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Why the EU insists on a level playing field

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We keep waiting for white smoke from the Brexit negotiation rooms. But the signals from the EU-UK talks are now that the parties have reached an understanding that regulatory divergence — where one party adopts laxer rules than the other on the environment, social and labour issues, or state subsidies — will be managed by the option to retaliate with tariffs to avoid being undercut by a race to the bottom. The technical talks are focused on whether this can be turned into concrete enough procedures that both sides are willing to sign up to — how to “future-proof fair competition”, in the words of European Commission president Ursula von der Leyen.

This is good news: we are now in “split the difference” territory rather than irreconcilable disagreements on principles. That is where negotiations can succeed. It is also why fish, despite the direct conflict of the two sides’ interests, will not be what prevents a deal from being agreed.

Of course, things can still go wrong. Even high-placed EU diplomats now seem only vaguely acquainted with what precisely is going on at the negotiating table. We will just have to see; but I stick to my view that a deal will happen, and it will largely happen because Prime Minister Boris Johnson will make the required concessions while declaring at home that he made the EU back down.

If the most important action has been on the EU’s level playing field demands, what is the reason for this? Reactions to the EU’s focus on protecting against British deregulation have ranged from jingoistic (“they don’t get that we want sovereignty”) to playing the victim (“punishment tariffs”) or patronising Europe (“they are too defensive about their single market”). We should do better. It is crucial to understand the rationale for insisting on level playing field rules in trade deals because it is going to become an increasingly common component of trade liberalisation worldwide.

The reason, as Spain’s foreign minister Arancha González has pointed out, is that trade deals are not vehicles for independence, but frameworks to manage interdependence. And this interdependence is intensifying in two ways. One is that as trade evolves towards services and more sophisticated goods, the product you trade can no longer be separated from how it is produced: financial services and personal data are just two examples of how the quality of the product you receive (the risk to your finances or your privacy, say) depends fundamentally on how the service is regulated in another country.

The other is that we increasingly understand the difference between globalisation and deregulation. To be an economic liberal internationalist is to promote cross-border economic exchange where everyone pursues the activity they can do best. It is not to accept that production is moved purely in order to circumvent the rules that express democratic preferences over how workers should be treated, whether producers may pollute, or how states subsidise companies to tilt the playing field in their favour.

In one sense, it is “very simple” as von der Leyen put it to the European parliament on Wednesday: it is about making trade liberalisation compatible with “fair competition on our own market”. The same can be said for other forms of globalisation: flows of capital or people should be encouraged, but not serve as means to circumvent rules for how we govern our economies.

In practice, of course, there are a lot of fine lines to draw. But this new, richer view of globalisation is not going to go away — indeed it is the reason why globalisation will continue, but take on a more overtly political form.

The EU’s insistence on an ability to withdraw trade privileges from trading partners going by sufficiently different rules is not something unique to the talks with the UK. Something like this has already existed in the EEA agreement for a good quarter of a century.

It could be said that the EEA is special: it is expressly designed as a framework for deep and evolving economic integration between trading partners whose intention is to play by a single set of rules. The economic logic of this is that of free trade: different rules create frictions for cross-border exchange. However, few if any other trading partners in the world are as committed to rule-sharing as the EU and its Efta partners. 

But more recently, the EU has become more willing to use its heft to condition trade with other partners, too, on their willingness to adopt rules to its satisfaction. The (still unratified) free trade agreement with Mercosur is the clearest case: it requires the parties to comply with certain climate change commitments. Earlier trade deals are less richly equipped but not bereft of requirements on social and environmental conditions. The EU is, for example, pressuring South Korea to strengthen workers’ rights under a commitment given in the two economies’ free trade agreement. The EU has also withdrawn trade privileges to Cambodia under its “everything but arms” framework, because of human right violations in the country.

And the EU is not alone. When the Trump administration renegotiated the North American Free Trade Agreement, it insisted on demanding wage floors in Mexican car manufacturing as a condition for tariff reductions. As for China, no one should doubt its willingness to condition trade on others playing by its rules; Australia is only the latest example.

Compared to these examples, the EU’s rule-making is benign. It is not against free trade to insist on similar regulation: it is simply pointing out that businesses should not compete on their ability to circumvent the rules to govern how a population democratically has decided to live. One might even say that understanding how globalisation and common rule-making go together is a precondition for popular sovereignty.

Other readables

  • The EU is preparing aggressive new rules on Big Tech. The proposals unveiled this week have already ignited fierce debate.

  • Current and former colleagues of mine have produced insightful analyses of China in the past week. James Crabtree analyses President Xi Jinping’s new economic policy framework, calling it “a radical new understanding of globalization and of China’s place within it”. In the FT, James Kynge and Jonathan Wheatley observe a significant pullback of infrastructure investments in China’s Belt and Road megaproject. And global investors are rushing in to buy Chinese stocks and bonds.

  • Last week’s EU summit may go down in history as more momentous than many have noticed.

Numbers news

  • The EU’s resolution fund is clearing its last legislative hurdles, and it is already having its intended effects. In Spain, companies are drawing up ambitious proposals for investment in digital and green infrastructure.





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Missing Belarus activist found hanged in Kyiv park

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Belarus updates

A Belarusian opposition activist has been found hanged from a tree in a park near his home in Ukraine, a day after he was reported missing. Local police said his death could have been made to look like suicide.

Vitaly Shishov, who led the Kyiv-based organisation Belarusian House, which helps Belarusians fleeing persecution find their feet in Ukraine, had been reported missing by his partner on Monday after not returning from a run.

Shishov’s death follows weeks of increased pressure in Belarus by authorities against civil society activists and independent media as part of what the country’s authoritarian president Alexander Lukashenko has called a “mopping-up operation” of “bandits and foreign agents”.

Many Belarusians have fled the country since Lukashenko launched a brutal crackdown last summer after nationwide protests erupted following his disputed victory in presidential elections. About 35,000 people have been arrested in Belarus and more than 150,000 are thought to have crossed into neighbouring Ukraine.

Franak Viacorka, an aide to Belarusian opposition leader Sviatlana Tsikhanouskaya who met UK prime minister Boris Johnson on Tuesday in London, said Shishov’s death was “absolutely shocking and unexpected to all of us”.

“He [Shishov] and his friends helped people who were moving to Ukraine,” Viacorka told the Financial Times. “They were very helpful, especially for those who have just arrived and didn’t know what to do.”

Viacorka said many activists living in Ukraine, such as Shishov who fled Belarus in 2020, had “complained about possibly being followed, and receiving threats”.

Kyiv park where Vitaly Shyshov’s body was found
The Kyiv park where Vitaly Shishov’s body was found after he failed to return home following a run © Gleb Garanich/Reuters

Downing Street said that after meeting Tsikhanouskaya, Johnson condemned the Lukashenko regime’s severe human rights violations. “The UK stands in solidarity of the people of Belarus and will continue to take action to support them,” a spokesperson said.

Ukrainian police have now launched a criminal case for the suspected murder of Shishov, including the possibility of “murder disguised as suicide”.

Yuriy Shchutsko, an acquaintance and fellow Belarus refugee who found Shishov’s body, ruled out suicide, pointing out that Shishov’s nose was broken.

“I suspect this was the action of the [Belarus] KGB . . . we knew they were hunting for us,” he told Ukrainian television.

Ihor Klymenko, head of the National Police of Ukraine, subsequently said Shishov’s body had what appeared to be “torn tissue” on his nose and other wounds, but stressed it would be up to medical examiners to determine if these were caused by beatings or the result of suicide.

There was no immediate comment from Lukashenko or his administration.

Belarusian House said: “There is no doubt that this is an operation planned by the Chekists [the Belarusian KGB] to eliminate someone truly dangerous for the regime.

“Vitalik was under surveillance,” it added. “We were repeatedly warned by both local sources and our people in the Republic of Belarus about all kinds of provocations up to kidnapping and liquidation.”

Adding to the swirl of attention on Belarus this week, Tokyo Olympics sprinter Krystsina Tsimanouskaya on Monday took refuge in Poland’s embassy after alleging she had been taken to the airport against her will, having criticised her Belarusian coaches.

The athlete has said she feared punishment if she went back to Belarus but has so far declined to link her problems to the country’s divisions.

Shishov’s death comes five years after Pavel Sheremet, a prominent Belarus-born opposition figure and journalist, was killed in an improvised bomb explosion in downtown Kyiv while driving to work at a local radio station. Lukashenko has ruled Belarus since 1994.

Ukrainian authorities at first suggested Belarusian or Russian security services could have been involved in the hit, as Sheremet was close to opposition movements in Russia as well.

Instead, officials charged three Ukrainian volunteers who supported war efforts against Russia-backed separatists in eastern Ukraine — although they steadfastly denied involvement and authorities were unable to provide a motive in what has been widely described as a flimsy case.

Additional reporting by Jasmine Cameron-Chileshe in London



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EU pledges aid to Lithuania to combat illegal migration from Belarus

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EU immigration updates

In the latest sign of deteriorating relations between the EU and Belarus, Brussels has promised extra financial aid and increased diplomatic heft to help Lithuania tackle a migrant crisis that it blames on neighbouring Belarus and its dictator Alexander Lukashenko.

Lithuania detained 287 illegal migrants on Sunday, more than it did in the entirety of 2018, 2019, and 2020 combined, the vast majority of them Iraqis who had flown to Belarus’s capital Minsk before heading north to cross into the EU state. Almost 4,000 migrants have been detained this year, compared with 81 for the whole of 2020. 

“What we are facing is an aggressive act from the Lukashenko regime designed to provoke,” Ylva Johansson, the EU commissioner for home affairs told reporters on Monday after talks with Lithuania’s prime minister Ingrida Simonyte. “The situation is getting worse and deteriorating . . . There is no free access to EU territory.”

The EU imposed sweeping sanctions against Lukashenko’s regime in June, after he fraudulently claimed victory in last year’s presidential election and then led a brutal campaign to violently suppress protesters and jail political opponents. Lukashenko has ruled Belarus since 1994.

The rising concern over the migrant crossings, which EU officials say is a campaign co-ordinated by Lukashenko’s administration, comes as one of the country’s athletes competing in the Tokyo Olympic Games sought refuge in Poland after team management attempted to fly her home against her will after she publicly criticised their actions.

Johansson said the EU would provide €10m-€12m of immediate emergency funding and would send a team of officials to the country to assess the requirements for longer-term financial assistance, including for extra border security and facilities to process those attempting to enter.

Simonyte said that Vilnuis would require “tens of millions of euros” by the end of the year if the number of people attempting to cross the border continued at the current pace.

Lithuania’s foreign minister Gabrielius Landsbergis told the Financial Times in June that Belarus was “weaponising” illegal immigration to put pressure on the Baltic country over its housing of several opposition leaders. Since then, the flow of illegal immigrants from Iraq, Syria, and several African countries has increased sharply.

Iraqi diplomats visited Vilnius at the end of last week after Lithuania’s foreign minister flew to Baghdad in mid-July. Johannson said on Monday that EU diplomats were engaged in “intensive contacts” with Iraqi officials, which she said were “more constructive than we had hoped”.

State carrier Iraqi Airways offers flights from four Iraqi airports to Minsk, according to its website. Former Estonian president Toomas Ilves suggested on Twitter that the EU could cut its aid to Iraq “immediately until they stop these flights”.

Speaking at the border with Belarus on Monday, Johansson added that the tents provided by Lithuania were unsuitable for families. Lithuania’s interior minister Agne Bilotaite said she hoped the number of illegal migrants would subside in the coming months but that Vilnius was planning to build some housing to accommodate them over the upcoming winter.



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Britain’s wrong-headed approach to refugees

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UK immigration updates

Thanks to the bravery of volunteers who run towards storms at sea to rescue ships’ crews, few British institutions command as much respect as the Royal National Lifeboat Institution. The charity, however, has recently had to negotiate a different kind of storm, over its efforts to help refugees who get into difficulties crossing the Channel from France. Nigel Farage, the former Brexit party leader, accused it of running a taxi service for illegal trafficking gangs. Last week, the RNLI said it had received hundreds of thousands of pounds of extra donations in response.

The RNLI has become embroiled in a now familiar story when the summer months allow more small boats to make the Channel crossing. Compared with the flows to other countries such as Spain, Italy and Greece, only a handful of migrants attempt the journey. That makes the UK’s inability to control the border in an effective and humane way — and shabby treatment of those who do make it across — no less of a scandal.

Britain’s strategy for stemming the flow has relied mostly on paying the French authorities to limit the number of boats crossing and return any that leave to France, while deterring would-be migrants through the unwelcoming environment that awaits them. Just as EU countries are dependent on their neighbours for keeping entrants down — whether Morocco for Spain or Belarus for Lithuania — the UK needs French co-operation to control the mutual border. Diplomatic spats, whether over Brexit or extra Covid quarantine restrictions on arrivals from France, have made that harder.

The UK approach manages to be simultaneously ineffective and cruel. Yvette Cooper, chair of the home affairs select committee, wrote last week to home secretary Priti Patel to complain of unacceptable conditions in the holding facility for migrants who make it to the Kent coast. A recent unannounced visit by MPs found most of those remaining in the overcrowded facility sitting on a thin mattress on the floor, with women and children in the same room as adult men.

Earlier this year, the High Court ruled that “squalid” conditions in the Napier Barracks, a temporary centre set up last year to house asylum seekers during the pandemic, were so bad as to be unlawful. While arrivals have declined since the peak seven years ago, cutbacks have led to a backlog in processing claims, leaving more in a legal limbo.

Since the start of the pandemic Britain has shut down other paths into the country, ending a resettlement scheme. This has ceded the ground to people traffickers. The “push factors” of the risk of violence and torture at home and “pull factors” of higher living standards mean many are still willing to resort to risky and illegal methods to try to reach the UK. Creating a harsh environment for those who make it has done little to dispel the widespread belief among migrants that Britain is a better destination than other European countries, and stem the flow.

That will not stop the government trying. Barristers have warned that a clause in draft border legislation could potentially make it a crime to help asylum seekers arrive in the UK, with a maximum penalty of life imprisonment; at present it is illegal to do so to earn a profit. The Home Office says the clause is aimed at criminal traffickers. But along with a suggestion to set up offshore processing centres, the provision has rightly earned criticism from human rights groups. If the government is unwilling to create safe and legal routes, its only option is to prevent people from coming in the first place. That, ultimately, will mean relying on France.



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