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whither the european union?

Friday 11 February, 2011

Ralph Folsom was back for his 10th annual lecture on international business & trade law @ the John Marshall Law School Center for International Law in a talk entitled “Whither the European Union?”  He opened by quoting Yogi Berra, a favored quipster, “If you don’t know where you’re going, how will you know when you get there?”  Folsom essentially took us through a legal history of Europe decade-by-decade since 1949, weaving in some themes that spanned over time, such as human rights.  These were spawned by the European Convention on Human Rights by the Council of Europe in 1950, & culminated in the Treaty of Nice EU Charter of Fundamental Rights “declared” in 2003 & became binding law in 2009 (UK & Poland opted out).  Interesting things to note:

  • the extent to which France led the initial integration, (although perhaps it shouldn’t be, as it was in response to “the German problem”)
  • the slowness of the Brits to integrate, 1st because of their own hesitancy to give up the notion of their empire, & then blocked by deGaulle for 10 years
  • Greenland “withdrew” from the EEC in 1983 to escape the highly regulated fishery industry in the EEC
  • Although not members of the European Union, Norway & Switzerland have aligned themselves tightly with the EU by mirroring much of the legislation the EU has passed.

So “Whither the European Union?”  Iceland wants in, so they can be ripe to be bailed out.  The Balkans show growth for the future, but what does that mean for Turkey?  How will the economies of Portugal & Spain hold up after the financial breakdowns in Greece & Ireland?  The people of Europe have spoken a number of times when European constitutions have been voted down in France &  Holland.  As the largest economy in Europe with the most financial might, biggest contributor to & benefactor from a unified Europe, Germany is a key decision-maker in the future of Europe.  The general questions posed to them are how committed are they to the EU as is stands now?, & how much are they willing to pay to keep it that way? They’ve already put 100M Euros in to bring in the IMF as sheriff in Greece & Ireland & created a 1TR Euro safety net to protect against future crises.   German elections are coming in the spring, so we will find out soon what the German electorate thinks.

Folsom doesn’t see a break-up or breakdown of the EU.  Although the legislators might have been ahead of the people in proposing a European constitution & there is still concern that they may be creating a federal monster in Europe, French & German leadership is strong.  Chancellor of Germany Angela Merkel suggested a potential free-trade agreement (FTA) for Europe with the US as a result of the failure of the Doha Round of WTO negotiations.  Canada is negotiating right now with Europe on an FTA, which could be a model for the US.  A key sticking point is agriculture.   They know where they’re going, as the EU structure has endured.

Q&A

  • China has bought goodwill in Europe by buying Greek & Irish bonds.  The Chinese trade surplus is not nearly as great with Europe as it is with the US.
  • There is no formula to resolve the issue of managing a currency, the Euro, with central monetary control of the money supply by the European Central Bank (ECB), but without any fiscal control of many very diverse federal country budgets over what they spend.  It’s been suggested for the ECB to enforce sanctions, but a unanimous vote of financial ministers is required & that won’t happen.  They can’t even agree on a definition of insolvency.  The Germans simply want to make sure that federal government deficits don’t exceed 3% of each country’s GDP.
  • An alliance between the EU & NAFTA makes sense, but again, the hang-up is on trade in agriculture & Europe’s Common Agricultural Policy (CAP).
  • There are rumblings of undercurrents of opposition to increased federalism in Europe.  There is a reason the German government hasn’t asked its people to vote on it.  The ringer is that the German constitutional court hasn’t bought into the sovereignty of the European Court of Justice.  Merkel doesn’t want to surrender German sovereignty to Europe.
  • The UK actually joined the EU with a trick that did not require the OK of its parliament.  The Brits are team players with the EU, playing by the rules & implementing lots of legislation, but they do lose a lot of debates there.
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