Bill Emmott - International Author & Adviser

Article

The best idea: do nothing
International Herald Tribune - January 4th 2007

By Vladimir Dlouhy and Bill Emmott

A twice-yearly European ritual began this week when Chancellor Angela Merkel announced her priorities during Germany´s six months as the next president of the Council of the European Union.

We would like to offer some alternative suggestions. We are outsiders and come with no single national bias: one of us is from the Czech Republic, the other from Britain.

Germany´s best policy for its EU presidency would be to do nothing.

All the important policy issues facing EU member countries are issues of national politics, not the EU, and as France will hold its presidential election during Germany´s term as EU president, nothing much can be achieved in any case.

So Germany should ideally announce that it plans to hold just one summit dinner for EU leaders, to show off German cuisine, culture and hospitality, and propose that all the leaders instead use the six months to liberalize their economies and encourage faster growth in living standards.

Rather than the fake pledge of "carbon-neutrality" made by Prime Minister Tony Blair for his G-8 meeting in Scotland last year, Germany could genuinely help the global climate by reducing summit-related travel and contributing the money saved to tree planting.

But this is impossible. No government would be able to pledge to do nothing. In that light, we suggest that Germany use as its benchmark a word that we think defines the European Union´s biggest challenge: relevance.

The problem that the EU faces, in terms of its own public and that of world opinion, is that EU discussions, institutions and policies have in recent years looked irrelevant to most people´s real concerns: jobs, living standards, competition from China and India, security.

Anything Germany seeks to achieve as EU president needs to be relevant to those concerns.

The list of candidate policies is short. The best option would be to use the six months to help truly revive the chances of achieving a single market in services inside the Union.

The services directive proposed in recent years by Fritz Bolkestein had an admirable aim: to liberalize services trade in the same way as goods trade has been liberalized in the single market, with huge benefits for growth, innovation, jobs and incomes.

Germany, along with France, was one of the chief opponents to the Bolkestein directive, which is why the European Parliament and the Commission diluted the proposal so drastically.

Now that Germany has a chancellor who says she favors liberal markets and open trade, it has a chance to put its considerable weight behind a new initiative on services, returning to the original aim in the 1957 Rome Treaty of a genuine single and open market.

Another possibility puts us more in line with Merkel: Her idea, announced this week, of trying to launch talks with the United States and Canada concerning a trans-Atlantic free-trade agreement is an excellent one.

As liberal advocates of global free trade, we are suspicious of bilateral and regional trade deals, fearing that they undermine the World Trade Organization and true global openness. We would much prefer a global approach.

But with the global trade talks under the WTO´s Doha Round unlikely to achieve anything, a trans-Atlantic deal could play a useful role in keeping the cause of free trade alive, and in putting pressure on national governments on both sides of the ocean to implement more liberal reforms.

One important condition for a trans- Atlantic free-trade agreement is that it must be open for other countries to join in the future. If that can be done, then a trans-Atlantic deal could genuinely be a stepping stone toward further global trade liberalization, rather than an obstacle to it.

Our third suggestion concerns the proposed European Union constitution.

Ideally, we would like this constitution to be abandoned. It was a lost opportunity to rethink the powers and purposes of the EU now that it consists of 27 countries in a modern, globalized economy, rather than the six-, nine- or 15-member community of the Cold War era.

It failed to transfer any significant powers back to member states, as had been promised, and failed to make the Union more understandable and accessible to citizens, which was the stated goal of the exercise.

We know, however, that Merkel has said that she wishes to find a way to revive the process of agreeing on a constitution.

We don´t believe that this is possible in its entirety. Instead, we suggest that Germany should restart the constitutional debate by calling for a special EU Council meeting to discuss the issue of "subsidiarity" (the principle that policies should be dealt with at the most local level of government possible) and the related issue of transference of powers back to the member states.

The most important and beneficial use of Germany´s six months at the helm of the EU, however, lies at home.

The reform process in Germany seems to have stalled, with even Merkel, who is an admirable liberal in theory, agreeing to changes in the laws on labor and unemployment benefits that will only help to preserve high unemployment.

Despite the country´s current cyclical economic recovery, a major effort needs to be made in order to regain momentum and consensus on liberal reforms. The danger posed by the EU presidency is that it could be a distraction from that effort.


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