The threat of low fertility rates in South Korea

Article by Alexandra Reinhild Berndt

In South Korea, low birth rates pose an important threat to society. The current fertility rate is estimated at 0.84 children per women (Lee, 2020). This means that the population is increasingly shrinking. At the moment, many Koreans decide to delay or avoid marriage (Kown & Yeung, 2019). The causes for this are multi-faceted and range from discrimination at the job market to the burden of care work. The government tried to counteract this development by providing financial incentives to young couples. Whether this approach is sufficient remains to be seen.

Causes of low fertility rates

The job market poses an important problem. Many women feel that they have to choose between a career and children. They have the impression that children are a significant impediment to a career (Gladstone, 2021). Women are expected to care for children, so that a return to the previous full-time job is very unlikely (Stangarone, 2019). Women may also face “questions about their marriage status and plans for having children when applying for a job” even though these questions are technically illegal (but the fines in case of law breaking are relatively low, so that firms are still willing to ask these questions) (Stangarone, 2019). Furthermore, the gender pay gap is with 35 percent the highest pay gap among OECD countries which have an average gap of 13,8 percent (Stangarone, 2019). Additionally, the work culture is very challenging with an average of 1967 hours of work per year (37,8 hours per week) (OECD, 2019).

The burden of care work

There are also social factors contributing to the decrease in the fertility rate. Koreans point to unsatisfactory childcare services as reason for not having a baby (Lee, 2020). Women carry most of the burden of care work (Peters, 2020). They work four times more in the household as men (Peters, 2020). It is thus not surprising that women prefer to work and earn money (instead of doing unpaid care work at home).  

Living and housing conditions

Suboptimal living conditions are also playing a role. Housing and rental prices are continuously rising and it is hard to find and adequate housing arrangement (Lee, 2020).  It is thus difficult for a young family to find an affordable and appropriate home.

Implications of decreasing birth rates

A shrinking and ageing population poses certain risks. It is important for a society, that there is a balance between the number of old people and children born. A decline in birth rates and an increase in life expectancy means a burden for the labor force. However, if the birth rate is too low to “stabilize its population”, migration might be an option to reduce the burden for the labor force.

Reaction of the South Korean government

Moon Jae-in, the South Korean President, tries to incentivize couples to get children. At birth, a couple is rewarded with 2 million won ($1,826) and there will be an extra amount of cash bonus every month (Gladstone, 2021). Furthermore, a young family may also expect “increased medical and other benefits” (Gladstone, 2021). In terms of the working conditions, the maximal number of working hours has been reduced from 68 hours to 52 hours per week in 2018 (Peters, 2020).

Conclusion

The causes of low fertility rates in South Korea are multi-faceted. The working conditions for women, however, seem to play a very important role. Especially for working mothers, it would be important that burdens for childcare are eliminated and that the working conditions are more flexible (Stangarone, 2019).

photo by Rod Long published on Unsplash

References

Gladstone, R. (2021, January 04). As Birthrate Falls, South Korea’s Population Declines, Posing Threat to Economy. Retrieved March 5, 2021, from https://www.nytimes.com/2021/01/04/world/asia/south-korea-population.html

Kim, S. (2021, February 10). South Korea’s jobless rate hits 21-year high as COVID cases rise. Retrieved March 5, 2021, from https://www.aljazeera.com/economy/2021/2/10/bb-southkoreasjobless-rate-hits-21-year-high-as-covid-cases-rise

Kwon, J., & Yeung, J. (2019, August 29). South Korea’s fertility rate falls to record low. Retrieved March 5, 2021, from https://edition.cnn.com/2019/08/29/asia/south-korea-fertility-intl-hnk-trnd/index.html

Lee, D. D. (2020, December 27). Can South Korea lift the world’s lowest birth rate with cash incentives? Retrieved March 5, 2021, from https://www.scmp.com/week-asia/health-environment/article/3115396/can-south-korea-lift-worlds-lowest-birth-rate-offering

Peters, K. G. (2020, March 07). Südkorea: Warum viele Koreanerinnen keine Kinder möchten. Retrieved March 5, 2021, from https://www.spiegel.de/politik/ausland/suedkorea-und-die-niedrige-geburtenrate-warum-viele-koreanerinnen-keine-kinder-moechten-a-40617d97-7761-43f0-ac63-4d63f3433a17

Quick, M., & D’Efilippo, V. (2019, October 14). South Korea’s population paradox. Retrieved March 5, 2021, from https://www.bbc.com/worklife/article/20191010-south-koreas-population-paradox

Stangarone, T. (2019, June 14). Gender Inequality Makes South Korea Poorer. Retrieved March 5, 2021, from https://thediplomat.com/2019/06/gender-inequality-makes-south-korea-poorer/

OECD (2021), Hours worked (indicator). doi: 10.1787/47be1c78-en (Accessed on 05 March 2021)

How far CETA can – and cannot – go

Article by Lea Schiller

The EU is Canada’s second largest trading partner, trailing only the United States, making up for 10% of Canada’s external trade in goods. On the EU’s side is a big export surplus – the EU’s exports to Canada in 2017 were worth 14.4 billion Euros more than its imports (European Commission, 2020). It’s no wonder that both partners sought to make the most of this relationship. The Comprehensive Economic and Trade Agreement (CETA) does just this – by abolishing 98% of all tariffs between Canada and the EU, it gives valuable opportunities to both partner’s businesses, consumers and economies. Or so CETA’s advocates claim.

What is CETA?

CETA is a bilateral trade agreement between Canada and the EU. Its negotiations were initially launched in 2009, but it would take until 2017 for it to provisionally enter into force. Provisionally – because in the eyes of the EU, CETA is a mixed agreement, meaning that it includes issues that are under the competences of member states. In practice, this means that all member states have to ratify the treaty themselves before it can fully go into force. Currently, 12 EU member states still need to ratify CETA, including the Netherlands (European Council, 2020). The benefits of this treaty are obvious. It opens the door to the Canadian market for European businesses by reducing trade barriers; the elimination of tariffs will save EU companies millions of Euros every year (Carleton University Center for European Studies). But that’s not the whole story.

How far can CETA go?

Because CETA is currently only provisionally applied, not all parts of the agreement are in force yet – namely, provisions for investments and regulations for the transparency of administrative proceedings. Other parts of the treaty, such as the elimination of tariffs, will come into place gradually. However, based on both the contents of the treaty and its reception in both Canada and the EU, it’s possible to make a first assessment. Firstly, CETA doesn’t eliminate all tariffs. Exceptions apply for “the most sensitive agricultural products” (European Commission, 2017); among these are for example beef, pork and cheese. CETA’s limits are also already being tested in Canada as a response to the EU’s announcement that it would put export controls on COVID-19 vaccines. Under CETA, export controls are illegal – but there are exceptions to this rule, and these exceptions include essential supplies (CBC News, 2021). CETA is therefore, though a free trade agreement, not particularly constraining when it comes to delicate areas of trade.

Why is there so much opposition to CETA?

In Europe, there is concern that opening up the market to Canada will have negative consequences for environment and food safety standards. Public pressure prompted Emmanuel Macron to commission a group of experts to assess the impact of CETA on the environment and health if it were to be fully enforced. The report found that “it is not possible to entirely exclude the risk of undermining the EU regulatory framework concerning food, animal health and welfare … but it is also currently impossible to provide an objective assessment of this risk” (Foodwatch, 2017). In other words, CETA does not incorporate enough safety provisions to rule out the risk of compromising the EU’s high food and environmental safety standards – but there are also no explicit risks that can be derived solely from the text of the agreement.

Is it worth it? One thing is for sure – the pandemic will have significant negative effects on both the EU’s and Canada’s economy. Fostering trade with a country that the EU has an export surplus to will give a much needed boost to its exports. CETA also doesn’t mean a loss of control for the EU – after all, its most vital interests are protected by the exceptions that are granted in the treaty. Granted, there are legitimate concerns about the effects of CETA on the environment and consumer health. But considering that there were no explicit problems listed in the expert report on CETA’s impact on the environment and health – it’s a calculated risk that is worth taking for the EU.

waving Canada flag
Photo by Sebastiaan Stam published on Unsplashed

References

Carleton University Center for European Studies.Reception of CETA. Retrieved from: https://carleton.ca/ces/eulearning/reception-of-ceta/

CBC News (2021, February 1). No written guarantee on EU vaccine shipments, says international trade minister. Retrieved from: https://www.cbc.ca/news/politics/vaccine-eu-export-controls-assurances-1.5896223

European Commission (2020, April 23). Countries and regions: Canada. Retrieved from: https://ec.europa.eu/trade/policy/countries-and-regions/countries/canada/

European Commission (2017, July). Guide to the Comprehensive Economic and Trade Agreement. Retrieved from: https://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156062.pdf

European Council (2020, December 2). Comprehensive Economic and Trade Agreement (CETA). Retrieved from: https://www.consilium.europa.eu/en/documents-publications/treaties-agreements/agreement/?id=2016017

Foodwatch (2017, November 1). The impact of CETA on the environment, climate and health. Retrieved from: https://www.foodwatch.org/en/campaigns/free-trade-agreements/the-impact-of-ceta-on-the-environment-climate-and-health/

Reactions to racial discrimination against the African community in Guangzhou

Article by Alexandra Reinhild Berndt

The African community in Guangzhou (China) suffered from increasing incidents of racial discrimination in April 2020. Many Africans were banned from certain locations as restaurants or hotels or even forced to leave their apartments (Tang, 2020; Burke, Akinwotu, & Kuo, 2020; Mules, 2020). Pictures of evicted Africans sleeping on streets were shared on social media platforms and started attracting considerable attention (Burke, Akinwotu, & Kuo, 2020). How did this come about and what were its implications?

Some Background information about the African community in Guangzhou

In the course of China’s Silk Road initiative, migration flows from Africa to China increased. The African diaspora in China grows continuously. As Guangzhou is a strategic place for international trade, the city attracted many African traders (Vandenberg, 2019). The African community is accordingly very large. There are officially about 14,000 people from African descent, the actual number might, however, be higher as there are many Africans without documentation (Human Rights Watch, 2020). African traders have been moving to Guangzhou since the 1990s (Vandenburg, 2019). The existence of the African community is, thus, not new to the Chinese population.

Corona fuelled pre-existing racial tensions

According to Human Rights Watch (2020), there have already been incidents of discriminatory practice in the past. Africans suffered, for instance, from unequal payment and employment discrimination (Human Rights Watch, 2020). Racial discrimination was also visible in advertisements and on television (Human Rights Watch, 2020). In 2016, for instance, a washing powder advertisement showed a Chinese woman who “shoves a black man into a washing machine only for him to emerge as a shiny, clean, Asian man” (Castillo, 2016). When the rate of COVID-19 infections increased in Guangzhou, “fear and misinformation” dominated the situation (Mules, 2020). Corona exacerbated pre-existing racial tensions and thus fuelled discriminatory practices (Mules, 2020).

Wide-spread international criticism

The implications of the increase in discriminatory practices in Guangzhou were far-reaching. Hashtags like “#ChinaMustExplain and #DeportRacistChinese” were increasingly shared on twitter (Albert, 2020). Politicians from various African countries started expressing their anger and criticizing the Chinese government (Albert, 2020; Burke, Akinwotu, & Kuo, 2020). Even the United States criticized the Chinese government. Two US diplomats also warned “African-Americans to stay away from the Guangzhou metropolitan area” (Mules, 2020). This reaction, however, is somewhat ironic as the US itself has a problem with structural racism (Sieren, 2020). Reactions also came from NGOs as Human Rights Watch. Human Rights Watch reminded China of having ratified the ICER (the Elimination of All Forms of Racial Discrimination) in 1981 (Human Rights Watch, 2020). The reactions from African governments, however, seemed to have the most important effect.

China’s reaction

Chinese investments in Africa strengthened not only economic, but also social and political ties. The reactions from African governments represented a threat the Sino-African relationship. At first, the Chinese government was “denying any form of discrimination against ‘African brothers’” (Mules, 2020). However, China “moved quickly to deal with the initial accusations of discrimination” by ensuring African countries to “take immediate action to safeguard the legitimate rights of Africans concerned” (Burke, Akinwotu, & Kuo, 2020). Chinese authorities then made efforts to calm the situation my adopting new measures against discriminatory practices in Guangzhou (Mules, 2020). This shows that China is interested in maintaining a stable, well-functioning relationship with African countries. China’s engagement in Africa thus has implications for China’s domestic policy options in terms of the treatment of the African diaspora in China.

Conclusion

In conclusion, the cascade of reactions to the discriminatory practices in Guangzhou not only unveiled pre-existing racial tensions, but also showed that the increasing interconnectedness between China and Africa has implications for China’s domestic policy options with regard to the African diaspora.

black car
Photo by Sean Foley published on Unsplashed

References

Albert, E. (2020, April 27). African Countries respond to Guangzhou’s ‘Anti-Epidemic Measures’  . Retrieved February 5, 2021, from https://thediplomat.com/2020/04/african-countries-respond-to-guangzhous-anti-epidemic-measures/

Burke, J., Akinwotu, E., & Kuo, L. (2020, April 27). China fails to stop racism against Africans over Covid-19. Retrieved February 5, 2021, from https://www.theguardian.com/world/2020/apr/27/china-fails-to-stop-racism-against-africans-over-covid-19

Castillo, R. (2016, August 14). The “racist” Chinese washing powder ad and the truth about Afrophobia in China. Retrieved February 5, 2021, from https://qz.com/africa/757850/the-racist-chinese-washing-powder-ad-and-the-truth-about-afrophobia-in-china/

Human Rights Watch. (2020, October 28). China: Covid-19 Discrimination against Africans. Retrieved February 5, 2021, from https://www.hrw.org/news/2020/05/05/china-covid-19-discrimination-against-africans

Mules, I. (2020, April 14). African expats accuse China of xenophobic response to COVID-19 resurgence fears: DW: 14.04.2020. Retrieved February 5, 2021, from https://www.dw.com/en/african-expats-accuse-china-of-xenophobic-response-to-covid-19-resurgence-fears/a-53120697 

Sieren, F. (2020, April 15). Sierens China: Afrikaner – Freunde und Sündenböcke: DW: 15.04.2020. Retrieved February 5, 2021, from https://www.dw.com/de/sierens-china-afrikaner-freunde-und-sündenböcke/a-53131187

Sieren, F. (2020, April 28). Rassismus in China in Coronazeiten – Schwarze als Risikogruppe eingestuft. Retrieved February 5, 2021, from https://www.deutschlandfunkkultur.de/rassismus-in-china-in-coronazeiten-schwarze-als.1008.de.html?dram:article_id=475591

Tang, D. (2020, April 14). ‘No blacks’: African migrants kicked out of homes and banned from shops in Guangzhou, China. Retrieved February 6, 2021, from https://www.thetimes.co.uk/article/no-blacks-african-migrants-kicked-out-of-homes-and-banned-from-shops-in-guangzhou-china-b9p0z0ggt

Vandenberg, L. (2019, July 31). The evolution of Afro-Chinese dentity. Retrieved February 5, 2021, from https://thediplomat.com/2019/07/the-evolution-of-afro-chinese-identity/

What the EU’s conflict with AstraZeneca means for the fight against COVID-19

Article by Lea Schiller

On Friday the 29th of January, the EMA (European Medicines Agency) approved AstraZeneca’s COVID-19 vaccine for use, making it the third vaccine to be used in the EU’s joint effort to vaccinate the bloc. But for this one, tensions were already brewing before the EMA gave its green light. AstraZeneca cut the expected quantity of vaccines to be delivered by 60%, citing problems in a factory in Belgium – but the European Commission insists on received what it has been promised. In a time where the relationship between the EU and the UK is already being put to the test by Brexit, and a time that has shown us a worse side of the pandemic than ever before, we cannot let this become a test of political strength – after all, thousands of lives depend on a sensible solution.

How AstraZeneca sees the debate

According to AstraZeneca, the conflict originated both in the contract and with the point in time that it was made (Collins & Herszenhorn, 2021). The EU originally signed the contract in August, three months after the UK placed their order with the company. This led to a situation in which AstraZeneca was already in a contract that it was committed to fulfil – namely, the 100 million doses it had promised to deliver to the UK. The contract with the EU therefore, 400 million doses in total with 80 million to be delivered by March, only states the company would make its “best effort” to deliver the vaccines (Collins & Herszenhorn, 2021). It’s the phrase AstraZeneca is now using to argue that they technically are not in breach of their contract.

The EU’s response

AstraZeneca’s announcement to cut vaccine delivery sparked outrage rarely seen from the European Commission. Stella Kyriakides, the EU’s Commissioner for Health, stated that AstraZeneca’s “best effort” argument is “neither correct nor acceptable” (Deutsche Welle, 2021). The contract, which was made public on Friday, mentions production sites in the UK – sites which the EU helped expand last year in a costly effort to increase the amount of vaccines these factories can produce (Herszenhorn & Deutsch, 2021). The EU now demands these factories be used to make up for the shortfall of those inside the Union. And it doesn’t stop there. The EU also signalled that it found AstraZeneca’s reasoning for the delay insufficient, with Kyriakides saying, “the European Union wants to know exactly which doses have been produced by AstraZeneca and where exactly so far and if or to whom they have been delivered” (Deutsch, Eder & Herszenhorn, 2021).

The fallout

AstraZeneca eventually offered the EU 8 million extra shots, which the EU was not satisfied with (Guarascio & Siebold, 2021). Instead, it initiated export controls on vaccines made in the bloc. In practice, every vaccine export will have to be authorized before it can be shipped to any country outside of the EU. These authorisations are not expected to be given should the supply of vaccines within the bloc be threatened by exports (Wishart & Baschuk, 2021).  The rest of the world was not pleased – Boris Johnson as well as the WTO called on the EU to rethink its decision, to prevent vaccine nationalism from spreading all over the globe. But most gravely, the export controls endangered the open border between the EU and Northern Ireland, which was guaranteed in the Brexit deal and a sensitive agreement to begin with. Mere hours later, the EU announced it would not introduce checks at the Irish border – averting a possible crisis.

What does this conflict mean for the fight against the pandemic?

This situation shows how the vaccination effort goes beyond a mere public health operation. For the EU, it also means a test of the trust citizens have in the Union, while for the UK, it is an important chance to prove itself after Brexit. However, with millions of lives on the line, this is not the time to play the blame game and alienate one another – what is most important now is to find solutions to the vaccine shortages. The current conflict between AstraZeneca and the EU could put this goal in jeopardy. Both sides need to engage with the other constructively. Otherwise, we could lose focus on the actual goal: stopping the pandemic. 
 

person in brown long sleeve shirt with white bandage on right hand
photo by Steven Cornfield published on Unsplash

References

Collins, H., & Herszenhorn, D.M. (2021, January 27). AstraZeneca CEO: EU vaccine contract is ‘not a commitment’. Politico. Retrieved from: https://www.politico.eu/article/astrazeneca-ceo-eu-vaccine-contract-is-not-a-commitment/

Coronavirus: EU expresses dismay over AstraZeneca vaccine delays. (2021, January 27). Deutsche Welle. Retrieved from: https://www.dw.com/en/coronavirus-eu-expresses-dismay-over-astrazeneca-vaccine-delays/a-56358916

Deutsch, J., Eder, F., & Herszenhorn, D.M. (2021, January 26). Enraged at AstraZeneca over shortfall, EU calls for vaccine export controls. Politico. Retrieved from: https://www.politico.eu/article/enraged-at-astrazeneca-over-shortfall-eu-calls-for-vaccine-export-controls/

Guarascio, F., & Siebold, S. (2021, January 29). EU holds out for more after AstraZeneca offered 8 million extra COVID-19 shots. Reuters. https://www.reuters.com/article/us-health-coronavirus-eu-astrazeneca/eu-holds-out-for-more-after-astrazeneca-offered-8-million-extra-covid-19-shots-idUSKBN29Y0UL?il=0

Herszenhorn, D.M., & Deutsch, J. (2021, January 29). Redacted contract fails to clear up EU-AstraZeneca vaccine row. Politico. Retrieved from: https://www.politico.eu/article/eu-astrazeneca-coronavirus-vaccine-contract-dispute/

Wishart, I., & Baschuk, B. (2021, January 29). EU Risks Global Vaccine Battle With Bold Export Control Plan. Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/2021-01-29/eu-sets-vaccine-export-controls-risking-global-battle-for-doses

Chinese investment in Ethiopia

Article by Alexandra Reinhild Berndt

In the context of China’s Belt and Road initiative, China invested heavily in Ethiopia. Between 2000 and 2018, Chinese investments even reached $13.7 billion (Marks, 2020). For Ethiopia, Chinese FDI represents an opportunity for economic growth and development. Even though poverty has been reduced in recent years, the rate of poverty remains a significant problem, especially in rural areas (Worldbank, 2020). Chinese funds have created many development opportunities. However, there are also certain risks associated with Chinese FDI.

The Ethiopian hope

China mainly invested in Ethiopian infrastructure. Railways, highways and metro-systems are financed by Chinese funds. The Ababa-Djibouti railway line is a perfect example showing Ethiopia’s hope in economic growth.  The international railway system links Ethiopia with Djibouti and guarantees Ethiopia access to Djiboutian ports. It provides a “major export and import connection” as it connects “land locked Ethiopia” with “the Red Sea’s international shipping routes” (Mohapatra, 2017).  It is expected to increase employment and revenue and thus shows Ethiopia’s hope in economic development.  Furthermore, the Ethiopian government expects Chinese investments to create an increase in employment. Several industries (as the textile industry) are planned to be further developed with the help of Chinese FDI (Breitegger, 2019). Ethiopia thus aspires to lift people out of poverty by insuring the creation of new jobs. Additionally, the government hopes that the increase in industrialization leads to a growth in the Ethiopian middle class (Breitegger, 2019). Another important aspect making Chinese FDI so attractive for Ethiopia is that China “disburses large sums of development aid to African countries” without making “assistance conditional on maintaining human rights standards or adhering to democratic norms and values” (Marks, 2020).

FDI with no strings attached?

The increasing dependency on Chinese investment, however, is the main risk associated with Chinese FDI. US Vice President Mike Pence even accused China of creating a “debt trap” (Breitegger, 2019; Olander, 2020). According to Marks (2020), “China accounts for nearly half of Ethiopia’s external debt” at the moment. The future will tell whether the American accusations are true.

Beijing’s interests

China’s interest in Ethiopia is multi-faceted. There are four main aspects that are worth mentioning. Firstly, the revenues for Ethiopian workers are significantly lower making it attractive for Chinese firms to create factories in the labor-abundant country (Breitegger, 2019). Secondly, Ethiopia represents a large consumer market (Crabtree, 2018). Thirdly, Ethiopia is attractive for Chinese investment as the Ethiopian government loweres taxes for Chinese firms (Breitegger, 2019). Fourthly, the creation of Chinese firms in Ethiopia provides jobs for Chinese citizens. It is estimated that one million Chinese people live in Africa at the moment, many of them working in the construction industry.

Implications of the Tigray conflict

In November 2020, the conflict in the Tigray region between the Tigray People’s Liberation Front (TPLF) and the Ethiopian federal government escalated (Farole, 2020). According to Farole (2020), “thousands of civilians have been replaced and hundreds have died”. The escalation of the ethnic conflict has motivated the European Union to suspend “nearly €90 million in budgetary aid to Ethiopia” (Marks, 2020). This decision reflects the EU’s attempt to link financial aid with the commitment to democratic values. In contrast to the EU, China’s investment in Ethiopia has not been conditional on the commitment to democratic norms and Human rights thus far (Marks, 2020). However, the impact of the conflict on Chinese investment decisions remains unclear.

Conclusion

Chinese investments are very important for the economic development of Ethiopia. The Ethiopian government hopes that Chinese FDI reduces unemployment and poverty and increase economic growth. However, it remains unclear to which extent the Tigray conflict might influence Chinese investment decisions. Furthermore, the increase in Ethiopian debt raises the question to which extent Ethiopia is dependent on China.

1 U.S.A dollar banknotes
photo by Sharon McCutcheon published on Unsplash

References

Breitegger, B. (2019, January 26). Chinas Rolle in Äthiopien. Retrieved January 4, 2021, from https://www.deutschlandfunk.de/afrikanische-wirtschaft-chinas-rolle-in-aethiopien.724.de.html?dram:article_id=439399

Crabtree, J. (2018, February 23). Chinese investment hotspot and a state of emergency: What’s going on in Ethiopia. Retrieved January 4, 2021, from https://www.cnbc.com/2018/02/23/china-investment-state-of-emergency-ethiopia-latest.html

Davis, K., Jr. (2019, July 29). Ethiopia could be the first African country to show China it has bargaining power. Retrieved January 4, 2021, from https://www.theafricareport.com/15757/ethiopia-could-be-the-first-african-country-to-show-china-it-has-bargaining-power/

Farole, S. (2020, November 24). Ethiopia’s Tigray conflict reflects unresolved ethnic tensions. Retrieved January 4, 2021, from  https://www.washingtonpost.com/politics/2020/11/24/ethiopias-tigray-conflict-reflects-unresolved-ethnic-tensions/

Marks, S. (2020, February 03). Ethiopia plays Europe off China in bid to boost investment. Retrieved January 4, 2021, from https://www.politico.eu/article/ethiopia-plays-europe-off-china-in-bid-to-boost-investment/

Marks, S. (2020, December 16). EU suspends nearly €90M in aid to Ethiopia over internal conflict. Retrieved January 4, 2021, from https://www.politico.eu/article/eu-commission-suspends-nearly-90-million-euros-in-aid-to-ethiopia-over-internal-conflict/

Mohapatra, D. R. (2017). An economic analysis of Djibouti-Ethiopia railway project. Economic and Financial Analysis of Infrastructure Projects: An Edited Volume, 158.

Olander, E. (2020, January 14). China’s infrastructure finance model is changing. Here’s how. Retrieved January 4, 2021, from https://www.theafricareport.com/22133/chinas-infrastructure-finance-model-is-changing-heres-how/

Worldbank. (2020, April 16). Ethiopia poverty assessment: Poverty rate declines, despite challenges. Retrieved January 5, 2021, from https://www.worldbank.org/en/country/ethiopia/publication/ethiopia-poverty-assessment-poverty-rate-declines-despite-challenges

COVID-19 could spark change bring about a digital tax in the EU– but will the US give its support?

Article by Lea Schiller

Before COVID-19, there was a move for a so-called “digital tax” in Europe – a tax aimed at the profits generated from digital activities. Even back then, the proposal was contested, not only within the EU but also with its Atlantic partners. Then came the pandemic, and with it not only an even bigger need for these taxes, but also shifted the world’s attention away from these plans. A solution to this problem is desperately needed, especially since governments will need the revenue to revive their economies – but an agreement that both the EU and the US will agree to is going to be difficult to reach. The EU should nevertheless move forward, towards a local digital tax.

What is a digital tax, and why is it important?

The goal of the digital tax is to close the legal hole that has been left by the existing taxation system. The current system does not take into consideration the many new business models that rely on digital spaces to make revenue (European Council, 2020). Current taxation systems assume that businesses have a physical presence in the country in which they make profit. This leads to a situation in which profits are not taxed in the country in which the consumers are – a situation that the digital tax proposal intends to fix. It is a hotly contested idea, not least because the stakes are high: more and more revenue are being generated online, and this development has only been exacerbated by the pandemic. Companies like Google and Facebook have found it easy to grow their revenue, as their business model benefits from the emphasis on digital spaces. On one side, tech giants like Google and Amazon are reluctant to give up their advantage. On the other hand, states seek a way to level the playing field for their domestic companies. In contrast to big corporations in the tech industry, they have been making major losses since the pandemic has started to force governments to put their countries in lockdown.

The EU’s efforts for a digital tax: a rocky road

In 2019, France introduced a 3% digital tax that was planned to go into effect in April of 2020 but had to be pushed back after the US threatened to retaliate with tariffs on French wine (Heikkilä & Braun, 2020). Nevertheless, the move prompted other EU member states (Spain, Italy, Austria and the Czech Republic) to come forward with their own proposals for a digital tax – though none of them have been implemented yet (Heikkilä & Braun, 2020). The EU sent the European Commission to represent the Union at the OECD, which is working on a global solution, in order to avoid regional differences and prevent countries from lowering the tax rate to entice companies to move their headquarters there. However, it is unclear if – or when – the OECD will come to a decision and so France has renewed talks of an EU-wide digital tax (Reuters, 2020). With good reason – the potential revenue that could be collected from these taxes would be welcome amidst the economic fallout of the pandemic.

Roadblock US: Why it will be difficult to keep them on the negotiating table

The first draft of a solution by the OECD consists of two pillars: firstly, the goal that companies will be taxed where they make profit, and secondly, a global minimum corporate tax. The European Commission has stated that it prefers a solution to include both pillars, as otherwise not all member states will agree to it (Heikkilä & Braun, 2020). However, the US has voiced strong opposition to the first pillar. And that is not where the story ends: in June, after pulling out of negotiations with European countries, the US Treasury sent a letter to the finance ministers of the UK, France, Italy and Spain, warning them of imposing a digital tax, and to expect tariffs on their goods if they do (Fleming, Brunsden, Giles & Politi, 2020). And it is unclear if the Biden administration will change its stance on the issue. The new president will have to deal with the economic fallout of the pandemic, and the Democrats have opposed digital taxes in the past, claiming that they unfairly target US companies (Horowitz, 2020). Getting the US to agree to a settlement could be a long, drawn out process that means conflict is ahead, whether the EU moves forward with their plans of a local digital tax or not.

Moving ahead

The EU is in dire need of a solution for the digital tax problem. France’s digital tax was only pushed back until December 2020 and the country is pushing the EU to find a solution by mid-2021, should the OECD not come to a decision until then (Reuters, 2020). It is a deadline that is a chance as much as it is a risk – moving towards a regional tax in Europe could lead to tensions with the newly inaugurated Biden administration. That is to say that establishing such a tax for the bloc is not going to be easy; not least because the EU will need to avoid triggering a trade war with the US. But the issue is too pressing to wait. Big companies operating in digital spaces have made profit during the pandemic – Amazon for example doubled its profits during the second quarter of 2020 (Dastin & Rana, 2020). And if the EU wants to mitigate the effects of the shutdowns on their domestic firms and small businesses, it is going to need as many sources of revenue as possible.

flag of U.S.A.
photo by Renan Kamikoga published by Unsplash

References

Dastin, R. & Rana, A. (2020, July 30). Amazon posts biggest profit ever at height of pandemic in U.S. Reuters. Retrieved from: https://de.reuters.com/article/us-amazon-com-results/amazon-posts-biggest-profit-ever-at-height-of-pandemic-in-u-s-idUSKCN24V3HL

European Council. (2020, October 20). Digital Taxation. Retrieved from: https://www.consilium.europa.eu/en/policies/digital-taxation/#

Fleming, S., Brunsden, J., Giles, C. & Politi, J. (2020, June 17). US upends global digital tax plans after pulling out of talks with Europe. The Financial Times. Retrieved from:  https://www.ft.com/content/1ac26225-c5dc-48fa-84bd-b61e1f4a3d94

Heikkilä, M. & Braun, E. (2020, July 23). Digital Tax: A cautionary tale. Politico. Retrieved from: https://www.politico.eu/article/digital-tax-a-cautionary-tale-france-germany-amazon-google-facebook-platforms/

Horowitz, J. (2020, November 25). France orders Big Tech to pay despite threat of US tariffs. CNN. Retrieved from: https://edition.cnn.com/2020/11/25/tech/france-digital-taxes/index.html

Reuters. (2020, November 30). Biden should clarify US position on digital tax within two months, France says. Reuters. Retrieved from: https://www.reuters.com/article/eu-usa-tax-idCAKBN28A18P

The CFA franc – a relic of the colonial past

An article by Alexandra Reinhild Berndt

Luigi Di Maio, an Italian minister, accused France of impoverishing Africa by means of the CFA franc (Giles & Goodman, 2019). The CFA franc has been introduced by the French government in 1945 and is still used by 14 African countries in West- and Central Africa (Specia, 2019). Why is the CFA franc still used today even though it is a legacy of the colonial era? In the following, I will elucidate both the advantages and disadvantages of the currency. Furthermore, I will investigate whether or not the Eco represents a solution to the problem. The Eco is a new currency that will be introduced in eight of the fourteen countries (Frisch, 2020).

Stability – The main economic advantage of the CFA franc

There are three central economic advantages of the CFA franc. First of all, the currency guarantees low inflation rates. This is very important as high inflation rates can have a negative impact on a country’s economic development (Assoko, 2020). Secondly, the CFA franc provides for low borrowing costs as interest rates are capped (Assoko, 2020). Thirdly, the currency makes it easier for investors to predict fluctuations (Assoko, 2020). The CFA franc thus ensures economic and monetary stability (Specia, 2019).

The neocolonial nature of the CFA franc

Critics perceive the CFA franc as a legacy of colonialism (Frisch, 2020). The original name of the currency was “Franc of the French Colonies of Africa” reflecting the neocolonial nature of the CFA franc (Specia, 2019). Many African artists showed their indignation at the currency in the context of art campaigns. In 2018, ten rappers from six different West African countries published a song named “seven minutes against the CFA” criticizing the currency as a relic from the colonial past (Cascais, 2018). Hervé Youmbi, an artist from Cameroun, invented a pan-African currency in the context of an art campaign to express his anger at the currency (Frisch, 2020).

Economic dependence – a point of critique

Critics of the currency condemn the economic dependence on France. France holds 50 percent of the foreign exchange reserves (about ten billion euro) in the French central bank in return for stable exchange rates (Herrmann & Bos, 2019). Furthermore, the CFA franc is pegged to the euro. This has several consequences. The currency is automatically pegged to monetary policies of the European Central Bank (Reuß, 2020). This means that the states using the CFA franc cannot change their exchange rates on their own. Moreover, the monetary policy of the European Central Bank does not necessarily serve African interests (Reuß, 2020). The states using the CFA franc are thus not independent in their economic and monetary decision-making. Another criticism is that French firms profit from the existence of the CFA franc as they can more easily export their products to the regions where CFA franc is used (Frisch, 2020). There are thus not only political, but also economic points of critique.

The Eco – a possible solution?

Eight countries from the West African Economic and Monetary Union decided to introduce a new currency: the Eco (Fröhlich, 2019). Changing the currency from CFA franc to Eco has several implications. The French government will “stop holding 50 percent of the reserves in the French Treasury” (Fröhlich, 2019). Moreover, France will “withdraw French governance related to the currency” (Fröhlich, 2019). However, the Eco is also “pegged to the euro, just like the CFA franc” (Fröhlich, 2019). In this regard, nothing has changed. It thus remains questionable whether the reform really provides a significant change.

In conclusion, countries using CFA franc face a trade-off between economic stability and self-determination. The debate about the currency shows the extent to which post-colonial countries are affected by colonial legacies. The Eco is an attempt to end economic dependence. However, it remains unclear whether the Eco-reform really guarantees self-determination.

Yugoslavia flag under blue sky
photo by Anthony Choren published on Unsplash

References

Assoko, J. T. (2020, December 03). The CFA Franc, Macron and everyone else. Retrieved December 5, 2020, from https://www.theafricareport.com/52934/the-cfa-franc-macron-and-everyone-else/

Cascais, A. (2018, July 21). Westafrika: Rap gegen die “Kolonialwährung” CFA-Franc. Retrieved December 5, 2020, from https://www.dw.com/de/westafrika-rap-gegen-die-kolonialwährung-cfa-franc/a-44340082

Frisch, R. (2020, October 04). Das Ende einer Kolonialwährung. Der Franc CFA und die Kontrolle des Geldes in West­afrika. Retrieved December 5, 2020, from https://geschichtedergegenwart.ch/das-ende-einer-kolonialwaehrung-der-franc-cfa-und-die-kontrolle-des-geldes-in-westafrika/

Fröhlich, S. (2019, December 23). West Africa’s new currency, the Eco: Rebrand or fresh start? Retrieved December 5, 2020, from https://www.dw.com/en/west-africas-new-currency-the-eco-rebrand-or-fresh-start/a-51784054

Giles, C., & Goodman, J. (2019, January 25). African migration: Is the CFA franc forcing people to leave? Retrieved December 5, 2020, from https://www.bbc.com/news/world-africa-46960532

Herrmann, C., & Bos, J. (2019, May 24). Der CFA-Franc: Eine Währung, die polarisiert. Retrieved December 5, 2020, from https://www.dw.com/de/der-cfa-franc-eine-währung-die-polarisiert/a-48854249

Reuß, A. (2020, July 19). Ein Schein von Unabhängigkeit. Retrieved December 5, 2020, from https://www.sueddeutsche.de/politik/koloniales-erbe-ein-schein-von-unabhaengigkeit-1.4971837

Specia, M. (2019, January 22). The African Currency at the Center of a European Dispute. Retrieved December 5, 2020, from https://www.nytimes.com/2019/01/22/world/africa/africa-cfa-franc-currency.html

How Biden’s presidency will change transatlantic relations

An article by Lea Schiller

Although they are looking to improve under Biden, relations between the European Union (EU) and the United States (US) as we have known them for the past couple of decades are over. For the EU, this situation is as much a hurdle as it is a chance.

It would be easy to assume that Biden, who has close ties to European leaders and has always been a transatlanticist (Karnitschnig, 2020), will reset the relationship between the EU and the US to what they were before Donald Trump took office. However, both EU diplomats and politicians in the US have argued that this is not going to be the case. For the EU, trying to hang onto its old relations with the US would not only mean treading on a path long abandoned, but missing a vital chance to establish a foreign policy free from American influence.

Throughout his entire four years in office, Trump has not only set a different tone towards Europe, but highlighted issues that had been plaguing the transatlantic relationship for years – one of the most important ones being the defence budgets of NATO members. Many members of the EU still have not fulfilled their pledge to raise their defence spending to 2% of their GDP – and Biden is unlikely to let this issue go (Karnitschnig, 2020). But even more important will be various issues connected to trade. Resolving conflicts around Europe’s planned digital tax and US subsidies for American aircraft maker Boeing might not be easy to resolve for Biden – Trump’s presidency has left distrust in the US’ trade deals in many Americans, especially Republicans (Lawrence & Murray, 2020). If the Democrats cannot gain a majority in Senate (two key Senate seats will be voted on in January), trade will be a hard-fought issue for years to come.

EU diplomats have also asserted the need for change. As Germany’s Foreign Affairs Minister Heiko Maas said in front of the European Council in June: “Regardless of who wins the elections in November, […] we will have to think about how to better contain the conflicts in Europe’s vicinity, even without the US” (Maas, 2020). And just two weeks ago, Emmanuel Macron asserted that “We owe it to our citizens not to depend on others” (Walt 2020). For many EU diplomats, the Trump presidency has been an awakening (Walt, 2020). After verbal attacks, taxes on European goods and conflicts around NATO, the US is not the dependable partner it once was.

Both sides are preparing for lasting change in their relationship; but what can the EU gain from this? Simply put, it is more autonomy from the US and a chance to assert itself as a world power, independent from the tensions between the US and China for instance.

But in order to stand on its own, the EU will need to present a more united front to the world – in practice, this means more integration. The willingness to achieve this is there for some – earlier this year, Macron called for a clear and definitive move towards more integration (Wintour, 2020). But on the other side of the bloc, Hungary and Poland have been blocking the enactment of the EU’s new seven-year budget following plans to tie it to the rule of law (Hopkins, Shotter & Fleming, 2020). The push for more integration would undoubtedly be met with stern opposition. Whether this can be overcome will depend on upcoming national elections in other member states; most notably, Germany in 2021 and France in 2022.

The EU will need to perform a very delicate balancing act of holding onto its good relations with the US while simultaneously protecting its own interests and finding a way to detach itself from American control. This, although difficult to achieve, will also be a chance for the EU. By losing dependence on the US, the EU could pursue its own foreign policy goals, without having to adhere to demands from Washington. But to make this possible, deeper integration of the bloc is unavoidable – whether this will be possible, and how quickly it could be realised, remains to be seen.

selective focus photography of USA flaglet
photo by Raúl Nájera on Unsplash

Amaro, S. (November 9, 2020). Europe welcomes Biden’s win after four fractious years of Trump. CNBC. Retrieved from: https://www.cnbc.com/2020/11/09/us-election-2020-what-a-biden-victory-means-for-europe.html

Hopkins, V., Shotter, J. & Fleming, S. (November 26, 2020). Hungary and Poland harden stance in EU budget stand-off. Financial Times. Retrieved from: https://www.ft.com/content/b1d3e780-9521-46a4-acc3-6891ce7d97ac

Karnitschnig, M. (November 8, 2020). What Biden means for Europe. Politico. Retrieved from: https://www.politico.eu/article/what-joe-biden-means-for-europe/

Lawrence, S. & Murray, S. (November 12, 2020). EU-US relations will never be the same again, says Ex-Trump aide. Euronews. Retrieved from: https://www.euronews.com/2020/11/12/eu-us-relations-will-never-be-the-same-again-says-ex-trump-aide

Maas, H. (June 29, 2020). Opening address by Foreign Minister Heiko Maas at the Virtual Annual Council Meeting of the European Council for Foreign Relations (ECFR). Retrieved from: https://www.auswaertiges-amt.de/en/newsroom/news/maas-ecfr/2358716

Walt, V. (November 17, 2020). ‘Trump has been a kind of awakening.’ E.U’s top diplomat says Europe’s relationship with U.S. is forever changed. Time. Retrieved from: https://time.com/5912676/us-europe-biden-relationship/

Wintour, P. (February, 15 2020). Macron sets out 10-year vision for EU with call for more integration. The Guardian. Retrieved from: https://www.theguardian.com/world/2020/feb/15/emmanuel-macron-sets-out-10-year-vision-for-eu-with-call-for-more-integration

The link between ghettoization and Islamist terrorist attacks in France

An article by Alexandra Reinhild Berndt

More than 200 people died due to Islamist terrorist attacks in the five past years in France (Gennies, Meier & Jansen, 2020). The beheading of the French teacher Samuel Paty and the killing of three people in a church in Nizza demonstrated the increasing danger of Islamist terror. In this article, I will evaluate the reactions of the French government and the Muslim world. Furthermore, I will investigate the causes of the increase in Islamist terrorist attacks by focusing on the formation of parallel societies.

The French school teacher Paty was murdered by an Islamist terrorist as he showed caricatures of the prophet Muhammad in class (Safi, Makoii, Baloch & Ahmed, 2020). The French government reacted by defending the right of freedom of speech and press. Furthermore, the military presence was increased from 3000 to 7000 soldiers (Gennies, Meier & Jansen, 2020). Macron also promised to introduce a new law against “Islamic separatism” (Willsher, 2020). The objective of this law is to fight against Islamist extremism by facilitating the shutdown of “mosques and other organizations accused of fomenting radicalism and violence” (Burke, 2020). Among the additional new measures introduced by the president are: homeschooling, the oversight over religious funding and the enforcement of respect of “Republic values” (Sandford, 2020). Another important consequence is the further increase in anti-Muslim sentiments, not only within the population, but also within government (Hebel, Salloum & Truckendanner, 2020). The presidents’ remark that Islam “is in crisis all over the world today” even lead to a diplomatic crisis with Muslim countries in the Middle East (Fishere, 2020). Muslim states as Turkey, Iran, Kuwait and Algeria started boycotting French products (Hebel, Salloum & Truckendanner, 2020). Iran even summoned a French diplomat and accused France of hypocrisy and arrogance vis-à-vis Islam (Hebel, Salloum & Truckendanner, 2020). An important Egyptian religious authority, Al-Azhar, even accused Macron of hurting “the feelings of two billion Muslim followers” and hindering “the path to constructive dialogue” (Fishere, 2020). The president’s remark on Islam thus even led to a diplomatic crisis. The Muslim community is now very concerned about stigmatization, an increase in anti-Muslim sentiment and discrimination against the Muslim minority in France (Hebel, Salloum & Truckendanner, 2020). The remarks of Macron, stigmatizing “the entire faith” for “actions of a small number of extremists”, also brought back memories about colonial times when people were systemically discriminated on the basis of their religious faith (Safi, Makoii, Baloch, & Ahmed, 2002).

After having examined the reactions of the French government and the Muslim society, I will subsequently investigate the role of parallel society and ghettoization. After Samuel Paty’s murder, Macron admitted that the French government made severe mistakes in the past in terms of dealing with ghettoization and parallel societies (Wachs, 2020).  France has had important problems with the integration of the Muslim minority into the French society (Onishi & Breeden, 2020). The formation of ghettos and parallel societies are a symptom of this failed integration. In the ghettoes, Muslim immigrants “turn to religion as a defense mechanism and rallying point” (Burke, 2020).  The president now promised to solve this problem by threatening to shutdown “mosques and other organizations accused of fomenting radicalism and violence” (Burke, 2020). However, these political measures only aim at calming voters short-hand, but fail to solve the underlying problem (Wesel, 2020). A solution to the problem is much more difficult and a long process. Solving the problem would mean to invest a lot of time and resources into integration, education, infrastructure and housing (Wesel, 2020). However, if the ghettoization was one of the main causes of radicalization and Islamist terrorism, it would be in the interest of the French society to invest time and resources to fight against it. An anti-Muslim rhetoric is not solving the problem but rather contributing to a severe intersocietal, interethnic conflict.

In conclusion, the Islamist terrorist attacks are a symptom of the ignorance of parallel societies. Adopting a Muslim rhetoric is not helpful, but rather contra-productive and has serious repercussions for the relations with the Muslim community in France and worldwide.

photo by Stephanie LeBlanc on Unsplash

References

Burke, J. (2020, October 29). Attacks in France put Islamist extremism back in spotlight. Retrieved October 30, 2020, from https://www.theguardian.com/world/2020/oct/29/attacks-in-france-put-islamist-extremism-back-in-spotlight

Fishere, E. C. (2020, October 20). France, the way to Islamic reformation is to challenge institutions – not stigmatize Muslims. Retrieved October 30, 2020, from https://www.washingtonpost.com/opinions/2020/10/20/france-macron-samuel-paty-teacher-attack-islam-reform/

Gennies, S., Meier, A., & Jansen, F. (2020, October 29). Wie islamistischen Terror bekämpfen, ohne dabei das Land zu spalten? Retrieved October 30, 2020, from https://www.tagesspiegel.de/themen/reportage/frankreich-die-versehrtenation-wie-islamistischen-terror-bekaempfen-ohne-dabei-das-land-zu-spalten/26573246.html

Hebel, C., Salloum, R., & Truckendanner, P. (2020, October 27). Macron und die Welle des Zorns. Retrieved October 30, 2020, from https://www.spiegel.de/politik/ausland/frankreich-vs-islamische-welt-emmanuel-macron-und-die-welle-des-zorns-a-7f706967-2793-48bf-af15-95f64a48da1b

Onishi, N., & Breeden, A. (2020, October 02). Macron vows crackdown on ‘Islamist Separatism’ in France. Retrieved October 30, 2020, from https://www.nytimes.com/2020/10/02/world/europe/macron-radical-islam-france.html

Safi, M., Makoii, A. M., Baloch, S. M., & Ahmed, R. (2020, October 28). Anger towards Emmanuel Macron grows in Muslim world. Retrieved October 30, 2020, from https://www.theguardian.com/world/2020/oct/28/anger-towards-emmanuel-macron-grows-in-muslim-world

Sandford, A. (2020, October 28). Macron and Islam What has French president Macron said to outrage the Muslim world? Retrieved October 30, 2020, from https://www.euronews.com/2020/10/27/macron-and-islam-what-has-the-french-president-actually-said-to-outrage-the-muslim-world

Wachs, S. (2020, October 29). Macrons Rede zu “Separatismus”: “Wir haben die Ghettoisierung zugelassen”. Retrieved October 30, 2020, from https://www.tagesschau.de/ausland/frankreich-paris-problemviertel-islamismus-macron-101.html

Wesel, B. (2020, October 21). Frankreichs schwerer Kampf gegen den Islamismus. Retrieved October 30, 2020, from https://www.dw.com/de/meinung-frankreichs-schwerer-kampf-gegen-den-islamismus/a-55350456

Willsher, K. (2020, October 02). Macron outlines new law to prevent Islamic ‘separatism’ in France. Retrieved October 31, 2020, from https://www.theguardian.com/world/2020/oct/02/emmanuel-macron-outlines-law-islamic-separatism-france

An update on Brexit

An article by Lea Schiller

As the transition period of Brexit comes to a close, many are asking what future relations between the two might look like. Currently, the UK still has to abide by EU regulations – but next year, it will leave the Single Market, the Customs Union. The Withdrawal Agreement, which was signed in January of 2020, makes provisions for both the transition period and the UK’s outstanding commitments to the EU. It does not, however, regulate how future trade relations will look like; it is therefore crucial whether a new deal can be reached before the transition period comes to an end. In this article I intend to provide a short overview on the key events that have halted the progress towards a new trade deal between the UK and the EU.

Negotiations started in March, with the most important issues being access to the UK’s fishing waters and state aid to companies. Hopes for a deal took a hit in early September following plans for the Internal Market Bill in the UK. It would override parts of the Northern Ireland Protocol, which stipulates that goods passing through the Irish border will not need to be checked. The Internal Market Bill would give the UK the power to interpret the trade arrangements made for Northern Ireland, even though the Northern Ireland Protocol gives this power to a Joint Committee of representatives from both the UK and the EU (Edgington, 2020). If implemented, the Internal Market Bill would therefore be an intentional breach of international law; as the Northern Ireland Protocol is part of the Withdrawal Agreement between the UK and the EU. The reaction from the EU was accordingly firm. EU diplomats have described this bill as “shocking” (Moens, 2020), and potentially the first step towards a no-deal. In short, the negotiations have been far from an uncomplicated process.

Around the same time, Boris Johnson threatened to walk away from negotiations should there be no deal reached by the 15th of October (Landler & Castle, 2020), adding more fuel to the fire. As of the end of October 2020, no deal has been reached, but this is not the first time Johnson has demanded a breakthrough by a certain date, only to later backtrack on this; in February, he already threatened to walk away if no deal was reached in four months (Landler & Castle, 2020). The EU is pushing to continue negotiations but would only sign a new trade deal if the UK amends the Internal Market Bill to be in accordance with previously signed deals, such as the Withdrawal Agreement and the Northern Ireland Protocol.

In the midst of frustration and wide disagreements on cure issues, the scenario of a no-deal is a possibility that is steadily coming closer. In this case, the UK and the EU would fall back on standard WTO terms (Sandford, 2020) – a disaster for everyone involved. Compared to the Single Market of the EU, trade under WTO rules would mean tariffs and non-tariff barriers to trade that have not existed between the UK and the EU for years. A drop in exports and imports would then make a recovery from the current recession even more challenging, which is why these last few weeks of the transition period are so crucial.

photo by Rocco Dipoppa on Unsplash

References

European Council. (2020, October 21). EU-UK negotiations on future relationship. Retrieved from: https://www.consilium.europa.eu/en/policies/eu-uk-negotiations-on-the-future-relationship/

Edgington, T. (2020, September 8). Brexit: What is the Northern Ireland Protocol and why is it needed? BBC. Retrieved from: https://www.bbc.com/news/explainers-53724381

Moens, B. (2020, September 9). Brexit negotiations hit low after UK’s ‘carpet-bombing’ tactics. Politico. Retrieved from: https://www.politico.eu/article/brexit-negotiations-eu-uk-no-deal-withdrawal-agreement-irish-border-breach-international-law/

Landler, M. & Castle, S. (2020, October 16). With Brexit clock ticking, Boris Johnson vows, again, to walk away. The New York Times. Retrieved from: https://www.nytimes.com/2020/10/16/world/europe/brexit-boris-johnson-europe.html

Moens, B. & Herszenhorn, D. (2020, October 14). EU to Boris Johnson: Get Brexit done already. Politico. Retrieved from: https://www.politico.eu/article/brexit-saga-drags-on-as-uk-boris-johnson-wont-end-talks-after-eu-summit/

Morris, C. (2020, January 23). What is the Withdrawal Agreement bill? BBC News. Retrieved from: https://www.bbc.com/news/uk-politics-50125338

Riley, C. (2020, September 30). Brexit is back and the stakes are higher than ever. CNN Business. Retrieved from: https://edition.cnn.com/2020/09/29/business/brexit-negotiations/index.html

Sandford, A. (2020, October 26). Post-Brexit guide: Where are we now – and how did we get here? Euronews. Retrieved from: https://www.euronews.com/2020/06/11/brexit-draft-deal-first-of-many-hurdles-to-a-smooth-exit