19th Nov 2017

EU paper suggests protecting common market

Just weeks after the European Commission revealed its plans to prevent foreign companies from uncontrolled access to the EU's energy sector, Brussels is set to reiterate that in a global economy "openness is not a one-way street."

"The EU has a key stake in using its clout in global negotiations to ensure that openness is not a one-way street: the political case for openness can only be sustained if others reciprocate in a positive manner", a paper on globalisation drafted by the EU's executive body says.

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The paper argues that the 27-nation bloc "needs to ensure that third countries offer comparable levels of openness to EU exporters and investors".

At the same time, it underlines that foreign companies wishing to do business in EU territory "will not be allowed to by-pass the rules applied in the [union's] internal market".

The 9-page document is the commission's contribution to an EU leader's informal summit on 18-19 October - a meeting primarily designed to put a full stop behind the union's years-long journey towards a new treaty.

Energy – just the beginning?

Non-Europeans got a first taste of Brussels' tougher line on foreign trade and investment in September, when it unveiled a sweeping reform of the EU energy sector, including a series of restrictive measures to be imposed on foreign energy bidders.

The proposed rules say, among other things, that third countries and their companies should not be able to acquire control over an EU transmission network unless there is an agreement between the EU bloc and the third country.

But Brussels has refused to label its call for reciprocity as protectionism.

"Protectionism cannot make Europe wealthier. Protectionism would impoverish, not protect our citizens", commission president Jose Manuel Barroso said after the Brussels executive adopted the globalisation paper last week (3 October).

But he added that "we [the EU] are not naïve. We are not soft touch. We can and will require a level playing field. We want others to open more".

The globalisation paper does not specify whether the approach suggested for the energy sector will be expanded to other areas.

It only suggests that "the way in which the EU applies its rules also needs to reflect the changes brought by globalisation in the patterns of ownership and interest in all sectors".

According to a commission official, speaking to EUobserver, it is "not clear" whether the energy sector will remain alone in this regard.

He said that the current discussion centres around the concern that a third country could exercise power in the political sphere via different investments.

On the other hand, some EU capitals are not in the mood for such a debate and argue the Union is in need of investors and cash inflow.

"The energy sector is more vulnerable to monopolisation and external dependency and runs a bigger risk of price-setting", one EU diplomat added, also underlining the somewhat unique position of the energy sector compared to others.

EU vows to shape globalisation

Having finally put six years of institutional wrangling behind it with last week's agreement on a new treaty, the EU says it is ready face outside challenges. Globalisation tops the list, with the political recipe for dealing with it a mixture of openness and protectionism.

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