How globalisation can work for EU
Brussels launches a debate on its benefits and downsides
13 May, 2017
The Commission presented last Wednesday a reflection paper on how the EU should deal with globalisation in the future, launching a debate on its benefits and downsides for the lives of Europeans, news wires reported. While globalisation benefits the European economy overall, “this means little to our citizens if the benefits are not shared fairly and more evenly,” Commission First VP Frans Timmermans said. “Europe must help rewrite the global rulebook so that free trade becomes fair trade. So that globalisation becomes sustainable and works for all Europeans,” he added.
Globalisation has helped lift hundreds of millions of people out of poverty and enabled poorer countries to catch up, says the reflection paper. For the EU, global trade has boosted EU economic growth, with every €1bn of additional exports supporting 14,000 jobs. Cheaper imports also benefit poorer households in particular. But according to the Commission, the benefits are not automatic nor evenly distributed among citizens and the solution lies neither in protectionism nor in laissez-faire politics.
According to VP Jyrki Katainen, “globalisation is a formidable force bringing benefits to Europe and the rest of the world but also many challenges.” “To preserve the benefits of openness but also address its drawbacks, Europe must promote a stronger rules-based global order, act resolutely against unfair practices, make our societies more resilient and our economies more competitive in the face of a fast changing environment.”
The report points out that Europe is impacted by the fact that other countries do not all share the same standards in areas such as employment, environmental or safety standards, making it more difficult for European companies to compete on price alone with their foreign counterparts; this can lead to factory closures, job losses or downward pressure on workers' pay and conditions. Globalisation needs to be “properly harnessed,” the report said. To do this, the EU could ensure better distribution of the benefits of globalisation by working together with Member States and regions as well as with international partners and other stakeholders.
Suggestions in the paper are that the EU could push for new rules to create a level-playing field by addressing harmful and unfair behaviour like tax evasion, government subsidies or social dumping. Effective trade defence instruments and a multilateral investment court could also help the EU act decisively against countries or companies that engage in unfair practices.
On the domestic front, the paper also suggests tools to protect and empower citizens through robust social policies and providing the necessary education and training support throughout their lives. Progressive tax policies, investing in innovation and strong welfare policies could all help redistribute wealth more fairly. And use of EU structural funds to assist vulnerable regions and the EU Globalisation Adjustment Fund to help displaced workers find another job can help mitigate negative impacts.
Separately, the European Parliament concluded that globalisation offers great potential to create wealth and jobs, but it also has the capacity to disrupt. The EU has always tried to make the most of it, while mitigating its negative effects by setting rules and working together with other countries. No doubt, the EU is the largest player in global trade and it uses its economic clout to impose high standards on products being imported as well as to promote its values abroad.
MEPs are always keen to make use of this by insisting on adding amendments to EU agreements. They favour measures to fight unfair competition from outside the EU, such as when they called for an EU strategy following a surge in low-cost EU imports of rail supplies. To protect European jobs, the Parliament is pressing for a swift agreement on the modernisation of the EU's trade defence instruments. As always it is about striking the right balance.
Parliament also often urges the Commission to prepare new legislation by adopting an own-initiative resolution. For example, in April MEPs called for EU rules to oblige textile and clothing suppliers to respect workers' rights. That same month MEPs also asked for a single certification scheme for palm oil entering the EU market to counter the impact of unsustainable palm oil production, such as deforestation and habitat degradation. These are just a few examples of what Parliament has done regarding globalisation in recent months, but they give an idea of the different ways MEPs are engaged in making it work for Europeans.