workamo, Billfactory, Upgig and CXC Global are a few examples of companies who provide these services.
We are also seeing positive disruption in the retail and transport sectors. Companies like Wolt and Bolt are moving into the instant delivery and quick commerce space. This means the speedy delivery of goods in order to save people time while improving efficiency and choice as well as lowering costs. At the same time, some operators are opening physical stores as they adopt a “bricks and clicks” approach. This trend will be important in revitalising some of Europe’s least competitive retail markets.
Benefits for society across so many sectors
Furthermore, what is often missed is the positive societal impact that the Platform Economy is having across a range of sectors.
If we take the modelling industry - which has been the subject of significant criticism in recent years - UBOOKER have a specific purpose and drive to make this better. Via their platform they ensure that models are paid on time, as well as vet photographers and other employees to see to it that models are not abused or put in difficult situations. UBOOKER’s rates are a fraction of those traditionally charged in the branch so that models keep more of the money that they earn. In addition, local recruitment means a more environmentally-friendly approach. Similarly in the influencer marketing space, Collabs create a platform where brands can get in contact with the influencers that they want quickly and easily.
The building sector is another industry which has become synonymous with questionable practices and varying quality of services. BraByggare is addressing this problem by ensuring that all companies and tradesmen on the platform are professionals who delivery quality. Furthermore they carry out checks and controls to ensure that you can trust them and their work. The platform also checks that working conditions and salaries paid are good, and that taxes are paid and no black work is undertaken.
When it comes to the beauty and wellness sector, B.Door are bringing these services - whether it be hairdressing, nail care, make up or massage - to consumers, wherever they are. This allows people who do not have the time to visit a salon, are concerned about the spread of COVID-19 or may have a physical handicap to receive the treatments that they want. It also creates a platform which provides work for professionals too.
The positive disruption provided by the Platform Economy also applies to the education sector. Companies like Tutor.ID help tutors to find work as well as manage their schedules in addition to providing easy payment and management systems. The platform also provides a quality control of the tutors who are offering their services.
We are also seeing companies like Uber, Bolt and Parkamo revolutionising transportation via their apps. The former are facilitating consumers to find the transport mode that they need, when they need it. The latter is a parking aggregator which helps you find the best solution while offering climate compensation too. All these companies provide more choice, increase efficiency and lower prices as well as create employment opportunities.
Advantages for consumers and businesses alike
These examples are just a snapshot of a much bigger wave which is breaking over the whole of Europe. The Platform Economy is bringing much needed disruption and benefiting consumers and businesses alike at the same time. In the same way that King Cnut realised that he could not hold back the tide, politicians and policy makers should understand the importance of the Platform Economy. They should embrace the vital role that it is playing in job creation - particularly in helping young people and migrants into the workforce - as well as improving societies by cutting costs, creating opportunities, facilitating innovation and improving efficiency across Europe.
This is a wave that should be welcomed and supported. In any case, it cannot be stopped.
In the framework of the European Commission consultation on the Data Act and amended rules on the legal protection of databases, we are delighted to share our feedback. In this document we therefore share our thoughts and insights on measures that would create a fair data economy by ensuring better control over and conditions for data sharing for citizens and businesses.
Data plays a vital role in the EU’s objectives for its digital future, and is an essential part of the growth in jobs, innovation, and competitiveness. Furthermore, we agree with the European Commission that small and medium enterprises (SMEs) could especially benefit from this Commission initiative and easier access to data.
We therefore call on the European Commission to support the following points:
General access to data: each company and individual should be able to get access to non-personalised public data without administrative, organisational or monetary barriers. This approach will foster open innovation.
It is important that national, regional and local non-sensitive public data (from governments, municipalities and public authorities) is open to allow the development of new products and services which will facilitate businesses and support consumers.
All barriers that hinder safe data sharing across the EU should be removed.
Open data will inter alia facilitate price comparisons and mobile payment solutions which will benefit consumers across Europe.
While personal data protection rules in the EU need to be strong, a framework should be created in Europe which allows for the easy and seamless transmission and sharing of non-personal data.
An open data model in Europe will create new possibilities but also improve efficiency and benefit the environment, thus aligning with Europe’s sustainability and Green Deal targets.
To facilitate business-to-business data sharing, the EU Data Act should allow Smart Contracts - a standard baseline for data sharing - and for companies to be able to share data in a simple, easy and cost-effective way. Smart Contracts should be based on voluntary standards developed by industry working with a European standards organisation. This should greatly facilitate automated data sharing, reinforce the principle of the EU Single Market and help SMEs to sell goods and services across borders.
Each EU citizen should be able to choose how to use their personal data and be allowed to benefit from cross-product/ company/ usage applications (e.g. like in banking where a citizen can choose to connect his/her bank account in one place and have all data there, and be able to execute a variety of transactions). This reduces friction for citizens, improves transparency of private data and simplifies processes as only one process needs to be executed. This is a huge advantage for citizens who do not need to follow separate individual processes in different products.
There is a famous line that if it moves, tax it. If it keeps moving, regulate it. If it doesn’t move, subsidize it. While this may not be a true reflection of how governments view the economy, it is correct that subsidies and tariffs are a never-ending source of conflict in international trade relations.
While the world is focusing on COVID-19 vaccine nationalism and the negative effects of trade barriers, there is a dispute over steel and aluminium tariffs and quotas which is being overlooked. While it may appear technical at first sight, the Section 232 tariffs and quotas on imports have – and will continue to have – a huge impact on EU-US trade relations.
Full metal jacket
Section 232 refers to the part of the US Trade Expansion Act of 1962 which allows the president to use authority delegated by Congress to impose tariffs or quotas when it is determined that imports “threaten to impair the national security.” Far from being a bureaucratic detail, this was invoked by President Trump in 2018 when he introduced 25% tariffs on steel and 10% tariffs on aluminium imports into the US.
The effects of this decision have been as dramatic as they have been widespread. The duties increased prices of key inputs for US manufacturers, led to retaliatory measures from the EU and other trading partners, while they also created new strains and tensions with allies and foes alike.
As a result, other industries have been caught up as collateral damage in the steel and aluminium dispute, with a whole range of goods from agricultural products to spirits and luxury items affected by tariffs. It is often the case that the ones most likely to suffer in any conflict are the innocent, yet all sides need to work together in order to avert this.
This would be a sufficiently bitter pill in itself but the EU’s retaliatory tariffs are set to double on the 1st of June this year.
Time for a reset
With the coronavirus pandemic maintaining its global grip and economies suffering, now is the time to strengthen the transatlantic trade relationship and reestablish it as the cornerstone of the multilateral trading system. By diffusing the steel and aluminium trade spat, the EU and US can be a good example to the rest of the world in difficult and uncertain times.
Dismantling tariffs would provide a big boost to many sectors in both the EU and the US. In the Airbus-Boeing disputes, it was primarily the unrelated sectors that had to suffer the consequences, with considerable export drops on both sides of the Altantic.
Some European businesses in affected sectors such as wine and spirits or confectionary suffered up to 40% export losses as a result. From the US perspective, the higher price of imported steel and aluminium due to the introduction of tariffs hit national firms hard. Some automotive manufacturers reported that higher tariffs cost them over USD 1 billion. At the same time, US steel and aluminium companies have witnessed falling share prices, lower levels of investment and increased lay-offs of employees.
Now is not the time for provocation. The EU and US should reach a solution that is beneficial for all. While the current dispute may appear vast, complex and impenetrable, a suspension of tariffs and quotas – as we saw in the Boeing-Airbus dispute – would be the best approach.
Every job may look easy when you are not the one doing it, but when it comes to dismantling steel and aluminium tariffs and quotas it is in the interests of everyone on both sides of the Atlantic to try. The clock is ticking.
*This article originally appeared in the publication New Europe
Jean Monnet, one of the founding fathers of ever closer union in Europe, held the mantra that crises are opportunities. The Coronavirus pandemic certainly falls into the former category, and has turned the world upside down in recent weeks. Despite infections and hundreds of deaths being reported daily across Europe, it is nonetheless important that we have one eye on the recovery. The Corona crisis will leave recession, unemployment and extensive damage to European industry in its wake when it eventually passes. The right blueprint to relaunch the EU economy is therefore needed now.
Opportunity takes the form of a €500 billion rescue package agreed by EU Member States and a €750 billion stimulus package earmarked by the European Central Bank to combat the impact of the Coronavirus.
But how should this be spent?
While the EU is doing a lot right - the goals of the European Green Deal, support for SMEs and the importance of Europe’s digital transition should remain vital cornerstones of Europe’s future - the threats to globalisation are already being felt. The voices calling for national/European actions to protect and support European business in isolation will grow. Calls for reshoring will increase and there is a risk that the newly launched EU Industrial Strategy will be used as a vehicle to support ailing European companies and pour money into favoured initiatives, rather than support innovation and cutting-edge technologies. When proposals for the next Multiannual Financial Framework are revamped, and the Work Programme for 2020 updated, decision-makers should bear the following points in mind.
Firstly, EU leaders need to remember that supply chains are global. They should not shut borders and create a "Fortress Europe". Zero tariffs on imports are needed, and the EU should look to lift their export ban as soon as possible.
Secondly, there is a need to strengthen and complete the EU Single Market. While seeming staid and unsexy compared to newer initiatives, completing the EU Single Market - by filling in gaps, making sure that legislation is properly implemented across the EU and correctly enforced - would work wonders for Europe. The Single Market is Europe’s greatest asset, and should include finance/banking, services and standards. The Internal Market is also one of Europe’s best opportunities for the future: achieving this would be the biggest single advantage for business in Europe. Estimates suggest a more integrated and better functioning Single Market would add an additional €183 to €269 billion annually for manufactured goods, and an additional €338 billion annually for services. In total this represents a rise in EU GDP of approximately 12%.
Thirdly, an increasing global focus on R&D, technology and innovation is needed to create growth and jobs as well as secure our future. The manner in which scientific organizations around the world have voluntarily and enthusiastically come together - sharing enormous amounts of information to find therapeutic treatments and vaccines to counter the Coronavirus - should be a model for the future for all sectors.
Finally, the free movement of labour among EU Member States and with its non-EU neighbours needs to be prioritised. Sadly, hostile views on migration are vote-winners in Europe, and COVID-19 has made border closures easier. This approach is wrong. Despite the short term economic downturn, there is a structural need for labour in Europe: particularly skilled workers . The EU’s recovery and economic growth depends on the technology, engineering and healthcare sectors, for example, attracting the right talent. To this end, the provisions included in the EU Directives on Intra-Corporate Transferees and Posted Workers - as well as the Blue Card scheme - need to be fully utilised nationally to facilitate this.
Europe is facing a huge crisis at the moment: EU leaders have the possibility to turn this into an opportunity. For the sake of Europe, and its recovery, let’s hope they take it and turn Jean Monnet’s credo into reality.
This article originally appeared as an opinion piece in Emerging Europe (April 2020).
The Roman statesman Lucius Annaeus Seneca once stated that “if one does not know to which port one is sailing, then no wind is favourable”. This is equally true today, as we start a new decade, as it was all those centuries ago.
January is always a perfect time for making plans and resolutions that we mean to keep, as we set our sails for the future. From a European perspective there are a number of ports to visit and adverse tides to navigate.
So where are we going in 2020 and what does the EU need to do? This White Paper sets out the Free Trade Europa view on all the main issues from climate action and sustainability to Brexit and free trade.
Free and Fair Trade
The European Union needs to promote, facilitate and commit to a rules-based multilateral trading system under the World Trade Organisation (WTO). Regardless of countervailing forces closed borders, tariffs and quotas will only harm European economies over the longer term as businesses and consumers lose out. This means maintaining an open trading bloc that stands against damaging trade wars. A “Fortress Europe” must be avoided, despite the nationalistic pressure rising inside and outside the EU.
Strong feelings about the environment and climate change are growing, particularly among younger people. In response, the European Commission launched its “European Green Deal” in December 2019. This plan aims to achieve the Herculean task of cutting emissions and reaching carbon neutrality by 2050 while ensuring social justice.
This policy centrepiece will extend the EU Emissions Trading System; introduce a Carbon Border Tax to avoid carbon leakage; launch a New Circular Economy Action Plan; inaugurate a Biodiversity Strategy for 2030; and adopt a new “gas decarbonisation package”.
These are all worthy initiatives. European and national legislators and policymakers need to work closely and constructively with business (companies, trade associations and chambers of commerce) as well as think tanks, NGOs, regions and cities to create a framework for viable solutions to climate change. At the same time, knee-jerk reactions to panic-inducing protesters and apocalyptic media headlines must be avoided.
The EU must also recognise the role of science and technology - the innovative solutions and breakthroughs that are being made every day - leveraging these developments to address environmental issues in a concrete way. Furthermore, sustainability needs to be in the DNA of all organisations as they work towards a true circular economy. Leading high-growth companies have moved sustainability from the periphery of their business strategy to the core of their organisation. It is no longer a case of creating a fluffy CSR add on. Sustainability is front and centre when it comes to:
1) Generating sustained, profitable growth;
2) Staying relevant in a rapidly changing world;
3) Attracting - and deepening ties with - employees, customers and stakeholders.
With regards to reporting, there is a need for coherent and universal green audit standards. Climate change may have become a mainstream corporate issue but there is no common system to determine how companies are doing nor what their exposure is to climate risk. There are a plethora of standards and metrics available today but these are complex and often contradictory.
In short, getting a grip on sustainability and addressing climate change is good for business, good for the share price and good for the environment.
At the personal level, we all have to take responsibility for our actions: making choices which reduce our impact on the environment and better use the resources available to us.
Three and a half years have passed since British voters decided by referendum to leave the EU. The time that has passed since 23 June 2016 has been marked by dithering, delay, ideological tub-thumping and countless false starts. The resounding victory of Boris Johnson’s government on a “get Brexit done” platform means that we now have a certain amount of clarity and a timeline in place.
The UK will leave the EU on 31st January 2020 and a transition period will run until 31st December. We are in uncharted waters but we can now move from philosophical debates to planning how goods will be moved between EU and the UK, for example, and shaping the the future framework of the relationship.
Striking a deal between the UK and EU27 that is favorable to both parties will not be simple. A “no-deal” cliff edge Brexit therefore represents a very real possibility. The result is likely to be an increase in administrative and legal barriers to trade. This will create winners and losers, so business engagement in forming the future landscape is crucial. We would like to see the EU resist the urge to punish the UK and create a close partnership built on shared values and standards as well as free and fair trade.
When it comes to the UK concluding trade agreements with the rest of the world, this will probably mean liberalising the agricultural sector, opening up more public sector contracts, meeting a demand for more flexible immigration rules and allowing better access to services. This is something that should be encouraged.
Democracy and openness
The need to promote democracy, fight corruption and address human rights abuses is vital within the EU’s borders, as well as around the world. The EU has an important role to play in both the online and offline worlds in protecting the Rule of Law as well as ensuring that free speech and personal choice are respected. Leading by example, sharing best practice and calling out abuses is fundamental to the EU’s purpose.
Functioning single market
The internal market is crucial to the EU and should be protected and expanded over time. The four freedoms - labour, capital, goods and services - underpin the raison d’être of the EU and represent one of its biggest successes. Furthermore, completing a true Digital Single Market in Europe is essential: it will drive economic development, facilitate job creation and support SMEs. The approach here needs to be market-driven, technology neutral and supportive of interoperability.
Sadly, we are seeing the single market being eroded through the erection of non-tariff barriers and national restrictions designed to protect incumbent local actors and shield them from competition. This is the wrong approach and reinvigorating the EU single market for all four freedoms would be one of the simplest ways to bring about growth and increase opportunities. Although not the sexiest of topics, a functioning single market is at the top of the wish list of most progressive companies.
Taking the collaborative economy seriously
The collaborative economy is a broad term used to cover new technology-enabled platforms; peer-to-peer sites allowing people to share everything from apartments to cars and drills; and people wanting a flexible approach to work that turns the traditional employer-employee relationship on its head. The unifying theme is the disruption to established business models and entrenched interests.
Rather than ignoring or trying to prevent the collaborative economy, there is a need for legislators, companies and user groups to come together in order to establish rules and responsibilities for legitimate actors. These should cover inter alia taxation, trust, consumer protection, insurance and the rights of employees, while addressing mistakes of the past.
The collaborative economy is a way for people - particularly the young, immigrants and people who have taken career breaks - to get into the labour market, and for others to make some extra money. As such, it should be promoted and not stopped.
Saying “no” to a European industrial policy
The best EU industrial policy would be a blank sheet of paper! Politicians and administrators should simply get out of the way and focus on other areas. Sadly, the European Union is currently heading down an interventionist path. With the UK leaving, and therefore the traditional counterweight being removed, France and Germany have already signaled that they want to pick winners and change EU competition rules at the same time.
Whether this is through industrial policy or environmental schemes, the desire to choose and back incumbents and selected national champions is growing. This kind of dirigisme is bad for business, bad for consumers and bad for the economy as resources are not allowed to flow to where they will be best served.
Saying “yes” to talent
Despite the sensitivity surrounding the migration topic, the EU needs to separate illegal from legal migration, while also making a distinction between skilled from non-skilled migration. The EU has a need for high-skilled workers and the lack of everything from computer programmers to engineers is harming companies and Europe’s growth as positions go unfilled. While European and national politicians may take a hard line against refugees and the low-skilled, the need to welcome talent and harness their skills is vital. More use should be made of Intra-Corporate Transferees and the Blue Card system should be revised to attract and facilitate the entry of top talent into the EU.
Technology and innovation
Digitalisation and automation are good for the European economy, not a threat. What is more, they often mean that humans no longer need to carry out tasks that are dirty, dangerous and repetitive.
The role for governments here is limited to creating an environment that allows organisations and companies to thrive. This means allowing - and facilitating - the free flow of data, the lifeblood of the digital economy. It also means facilitating and supporting global technology cooperation. This pooling of resources and cross-fertilisation of ideas benefits everyone and takes us further along the path of knowledge, innovation and progress. As such, the notion of “technology sovereignty” that is gaining currency in Brussels is deeply worrying. It means cutting off cooperation and breaking up current technology eco-systems which are truly international. This form of retrenchment is terrible for companies and eventually consumers, as opportunities will be lost and progress slowed.
Furthermore, Artificial Intelligence, Machine Learning and Big Data also require an increased focus on cybersecurity, ethics and control over personal data. Governments and business will need to work together to develop the appropriate policy framework.
Moreover, governments should be investing in R&D - along with companies - and be open to public private partnerships. Governments will also have a responsibility to get workers ready for this increase in technology and innovation. Education systems and training schemes need to be reformed to provide citizens with the skills that make them employable and ready for the workplace of today and tomorrow. Currently, education systems are too slow to adapt to reality and being heavily unionised are more focused on the rights of teachers than the needs of students. This imbalance needs to change.
A multi-speed EU and a better approach to enlargement
Given the size and complexity of the EU today a multi-speed Europe is inevitable. EU Member States should be allowed to go further on certain issues and work in different constellations within the EU framework. The notion of “variable geometry”, “asymmetric integration” and a Europe of “concentric circles” is not new. It was evoked by former Commission President Jacques Delors over two decades ago.
While the integrity of the EU and its “four freedoms” (labour, capital, goods and services) are immutable, there needs to be a flexibility across policy areas to allow willing coalitions to go further and not be hindered by the slowest wagon in the train. The current fragmentation and polarisation in the EU will also demand this. A multi-speed Europe would also not represent a significant step-change. We already see this reality today in the financial area, with the Eurozone, and on border issues with Schengen.
Furthermore, Europe does not stop at the borders of the EU 27 Member States. A true multi-speed Europe would allow us to facilitate different levels of integration. Slamming the door in the face of prospective members - as happened in October 2019 with Albania and Macedonia - was a damaging mistake. The basic acquis communautaire of the EU should be respected but the possibility of outer-tiers of membership should not be discounted. This would allow the EU to open up to the Western Balkans, former Soviet States and even North Africa. This could be considered like a club with silver, gold and platinum membership. You have the same basic rights and responsibilities but gain new benefits as you go further.
Given the issues facing the world today - and connecting back to the founding tenet of establishing peace, prosperity and progress in Europe - stabilising these regions on Europe’s current frontiers could be the most important purpose that the EU can find today.
EU decision-makers and influencers need a blueprint for the new decade and would be well advised to focus on the topics covered in this paper to deliver sustainable growth and support businesses across Europe. Of course we do not have a crystal ball - unforeseen events will occur over the coming months - and actions will need to be taken accordingly. We always need some flexibility when faced with changing situations and shifting realities. The heavyweight boxing champion Mike Tyson once said that “everyone has a plan until they get punched in the face”: this may be partly true but it doesn’t mean that we don’t need a plan.
30th September could go down in history as the day that the multilateral global trading system died a painful death.
In the coming days the WTO dispute settlement panel will officially rule that EU countries illegally subsidized Airbus after an investigation which has spanned the last decade and a half. But while the case may have rumbled on for years, the next phase may unfurl at lightning speed. There is the belief that the US government will unleash EUR 8 billion worth of tariffs on the EU in retaliation within 24-48 hours. This will effectively fire a bullet through the heart of an international trading system - and a global economy - that are already on their knees.
However justified and tempting it may be to pull the trigger, the US should think again for three reasons. After all, there is never a right way to do a wrong thing.
Timing is everything
Firstly, there is never a good time for a trade war, but the present moment is a particularly bad one. Germany and other EU countries are teetering on the edge of recession and the global oil price is rising. A messy trade war would make a bad situation worse. A trade fight with traditional US partners would poison relations but also hurt US businesses and consumers.
Furthermore, US President Donald Trump needs growth and a buoyant economy going into a Presidential election year. History clearly shows that no sitting US President has ever been re-elected when the country is in recession.
Casualties of (trade) war
Secondly, there is the issue of protecting the innocent. It is a truism that the ones most likely to suffer in any war are the innocent. This time is no different. Washington is not only gearing up to strike at Airbus and their partners but also agricultural products, spirits and luxury goods. These sectors are unrelated to the Airbus-Boeing spat, but despite being guiltless now find themselves in the US cross-hairs. Blameless industries will be annoyed, lose money and potentially be forced to start shedding jobs. A trade war is bad enough in itself, but when those who have done nothing wrong get hit the high level of collateral damage must make officials think if the ends really do justify the means.
The US risks breaking its own system
Thirdly, the US has carefully constructed the global order post-World War II. The land of the free built - and backed - the multilateral global trading system in its own image and used its soft power for decades to cement this in place. The US economy flourished as a result. Slapping extensive tariffs on EU goods will take a wrecking ball to this system, causing irreparable damage. This strategy will also play into the hands of enemies of the US. They will rub their hands with glee as the multilateral trading system and its structures lay in pieces on the floor, unable to be put back together.
Stepping back from the cliff-edge
Despite all the doom and gloom there is a way for both sides to take a step back and avoid a bloodbath where no one wins.
The situation is grave, yet mutually assured destruction is not inevitable. A negotiated settlement is still possible and represents the only sensible solution. US prudence is needed now more than ever. The incoming EU Commission and the US administration need to get around the negotiating table and press the reset button on a relationship that is as mutually important as it is to the global economy. Hope lies in the fact that while President Donald Trump can be brusque and impatient, he is also an intelligent businessman who knows the art and power of a deal. Weaponising trade is one thing, but throwing gasoline on a fire that is already burning just to see what happens would be self-defeating.
President Trump also knows that the US taking the moral high ground over the Airbus case could be short-lived. The WTO could well rule in the coming months that the US was responsible for providing illegal subsidies to Boeing too. With both parties in the wrong, a negotiated solution would be the smart choice. The US would gain economically and prevent fueling a tit-for-tat trade war. Being in the right, and having the WTO’s blessing, would be a whole lot better for the US than both sides dying by a thousand cuts.
The current approach to environmental stewardship and addressing climate change has been dominated by a focus on figures. Whether it is reducing emissions by 30%, 50% or 100% - or preventing average temperatures rising by more than 1%, 2% or 3% - the focus is often on figures which seem random at best and totally arbitrary at worst to the general public. This has the effect of objectivising the problem: it is no longer something that is tangible, emotional or personal to me.
It doesn’t matter to me
People become immune to the constant refrain that the world is coming to an end and that global temperatures are soaring above safe levels. When you experience a wet and grey week in August - with the mercury just making low double figures - global warming is often the last thing on your mind. You can easily push it out of your head and give an “it doesn’t apply to me” shrug.
The teenage environmental activist Greta Thunberg has made strides forward on the emotional front with her powerful speeches, but the entire mission of changing behaviour - not to mention convincing businesses and governments to take immediate action - cannot be left solely to a 16 year old girl.
Equally disingenuous is the desire of politicians to agree increasingly stringent targets while extending the time frame to 2030 or 2050. This is beneficial for politicians - and business leaders - since they will be long gone from office when real action is required. At the same time they can pay lip service to being green while kicking the can down the road for someone else to pick up at a (much) later date. This is sadly an all to common way of appearing to protect the environment while actually doing next to nothing.
Make it personal, emotional and relevant
A much better approach to promoting environmental stewardship would be to make this more personal, emotional and relevant. When you cycle or walk down a busy street on a hot summer day, it is very difficult not to be affected by the noxious fumes spewing out of the exhaust pipes of cars, buses and lorries. It does not take much to convince anyone that this form of pollution is a bad idea and that progress is needed. Similarly, to go swimming on a beach this summer surrounded by used plastic bottles, cans and rubbish of all descriptions is a depressing experience. No one can say that this is acceptable - let alone good - so getting people to agree to recycle and reduce the amount of waste created is easier against this background. As a general rule, relating to real life experiences makes it easier to get people to take personal responsibility for their actions and the environment.
A circular economy
These factors create the basis for why a true circular economy needs to be established. At the moment - despite what companies and politicians may say - it is almost completely linear. What we view as “waste” instead needs to be viewed as “raw materials”. This is an important step change. It cannot come soon enough and it also presents companies with huge business opportunities to harness this need and make the circular economy a reality.
A new hope starts with us all
There is a widespread feeling that change is possible and this begins with personal responsibility, and a belief in the opportunities that technology and science can bring. This belief in progress sits at the heart of solving climate and environmental issues .
Digging carbon out of the ground to heat our homes and power our factories, and then pumping this carbon into the atmosphere, rightly seems like a bad idea and not very smart to an increasing percentage of the population. Thankfully we can adapt. Let’s bear in mind that in early industrial society we used to slaughter countless numbers of whales to produce oil for lighting. This seems like a terrible idea today. Soon spewing CO2 into the atmosphere and throwing away rubbish will appear equally ridiculous.
The European Union is searching for a purpose as well as fighting for legitimacy and sovereignty in the current international climate. Given this soul-searching and head-scratching, the European Union should look back to look forwards.
Looking back to the EU’s purpose: peace and progress
The origin of the whole EU project was a search for peace. On the back of bitter, bloody wars that had wrecked Europe physically, economically and emotionally, visionary business and political leaders decided that a new order needed to be constructed from the rubble of the continent. A functional union of the coal and steel industries was the first building block - making war between former enemies physically impossible - towards a union of countries built on the Rule of Law (rather than “might is right”) and cooperation.
Lessons of the past, lessons for the future
The EU of today would therefore be well-served in revisiting its original purpose for inspiration as we start the new 2019-24 institutional cycle with a new European Parliament and a new European Commission. This purpose should include promoting and facilitating free trade - through the EU Single Market and globally within the framework of the WTO. The EU should also be encouraging openness - including the fight against corruption and human rights abuses, as well as protecting the Rule of Law - in addition to promoting personal choice.
The Hanseatic League - the Nordics, Baltics, Netherlands and Ireland are natural allies here - should drive this agenda within the EU, but it should not be a closed shop. It should be open to all countries who share, and strive for, these values.
A multi-speed Europe
Moreover, given the size and complexity of the EU today a multi-speed Europe is inevitable. EU Member States should be allowed to go further on certain issues and work in different constellations within the EU framework. The notion of “variable geometry”, “asymmetric integration” and a Europe of “concentric circles” is not new. It was evoked by former Commission President Jacques Delors over two decades ago.
While the integrity of the EU and its “four freedoms” (labour, capital, goods and services) are immutable, there needs to be a flexibility across policy areas to allow willing coalitions to go further and not be hindered by the slowest wagon in the train. The current fragmentation and polarisation in the EU will also demand this. A multi-speed Europe would also not represent a significant step-change. We already see this reality today in the financial area, with the Eurozone, and on border issues with Schengen.
Furthermore, Europe does not stop at the borders of the EU 28 Member States. A true multi-speed Europe would allow us to facilitate different levels of integration. The basic acquis communautaire of the EU should be respected but the possibility of outer-tiers of membership should not be discounted. This would allow the EU to open up to the Western Balkans, former Soviet States and even North Africa. This could be considered like a club with silver, gold and platinum membership. You have the same basic rights and responsibilities but gain new benefits as you go further.
Given the issues facing the world today - and connecting back to the founding tenet of establishing peace, prosperity and progress in Europe - stabilising these regions on Europe’s current frontiers could be the most important purpose that the EU can find today.
As the European Union stands at a crossroads - buffeted by the storms of populism, as well as economic and social crises - many have asked the question “what is the purpose of the EU today?” The new mantra that many European politicians and officials have come up with is “A Europe that protects”. But as the EU fights for legitimacy, as well as sovereignty, it is appropriate to ask the questions: “protects against what?” and “is this goal achievable?”
Protection from what?
To answer the first question, “protection from what” is a difficult concept to pin down: it means different things to different people. The broad framework, however, is one of taking back control. The fact that this was ironically used by the Vote Leave campaign during the Brexit debate in the UK - and was found to contain little but hot air - should bring a smile to the face of many a cynic.
A Europe that protects the environment, the rights of the individual and free trade is a positive thing and should rightfully be supported. However, laying the blueprint for a “Fortress Europe” would be a terrible backward step. A Europe which erects borders, vetoes investments by non-EU companies, puts in place a European Industrial Policy to create national/EU champions would be the wrong type of protection. Businesses and consumers would lose out.
Is protection possible?
Secondly, is protection achievable? Given the reality of the increasingly globalised world, the idea of being able to put a lid on economic, political and social forces is chimerical. Furthermore, the political fragmentation and polarisation across Europe means that there is no universal consensus. Achieving a position which will appeal - and be promoted - across the EU 27 is almost impossible, even if real protection were possible.
Europe has been badly harmed by recent crises, and the current wave of populism which is fueled by perceived inequalities, falling living standards and reduced opportunities. By promising a Europe that protects and that will take back control, European leaders may risk creating another crisis when it becomes clear that this vision is not achievable.
With a new European Parliament now elected, and a new European Commission set to be installed in the autumn, we stand at a perfect juncture to look Janus-like at what has happened, where we are now and assess where the European Union should be heading. Now more than ever there is a need for an EU that is committed to free trade, openness and personal choice.
The EU: democracy’s graveyard?
Within the EU, the belief in liberal democracy and globalisation has been questioned. The 2019 European elections will be held in a climate of uncertainty, discontent and change. The reasons for this are complex and nuanced. All across the EU, voices are being heard on perceived inequalities, falling living standards and reduced opportunities. Ever since the Financial Crisis of 2008, the Euro Crisis of 2010 onwards and the Migration Crisis starting in 2013, voters have been turning to more extreme solutions to local, national and European problems. With national elections across Europe having delivered significant gains for right-wing political parties and nationalists, we need to ask the question: are liberal values, openness and free trade falling out of favour?
From Italy to Poland, Hungary and beyond we are seeing the rule of law diluted and a desire to put up barriers to protect against perceived threats from foreign businesses, labour and money. Many column inches and much ink has been used to describe the decline of liberal democracy in Europe.
Granted the financial crisis of 2008 dented the image of free trade and liberal policies, as has the fact that living standards in Europe are no longer growing at the levels they once did. Elites are seen as out of touch and many feel that popular views are not being expressed in policies. These are serious concerns, and they should be addressed, but it is important to keep a perspective.
Fear the alternatives
After the Second World War, the alternative to fascism was clear and attractive to all. Similarly, during the Soviet occupation of Central and Eastern Europe and the Cold War, liberal democracy was again the natural choice around which to organise states and society. Today, we should once more consider the alternatives. Do European countries really want to install regimes where we see rights eroded and the will of the people increasingly – and counter-intuitively – ignored? Free trade, liberalisation, personal choice and the rule of law need to remain central pillars of our democracies. Just looking at the alternatives underlines this reality.
A new hope
The current period of reflection and soul-searching should be put to good use. One reality is that the smaller states with export-orientated economies who favour free trade, openness and personal choice are losing their champion with the UK leaving the EU. While the UK would take many of these fights in the past, there is now the need for like-minded countries such as the Nordics, Baltics, The Netherlands and Ireland to work together and increase their cooperation to make their voices heard and shape the EU agenda. There has been ad hoc, high-level cooperation on financial issues between these states, but there is a need to expand this across policy areas – from environmental stewardship to the digital single market – while also facilitating a bottom-up approach from business and civil society. In this way, “the new Hanseatic League” as it has been christened will be a vital vehicle in modernising the EU and ensuring that free trade, openness, Atlanticism and personal choice remain front and centre in EU policy-making.
No “Fortress Europe” and no Franco-German closed shop
By contrast, the creation of a “Fortress Europe” would be a disaster for the EU and also send out the wrong signals globally. Despite being faced by a progressively more isolationist and the tariff-wielding US, and a commercially aggressive China, the EU needs to stay true to its liberal democratic heart. After all, there is never a right way to do the wrong thing.
By the same token, the future of Europe cannot be built solely on the outdated concept of a Franco-German axis. The calls to create a European Industrial Policy – with all the terrible trappings of old-style state intervention and French dirigisme – are a worrying sign of what may come to pass if we blindly followed this route. Statism, picking winners and creating national/EU champions would waste resources and ensure that consumers and other businesses lose out. History clearly shows that a lack of competition often leads to higher prices, less choice and poorer products due to a lack of innovation.
In sum, the EU needs to evolve and address an increasing number of internal and external challenges. Free trade, openness and personal choice rest at the heart of the solution to these issues and the Nordics need to partner like-minded countries to promote this agenda.
It is a well known fact that Juventus and Portugal football star Cristiano Ronaldo employs his own chef. Every meal is calibrated to ensure the right amount of protein, carbohydrates and nutrients so that one of the greatest footballers that has ever lived is able to play to his maximum ability and deliver the goals, trophies and titles that his employers demand. As such, excess sugar and junk food do not enter the equation. You are what you eat and a top athlete cannot perform without the right fuel.
At the same time that Ronaldo’s athletic frame is gracing stadiums and TV screens across the globe, obesity is an increasing problem: particularly among the young.
The rise of obesity and the reaction of governments
WHO statistics show that over 50% of men and women in Europe are overweight, while 23% of women and 20% of men are obese. Childhood obesity is rising too and WHO figures show that one in three 11-year-olds are obese in Europe. This alarming statistics are strongly linked to illnesses such as diabetes and heart disease, as well as poor mental well-being and underachievement at school and work.
The reaction from politicians has been regulation. A sugar tax was introduced in the UK in April 2018 while Hungary and Mexico launched their taxes in 2011 and 2013, respectively. Denmark introduced a “fat tax” in 2011 on food items with more than 2.3% saturated fat, and had plans to extend this to a sugar tax over time. The results were terrible: less than 10% of Danes reduced their fat intake while hundreds of jobs were lost as Danes headed to Germany to buy their products. This mess led to the “fat tax” being abandoned after 15 months and the sugar tax being shelved indefinitely.
While tackling obesity is a big and important issue, legislation and increased taxation are not the answer. In the same way that many of the most corrupt countries on earth have the strictest anti-corruption laws, legislation is no guarantee of a positive effect and a change in human behaviour. Very often this means that the consumers of fatty and sugary products - often people on low incomes - continue to consume them, but pay more for the “privilege.”
At the heart of addressing childhood obesity lie education, personal choice and leading by example.
A better approach: beyond the nanny state
Firstly, education. Almost everything in moderation is ok: whether that is a Big Mac, a fizzy drink or a green apple. Eating junk food on a daily basis and avoiding fruit and vegetables is not good but we should not make people feel guilty about an occasional bar of chocolate, for example. The risk of provoking eating disorders - already on the rise in Europe - is equal to the threat from obesity. We need to tread very carefully.
Secondly, we should not forget personal choice. We need to take responsibility for our own lives and say “no” to unhealthy options. We only get one body and it is in our interests to look after it. We do this by giving it the right mix of the best fuels - combined with regular exercise and sufficient sleep - not filling it up with rubbish. No politician, tax or campaigner should have to decide for us.
Setting a good example is also key. Whether this is parents, teachers or Cristiano Ronaldo, people learn by copying behaviour rather than by being told what to do. There is a reason why “influencers” on social media are so popular and paid so much. People like to copy behaviour and the lifestyles of people they aspire to be. Therefore setting a good example is very important. And if you can’t be a good example then you may be a terrible warning!
Robert E Lee once said that you should never do a wrong thing to make a friend or keep one. This advice was probably top of mind as the European Commission rejected the merger of rail companies Siemens and Alstom on antitrust grounds. Despite political pressure, it was right to do so.
This proposed mega-merger between the French and German giants has brought the topic of creating European champions to the fore once again. The voices for an EU industrial policy are bolstered by a progressively isolationist and tariff-wielding US, as well as a more commercially aggressive China.
The folly of picking winners
Picking winners and creating super companies has often been the whim of politicians and some industry leaders. This tendency has been particularly strong in countries like France for many decades. It is a trend that must be resisted. Creating European (or national) champions wastes resources and ensures that consumers and other businesses lose out. The lack of competition often leads to higher prices, less choice and poorer products due to a lack of innovation.
Merely copying the short-sighted strategy of the US and China in this field is no excuse. There is never a right way to do a wrong thing. This applies in business as it does in life. Very often the threat from other countries and their champions is overplayed to scare politicians and decision-makers to adopt a strategy that creates local champions. All too often cries that companies will be smashed underfoot by giant foreign behemoths have come to nothing.
The need to stand firm
In short, big mergers which create monopolies should be given a red light, regardless of the political pressures. The European Commission is right to fully test the dominance that new companies will have, as well as their likely impact on markets and therefore consumers. The European Commission is admirably holding a firm line in the face of criticism and political meddling.
While almost no one in political circles wants a no-deal Brexit, there is the strong possibility that the UK will sleepwalk off the cliff-edge. This is due to Prime Minister May being unable to satisfy the right and left wings of her party - or the Northern Irish Democratic Unionist Party which props up the Prime Minister’s minority government - while the opposition Labour party are focused on calling a general election - not national unity - while remaining stoutly Eurosceptic. As the clock ticks down towards the March 2019 deadline, Prime Minister May’s almost universally unloved Brexit deal and a no-deal Brexit are the two realistic options which lay on the table. From a democratic perspective, polls show that the support of UK citizens for a no-deal Brexit is pretty high. 40% said they would support this in a recent poll.
The only other remote possibility would be a second referendum which would be intended to make the whole Brexit issue go away. This remains highly unlikely and opinion polls show that the result of any hypothetical second referendum could well be identical to the one held in June 2016.
For these reasons, a no-deal Brexit is highly likely. Although the details are being thrashed out, it is important for business to know the threats and look for opportunities. Outside of how planes will take off and land on 30th March - or how gas and electricity networks will operate - this is what businesses need to know.
No Single Market for the UK
The UK would no longer have unrestricted access to the EU internal market of nearly 450 million citizens. The basis for the UK’s trading framework would disappear, as would the immense body of laws, practices, standards and agreements that have been established over the past 45 years which cover everything from food standards to financial markets and water quality. This wrench would be painful, confusing and costly to businesses big and small. Tariffs would immediately be imposed on all goods and services, for example. The legal quick-fixes that could be established are uncertain and are likely to be rudimentary at best.
Future trade deals?
Despite the confidence of the UK government that leaving the EU will make the country a rejuvenated and nimble international player, deals take a long time and a lot of effort to develop and sign. The UK International Trade Minister Liam Fox famously stated that 40 free trade agreements would be signed and in place by the time the UK leaves the EU. He has not managed to deliver even one.
That said, there are immense opportunities for companies to access a market of 65 million people which remains one of the biggest and richest economies in the world. The ideal scenario would be an open, dynamic UK market focused on freeing up trade and developing relations with countries that have been kept outside the EU’s tariff wall. Regardless, now is the time for companies to be courting UK politicians and decision-makers as to the shape of the UK’s business and trading future.
Opportunities for companies
This previous point leads us to the fact that the UK government will be desperate to show that it is still open for business after a no-deal Brexit. This translates into an excellent opportunity for companies to benefit from tax breaks, incentives and sweeteners of all shapes and forms. From building factories to creating jobs and guaranteeing investments, this represents a golden opportunity for companies to negotiate a favourable deal. Furthermore, if a no-deal Brexit led to lower (or no) tariffs, more open trade and fewer checks and regulations would follow. The opportunities would be huge for companies to secure better access to the UK market. World Trade Organisation (WTO) rules mean that lowering tariffs for one country, or trading bloc, would need to be done for all. You cannot pick and choose your tariffs without a formal trade agreement. Free Trade Europa would be supportive of this no tariff approach and feel it would be an excellent positive example internationally.
Trade in services, however, is a notoriously difficult area. Regulatory harmonisation is politically sensitive and incredibly tricky to achieve at the EU level, let alone within the WTO where rules are threadbare in the extreme. Financial companies, for example, will need to establish a base in the UK and EU since the “passporting rules” which allow institutions to carry out activities from within any EU market to serve another will no longer be possible.
A no-deal Brexit is also likely to lead to a slide in the value of sterling. While this will make UK goods cheaper, and benefit exporters, the long term effects could well be higher inflation and an increase in interest rates. This will affect the purchasing power of companies and UK citizens alike over the longer term.
UK and EU supply chains will also be drastically affected. Modern logistics networks see goods and materials sourced internationally and the “just in time” nature of these supply chains means that warehousing requirements are kept to a minimum. The UK government will need to safeguard its transport infrastructure and allow these networks - which criss-cross national borders - to continue or else risk a catastrophic collapse in the UK’s business infrastructure.
Similarly, the evaporation of the free movement of workers within the EU is tragic for business - as well as socially and politically - in Free Trade Europa’s view. Not only will the supply of skills and talent be reduced but increased rules will push up costs, increase confusion and cause delays for business.
What about agriculture?
The support and subsidies that the UK agricultural sector benefits from - through the Common Agricultural Policy - would disappear. The UK would no longer be able to compete on the global stage and tariffs would cut farmers off from the EU market. This would likely lead to the decline and even demise of much of the agricultural sector in the UK without significant funding from the UK government, which is unlikely to materialise.
From an international perspective, a UK agricultural market freed from the grip of the Common Agricultural Policy could mean lower tariffs and regulations, and therefore a more attractive destination for meat, fruit and vegetables. The result could also be cheaper food for UK consumers.
Grey clouds with silver linings?
Although the future remains uncertain, a no-deal Brexit is certain to be messy, complicated and time-consuming. Many rules and regulations will be unclear and there will be a huge amount of ill will to go around. That said, business will need to pick its way through the wreckage and seek out the opportunities. In business - as in life - finding the positive in every negative is essential. There are huge potential gains for those who get it right.
Brexit and the tragic end of the free movement of people.
There is an old saying that there is never a right way to do a wrong thing. This certainly applies to the UK leaving the European Union. One of most dramatic and damaging elements of Brexit could be encapsulated in Prime Minister May's triumphant declaration that the free movement of people would be ended "once and for all". This was probably one of the most tragic, depressing and damaging statements made in a long while.
The interchange of ideas, culture and peoples has been at the heart of forming the UK as well as being the lifeblood of dynamic, open and progressive societies. By cutting this off, the UK - and particularly cities like London - risk losing the essence of what makes them a vibrant, thriving and attractive metropolis today.
Cities - like companies and successful organisations - realise that diversity is at the heart of creativity, innovation and progress. They have worked on this for decades, rich in the knowledge that diversity makes a city an exciting and attractive place to live and work.
The European single market - a fantastic creation in the eye's of Free Trade Europa - was the brainchild of a French Socialist in European Commission President Jacques Delors and a British Conservative in Margaret Thatcher's chosen disciple Lord Cockfield. On the face of it an extremely odd couple, but diversity so often reaps impressive and unexpected results.
Similarly, the European Union we know today is built on the post-World War II vision of people like Robert Schuman: a politicians born to a Luxembourgish mother and German father in a region which became French after a war with Germany - and Jean Monnet: a French Brandy salesman turned internationalist and statesman. Opposites do attract and the synthesis of different people, from different backgrounds and with different ideas never ceases to amaze. The possibilities are endless.
We can but hope that the UK's leaders realise this sooner rather than later. Cutting off Brits from finding work and opportunities (both professional and personal) in other countries, as well as vice versa, would indeed be a tragedy.
Banning single-use plastics.
With winter upon us in Europe, memories of lazy, sunny days by the sea have long since faded. One thing that should remain vividly in our minds is the amount of plastic waste in our seas, oceans and waterways. From plastic bags to bottles and drinking straws, our seas are literally drowning in plastic waste. The Plastic Oceans Foundation calculate that human beings are producing 150 million tons of single-use plastic every year, and over 8 million tons are being dumped into our seas.
Thankfully the tide is turning. European-wide laws have been agreed to ban single-use plastics by 2021 in an effort to reduce marine pollution. Companies are also taking the lead by phasing in plans to ban non-recyclable plastic packaging. The requirement for goods and products to be made from sustainable materials will be a step forward for the environment, and will help combat marine pollution. At the same time, this reality will open up new market opportunities for innovative packaging companies and retailers as well as for recycling plastics. Deposit-return schemes for single use bottles are common across Scandinavia, for example, and significantly help with plastic waste. This is something that should be considered more broadly in other countries. Similarly, promoting a "circular economy" - which covers waste disposal from product design to recycling - needs to be front and centre for governments and companies alike.
Yet companies and legislation cannot, and should not, be the panacea for cutting plastic waste. Personal responsibility and changing our own behaviour is vital. Simply not dropping litter and disposing of plastic waste properly has a huge beneficial effect. By way of an example, research shows that 50% of the plastic waste in the Estonian waters of the Baltic Sea comes from cigarette butts. Once plastic waste makes its way into our seas and waterways it is very difficult to remove. Each one of us has a role to play in looking after our environment and building a sweeter future.
Turning the UN Sustainable Development Goals into concrete actions.
Many of us are familiar with the 2030 Sustainable Development Goals. These were adopted in 2015 and set out 17 key objectives that need to be addressed and solved by 2030. These range from getting rid of poverty to the provision of affordable and clean energy.
Like motherhood and apple pie, there is very little to argue against in this list. Like so much that is produced by the United Nations it is necessarily vague, lofty and all-encompassing.
Furthermore, if someone had sneaked in "fill in Jupiter's red spot" as Goal 18 then a cynic could have stated that the United Nations would be equally likely to achieve success. Goals are one thing, but achieving them is a different matter entirely.
This reality was brought into focus when the UN Climate Change Panel stated that global temperatures are set to rise more than 1.5 degrees Celsius above pre-industrial levels. Scientists have been stating for some time that this will spell doom and gloom for the planet. Rising sea levels, drought and extreme weather are highlighted as likely results. So why is not more being done?
In reality, a great deal is already being done and a focus on better communication would improve things still further. Merely repeating that the world is falling apart - painting an ever more bleak picture - can only take us so far. Studies show that using a negative approach and dictating to people is not effective over the longer term. After a while businesses and citizens switch off. They become immune. It is therefore time to turn the rhetoric on its head.
From a business perspective, there is a huge opportunity for companies to create solutions which mitigate against the effects of climate change. Action is not only good for the environment, but also for profits and the economy as a whole. Whether it is power generation, building materials or even sales of electric bikes, there are huge business opportunities for a number of sectors. Climate change is a form of disruption. As always with disruption, the organisations best-placed to handle this will be the winners.
From a consumer perspective, the issue seems too big and too global to get a handle on. What can one individual do? The key is to educate that every act counts, no matter how small, and these should be applauded. Simple messages and using the right channels - where people are active and actually spend time - are as important as promoting the positive angle. For example there are a few things that everyone can do - as of today - that will have a significant impact on the environment, as well benefit them personally:
Through education, communications and changing behaviour the biggest gains can be made.
Time to focus on a bit of carrot. We have had enough stick.