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EU Monitor

The series "EU Monitor" focuses on political, economic and monetary developments in the enlarged EU. The spectrum ranges from political commentaries and reform of the EU institutions to matters pertaining to the European Economic and Monetary Union, financial-market and banking aspects, and the consequences of enlargement for specific sectors and countries.

88 (71-80)
July 27, 2012
Since 2006 the European Union has increasingly been looking to sign deep and comprehensive free trade agreements with emerging markets. In the meantime it has also been turning its attention to some industrialised nations. A trade agreement with South Korea has already come into effect. Although the EU is pinning great hopes on India and a number of ASEAN states, it is also keen to conclude similar agreements with Mercosur, Canada, Ukraine and virtually all of the Southern Mediterranean countries. It is even considering Japan and the United States as potential partners. If the European Union's bilateral free trade strategy were fully implemented by the end of this decade, it would give a moderate boost to trade, welfare, growth and employment in the EU and would often provide a much stronger stimulus in the partner countries concerned. This free trade strategy is also highly ambitious in terms of its diplomatic objectives because issues that have so far received insufficient attention – such as trade in services, technical trade barriers and foreign direct investment – are to be better regulated. Whether the EU – currently the world's largest trading bloc – is ultimately successful with this strategy will in many cases be decided by domestic politics in the partner countries. The fundamental question of whether a deep bilateral strategy should perhaps be complemented by a parallel multilateral approach as a matter of considerable urgency will be especially pertinent in transatlantic relations. However, there is also a risk of tensions within the international system. [more]
71
December 8, 2011
The U.S. state and local government sector undoubtedly faced significant short-run challenges brought about by the 2007-2009 recession which are likely to partly persist over the next few fiscal years. Yet, warnings of state bankruptcies and mass defaults at the local level are unduly exaggerated. All in all, a satisfactory assessment requires the separation of cyclical revenue problems from looming long-term challenges in pensions and healthcare. Although they do not pose an imminent threat yet, state and local pension funds and retiree healthcare commitments are in dire need of reform in order to keep them affordable. Moreover, to improve their finances, subnational jurisdictions need to correct the structural flaws in their revenue systems and budget processes and increase the effectiveness of spending to curtail the unsustainable ballooning of costs. [more]
72
November 15, 2011
Region:
The world economic crisis has seriously weakened potential economic growth in many industrialised countries for the coming years. And new regulatory requirements in the financial sector are likely to deal it a further blow. This has made economic policy measures to stimulate economic growth in the wake of structural reform an absolutely essential complement to macroeconomic measures, especially in the big industrial nations. Even at a time when the scope has narrowed for fiscal policy, this still holds true. It is precisely in periods of consolidation that structural reforms are vital to sustained success. [more]
73
August 2, 2011
Region:
Europe on the way to becoming a transfer union? The euro rescue packages - and the ECB’s involvement in the crisis - are reputed to be the forerunners of a transfer union between the euro countries. However, for the time being these are mainly government guarantees, the failure of which cannot be taken for granted. The EU is even further away from systematic financial equalisation of the euro countries. Nevertheless, continuing macroeconomic tensions could increase the need for transfers - and further inflame political tensions. [more]
74
June 28, 2011
The world trade regime has reached an historic crossroads. Conclusion of the Doha Round this year could give global trade a significant boost. If the negotiations break down, in the medium term the international community faces the prospect of a relapse into tit for tat in trade policy. To bring the Doha Round to a successful conclusion political leadership is necessary – in the big emerging markets as well as in the US and EU. The former also stand to reap substantial gains from reciprocal market liberalisation. [more]
75
June 9, 2011
The financial crisis dealt international banking a serious blow. This paper reviews 1) the extent to which financial markets have become global in recent years as well as the damage inflicted on cross-border linkages by the financial crisis, 2) the reasons for the internationalisation process and 3) prospects for international banking in the “new-normal” environment. Apart from market developments, this reflects a new focus in the political and regulatory debate aimed at increasing the – mostly domestic – grip on the banking industry. [more]
76
September 17, 2010
Region:
The responsibility to manage volatility in agriculture is increasingly in farmers’ hands and they will need to rely more heavily on market-based tools. All in all, public policy could be most useful in increasing the risk management ability of farmers. Any extension of the public safety net will reduce the incentives for farmers and other agents along the food supply chain to manage their risks effectively through derivatives, private insurance or on-farm strategies like production diversification. Policies need to empower farmers to take their own risk management decisions and to have access to a diversity of instruments and strategies. More direct interventions are likely better kept as a means of last resort and restricted to measures which do not act at the expense of the rest of the world or of environmental sustainability. [more]
77
August 2, 2010
Region:
Analyst:
Financial market size: Traditional centres lose market shares, emerging markets up-and-coming. US and EU financial markets continue to provide around three-quarters of global financial services, albeit, after the crisis, at substantially lower overall levels of market activity in many market segments. Emerging financial markets, especially in Asia, have grown strongly in past years and are set to accelerate their catch-up process. [more]
78
July 12, 2010
Region:
The euro-area countries urgently need to slash their debt and they will have to find new ways to address this task in the process. Germany’s debt brake is an intelligent concept for achieving a long-term reduction in public debt that could also be remodelled to fit the conditions in other euro countries. National debt brakes could help cut public debt on a long-term horizon without jeopardising the growth prospects of the euro-area economies. [more]
79
June 22, 2009
Region:
Analyst:
Five years after the Ecofin Council reached agreement on the Savings Taxation Directive, the European Commission has submitted a proposal on its extension. The prevailing political climate for more cooperation and exchange of information between the States has improved significantly in recent months. A flurry of new bilateral agreements, initiatives at OECD level and further EU proposals for directives underscore the momentum that has gathered here. Negotiations on amendment of the Savings Taxation Directive will presumably not drag on again. [more]
80
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