EconPol Opinions

On December 5, 2017, the European institutions - Commission, Council, and Parliament - reached political agreement on reforming the EU’s trade defense instruments. This “modernization” of anti-dumping legislation is, in fact, an attempt to provide the EU with stronger tools to tackle the allegedly “unfair” practices of its trade partners. On its website, the Commission advertises that the deal will enable the EU to impose higher duties on dumped products. Does Germany’s position signal a new and worrying stance toward free trade?

In view of loud complaints over alleged austerity policy in Europe, the call for tougher debt ceilings seems untimely. It is claimed that the current rules are too restrictive and will hamper public investment. The next German federal government's position on reforming European Monetary Union is one of the main issues on the table in the coalition negotiations and it is highly controversial. ifo President Clemens Fuest is convinced that a serious application of the existing concepts for ensuring sustainable fiscal policy would call for stricter, not softer debt rules. This Opinion explains why Europe needs stricter debt rules and should not follow in Japan’s footsteps.

Spanish cohesion is currently facing a severe test in the chaotic conflict surrounding the referendum on Catalan independence. Of particular importance is the fiscal dimension of the issue. A highly influential argument of the independence movement has pointed to the financial burden placed on the region combined with Catalonia’s limited budgetary autonomy. This is an experience that Europe should pay close attention to, given the ambitious reform proposals currently discussed for the EU and the euro area many of which point to greater centralisation.

Juncker’s proposals on the euro area are lacking in substance and coherence. His starting point was that the euro should be considered the currency of the Union, not just the currency of some Member States. From a formal point of view this is correct, as the euro is indeed designated in the European Treaties as the currency of the Union. The countries that are not part of the euro area are considered to have a temporary derogation. Network member David Gros, Director of CEPS, says that the reality is,  however, different and explains why small, concrete steps aimed at strengthening financial stability would have been more useful. 

The lead story in the Economist earlier this month (8 July 2017), “Why the German current-account surplus is bad for the world economy”, starts from the assumption that the rest of the world would benefit if Germany were to spend more. But this holds true only in a world that is constrained by demand.