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21. The EU Self-Surplus Puzzle: An Indication of VAT Fraud?

Author:
Martin T. Braml and Gabriel Felbermayr
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The world runs a trade surplus with itself: Exporters report larger values of exports than what importers report as imports. This is a logically impossible but well known empirical fact. Less well known, in recent years, more than 80 percent of the global surplus is a trade surplus that the EU has with itself. In this paper, we show that this self-surplus of the EU amounts to a striking 307 billion Euro in 2018. It persists in goods, services, and secondary income accounts. It also exists within the Euro Area, and is strongest between neighboring countries. Around the 2004 Eastern Enlargement the EU’s self-surplus quadrupled. Balance of payments data from the United Kingdom appear highly distorted. We argue that the phenomenon is not only due to measurement error. Rather, a large fraction of the EU’s self-surplus puzzle seems related to fraud in value added tax. The loss in tax income could amount to as much as 64 billion Euro per year.
Topic:
International Political Economy, European Union, Trade, and Trade Policy
Political Geography:
Europe

22. EU Trade Policy amid the China-US Clash: Caught in the Cross-Fire?

Author:
Felipe González and Nicolas Véron
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
China's rapid rise and unique economic system and the increasingly aggressive and disruptive US trade policy are posing an unprecedented threat to the global rules-based trading and economic system. The European Union has critical interests at stake in the current escalation, even as it has so far been comparatively spared from US trade policy belligerence and China's reactions. In this context, the European Union should adopt an independent and proactive stance, building on recent efforts and going beyond them. The European Union, even more than the United States or China, has a strategic interest in the preservation of the global rules-based order embodied by the World Trade Organization (WTO). It must play a leading role in steering WTO reform and modernization, working closely with broadly aligned third countries such as Japan and other players. It should expand its outreach beyond its immediate negotiating counterparts in both the United States and China, and leading European officials at both the EU and member state levels should work at better understanding China. While strengthening its domestic policy instruments to address new challenges, such as the screening of foreign direct investment for security purposes, the European Union must also resist its own temptations of protectionism and economic nationalism. In support of these objectives, the European Union should prepare itself for difficult decisions, which may involve revising some of its current red lines in international trade negotiations. Conversely, the European Union should stand firm on principles such as refusing one-sided agreements and rejecting abusive recourse to national security arguments in trade policies. The European Parliament, in working with the European Council and the European Commission, will have a critical role to play in steering the European Union through these challenging times.
Topic:
International Relations, Economics, Trade Wars, and Trade Policy
Political Geography:
China, Europe, Asia, North America, United States of America, and European Union

23. EU Relations with Azerbaijan: More for Less?

Author:
Jacqueline Hale
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Open Society Foundations
Abstract:
The EU’s rhetoric on comprehensive engagement and a multidimensional Neighbourhood Policy has failed to result in pressure to improve human rights in Azerbaijan. Instead, energy security has regularly trumped human rights concerns as the EU has privileged a narrower set of priorities than those agreed in the joint Action Plan. The expansion of energy cooperation, far from improving governance and transmitting European norms, has resulted in even less willingness to raise these concerns in Baku. EU policymakers, believing that they lack leverage in the face of hydrocarbon-rich Azerbaijan and insecure about the attractiveness of what the EU has to offer, have not attached conditions to the relationship. Against the background of the Arab Spring and the recent Neighbourhood Policy review, this paper discusses the EU's potential leverage, concluding that a robust EU policy that incorporated human rights would deliver better results. It is time for the EU to link its expectations for political reform to policy consequences.
Topic:
Human Rights, Regional Cooperation, Democracy, and Trade Policy
Political Geography:
Europe and Azerbaijan