A Trumpian trade war, a new German government, and an Italian election mess

A new government is finally ready to take office in Germany, just in time for a threatened trade war from Washington and political chaos in Europe's fourth largest economy.

Juncker's Wallonia bypass could save Brexit

Next week the Commission is expected to outline a plan in which governments will no longer have veto power over most EU trade deals. It could be a game-changer for the Brexit negotiations.

One year ago, as Canadian Prime Minister Justin Trudeau prepared to board a plane tp Brussels to sign a landmark free trade deal with the European Union, he had a bone to pick with some fellow Francophones 4km to the south of the EU capital.

The deal was done and all 28 EU national governments had agreed to it. But the tiny region of Wallonia, the French-speaking, politically far-left Southern part of Belgium, was threatening to wield a veto. A region of 3.5 million people was about to unilaterally kill the trade deal agreed by the other 509 million. 

The premier of Wallonia asked Trudeau to cancel the visit, saying it would be a "provocation" to do so while Wallonia had not yet given its assent. The Canadian PM cancelled his flight, but he was not pleased. "If, in a week or two, we see that Europe is unable to sign a progressive trade agreement with a country like Canada, well then with whom will Europe do business in the years to come?" he asked.

May's Brexit vision depends on the goodwill of Australians

Brexit Britain will cut itself off from Europe and 'turn to the world'. But does the world want them? In Australia, feelings are ambivalent.

This morning in London, Theresa May will make what is probably the most important speech of her political career.

The British people "voted to leave the European Union and embrace the world" she will say, outlining a vision for the UK to completely cut itself off from the EU and instead focus on rebuilding a globally-focused maritime trading empire. The first focus will be on the countries which share a monarch with Britain - Australia, New Zealand and Canada. 

I've been travelling through Australia for the past two weeks as part of a month-long visit, and I've been asking Australians how they feel about being part of Britain's glorious new trading vision. The reaction has largely been bemusement. But more on that later.

Soft Brexit or Hard Brexit? It's a false choice

Today's vote in Wallonia against an EU-Canada free trade deal makes it painfully clear - Europeans will not approve any arrangement that lets Britain have its cake and eat it too.

Over the past weeks, people in the UK have been engaged in a tortured debate - should we have a "hard Brexit" or a "soft Brexit"?

A hard Brexit, viewed by most people (even the Brexiteers) as the worst outcome, would mean that the UK cuts economic ties with Europe, and continues to trade with the EU only on WTO terms. In other words, the UK is left with the same relationship with the EU enjoyed by Morocco.

A 'soft Brexit' would mean the UK retains market access while formally leaving the EU. This would occur either by the UK joining the EEA (à la Norway and Iceland) or negotiating bilateral treaties (à la Switzerland). Either of the latter two options would involve compromise. Crucially, the EU has made clear that the UK can't have either of these "soft Brexit" scenarios without maintaining freedom of movement (the ability for EU citizens to live and work in any EU country).

Why England in the EEA would be a victory for France

France has always resented British influence in the EU. Excluding the UK from EU law-making could reshape the union in the French model.

In 1963, when the United Kingdom first applied to join the European Community, the answer from Paris was a resolute 'non'. 

French President Charles de Gaulle vetoed the application in '63 and again in '67. He said that "a number of aspects of Britain's economy, from working practices to agriculture...made Britain incompatible with Europe". He added that the UK had a “deep-seated hostility” to any pan-European project.

It wasn't until De Gaulle relinquished the French presidency that Paris finally relented and allowed the UK to join the club in 1972.

So what were the "aspects of Britain's economy" that De Gaulle was so worried about? It was free market liberal economics. De Gaulle, and his successors, distrusted the "Anglo-Saxon" (The French term for Anglo-American) model of capitalism and had a very different vision for Europe.

Putin suggests an EU-Russia union

Should Russia and the EU link up in a "common continental market?" Vladimir Putin thinks so. The Russian prime minister made the case for such a union in an editorial appearing in a German newspaper yesterday ahead of a two-day visit to Germany. But German Chancellor Angela Merkel quickly made her feelings on the subject known. Asked about Putin's editorial at a press conference yesterday she said she would have to "pour cold water" on the idea when she meets with Mr. Putin, though she said an EU-Russia free trade zone is a possibility.

The idea of a pan-European free trade zone, similar to the North American Free Trade Agreement (NAFTA) struck in the 1990's, has been floated for some time. But Putin's editorial seems to go further than this. "We propose the creation of a harmonious economic community stretching from Lisbon to Vladivostok," he wrote. "The result would be a unified continental market with a capacity worth trillions of euros." He said "the global economic crisis has revealed both Russia and the EU to be economically very vulnerable," adding that Russia is too dependent on its oil and gas exports while the EU is too dependant on imports, and the EU has lost its competitive edge because of de-industrialisation. Linking the two economies, Putin wrote, could solve problems on both sides.

May you live in interesting times

I've spent the past few days getting settled here in Brussels, and so far things have gone quite well. I've got a great apartment right in Centre Ville next to the Grand Place, and my intensive French class is fantastic. It's an advanced class and there's only seven of us, each from a different country.

Last night I had drinks with a French friend who lives here in Brussels, and we were talking about different things going on the EU these days. There wasn't a shortage of things to discuss. Toward the end of the conversation, we remarked on what a crazy time this is to be living in Brussels reporting on the EU. It feels like we're on the precipice of something, particularly in Europe. Things are about to change, we speculated, and they could possibly go in extreme directions. It looks like we've all been victims of that old purported Chinese curse, "may you live in interesting times." But to continue with the 'mangled cliches claiming to be proverbs theme', the Chinese character for crisis also means opportunity! Could the economic crisis lead to a strengthening of pan-European institutions, or could it just as easily lead to the disintegration of the entire EU project?

Just say no to EU roaming

This is funny, I’ve been complaining for the last week about how Europeans should demand an end to roaming mobile charges within the EU, and then the issue goes before the EU parliament today.

The assembly voted to restrict the amount that mobile phone carriers can charge EU consumers for roaming in other EU countries. Right now, if I wanted to use my phone when I go to France next weekend, for instance, I would have to pay over a dollar a minute to make or receive a call. Same with text messages or internet use.

I’ve been complaining about this because I gave in last week and signed up for a monthly mobile plan. I really shouldn’t have one, I don’t like talking on the phone very much (I really just have short conversations to make plans) so I don’t use many minutes, pay-as-you-go would have been the better system for me. But I really wanted the new N95, and without signing up for a plan it would have been $1,000.

I also got the free unlimited internet and GPS locating. But what’s annoying is that the times when I’ll most want to be using it, namely when I’m traveling, I can’t use it. Since the UK is a tiny country, when I’m traveling I’ll most likely be in a different country in Europe. At those times the rate for going online or using GPS would be outrageous, as would be any attempt to make a call.

I’ve been trying to get my British friends to understand how unfair and frustrating this is. In the US, when you travel you are most likely staying within the country. That means anywhere you go, you are never roaming. I can take a trip to LA, Seattle, Denver, Chicago, New Orleans, Miami, anywhere I like, and I will never be roaming. And, it isn’t any extra to call numbers in those places either. Every cell phone plan comes with nationwide calling, no long distance anywhere domestic, ever. That means when I moved around so much the past few years I was able to keep my New York number, because it wasn’t any extra for people in Chicago to call me.

This wasn’t always the case. When cell phones first came out most plans were just regional, meaning that if you left your individual coverage area (Connecticut, for instance) you were roaming. But eventually the market took action, one company offered nationwide coverage, and soon they all followed. Once again, the large unified market of the US worked to the benefit of consumers.

What angers me is that all of the big mobile carriers in Europe, TMobile, Vodaphone, and Orange for instance, operate all over the country. I have TMobile. But if I use the TMobile network in Germany, I get charged roaming. I think that’s pretty outrageous. So I’ve been asking, since the EU is trying to encourage open borders and an open trade zone, shouldn’t the force the mobile carriers to allow their customers to use their entire network?

Now I guess they’ve taken a step in the right direction by voting to cap roaming rates at 40 Euro cents a minute to make a call and 15 Euro cents a minute to receive one. If it passes the final hurdle the changes will hopefully go into effect by this summer.

While I welcome this decision, I think it doesn’t go far enough. I think the major carriers should be forced to allow consumers to use their entire network within the EU. I really don’t understand why one of them hasn’t done it. Think about it, if TMobile suddenly said we’re going to open up our entire European network, they would get tons of people switching to it. It would shut down their small local competitors and give them a huge edge in every market.

For all you Eurosceptics out there this is just another example of how not having a single market hurts you as a consumer. Think about the myriad advantages Americans have because we have such a gigantic open market. This point is rarely made by politicians here, but it would go a long way in swaying the public toward the EU project.