Desempenho comercial do mercado único europeu - John Weeks (Social Europe)

Trade Performance In EU Internal Market In Euro Era

by John Weeks 

Social Europe,

on 9 July 2018 @johnweeks41

John Weeks

European integration began as a political project to institutionalize peace and cooperation, with the Coal and Steel Community the initial step. In the late 1980s and into the 1990s, roughly coinciding with the end of the Cold War, priorities changed – from peace and cooperation to trade competitiveness.

The Treaty on European Union (TEU) formalized this shift (also known as the Treaty of Rome, subsequently amended by the Treaties of Amsterdam, Nice and Lisbon). Article 2, section 3 reads:

The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. [Eur-Lex, emphasis added]

The treaty makes political and ideological specifications for the European Union. It commits all member governments to a specific form of economic organization, a “market economy”. Other parts of the two major EU treaties make it clear that “market economy” is synonymous with “capitalism” (Treaty of the Functioning of the European Union is the other).

No constitution of a major country, even though it may have a capitalist economy, includes such an ideological commitment, with the possible exception of China’s (Smith and Weeks 2017). The treaty language further specifies that the EU economy be “highly competitive”. Because those words are used immediately following the mandate for “an internal market”, it is a reasonable inference that “highly competitive” means “trade competitive”.

Because the treaty section commits to “a highly competitive social market economy”, singular rather than plural, the referent must be the Union as a whole. Thus, Article 2(3) must refer to extra-EU trade: that the EU economy taken as a whole should be internationally competitive. This interpretation implies that the TEU makes a fundamental change from the concept of the early initiators of integration. Their focus was to facilitate intra-EU trade, through a customs union that would lay the basis for political integration.

Intra- and extra-EU trade patterns

By definition the purpose of a customs union is to give preference to trade among members. With that in mind we can assess if the intentions behind the wording in the TEU have affected the pattern of EU trade. At the beginning of this century the adoption of the euro represented a major institutional change affecting EU trade. One would expect the euro’s entry to reinforce intra-EU trade.

Internal EU regulations on product safety and related rules also impact on intra- and extra-EU trade. We should expect EU regulations to have a different impact on extra-EU imports than on extra-EU exports. Extra-EU imports must conform to intra-EU regulations, while extra-EU exports need not do so. The restrictive fiscal policies pressed upon national governments after 2010 represent a second possible depressor of intra-EU trade, due to their growth-reducing effects.

That extra-EU exports may face less regulation than extra-EU imports suggests the possibility of different patterns for exports and imports. The statistics indicate such a difference. Chart 1 shows annual rate of growth of intra- and extra-EU imports for the 19 Eurozone countries and the nine with national currencies from the introduction of the euro in 2001 through 2017. For the 19 Eurozone countries in a bare majority, 10 of 19, intra-EU import trade grew faster than extra-EU import trade. Among the non-euro countries in 7 of 9 intra-EU imports grew faster.

One would have expected the opposite result, faster growth of intra-imports for the euro group, not the non-euro group. A major purpose of the introduction of the euro was to reduce transactions costs, making trade more “seamless”. The statistics do not support that prediction. It appears that any cost-reducing role of the euro was outweighed by other effects.

One such effect might relate to level of development and structural characteristics. The ten countries in which intra-EU imports grew fastest were from the Baltic region or central Europe, countries in transition from centrally planned economies (annual rates in percentages): Lithuania (10.9), Slovakia (10.7), Romania (10.5), Bulgaria (9.2), Latvia (8.7), Estonia (8.6), Czech Republic (8.5), Poland (8.3), Hungary (6.7) and Slovenia (5.1). For all ten except Slovenia intra-imports grew faster than extra-imports. These statistics suggest that the euro has not facilitated intra-import trade.

Chart 1: Annual rates of growth of intra-EU imports and extra-EU imports, Eurozone and non-euro countries, 2001-2017 (percentages)

Note: Rate of growth calculated by using end years. Black line divides the 19 Eurozone members from the nine non-euro countries.

Source: Eurostat

The same statistics on exports is consistent with the hypothesis that EU rules have a relatively restrictive effect. Of the 28 countries, for only one, Bulgaria, did intra-EU exports grow faster than extra-EU exports, and for another the rates were the same to one decimal point (Sweden).

The statistics also cast doubt on the reputation of the German economy as an engine of export growth. Over the 17 years, German intra-EU exports grew slower than in 12 other EU countries (faster than 15); and for extra-EU exports 16 countries showed faster growth rates (eleven slower). The expanding German goods surplus resulted from relatively slow growth of imports compared to exports, rather than rapid export growth.

Chart 2: Annual rates of growth of intra-EU exports and extra-EU exports, Euro zone and non-euro countries, 2001-2017 (percentages)

Note: Rate of growth calculated by using end years. Black line divides the 19 Eurozone members from the nine non-euro countries.

Source: Eurostat

Peace, not trade

These statistics suggest a few conclusions. First, the EU internal market has integrated the formerly centrally planned countries into international commerce, though more so for imports than exports. Second, the EU internal market has not fostered trade growth relatively to the non-EU market. Its benefit to EU citizens is probably consumer protection rather than cheap goods, with the former the more important benefit. Third, the euro has not facilitated trade within the internal market, neither for imports nor for exports.

Many others have for several years argued that “benefits from trade” is a weak argument for EU membership. The statistics support that conclusion and indicate that it may apply to most EU members.   The strongest arguments for membership are those put forward by the visionaries of European integration in the late 1940s, which are political and social, not economic. EU reform should be based on the sublime goals of peace and cooperation, not the commercial banality of export competitiveness.

Alemanha: um "imperio acidental" - Ulrich Beck (Social Europe Journal)

Germany Has Created An Accidental Empire

 BY ULRICH BECK, 

Social Europe Journal, 25/03/2013

Are we now living in a German Europe? In an interview with EUROPP editors Stuart A Brown and Chris Gilson, Ulrich Beck discusses German dominance of the European Union, the divisive effects of austerity policies, and the relevance of his concept of the ‘risk society’ to the current problems being experienced in the Eurozone.

How has Germany come to dominate the European Union?

Well it happened somehow by accident. Germany has actually created an ‘accidental empire’. There is no master plan; no intention to occupy Europe. It doesn’t have a military basis, so all the talk about a ‘Fourth Reich’ is misplaced. Rather it has an economic basis – it’s about economic power – and it’s interesting to see how in the anticipation of a European catastrophe, with fears that the Eurozone and maybe even the European Union might break down, the landscape of power in Europe has changed fundamentally.

First of all there’s a split between the Eurozone countries and the non-Eurozone countries. Suddenly for example the UK, which is only a member of the EU and not a member of the Eurozone, is losing its veto power. It’s a tragic comedy how the British Prime Minister is trying to tell us that he is still the one who is in charge of changing the European situation. The second split is that among the Eurozone countries there is an important division of power between the lender countries and the debtor countries. As a result Germany, the strongest economic country, has become the most powerful EU state.

Are austerity policies dividing Europe?

Indeed they are, in many ways. First of all we have a new line of division between northern European and southern European countries. Of course this is very evident, but the background from a sociological point of view is that we are experiencing the redistribution of risk from the banks, through the states, to the poor, the unemployed and the elderly. This is an amazing new inequality, but we are still thinking in national terms and trying to locate this redistribution of risk in terms of national categories.

At the same time there are two leading ideologies in relation to austerity policies. The first is pretty much based on what I call the ‘Merkiavelli’ model – by this I mean a combination of Niccolò Machiavelli and Angela Merkel. On a personal level, Merkel takes a long time to make decisions: she’s always waiting until some kind of consensus appears. But this kind of waiting makes the countries depending on Germany’s decision realise that actually Germany holds the power. This deliberate hesitation is quite an interesting strategy in terms of the way that Germany has taken over economically.

The second element is that Germany’s austerity policies are not based simply on pragmatism, but also underlying values. The German objection to countries spending more money than they have is a moral issue which, from a sociological point of view, ties in with the ‘Protestant Ethic’. It’s a perspective which has Martin Luther and Max Weber in the background. But this is not seen as a moral issue in Germany, instead it’s viewed as economic rationality. They don’t see it as a German way of resolving the crisis; they see it as if they are the teachers instructing southern European countries on how to manage their economies.

This creates another ideological split because the strategy doesn’t seem to be working so far and we see many forms of protest, of which Cyprus is the latest example. But on the other hand there is still a very important and powerful neo-liberal faction in Europe which continues to believe that austerity policies are the answer to the crisis.

Is the Eurozone crisis proof that we live in a risk society?

Yes, this is the way I see it. My idea of the risk society could easily be misunderstood because the term ‘risk’ actually signifies that we are in a situation to cope with uncertainty, but to me the risk society is a situation in which we are not able to cope with the uncertainty and consequences that we produce in society.

I make a distinction between ‘first modernity’ and our current situation. First modernity, which lasted from around the 18^th century until perhaps the 1960s or 1970s, was a period where there was a great deal of space for experimentation and we had a lot of answers for the uncertainties that we produced: probability models, insurance mechanisms, and so on. But then because of the success of modernity we are now producing consequences for which we don’t have any answers, such as climate change and the financial crisis. The financial crisis is an example of the victory of a specific interpretation of modernity: neo-liberal modernity after the breakdown of the Communist system, which dictates that the market is the solution and that the more we increase the role of the market, the better. But now we see that this model is failing and we don’t have any answers.

We have to make a distinction between a risk society and a catastrophe society. A catastrophe society would be one in which the motto is ‘too late’: where we give in to the panic of desperation. A risk society in contrast is about the anticipation of future catastrophes in order to prevent them from happening. But because these potential catastrophes are not supposed to happen – the financial system could collapse, or nuclear technology could be a threat to the whole world – we don’t have the basis for experimentation. The rationality of calculating risk doesn’t work anymore. We are trying to anticipate something that is not supposed to happen, which is an entirely new situation.

Take Germany as an example. If we look at Angela Merkel, a few years ago she didn’t believe that Greece posed a major problem, or that she needed to engage with it as an issue. Yet now we are in a completely different situation because she has learned that if you look into the eyes of a potential catastrophe, suddenly new things become possible. Suddenly you think about new institutions, or about the fiscal compact, or about a banking union, because you anticipate a catastrophe which is not supposed to happen. This is a huge mobilising force, but it’s highly ambivalent because it can be used in different ways. It could be used to develop a new vision for Europe, or it could be used to justify leaving the European Union.

How should Europe solve its problems?

I would say that the first thing we have to think about is what the purpose of the European Union actually is. Is there any purpose? Why Europe and not the whole world? Why not do it alone in Germany, or the UK, or France?

I think there are four answers in this respect. First, the European Union is about enemies becoming neighbours. In the context of European history this actually constitutes something of a miracle. The second purpose of the European Union is that it can prevent countries from being lost in world politics. A post-European Britain, or a post-European Germany, is a lost Britain, and a lost Germany. Europe is part of what makes these countries important from a global perspective.

The third point is that we should not only think about a new Europe, we also have to think about how the European nations have to change. They are part of the process and I would say that Europe is about redefining the national interest in a European way. Europe is not an obstacle to national sovereignty; it is the necessary means to improve national sovereignty. Nationalism is now the enemy of the nation because only through the European Union can these countries have genuine sovereignty.

The fourth point is that European modernity, which has been distributed all over the world, is a suicidal project. It’s producing all kinds of basic problems, such as climate change and the financial crisis. It’s a bit like if a car company created a car without any brakes and it started to cause accidents: the company would take these cars back to redesign them and that’s exactly what Europe should do with modernity. Reinventing modernity could be a specific purpose for Europe.

Taken together these four points form what you could say is a grand narrative of Europe, but one basic issue is missing in the whole design. So far we’ve thought about things like institutions, law, and economics, but we haven’t asked what the European Union means for individuals. What do individuals gain from the European project? First of all I would say that, particularly in terms of the younger generation, more Europe is producing more freedom. It’s not only about the free movement of people across Europe; it’s also about opening up your own perspective and living in a space which is essentially grounded on law.

Second, European workers, but also students as well, are now confronted with the kind of existential uncertainty which needs an answer. Half of the best educated generation in Spanish and Greek history lack any future prospects. So what we need is a vision for a social Europe in the sense that the individual can see that there is not necessarily social security, but that there is less uncertainty. Finally we need to redefine democracy from the bottom up. We need to ask how an individual can become engaged with the European project. In that respect I have made a manifesto, along with Daniel Cohn-Bendit, called “We Are Europe”, arguing that we need a free year for everyone to do a project in another country with other Europeans in order to start a European civil society.

A more detailed discussion of the topics covered in this article is available in Ulrich Beck’s latest book, German Europe (Polity 2013). This interview was first published on EUROPP@LSE