Search

Begin New Search Content Type Policy Brief

121. Rebooting Europe: a framework for a post COVID-19 economic recovery

Author:
Julia Anderson, Simone Tagliapietra, and Guntram B. Wolff
Publication Date:
05-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
COVID-19 has triggered a severe recession and policymakers in European Union countries are providing generous, largely indiscriminate, support to companies. As the recession gets deeper, a more comprehensive strategy is needed. This should be based on four principles: viability of supported entities, fairness, achieving societal goals, and giving society a share in future profits. The effort should be structured around equity and recovery funds with borrowing at EU level.
Topic:
Climate Change, Energy Policy, Global Recession, European Union, and COVID-19
Political Geography:
Europe

122. The European Central Bank in the COVID-19 crisis: whatever it takes, within its mandate

Author:
Gregory Claeys
Publication Date:
05-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
To keep the euro-area economy afloat, the European Central Bank has put in place a large number of measures since the beginning of the COVID-19 crisis. This response has triggered fears of a future increase in inflation. However, the ECB's new measures and the resulting increase in the size of its balance sheet, even if it were to be permanent, should not restrict its ability to achieve its price-stability mandate, within its legal obligations.
Topic:
Governance, Central Bank, Macroeconomics, Judiciary, and COVID-19
Political Geography:
Europe

123. COVID-19’s reality shock for external-funding dependent emerging economies

Author:
Alicia Garcia-Herrero and Elina Ribakova
Publication Date:
05-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
COVID-19 is by far the biggest challenge policymakers in emerging economies have had to deal with in recent history. Beyond the potentially large negative impact on these countries’ fiscal accounts, and the related solvency issues, worsening conditions for these countries’ external funding are a major challenge.
Topic:
Monetary Policy, Regulation, Finance, Economy, Central Bank, and COVID-19
Political Geography:
Europe, Asia, and Latin America

124. A European carbon border tax: much pain, little gain

Author:
Ben McWilliams and Georg Zachmann
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Commission should not make the implementation of a carbon border adjustment mechanism into a must-have element of its climate policy. There is little in the way of strong empirical evidence that would justify a carbon-adjustment measure. Moreover, significant logistical, legal and political challenges will arise during the design. The EU should instead focus upon the implementation of measures to trigger the development of a competitive low-carbon industry in Europe.
Topic:
Climate Change, Energy Policy, European Union, Trade Policy, and Carbon Tax
Political Geography:
Europe

125. How good is the European Commission’s Just Transition Fund proposal?

Author:
Alienor Cameron, Gregory Claeys, Catarina Midoes, and Simone Tagliapietra
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
On 14 January 2020, the European Commission published its proposal for a Just Transition Mechanism, intended to provide support to territories facing serious socioeconomic challenges related to the transition towards climate neutrality. This brief provides an overview and a critical assessment of the first pillar of this Mechanism, the Just Transition Fund (JTF).
Topic:
Climate Change, Governance, Budget, European Union, Macroeconomics, Renewable Energy, and Transition
Political Geography:
Europe

126. FDI another day: Russian reliance on European investment

Author:
Marta Dominguez-Jimenez and Niclas Poitiers
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Most foreign direct investment into Russia originates in the European Union: European investors own between 55 percent and 75 percent of Russian FDI stock. This points to a Russian dependence on European investment, making the EU paramount for Russian medium-term growth. Even if we consider ‘phantom’ FDI that transits through Europe, the EU remains the primary investor in Russia. Most phantom FDI into Russia is believed to originate from Russia itself and thus is by construction not foreign.
Topic:
Economics, Energy Policy, Foreign Direct Investment, Governance, Sanctions, European Union, and Global Political Economy
Political Geography:
Russia and Europe

127. From climate change to cyber attacks: Incipient financial-stability risks for the euro area

Author:
Zsolt Darvas, Marta Dominguez-Jimenez, and Guntram B. Wolff
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The European Central Bank’s November 2019 Financial Stability Review highlighted the risks to growth in an environment of global uncertainty. On the whole, the ECB report is comprehensive and covers the main risks to euro-area financial stability, we highlight issues that deserve more attention.
Topic:
Governance, Finance, Central Bank, and Macroeconomics
Political Geography:
Europe

128. Market versus policy Europeanisation: has an imbalance grown over time?

Author:
Leonardo Cadamuro and Francesco Papadia
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
This Policy Contribution tests the hypothesis that an imbalance has grown in Europe over the last few decades because markets have integrated to a greater extent than European-level policymaking, potentially creating difficulties for the democratic process in managing the economy. This hypothesis has been put forward by several authors but not so far tested empirically.
Topic:
Markets, Governance, Democracy, Regional Integration, Macroeconomics, and Trade Policy
Political Geography:
Europe

129. Curbing State-Driven Trade Policies: How to Craft New & Effective Approaches to Counter Distortive Practices

Author:
Wendy Cutler
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Asia Society Policy Institute
Abstract:
Much attention has been focused on China’s unfair intellectual property practices and the imbalance in the U.S.-China trade relationship, but equally troubling are large-scale Chinese industrial subsidies, the behavior of state-owned enterprises (SOEs), and in general, the oversized and opaque role of the Chinese state in the economy. While the U.S-China phase one trade deal tackled some important sources of bilateral tension and aimed to boost Chinese purchases of U.S. goods and services, it was silent on industrial subsidies and related matters, leaving them for the next phase of negotiations, the fate of which is now in question. U.S. concerns on these matters are shared by other trading partners including the European Union (EU) and Japan. Yet despite widespread disapproval of such practices, building new global rules to combat subsidies has proven challenging. This is due to several factors, ranging from gridlock at the WTO, differences of views among like-minded countries on the required level of ambition, and uncertainty as to how best to approach the enormous complexities in China’s subsidies and related policies. The Organization for Economic Cooperation and Development (OECD) has sought to unpack this complexity, conducting recent studies of Chinese subsidies in two key sectors: aluminum and semiconductors. Both studies illustrate how Chinese subsidies are not simple cash handouts from the state to protected firms so that they can sell at favorable and distorting prices. The OECD finds subsidies can take various forms, including downstream or upstream help that trickles up or down to the firm that’s intended to benefit. They can take the form of favorable equity or debt purchases or bonds provided at below-market rates. And with interconnected global value chains, subsidies can effectively be granted covertly, intended to benefit one firm that might be several links away along the chain. In China, the problem is compounded by an opaque “party-state” structure that obscures not only the recipients of subsidies, but also the source. According to Mark Wu, a Harvard Law School professor who previously served as the Director for Intellectual Property in the Office of the U.S. Trade Representative, subsidies not only flow directly from government bodies in Beijing, but also indirectly through informal responses to directives — sometimes even left unsaid, but understood — from the Chinese Communist Party. Against this backdrop, the Asia Society Policy Institute (ASPI) convened two roundtables in the fall of 2019 and the spring of 2020 to discuss how best to build a new rules-based infrastructure that might combat such subsidies and prevent trade-distorting results such as unfair competition, market access barriers, and, above all, overcapacity in global markets. Experts from the private sector, think tanks, governments, and academia weighed in with possible solutions, which included: Negotiating new rules in the WTO; Using the WTO dispute settlement system, despite its often-discussed flaws; Forming ad hoc rules-based approaches, where possible, like the U.S-EU-Japan trilateral initiative; Plurilateral negotiations conducted on a sector-by-sector basis; Forming coalitions of like-minded trading partners to establish an alternative model, much in the way that the Trans-Pacific Partnership (TPP) was framed. During the roundtables, most experts agreed that there is no silver bullet that solves the subsidy and related issues on its own. And most agree that, left unaddressed, the problem is likely to deepen. The COVID-19 pandemic might even exacerbate it by leading to more state involvement in economies around the world and making it hard to discipline Beijing’s practices. Recognizing all of these real challenges that the international trade community faces, the roundtables reached the following key conclusions: Transparency on the scope, level, and nature of industrial subsidies is vital; Efforts to publicize the ongoing work in these areas, particularly that being done by the OECD, should accelerate; Turning research into tangible new policies is a key step; and Persuading China to agree to updated rules will be necessary, given that China is a singular contributor to overcapacity.
Topic:
International Trade and Finance, Treaties and Agreements, Trade, Industry, and WTO
Political Geography:
China, Asia, North America, and United States of America

130. United G20 must pave the way for robust post-COVID-19 recovery

Author:
Phil Thornton
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The world is facing unprecedented health and economic crises that require a global solution. Governments have locked down their economies to contain the mounting death toll from the COVID-19 pandemic. With this response well underway, now is the time to move into a recovery effort. This will require a coordinated response to the health emergency and a global growth plan that is based on synchronized monetary, fiscal, and debt relief policies. Failure to act will risk a substantial shock to the postwar order established by the United States and its allies more than seventy years ago. The most effective global forum for coordinating this recovery effort is the Group of 20 (G20), which led the way out of the global financial crisis (GFC) in 2009, the closest parallel we have to the current catastrophe. Eleven years ago, world leaders used the G20 meeting in London as the forum to deliver a unified response and a massive fiscal stimulus that helped stem economic free fall and prevented the recession from becoming a second Great Depression. A decade on, it is clear that the G20 is the only body with the clout to save the global economy. This does not mean that the G20 should be the only forum for actions for its member states. The United States, for example, should also work closely with like-minded states that support a rules-based world order, and there are many other fora where it can and must be active with partners and allies. But no others share the G20’s depth and breadth in the key focus areas for recovery. The other multilateral organizations that could take up the challenge lack either the substance or membership. The United Nations may count all countries as members but is too unwieldly to coordinate a response. The International Monetary Fund (IMF) has the resources but requires direction from its 189 members. The Group of Seven (G7), which once oversaw financial and economic management, does not include the fast-growing emerging economies. The G20 represents both the world’s richest and fastest-growing countries, making it the forum for international collaboration. It combines that representation with agility.
Topic:
Security, Energy Policy, G20, Global Markets, Geopolitics, Economy, Business, Trade, Coronavirus, and COVID-19
Political Geography:
China, Middle East, Canada, Asia, Saudi Arabia, North America, and United States of America