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Monday, October 30, 2006

Stern words: review admits problems with EU Emissions Trading Scheme

The Stern Review is out. Just digging through it now. For the first time the Government are acknowledging the problems with the EU's Emissions Trading Scheme.

The Commission has already fessed up that the EU is off course to meet its carbon reduction targets. The front page of Saturday’s Guardian reported that according to figures released by the European Commission, the EU “is falling woefully short of its targets for cutting greenhouse gas emissions.”

It said that, based on current measures and policies, the emissions of the EU's original 15 members will be just 0.6% below 1990 levels by 2010, and predicted that emissions in 2010 will actually be 0.3% higher than they were in 2004. The Commission said that, on unchanged policies, seven countries - Austria, Belgium, Denmark, Ireland, Italy, Portugal and Spain - would exceed their individual emission limits, which are binding under EU law. Even with extra measures, Spain is projected to exceed its 1990 emissions by 51.3% in 2010, compared with an allowed increase under Kyoto of 15%.

This won't surprise anyone who read our paper on the emissions trading scheme (ETS), which is currently costing the UK billions but failing to reducing emissions. Undaunted by this, instead of fixing the existing system, the Commission is proposing that civil aviation be brought within the EU's Emissions Trading Scheme and is considering legislation for car manufacturers.

Will Hutton, writing in the Observer, said that the EU’s Emmissions Trading Scheme “has had a wobbly first 12 months”. But this is totally missing the point - the problems with the scheme are now locked in until 2012.

Last week the Commission admitted that the ETS is currently "pointless", because even in the second phase (2008-2012) EU members are planning to print 15% more permits than there is pollution. Commissioner Dimas said that if these targets were accepted then the ETS would "become pointless and it would be difficult to meet our Kyoto targets."

However, the Stern Review is the first time we have had an admission from (effectively) the UK Government, that the system isn't working:

They note that: "Overall allocation in the EU ETS market is not set centrally. Rather, it is the sum of 25 individual member state decisions, subject to approval by the Commission. As such, total EU allocation is an outcome of many decisions at various levels, with a risk of gaming on allocation levels between member states if they make their decisions expecting allocation levels will be higher elsewhere in Europe. It has therefore been difficult to ensure scarcity in the EU ETS market. As a result, the total EU wide allocation in Phase One is estimated to be only 1% below projected “business as usual” emissions15,16. This underlines the need for stringent criteria on allocation levels for member states, and robust decisions by the European Commission on NAPs to ensure scarcity in the scheme."

The review goes on to say that : "At the start of trading in January 2005, traders had limited information on supply and demand for emission allowances. In particular, the NAPs did not contain clear data on the assumptions lying behind the projections of emissions used as the basis for allocations. The release of the first data on actual emissions from the scheme’s participants in April 2006 led to a dramatic downward correction in prices (see figure above), as the data showed that the initial NAP allocations exceeded emissions in most sectors of the scheme14. The volatility that this caused demonstrates the importance of transparency in initial allocation plans." (p.329)

They produce the graph of the collapse of the system in April 06 - when the markets finally realised that too many permits had been printed:

Stern notes that the EU went down this ineffective route having failed to agree on a common carbon tax:

"The international harmonisation of carbon taxes can be extremely difficult in practice. At
a European level countries have previously failed to agree on a common carbon tax. Even the
relatively homogenous group of four Scandinavian countries that sought to implement a uniform tax from the early 1990s ended up with a complex patchwork of partial application and
exemptions between and within the countries" (p.474).

However, it says the ultimate goal should remain the creation of a "global price for carbon" through a network of overlapping international agreements. This is a very thorough bit of work. But the ideas in it are not really new. Even within our own niche on the EU ETS it doesn't seem to have really taken the problems head on.

Its proposed solutions for the ETS are:

1. more auctioning (good, but how will you achieve it and when?)
2. a "tougher" review by the Commission of member states self-set emissions targets (won't make any difference - members aren't scared of being whinged at by the Commission) and
3. further expansion of the scheme.

The last bit is the most problematic. Inclusion in the scheme is currently restricted to certain sectors and installations with a potential thermal output above 20MW. Bring in more small operators and the high admin costs of trading start to outweigh the benefits.

The bigger problem with the ETS (apart from the fact that it doesn't work, and won't work, and costs the UK a fortune) is that it doesn't reward (or punish) member states for doing the big stuff that might actually make a dent in global warming. Example: Britain's carbon emissions are about 40% higher than in France - a result of France's heavy use of nuclear.

The report has already done what it is supposed to - pave the way for a whole raft of fiddling tax rises from the Treasury. (It was interesting to hear Stern himself on Today this morning - resisting the Government's spin on his work from almost the first word.)

But it doesn't really take us much further forward. What we need is an environmental equivalent of the Economist's "Stockholm Consensus" project - which effectively sought to answer the question - "what is the most effective use of given international aid budget?". We could do with a serious piece of economic work on the lowest cost way to reduce emissions. Maybe the opposition could take a lead.

Sunday, October 29, 2006

Reid rowing back - already?

Today's Sunday Times reports (sans hat tipping) a story which came to our attention a couple of days ago.

When the Home Office announced their rather confusing work permit scheme for Bulgarians and Romanians at the start of the week, they said that they would be allowing a maximum of 20,000 permits to work legally in the UK:

"Low-skilled migration from Bulgaria and Romania will be restricted to those sectors of the economy where the UK already has low-skilled schemes and will be subject to a strict quota which will not exceed 20,000 workers per year.

The largest number were to be allowed into the UK via food processing (3,500 places) and the Seasonal Worker's Scheme, known as "SAWS" (16,250 places), which are currently shared between non-EU countries.

The Home Office (via its regional "managed migration units") wrote to farmers warning them that come the 1st of January, they will have to stop using the non-EU employees they have worked with under the Seasonal Workers Scheme. The problem, as the Home Office admitted in their letter, was that farmers have already signed contracts with non-EU workers (mostly Russians) for 2007. The Home Office letter admits: “I am aware this is not welcome news”, and also offered to find a loophole, in order to “take proper account of your existing recruitment commitments”.

Apparently farmers were less than happy, and now are threatening to sue. They say that the Home Office's interpretation of EU law is wrong. The Home Office had argued that non-EU workers had to be squeezed out in favour of "EU citizens" because of the doctrine of "Community Competence" - the idea that people from the EU can only be recruited for a job if no-one in the EU can do it. But apparently that doesn't need to be applied during the transitional years after accession.

So the Home Office is now offering farmers a deal whereby only 40% of the places on SAWS (i.e. 6,500) will initially be offered to Bulgarians and Romanians, taking the total quota down below 10,000.

The Sunday Times reports that, "The Home Office admitted the number of legal work places for Romanians and Bulgarians next year would be lower than announced “while we finish phasing out the other schemes”."

Does any of this matter? In one sense no - as we have argued before, given the basic right to free movement and various legal rights under EU law to work in the UK, the majority of people will either find ways to circumvent or simply ignore Reid's system. Indeed, the fewer permits to work legally, the more people will work illegally. More people in the black economy is bad for taxpayers and people on low incomes. But it does have the advantage, from a Home Office point of view, of making the "official" numbers look smaller.

But in another sense this story does matter - a radical change of plan just a couple of days after the system was launched shows what a cobbled-together and poorly planned operation the Home Office are running. That's worth remembering when you hear Reid promising that the EU's "e-borders scheme" will offer us "a revolution in border control". Uh oh...

Friday, October 27, 2006

Help us drain the wine lake

Sadly not an invitation to some kind of depraved EU party, but merely a tender in the Scotsman for companies to bid to turn 100,000 hectolitres of the EU's surplus wine into industrial products which the EU can then dump onto other countries.

"Tendering procedures should be organized for the sale of wine alcohol for new industrial uses with a view to reducing the stocks of wine alcohol ... and enabling small-scale industrial projects to be carried out and such alcohol to be processed into goods intended for export for industrial uses."

Actually, in total the EU has about 1.5 million hectolitres of low quality plonk that it wants to get rid of.

In fairness, during the summer the Commission came up with a plan to rein in the worst excesses of the system. But even that was rejected by wine-making member states led by France.

Obviously, this isn't economically rational or good for the environment. It's a reminder of what an amazingly complicated and sprawling set of different policies are covered by the shorthand expression, "the CAP". And a reminder how little progress has ever been made towards reform.

The CAP wine policy was set up just before the UK joined the then EEC, in 1970. According to the slightly sozzled southern-European sounding Commission website:

"It started out very literal, with no curbs on plantings and very few market regulation instruments (the aim being to confront the annual variations in production). It then coupled freedom on plantings with the virtually guaranteed sales, thus generating serious structural surplus. From 1978 it became very interventionist with the ban on planting and the obligation to distil the surplus."

And since then, despite a lot of to-ing and fro-ing, not much has changed. The EU is probably the best example in the world of the economics of public choice theory. Well dug-in vested interests get concentrated benefits and lobby hard to keep them, while the rest of us get lumbered with the (more diffused) costs.

One of the key strategies for any vested interest group is to minimise the amount of information that is available about their cosy arrangement. Organisations like Farmsubsidy.org are trying to counter that through a relentless campaign for freedom of info.

But it isn't easy. We have managed to get some info about CAP spending out of the Commission. But not much.

We do know how much each member state got for wine subsidies in 2004. The biggies are Spain on €434m, Italy on €445m, France on €245m, and Greece on €190m. Interestingly, Britain is guilty too - though it only got a paltry €500,000. (Amazingly the UK even managed to claim €100k worth of tobacco-growing subsidies).

But when it comes to the really sensitive stuff the Commission just tell you to forget it. In the summer we asked about how much subsidised produce the EU was dumping on a range of developing countries.

From xxxxxxxxxx@cec.eu.int
Sent: 21 August 2006 10:36
To: Juan Monras
RE: Some questions on CAP

Dear M. Monras,

Thanks for your messages. Regarding your question, I can only confirm the answer from Mrs Borchmann, i.e. that this is a difficult task and set of information to provide.

...information for subsidised exports per country of destination is more difficult to obtain. DG AGRI services keep records of the export licences and subsidies granted. However export licences are often valid for a region and not for a single country: it could in some cases prove impossible to calculate export subsidies by destination, unless reasonable simplifying assumptions. In many cases, Member States do not provide detailed information on the destination of subsidised exports as they only provide us with the total of export certificates for their own country.

In summary, I am afraid that the provision of the required information appears very difficult, if not impossible.

Best regards,


You mean you don't even know how much you dumped on poor countries?

Now that's very convenient, isn't it?

Thursday, October 26, 2006

Panda diplomacy or pander diplomacy?

No-one really knows what to do about China. That's not exactly a new phenomenon. People have been fretting about 'what to do about China' ever since the high era of "panda diplomacy".

But things are more serious now, with China locked on course to being the world's largest economy sometime between the mid 2020s and the mid 2040s. China's increasing influence in Africa, as it scrambles for raw materials, seems to concern everyone from hardcore neocons to left-leaning NGOs.

And the political future of the People's Republic is less than clear. The work of James Kynge shows just how just how competitive the PRC is (though he acknowledges the challenges it faces), while Minxin Pei thinks the current system is doomed, stuck in a "trapped transition", and bogged down in a sea of corruption.

Handling the rise of a new great power isn't easy. Robert Kagan points out that while the west has been debating engagement vs. containment, all the Chinese regime hears is "containment, containment, containment". That's bad news given the attitude of some members of the PRC military - as exemplified in Bernstein and Munro's famous 1997 Foreign Affairs article. It quoted a General. Mi Zhenyu, of the Beijing Academy of Military Sciences as saying that China must "quietly nurse our sense of vengeance . . . We must conceal our abilities and bide our time."). Hmmmm - hopefully he has been retired by now.

The EU members seem to be split down the middle about how to deal with China. A good example of the mixed messages the EU countries are sending out is happening today: Peter Mandelson says that China needs to float its currency and open its domestic market. He has launched an EU strategy paper which notes that the EU has overtaken the United States as the world's largest buyer of Chinese products, and the EU-China trade imbalance has started to yawn open - reaching $133 billion. Mandelson says (quite fairly) that "EU companies often find themselves competing on unfair terms in China", and that "China has reached a stage in its development when the rest of the world is entitled to ask for more from China."

But at the same time Chirac has arrived in Beijing yesterday with a whole bunch of French business people. To seal the deal(s) he reiterated his support for the end of the EU arms embargo against China, which was imposed in 1989 after the Tiananmen Square massacre. The UK and other member states managed to block the same proposal back in mid-2004. But it is scheduled to come back on the agenda later this year.

That sort of thing drives the US crazy. As the Heritage Foundation has pointed out, the Europeans have already been selling the Chinese technology for use in the military: jet engines, radar, submarine engines. And the EU is transferring ultra-sensitive satellite technology to China through its inclusion in the Galileo system (and the Commission admitted earlier this month that it wants to allow the direct military use of the system to claw back its spiraling costs).

Some people in Brussels would love the EU to team up with China to balance against the US. But continuing pressure from groups like Amnesty International makes it difficult for national politicians or the EU to suck up too much to China.

So what seems most likely is that the EU will continue a sort of messy half-in-half-out strategy with regard to China - alternately playing both 'good cop' and 'bad cop'. That's the problem with the hazy old argument that "being part of a big bloc is the only way to have any clout in the modern world". There just is no common foreign policy, and the attempt to pretend that there is tends to lead to an incoherent, lowest common denominator approach. As one Guardian journalist remarked - putting together 25 jellyfish doesn't make a sabre-toothed tiger.

Wednesday, October 25, 2006

The PM asks: “Who needs suicide bombers when you’ve got the European Commission?”

Having put up with yesterday’s display of “fantasy politics” from John Reid, it was rather a nice change to indulge in some real fantasy politics - in front of the box watching The Amazing Mrs Pritchard – the BBC drama series starring Jane Horrocks as an unlikely Prime Minister.

A plane had crashed in the middle of the night over London, killing dozens and triggering widespread panic. The PM immediately launched into action, visiting the injured and issuing tearful television statements. Having spent the last 12 months in office distancing her administration from Tony Blair’s Iraq policy (and apparently isolating herself from the White House), she also boldly announced she would resign if it turned out to be a terrorist attack.

But it didn’t. As her foreign secretary sheepishly told her – “It wasn’t terrorism, but it may still be our fault”, explaining that a piece of EU legislation reducing airport safety controls had been passed, going via the European Scrutiny Committee, three months before and with no-one noticing.

“And no-one thought to tell me!?” asked an incredulous Mrs Pritchard, “We’ve relaxed our controls to fit in with Europe?!” “Who needs suicide bombers when you’ve got the European Commission” quipped an aide. Someone then explained to her (and the rest of the country who happened to be watching the Beeb at tea-time on a Tuesday night) that thousands of pieces of important legislation pass through the EU Scrutiny Committee every year, and only a few are picked out for debate in the House.

In an amusing twist, leaked video footage then showed that the opposition Conservative member had been asleep while the legislation was being discussed in Committee. However as someone pointed out, “What’s worse, being asleep while this awful law went through, or wide awake?”. Mrs Pritchard subsequently went on Newsnight to argue “We need a new relationship with Europe”, saying all European legislation should be subject to the same rigorous scrutiny undergone by national legislation. Triumphantly, she said that otherwise, the Government should withdraw its payments to the EU, which, she spat, amount to “£1.5 million an hour.”

This is all dangerously close to being educational - though obviously the idea that MPs might actually be allowed to debate the thousands of pieces of EU legislation they rubber stamp every year is the stuff of… sheer fantasy?

PS - The producers of the programme called us a few months ago and we directed them to our admittedly rather dry report on reforming EU scrutiny at Westminster. Never dreamed it would end up being quoted during a primetime BBC drama...

Tuesday, October 24, 2006

The dirty dozen

Ah, the annual ritual: the Court of Auditors has qualified the EU's accounts for the 12th year in a row.

This year things are a bit more interesting because the Commisson has launched a pre-emptive attack on the court. The Vice-President for administration, audit and anti-fraud, Siim Kallas, dismissed the idea of corruption in Brussels as a myth, arguing, “If you lose your wallet and you get it back with the money inside, the problem is over... This perception of widespread error and fraud is highly unfair. The spending of money in the EU is under tight control.”

Today the Court is hitting back at a cheeky claim by the Commission that the Court had given it a "statement of assurance" - whereas the Court says the whole point is that it is a qualified statement of assurance. Report highlights this year include:

  • The fact that the about 2% of the EU's cows and 6% of sheep seem to have have gone missing. (Info note, page 17)
  • All the stats from Greece turn out to rely on a database which is run by... the Greek Farmers Union. (Main report, page 92). Great system, guys.

But could this article from the BBC be any more one-sided? Its kind of hard to see how. It's fair to look at the Commission claim that it's not their fault. There are three or four people quoted making the Commission's case, but no-one quoted arguing the opposite. That's not good journalism.

To take just one of many possible examples, why not look at the External Aid budget? It's directly run by the Commission, not member states, but its one of the areas most riddled with fraud and irregularities.

Too many people in Brussels - including some Conservative MEPs - just don't seem to accept that its an EU problem, or at least not a big one. According to the BBC "The Commission does not deny that fraud occurs, but it says the scale is minute - around 0.09% of the total budget." But according to a parliamentary answer from early last year the total EU spending not signed off by the Court 1994-2003 was £511 billion. That's no small change.

We know this ritual is boring - but until politicians come under some pressure, this isn't going to be sorted out. Change isn't going to happen if the Commission are allowed to just shift the blame onto the member states.

Bulgarian and Romanian work permits won’t work

John Reid has today set out the Government’s proposals for a work permit system for workers from Bulgaria and Romania once they join the EU. While the announcement will play well with tomorrow's papers, it is missing the point. It is the perfect example of 'junk politics' - design a policy to get good coverage and then move on regardless of the consequences. In this post we explain why:

(1) EU law means the Government can’t stop people coming – so permits will only drive people into the illegal economy

Reid’s proposal would create a situation that is the worst of all worlds. Under EU law the UK is unable to stop people from Bulgaria and Romania from entering the country once they join the EU in January. They no longer need visas and will be given an automatic three month “right of residence” in the UK. They will have EU rights to work in the UK as self employed people, or be posted to the UK by Romanian or Bulgarian companies.

The Government has tried to imply that it can stop people from Bulgaria and Romania coming to the UK. However, the only action that EU law allows the Government to take is to restrict the numbers of Romanians and Bulgarians who can be employed by UK companies for between two to five years.

If such a work permit system is put in place all the evidence from the last round of enlargements in 2004 suggests that migrants will still come to the UK, but instead of complying with the complicated and bureaucratic permit system will choose to work in the informal or grey economy.

In a comparison of different systems put in place before the 2004 enlargement two academics looked at how the Finnish government put in place what it thought was a robust work permit system to limit the numbers of migrants. The new system succeeded in reducing the numbers of Eastern Europeans applying for permits, and applications dropped by a third. But the number of posted workers simply increased hugely. 18 months after EU enlargement the Finnish Government estimated that 10,000 workers had been posted to the country; more than double the number who applied for permits. Finland has now relaxed its work permit scheme.

Similarly, in Denmark it is estimated that three times as many posted workers (6,000) entered their country compared to those who applied for permits. Sweden, which had a completely open border policy and uniquely allowed full right of access to welfare benefits, actually had less immigration than Norway, which had stricter controls. Evidence also suggests that Germany, which had the most restrictive system, received more immigrants than any other country. According to official government estimates Germany received over 500,000 between May 2004 and September 2005, whereas the UK received just under 300,000 in the comparable period.

A work permit system will create another tier of effective ‘illegal’ immigrants operating outside the boundaries of normal UK society: not paying taxes, earning sub-minimum wage salaries - but still being entitled to use UK public services like the NHS.

(2) The Government should address the real problems - criminals from other member states should be made to leave the country

On the other hand, while EU law allows the Government to restrict numbers coming to work for companies in the UK it currently forbids it from stopping dangerous criminals from entering the country, or deporting them if they commit a crime in the UK.

Back in May Tony Blair told Parliament that “it is now time that anybody who is convicted of an imprisonable offence and who is a foreign national is deported.” He also said that foreign criminals should be deported "automatically".

However, just days before, the Government had passed EU legislation through Parliament, which states that “Expulsion orders may not be issued by the host Member State as a penalty or legal consequence of a custodial penalty” to EU citizens. That is why John Reid announced last week that the Government is no longer trying to deport criminals from other EU member states.

He told Parliament last week: “The immigration and nationality directorate has been taking a robust approach to the deportation of European Economic Area nationals, which has been defeated consistently in the courts. We will be changing the law to strengthen the link between criminality and deportation, but in the meantime we are no longer taking unproductive cases to the courts at the taxpayers’ expense, with negative results.” (Hansard)

The Government’s proposals will therefore create an absurd situation where Bulgarians and Romanians who want to work legally and contribute to the UK will be kept out - or more likely will turn to illegal employment - while dangerous criminals and those with no intention of working will be allowed in.

(3) Even Government ministers admit the permit scheme won’t work

This morning’s Times reported that Margaret Beckett believes that “the controls will be impossible to police because self-employed workers have an unrestricted right to come.”

As both the Telegraph and the Guardian have reported, there is considerable unease about the Government’s proposals from within the cabinet, with one unnamed minister quoted in the Telegraph dismissing the new curbs as simply “cosmetic posturing”.

For some suggestions on the how the system could be improved check out a pamphlet we wrote a couple of months ago.

The deadline recedes

Interesting... the EU's delegation in Kenya have already started saying that the end-2007 deadline for the EU's new agreements with developing countries (EPAs) might have to be ditched...

The Standard (Nairobi)

Sunday, October 22, 2006

Out of the EU and into... Norway.

More live blogging - this time from Oslo.

An extensive socio-cultural research programme (a weekend visit to you and me) reveals that almost everything everyone says about Norway is true.

For starters, it really is squeaky clean. Even the dirt is clean. Arriving in Oslo airport is a bit like arriving in the future: everything is shiny and there are even porters on futuristic tiny motor scooters.

And it really is eye-wateringly expensive. Off the plane and about two thirds of the people were straight into the duty free to stock up on the only cheap drinks in town.

Lastly but not leastly, it really does feel (from three days experience) like an amazingly smoothly running, and frankly quite cosy, kind of culture. Everything runs on time. People are stunningly helpful. For instance, on Sunday there was an amazing national collection day for Medicines Sans Frontiers. There were hundreds of people everywhere collecting - and plenty of people coughing up too.

On a trip with two former members of the no euro campaign team (Harriet + Helen) it was probably inevitable that there would be some political geekery. It turned out that another former no-euro person was in town. It transpired that Peter Gusavvsson (Swedish) was going to be talking to a conference of Norwegian young Labour types about... (I hear you groan) ...Sweden's experience since joining the EU.

We ended up meeting up with the Labour people too. Talking politics (honestly - only for a little bit...) they were mostly concerned about the Progress party having overtaken Labour in the polls. Progress is a right wing party founded to campaign against higher taxes, which wants to make a pretty dramatic break with the Nordic model, and shrink the state. They also get votes off the back of concern about migration, which is bubbling away as an isue in most of the Nordic countries.

But quite a few of the young Labour people are also interested in (and very critical of) the EU too. A lot - probably a majority - of the older members of the political class would like to join. But since the most recent referendum 'no' to joining in 1994, there isn't much chance of them getting their way unless something pretty unexpected happens.

Several of the people we met were dead against joining. Talking to them it struck us that, as well as the big strategic sticking points, (like fishing and fears about a common EU energy policy) one of the really big EU turn-offs for them seems to be really about political culture more than anything else.

Compared to the confrontational, in-your-face world of British politics, the Norwegian scene seems very soft - in fact almost naïve. Oslo is officialy a "city of peace". The Nobel Insititute and international conflict resolution are a big deal here. Norway's aid budget is big, and generally seen in the 'industry' as among the worlds most effectively spent. Its generally very outward looking.

National politics is still (despite a lot of recent soul-searching) a far more transparent process here than in most of the west. In fact, this seems to be a Nordic thing - we've always admired the Swedes' and Finns' attitude to EU discussions: many is the time they will fax you an EU doc that the UK government is still telling Westminster MPs doesn't exist yet...

But, although they went into it with their eyes open, quite a few Swedish and Finnish politicians were genuinely surprised to find that daily life is in Brussels is less about peace and international friendship than they might have hoped - and rather more about a relentless struggle for money, power and prestige, all carried out still almost entirely behind closed doors.

Their experience of the EU really isn't making Norwegians any keener to join. It strikes me that - in the style of Gordon Brown's 'five tests' - one of the key 'tests' for reform of the EU should be whether it can be transformed into the kind of flexible, democratic organisation that Norwegian and Swiss voters would find atractive enough to join.

Can it really be done? A lot of people think such a transformation is just pie in the sky. But there is no question that the EU is heading for a real crunch in the none too distant future: the relaunch of the EU Constitution in March 2007, a row over the CAP review in 2008, and a new more sceptical PM in the UK. Perhaps the coming crisis (unlike so many before) might actually be seized as an oportunity for reform.

The Commission are always keen to paint Norway's refusal to join the EU as the product of an eccentric or insular - or even selfish - mentality on the part of Norway's voters. We fear that it says more about the EU as it is today than it does about Norway.

Friday, October 20, 2006

And the winner is...

Amid great excitement, the EU has announced the winner of its 50th birthday logo competition. The prize went to Szymon Skrzypczak from Poland who gushed: “I almost not believe that I was able to convince the jury with my creation and can hardly imagine that it will appear all over Europe”.

The logo will be used for the EU's lavish 50th birthday celebrations, which will entail 50 back-to-back days of parties in Brussels and will cost European taxpayers millions. The EU Commission has said that it wants "to show that the EU can dance".

In the days since the release of this new logo the Open Europe blog team have stumbled across a few alternatives. We'll leave it up to our readers to decide which one is most appropriate.

The first is from the highly effective guerilla campaigners at the Democracy Movement:

Or there's this great one from the Spine

Thursday, October 19, 2006

EBA, ACP, EPA - or just SNAFU?

Ok - here goes with a first attempt at live blogging... At a European Parliament meeting on the EU's attempt to negotiate Economic Partnership Agrements (EPAs) to replace its current trade agreements with the African, Caribbean and Pacific (ACP) countries.

Peter Mandelson was speaking a little earlier defending EPAs and reassuring us all that everything is fine. But the big crowd of people here from the ACP countries (and the equally big crowd of NGO types) don't seem so convinced. At least not yet.

Until now the EU's trade policies have been - in the awful jargon - 'non-reciprocal' - in other words the EU has offered them access (though often rather limited access) to EU markets without asking them to open their markets to goods from the EU.

That's all going to change in just over a years time. At the end of 2007 the WTO 'waiver' which makes this deal compatible with global trade rules is going to lapse.

There have been all kinds of replacements suggested. But the option the EU is pursuing is to turn the ACP arragement into a series of reciprocal free trade deals (branded EPAs)- which would be fine under WTO law.

Mandelson told us that this isn't a free trade deal. That caused an audible moan, if not a boo - what the ACP countries are worried about is that they will have to open up 80 percent of their trade to the EU (i.e. abolish 80 percent of their tariffs) over the next twelve years. They fear the EU is going to, as General Dannatt put it in another context, "kick the door down" and flood them with (often subsidised) EU products.

Now, there is a long running debate about how to encourage developing countries to open up their trade. Do you (a) set a good example and reduce your own barriers, while giving poor countries 'policy space' to cut their trade barriers at their own speed, or (b) put pressure on them to open up by making access to your market conditional on opening up theirs? The EU says plan 'A' hasn't worked and that it is time for plan 'B'.

Apart from that big question, the EU plan has raised a series of other hard problems. The EU has got the ACP to form themselves into six regional blocs, and wants them to form (basically) customs unions amongst themselves first: essentially half a dozen mini-versions of the EU. That's hard enough in itself.

Many of the countries are in several free trade areas. So countries like Tanzania have to choose between their different partners, and have to ditch one group of friends.

There are good arguments on both sides. But if one thing is clear here, it is that the negotiations are *not* going well.

Apart from a million other concerns expressed by the ACP countries, its clear that the EU's attempt to introduce a set of controversial issues about competition and public services into the talks (the Singapore issues), which the EU was forced to back off from at the WTO, really hasn't helped matters. The real deadline is summer '07. But some of the regional groups have effectively stopped negotiating.

Glenys Kinnock just told us that the Commission 'cannot just continue to offer us complacent assurances'. The ACP council say they are 'apprehensive' and 'concerned'. Now the ambassador from Cameroon is telling us that poor countries are being asked to make a "leap into the unknown'. It feels like a nasty train wreck is about to happen...

Wednesday, October 18, 2006

"Fire up the FCO word-processor"

Europe Minister Geoff Hoon has a ludicrous letter in this morning’s FT about our poll. It prompts the thought - who the hell writes these things?

The FCO press office is still churning out stuff which could have been written in the 1980s. In his letter Hoon says he was “disappointed to read about the concerns of some business people in relation to the pace of reform in the EU.”

Now, there’s something about the tone there that is vaguely reminiscent of Brecht’s line about the Government dissolving the people and electing a new one. Hoon certainly won’t be as “disappointed” as the majority of businesses are with the Government’s total failure to do anything about the spiralling cost of EU legislation.

But worse is Hoon's claim that “current research” suggests that 3 million British jobs depend on EU membership. Errrrr – no actually. Quite apart from the small point that we are not calling for Britain to leave the EU, the Foreign Office have definitely been touting the “3 million jobs claim” about since at least the year 2000.

In fact, if we remember right, Simon Buckby of Britain in Europe (remember them?) originally ran a bonkers ad campaign featuring a giant axe and the claim that “8 million jobs” were dependant on the EU. Then the ads got pulled after the man whose research it was supposedly based on (Martin Weale at NIESR) branded Buckby “worse than Goebbels” and said he had completely distorted his work. The Advertising Standards Authority said it was "misleading".

But now Hoon has decided to dust it off the old FCO word processor for some reason. Instead of actually engaging in the debate they still think they can just pump out a bunch of scaremongering stats. Welcome to the Foreign Office… the local time here is about 1986.

Jose in London

So in his speech yesterday at Chatham House, Jose Barroso mentioned his desire for an "open europe" three times and used the word "open" sixteen times. We feel strangely singled out.

Interesting in that he also admitted in the Q&A that the European Parliament was often an obstacle to reform. He claimed, "we have proposed at least 70 regulations to be scrapped but the European Parliament... said ‘you can not do that’." The Parliament certainly played a key role in gutting the services directive. It is now in the process of making the ludicrous REACH directive even worse.

A couple of years ago "more power for the European Parliament" was the pro-euro lobby's answer to all the woes of the EU. But being in Government seems to change peoples minds. We were at an off the record briefing a couple of years ago, where someone who is now a key Blair advisor on Europe was asked about it. "I wish we could shut the bloody thing down" he said. How times change.

Tuesday, October 17, 2006

Mandelson attacks Open Europe

Hmmmm. We seem to have hit a nerve with our poll of 1,000 businesses published in the FT yesterday. Interviewed on the BBC’s PM programme in response, Peter Mandelson got seriously tetchy about Open Europe. He claimed “This was a poll designed by and conducted on behalf of the no to Europe campaign, very hardened anti-Europeans... designed by the no campaign even though it was technically carried out by ICM.” No Peter - dont hold back, tell us what you really think.

Apart from the usual rantings about how anyone who criticises the EU in any way is obviously a fanatical Europhobe, Mandelson went on to say that an independent poll by YouGov proved that business still thought the EU was doing just great.

What he didn't mention (and the BBC didn't point out) was that the 'independent' poll he cited was carried out for the pro-euro “Business for New Europe” (BNE) group, (chaired by Mandelson's best mate Roland Rudd).

Mandelson said their poll "showed 68% believed the single market has been good for British business... so I think if you go to those business leaders... you get a very different view to the impressions - and I quote impressions - found by this poll for the no to Europe campaign.”

But hang on a minute. BNE polled just 50 business people. So when Mandelson talks about what “68% of business” thinks what he really means is just 34 people. In other words, his claim that “business leaders” overwhelmingly think the EU is doing a great job is based on a lead of just nine people. Obviously this piece of statistical nonsense went totally unchallenged on the BBC…

Challenged later in the interview to name a single regulation the EU had repealed as part of its much-hyped “deregulation drive”, Mandelson was unable to give a single example. So much for 1997-style instant rebuttal.