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Policy Contribution

Redefining Europe’s economic sovereignty

This Policy Contribution delves into the position of the EU in the current global order. China and the United States increasingly trying to gain geopolitical advantage using their economic might. The authors examine the specific problems that China and the US pose for European economic sovereignty, and consider how the EU and its member states can better protect European economic sovereignty.

By: , , , and Date: June 25, 2019 Topic: Global Economics & Governance

Europeans like to believe the European Union has the collective economic size and capacity to determine its own economic destiny. But the behaviour of others global powers is increasingly calling this ability into question. China and the United States, especially, do not separate economic interests from geopolitical interests in the same way the EU does. They are increasingly using economic connections, from cyberspace to financial links, to gain geopolitical advantage or to serve geopolitical goals. Europe’s economic sovereignty is at stake.

The problem for Europe is real but manageable. This Policy Contribution examines the specific problems that China and the US pose for European economic sovereignty, and considers how the EU and its member states can better protect European economic sovereignty in a range of areas, including state aid to domestic industries, competition policy, investment screening, export controls, the international role of the euro, the role of European development banks, the European payments infrastructure and the global governance system. In each area, we recommend ways to improve the EU’s capacity to wield economic power, without advocating increased protectionism or a retreat from globalisation.

We make recommendations on how to adapt the EU and national policy systems to better integrate economic and geopolitical considerations. The next European Commission should develop an economic sovereignty strategy to boost Europe’s research and scientific base, protect assets critical to national security from foreign interference, enforce a level playing field in domestic and international competition, and strengthen European monetary and financial autonomy.

To guide the implementation of this strategy, an economic sovereignty committee should be established that will seek to integrate economic and security considerations within the European Commission. But the answer to this problem does not lie only in Brussels. We recommend a flexible implementation strategy that connects with member-state policy debates and makes use of ‘mini-lateral’ groups of member states.

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Opinion

China Has an Unfair Advantage in the EU Market. What Can Be Done to Level the Playing Field?

This article has originally been published in Brink News. The dominance of Chinese state-owned enterprises in China’s domestic market is giving them unfair advantages in the European Union single market as well. The EU Commission recently released a series of recommendations for leveling the playing field regarding foreign subsidies. Unfortunately, while useful, these ideas are unlikely to […]

By: Alicia García-Herrero and Guntram B. Wolff Topic: Global Economics & Governance Date: July 28, 2020
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Blog Post

Europe’s China problem: investment screening and state aid

China’s state capitalist economy poses a challenge to EU openness to foreign investment. In response, the European Commission 17 June published a White Paper on “levelling the playing field with regard to state aid”, contemplating sensible and balanced policies to protect the integrity of the European single market from subsidised foreign acquisitions. However, against the backdrop of collapsing global capital flows and limited existing FDI from China, there is little risk of excessive exposure, indeed a deepening of bilateral investment flows would be beneficial for both economies.

By: Marta Domínguez-Jiménez and Niclas Poitiers Topic: Global Economics & Governance Date: July 2, 2020
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Opinion

A tale of two pandemics

The two narratives briefly examined here cast light on different aspects of the EU in the times of Covid-19. Euroskeptic nationalists typically propagate claims of EU failure but have been rather subdued during the pandemic as mainstream governments have taken over their trademark policy of closing borders to foreigners. Nonetheless, the grip on power of several pro-EU mainstream leaders, including President Emmanuel Macron in France, Prime Minister Conte in Italy and Prime Minister Pedro Sanchez in Spain, remains tenuous.

By: Michael Leigh Topic: European Macroeconomics & Governance Date: June 23, 2020
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External Publication

EU-China trade and investment relations in challenging times

In this report, we have focused on trade and investment relations and have not attempted to define the many other policy instruments that the EU can and should pursue to increase its leverage towards China, and to protect its domestic economy while boosting domestic investment and trade.

By: Alicia García-Herrero, Guntram B. Wolff, Jianwei Xu, Niclas Poitiers, Gabriel Felbermayr, Rolf J. Langhammer, Wan-Hsin Liu and Alexander Sandkamp Topic: Global Economics & Governance Date: June 4, 2020
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External Publication

European Parliament

A Just Transition Fund – How the EU budget can help with the transition

On 14 January 2020, the European Commission published its proposal for a Just Transition Mechanism, intended to provide support to territories facing serious socioeconomic challenges related to the transition towards climate neutrality. This report provides a comprehensive analysis of how the EU can best ensure a ‘just transition’ in all its territories and for all its citizens with the tools at its disposal. It provides an overview and a critical assessment of the Commission's proposal, and suggests possible amendments based on best practices from other just-transition initiatives.

By: Aliénor Cameron, Grégory Claeys, Catarina Midões and Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance, European Parliament Date: May 26, 2020
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Policy Brief

Rebooting Europe: a framework for a post COVID-19 economic recovery

COVID-19 has triggered a severe recession and policymakers in European Union countries are providing generous, largely indiscriminate, support to companies. As the recession gets deeper, a more comprehensive strategy is needed. This should be based on four principles: viability of supported entities, fairness, achieving societal goals, and giving society a share in future profits. The effort should be structured around equity and recovery funds with borrowing at EU level.

By: Julia Anderson, Simone Tagliapietra and Guntram B. Wolff Topic: Energy & Climate, European Macroeconomics & Governance Date: May 13, 2020
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Past Event

Past Event

An alternative mobile operating environment?

Walking the wire: we discuss risks and benefits involved for the EU should it embark on developing a new smartphone operating system.

Speakers: Hosuk Lee-Makiyama, J. Scott Marcus, Renato Nazzini, Peter Stuckmann and Andreas Zimmer Topic: Innovation & Competition Policy Date: April 29, 2020
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External Publication

How has the macroeconomic imbalances procedure worked in practice to improve the resilience of the euro area?

This paper shows how the Macroeconomic Imbalances Procedure (MIP) could be streamlined and its underlying conceptual framework clarified. Implementation of the country-specific recommendations is low; their internal consistency is sometimes missing; despite past reforms, the MIP remains largely a countryby-country approach running the risk of aggravating the deflationary bias in the euro area. We recommend to streamline the scoreboard around a few meaningful indicators, involve national macro-prudential and productivity councils, better connect the various recommendations, simplify the language and further involve the Commission into national policy discussions. This document was prepared for the Economic Governance Support Unit at the request of the ECON Committee.

By: Agnès Bénassy-Quéré and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: March 24, 2020
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Policy Contribution

An effective economic response to the Coronavirus in Europe

'Whatever it takes' needs to be the motto to preserve lives and reduce the impact on the economy of the epidemic.

By: Maria Demertzis, André Sapir, Simone Tagliapietra and Guntram B. Wolff Topic: European Macroeconomics & Governance, Testimonies Date: March 12, 2020
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Opinion

What if the rest of Europe follows Italy's coronavirus fate?

The silence from Brussels could be as damaging as the silence on Italian streets

By: Simone Tagliapietra Topic: Global Economics & Governance Date: March 11, 2020
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Policy Contribution

A European carbon border tax: much pain, little gain

The European Commission should not make the implementation of a carbon border adjustment mechanism into a must-have element of its climate policy. There is little in the way of strong empirical evidence that would justify a carbon-adjustment measure. Moreover, significant logistical, legal and political challenges will arise during the design. The EU should instead focus upon the implementation of measures to trigger the development of a competitive low-carbon industry in Europe.

By: Ben McWilliams and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance Date: March 5, 2020
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Blog Post

As the Coronavirus spreads, can the EU afford to close its borders?

In 2018, 320 million trips were made between EU countries and almost 2 million people crossed Schengen borders to go to work. Stopping them would cause serious economic disruption.

By: Raffaella Meninno and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: February 27, 2020
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