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161. Foul Play? On the Scale and Scope of Industrial Subsidies in China

Author:
Frank Bickenbach, Dirk Dohse, Rolf Langhammer, and Wan-Hsin Liu
Publication Date:
04-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
China makes extensive use of subsidies in order to take a leading role on the global markets in the green technology sectors of electric vehicles, wind turbines and railway rolling stock. According to DiPippo et al. (2022) and recent OECD studies, the industrial subsidies in China are at least three to four times or even up to nine times higher than in the major EU and OECD countries. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019. According to recent data of 2022, direct government subsidies for some of the dominant Chinese manufacturers of green technology products had also increased significantly - the electric car manufacturer BYD alone received EUR 2.1 billion. The authors point out that Chinese companies are benefiting from further support measures, including subsidized inputs, preferential access to critical raw materials, forced technology transfers, the strategic use of public procurement and the preferential treatment of domestic firms in administrative procedures. The authors recommend the EU to use its anti-subsidy proceeding against BEV imports from China to enter into negotiations with the Chinese government and persuade it to abolish public support measures that are particularly harmful to the EU.
Topic:
Globalization, International Trade and Finance, Foreign Direct Investment, European Union, Business, Renewable Energy, Industry, Subsidies, and Electric Vehicles
Political Geography:
China and Europe

162. Build Carbon Removal Reserve to Secure Future of EU Emissions Trading

Author:
Wilfried Rickels, Mathias Fridahl, Roland Rothenstein, and Felix Schenuit
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
• A carbon central bank (CCB) that translates carbon removals into allowances would transform the European Union Emissions Trading System (EU ETS) from a fiat allowance to a gold standard system, ensuring unchanged net emissions on the path to net-zero greenhouse gas (GHG) targets. • Meeting such expectations would require a CCB with a clear commitment to a net-zero GHG target, but also with the capacity to manage the market on the path to that target. • This requires a strong institutional framework, which could be achieved by integrating the CCB into the European Central Bank (ECB), building on its reputation and capacity. • Given the long lead time to set up such an institution, the European Commission should already take the first steps to fulfil the other requirement, namely building up a large carbon removal certificate (CRC) reserve, which would provide the CCB with the credibility to stabilize the market in the future. • To fill the CRC reserve, the EU should emulate the US approach by immediately initiating resultbased carbon removal procurement as a first key step of a sequential approach to integrated carbon removal into climate policy. • This could be achieved by developing a centralized procurement program, supporting existing procurement programs, such as Sweden’s or Denmark’s, and incentivizing additional EU member states to initiate procurement. • An important prerequisite for this is the ability to bank CRCs that are not yet eligible for compliance with near-term EU climate targets and use them in later crediting periods.
Topic:
Climate Change, European Union, Carbon Emissions, Net Zero, and Carbon Central Bank
Political Geography:
Europe and Global Focus

163. EU-China Trade Relations: Where Do We Stand, Where Should We Go?

Author:
Alexander Sandkamp
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
• In the aftermath of the Covid-19 pandemic, China’s share in European trade has fallen continuously. Nevertheless, the country remains the EU’s largest source of imports (20.5 percent in 2023) and its third largest export destination (8.7 percent). • This apparent dominance of China is put into perspective when incorporating intra-EU trade. For example, Germany – Europe’s largest economy – sent 6.1 percent of its ex-ports to China, but 55 percent to EU members states. For imports, the Chinese and Euro-pean shares are 11.5 percent and 52.7 percent, respectively. • Decoupling the EU from China (i.e. almost eliminating bilateral trade) would permanent-ly reduce European real income by 0.8 percent in the long-run. In terms of gross domes-tic product in 2023, the EU would forego 136 billion EUR of value added every year. Short-term effects are likely to be stronger. • China dominates global production of important products such as laptops and mobile phones as well as raw materials including Germanium and Gallium that are critical for the green energy transition. A trade disruption might thus both delay the energy transi-tion and increase its costs. • To reduce specific dependencies, the EU should intensify its efforts to diversify procure-ment by increasing the attractiveness of alternative suppliers. Finding the courage to move forward in the negotiation of free trade agreements with potential strategic part-ners such as Australia and the Mercosur countries would strengthen the EU’s geopolitical position and increase prosperity among partners.
Topic:
Globalization, International Trade and Finance, European Union, Geoeconomics, and Decoupling
Political Geography:
China, Europe, and Germany

164. Nigerien Law 2015-36: How a New Narrative in the Fight Against Smugglers Affects the Right to Leave a Country

Author:
Sarah Isabel Pfeiffer
Publication Date:
02-2024
Content Type:
Journal Article
Journal:
The Goettingen Journal of International Law
Institution:
The Goettingen Journal of International Law
Abstract:
In 2015, the Republic of the Niger adopted an anti-migrant smuggling law (Law 2015-36) with direct involvement of the European Union (EU). Since then, concerns have been raised that this law constitutes a de facto travel ban for anyone moving northwards from Niger. Rather than addressing the involvement of the EU, this article will focus on the direct obligations of Niger, including those set by regional human rights agreements, as the country where the so-called cooperative migration control takes place. People on the move towards Libya will be a special focus as the most affected by the Nigerien law. First, the Nigerien law and its provisions will be described, in order to then assess whether the law and its application infringe the human right to leave any country including one’s own. Drawing from the findings of non-governmental organizations and the United Nations Special Rapporteur on the Human Rights of Migrants, this article argues that Law 2015- 36 renders it impossible for non-Nigerien nationals to leave the country without risking their life and safety. Thus, Law 2015-36 infringes the right to leave. The third part explores possible justifications for the law with a focus on the interests of people on the move, the interests of bordering States, and national interests. It finds that Law 2015-36 is disproportionate and, in fact, impairs the essence of the right to leave, resulting in an unjustified interference. The concluding fourth part contains recommendations for possible amendments to the law.
Topic:
Human Rights, International Law, Migration, European Union, Smuggling, and Irregular Migration
Political Geography:
Africa, Europe, and Nigeria

165. EU-NATO relations in a new threat environment: Significant complementarity but a lack of strategic cooperation

Author:
Tuomas Iso-Markku
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The relationship between the EU and NATO has traditionally been characterised by a degree of ambiguity and competition but also by attempts at coordination and cooperation. In the context of Russia’s war on Ukraine, the EU and NATO have played crucial and mutually complementary roles, taking advantage of their respective strengths. However, there are also many areas in which their efforts overlap and closer cooperation would be necessary. Thus far, only small steps in this direction have been taken. Ideally, the EU and NATO would work together to develop a more strategic outlook on issues such as developing Europe’s military capabilities, strengthening the security and defence of membership aspirants as well as managing crises beyond EU and NATO territory. Formal relations between the EU and NATO remain complicated. However, there are ways to work around the existing obstacles to EU-NATO cooperation, not least in the capitals of EU and NATO member states.
Topic:
Defense Policy, NATO, European Union, and Threat Assessment
Political Geography:
Europe

166. The EU and military AI governance: Forging value-based coalitions in an age of strategic competition

Author:
Katja Creutz, Ville Sinkkonen, Mahmoud Javadi, and Michal Onderco
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The use of Artificial Intelligence (AI) has increased dramatically, driving discussion on the best way to govern it. While much of the discussion has focused on AI in the civilian domain, its usage in military applications raises distinct ethical and legal questions that actors increasingly seek to address. Governance initiatives are becoming more common, even though strategic competition between major powers remains a challenge. The EU navigates this governance landscape more hesitantly than in the civilian domain with its Artificial Intelligence Act (AIA). More information is needed regarding what kind of regulation, and especially with whom the Union could pursue such avenues. This paper seeks to address these questions by presenting and analyzing results from an expert survey conducted in autumn 2023 by researchers at Erasmus University Rotterdam. It argues that the EU needs to pursue a broad range of cooperation formats to advance its values and interests in the context of military AI. Strategic multilateralism is needed, especially with like-minded states that share values with the Union.
Topic:
Science and Technology, Governance, European Union, Artificial Intelligence, and Strategic Competition
Political Geography:
Europe

167. Foreign investments, de-risking and the EU’s green transition: Mining critical minerals in Finland

Author:
Elina Sinkkonen and Marco Siddi
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
The EU is highly dependent on imports of critical and strategic raw materials, both at the extraction and the processing stages. Many of the key supply chains for these materials are dominated by China. In addition, the EU is also dependent on China for many green technologies, such as battery production. The EU’s Critical Raw Materials Act (2023) sets concrete targets for reducing dependencies in the green transition by 2030. Considering both the level of existing dependencies in critical and strategic raw materials and the fact that the Act does not provide any new funding instruments, the feasibility of reaching the set targets is questionable. The Finnish mining sector presents an interesting case that illustrates the scarcity of domestic financing. Most metal ore mines in Finland are owned by foreign companies, and similar trends apply to the refining and recycling of materials. If the EU wishes to mitigate the risks of becoming dependent on authoritarian countries, foreign investments in sectors relevant to the green transition should be subject to investment screening. For example, the Finnish Act on the Screening of Foreign Corporate Acquisitions does not cover greenfield investments such as investments in building battery factories.
Topic:
European Union, Mining, Supply Chains, Green Transition, Raw Materials, Critical Raw Materials (CRM), and De-Risking
Political Geography:
Europe and Finland

168. EU support for Ukraine: The paradox of insufficient assistance

Author:
Tyyne Karjalainen
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
Since Russia started its aggression against Ukraine in 2014, EU member states have lacked the political will to firmly contest Russia’s imperialism in the shared neighbourhood. This was concretized in the rejection of Ukraine’s EU path and the failure to build Ukraine’s military capabilities before 2022. The EU’s response to Russia’s full-scale invasion has been more successful than expected considering its limited capabilities and some past failures of international security assistance. The West is, however, failing to equip Ukraine to win the war. This paradox of insufficient aid leaves Ukraine in limbo, whereby it is enabled to continue the defence effort but without adequate means to succeed. In theory, the EU backs Ukraine’s strategy of non-negotiation with Russia, but the limited military support is pushing Kyiv towards peace talks. EU capitals continue to disagree over the extent to which Russia’s imperialist policies need to be suppressed, and whether small concessions could help to end the war in Europe. Even in the scenario where Ukraine emerges from the war as a truly sovereign state, the risk of future Russian interference, combined with Ukraine’s particular vulnerabilities and the likely challenges of post-war reconstruction, cast a shadow over its immediate future.
Topic:
Defense Policy, European Union, Military Aid, and Russia-Ukraine War
Political Geography:
Europe and Ukraine

169. The rise of the far right in the European Union: Gaining power not through a sweeping victory, but through creeping normalisation

Author:
Nils Fabian Müller
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
In the 2024 EU elections, far-right parties are expected to win more seats in the European Parliament than ever before. At the national level, too, far-right parties are entering more and more EU governments. Despite these gains, the centre-right European People’s Party, rather than the far right, is likely to play the central role in the EU institutions in the next legislature. The EU’s consensus-based system is a safeguard against the sudden seizure of power by far-right parties. But once they have achieved a certain position, the same system makes it difficult for others to form majorities without them. The EU is therefore facing not a sweeping but a creeping gain in far-right power, as centrist political parties become more open to cooperation, and far-right positions are slowly normalised in political discourse. Paradoxically, the very mechanisms that are supposed to protect national sovereignty (such as unanimity requirements in the Council) are the ones most likely to allow far-right parties to influence EU policy, even if they represent only a minority of EU citizens.
Topic:
Elections, European Union, Far Right, and European Parliament
Political Geography:
Europe

170. The EU’s accidental geopolitics: Europe’s geopolitical adaptation and its limits

Author:
Niklas Helwig
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
This Working Paper develops the idea that the EU is engaged in accidental geopolitics. There is a lack of consensus among EU institutions and members on the extent of the EU’s geopolitical role. The Union’s structures and strategic culture do not reflect a focus on geostrategy and power. Instead, the environment of strategic competition has pushed the EU to act in geopolitical ways, for example through the financing of military aid or the imposition of sanctions. The paper argues that these actions have been accidental rather than intentional. To substantiate this argument, the paper draws on an analysis of several key foreign and security policy developments during the EU’s outgoing institutional cycle (2019–2024). The analysis reveals the EU’s shortcomings in becoming an intentional geopolitical actor, and highlights the role of foreign policy agents within the Union in driving decisions. Accidental geopolitics and the reactive deployment of the EU’s international leverage underline the impact of the Union’s top jobs on its role in international politics.
Topic:
Foreign Policy, European Union, Geopolitics, and Adaptation
Political Geography:
Europe