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151. UK Trade Tracker Q3 2024

Author:
Stephen Hunsaker
Publication Date:
09-2024
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
The UK in a Changing Europe trade tracker focuses on three key areas: UK trade and its performance relative to historical data; UK trade with the EU and what has changed since Brexit; and UK trade in a global context and how it compares to the G7. This tracker reviews the first half of 2024 using ONS and OECD data. Following the election on 4 July, this data provides a final look at what the now-departed Conservative government achieved with its ‘Brexit freedoms’ on trade, and the situation the incoming Labour government has inherited. In this edition, we examine UK goods and services trade as a percentage of GDP as well as trade trends in the first two quarters of 2024. We then break down the data by goods trade with the EU and non- EU countries; exploring whether the previously puzzling trends of declining non-EU trade and stable EU trade continue to defy Brexit expectations. Additionally, we analyse UK total trade by country and region, including the top 10 UK trade partners, and how trade has changed over the past two quarters compared to the last few years. Lastly, we look at how UK trade fares when compared to its counterparts in the G7.
Topic:
Elections, European Union, Economy, Brexit, and Trade
Political Geography:
United Kingdom and Europe

152. UK-EU relations 2024

Author:
Cleo Davies, David Moloney, Jannike Wachowiak, Joël Reland, and Anand Menon
Publication Date:
06-2024
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
UK-EU relations have not been a central issue in this election campaign. Yet this does not mean it will not be a major policy challenge following the election. This report is the second comprehensive UKICE stock take of UK-EU relations, following eighteen months after our first. It aims to see where we have got to, and to suggest how relations might develop in the future. EU relations continue to exert a major influence on our politics and economic performance, and the next government will not be able to ignore that reality. The report highlights that despite the Windsor Framework agreement, UK-EU political dialogue remains limited. The UK has failed to boost its trade with the rest of the world and the government lacks a clear strategy for coping with EU regulatory changes, which complicates life for British businesses. Furthermore, there will be a number of challenges after polling day. The full implementation of both GB border controls and the Windsor Framework could create new trade problems, while negotiations on Gibraltar and fisheries could cause friction. The application of EU law in Northern Ireland also looks likely to be a continued source of tension. Drawing on discussions with key stakeholders, the report covers, among other areas, trade and the economy, migration and mobility, the UK Union, public opinion in the UK and EU, upcoming deadlines and decision points, the impact of political developments on both sides of the Channel, and the wider geopolitical environment.
Topic:
Bilateral Relations, Elections, European Union, Economy, and Trade
Political Geography:
United Kingdom and Europe

153. In Support of Market-Driven Standards

Author:
Matthias Bauer, Fredrik Erixon, Oscar Guinea, and Vanika Sharma
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU published its new Standardisation Strategy in 2022. The strategy contains some good ideas to improve the way European standards are set. However, in its attempt to gain more control over technical standards, the EU risks killing the goose that lays the golden egg. The primary motivation behind the strategy is the belief that the process governing the way CEN, CENELEC, and ETSI – the three European Standardisation Organisations – take decisions over EU standards favours non-EU multinationals. To address this perceived imbalance, EU National Standardisation Bodies will have the exclusive power to accept standardisation requests, and adopt, revise and withdraw European technical standards. These changes are particularly significant for ETSI, Europe’s Standardisation Body in charge of telecommunication standards and one of Europe’s most successful organisations. ETSI is a prime example of EU normative power since it hosts companies from more than 60 countries, while retaining a large membership of EU firms. The regulatory changes included in the strategy are not risk-free. There could be unintended consequences that may undermine a standardisation system that has delivered significant economic benefits for the EU and the world. First, giving more responsibility to EU’s National Standardisation Organisations will turn a European discussion into 30 (EU and EEA) national debates. As a consequence, small companies will not be able to contribute to each and every one of the National Standardisation Organisations, diluting their contribution, while multinational companies, with the resources needed to cooperate with a larger number of bodies, will benefit from an expanding role in the EU standard setting process. Second, if standards are fragmented along national borders and companies must multiply their efforts to take part in several Standardisation Development Organisations, there will be less resources for Research and Development spending. Finally, if each and every National Standardisation Organisation needs to have a position with regards to the acceptance of a standardisation request, or adoption, revision and withdrawal of European technical standards, the time period required to adopt a technical standard may be extended rather than shortened, which is the exact opposite of what the European Commission wants to achieve. The regulatory changes included in the EU Standardisation Strategy are akin to cracking a nut with a sledgehammer. If the European Commission is concerned about the influence of non-EU companies in European Standardisation Bodies, it does not need to overhaul their governance systems. Supporting greater participation of European firms in the European standard system will ease EU’s concerns without the downside risks associated with changing the rules of the game that govern Europe’s Standardisation Bodies. The success of the European standardisation system, which is market-driven and based on consensus, has had significant economic benefits in the development of specific industries, like the European Information and Communication Technologies (ICT). Technical standards in ICT have shaped a European industry that is not only dynamic and international but also enjoys some of the highest levels of wages and Research and Development spending. Moreover, if technical standards are not developed through an open, consensus-based, and industry-led voluntary process, they will be developed in different ways. For instance, governments and private companies can develop standards by themselves. Both solutions are inferior to the current market-driven approach that governs European standards. However, the European market-driven approach to set standards is voluntary, and its success and continuation must not be assumed. European policymakers should be worried about tinkering with a European standardisation system which has produced economic specialisation and innovation to the benefits of EU firms and consumers.
Topic:
Markets, European Union, Regulation, Economy, and Standardization
Political Geography:
Europe

154. What is Wrong with Europe’s Shattered Single Market? – Lessons from Policy Fragmentation and Misdirected Approaches to EU Competition Policy

Author:
Matthias Bauer
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
What is wrong with Europe’s Single Market? The brief answer to that question is that it does not really exist – it is unsingle. The Single Market is in many ways a political illusion. It exists only nominally. Any company doing business in Europe faces significant barriers to cross-border exchanges within the EU, and it is these barriers that hamper companies’ ability to scale and compete internationally on the back of innovation and economic integration. We outline that Brussels and national governments need to beat the drum for eliminating policy fragmentation in Europe’s internal market and at the same time change course in competition policy to sufficiently support investments in innovation, business growth, and the adoption of advanced technologies across industries. Major economic indicators show that Europe is caught in a protracted corporate and technology crisis. The EU has for a very long time now been tailing US corporate and innovation leadership. At the same time, competition with technology-intensive imports from China is getting increasingly intense. Europe’s underperformance is rooted in a legally fragmented internal market which is disincentivising business growth and innovation. On top of that, an outdated approach to competition policy is discouraging businesses from adopting innovation and scaling across national borders, risking that EU companies continue to lose clout and international competitiveness. 30 years have passed since the formal establishment of Europe’s Single Market. Data reveals that regulatory convergence has reversed or come to a halt in most policy areas. Recent policies for technologies and digital business models, which are key sources of cross-industry competitiveness, created new layers of regulation and legal uncertainty in EU and Member State law. Overall, EU policies have not significantly helped European companies, large and small, to do business in another Member State or use advanced technology-enabled services. EU competition policy does not live up to its promise to “enable the proper functioning of the EU’s internal market”. Europe’s competition policy is still fragmented along national borders and largely ignorant to dynamic effects of competition, especially investments in innovation. Due to mixed legal competences, competition rules are often enforced differently by Member States’ national authorities and can be appropriated to support protectionist industrial policy ambitions. The recently enacted Digital Market Act (DMA) demonstrates that the European Commission and Member State authorities favour protection and discretionary enforcement over innovation and economic disruption, without providing solid evidence of abusive business behaviour and consumer harm. With the DMA, the EU introduced legislation with serious ambiguities in objectives, concepts, and rules, and explicitly allows national Member States to regulate competition at their own discretion. A recent attempt by Germany’s competition authority, the Bundeskartellamt, to enforce its own rulebook for large digital companies (Section 19a of the German Competition Act) risks creating a patchwork of competition rules for large providers of advanced digital services across the EU. Local adopters of advanced digital services, particularly small businesses, that use advanced technology services to compete in their markets would be confronted with less choice and quality. Recently imposed policies under the umbrella of European Strategic Autonomy will hardly help policymakers in their ambition to achieve “innovation and technology leadership”. The paramount task for the EU and national governments is to eliminate policy fragmentation in Europe’s internal market, accompanied by an approach to competition policy that embraces investments in innovation and business growth while accounting for the substantial value created through the adoption of innovative technologies and disruptive business models across industries in the EU.
Topic:
Markets, European Union, Economy, and Competition
Political Geography:
Europe

155. The Insurance Implications of Government Student Loan Repayment Schemes

Author:
Martin Gervais, Qian Liu, and Lance Lochner
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
A large literature examines the extent to which consumption responds to idiosyncratic earnings shocks.1 This paper studies whether student loan repayments serve as a source of insurance, much like government tax and transfer programs.2 Indeed, this insurance mechanism is an explicit aim of formal income-contingent repayment schemes in many countries, where the efficient structure of contingencies depends on such market frictions as moral hazard, adverse selection, and costly income verification (Lochner and Monge-Naranjo, 2016). We use new administrative data that links detailed information on Canadian student loan recipients with their repayment and income histories from the Canada Student Loans Program (CSLP), income tax filings, and post-secondary schooling records to measure the extent to which student borrowers adjust loan repayments to insure against income variation.3 Several mechanisms are available for students to adjust loan repayments in response to income fluctuations: formal, like CSLP’s Repayment Assistance Plan (RAP); and informal, such as delinquency or default. Close to 30% of students are enrolled in RAP soon after graduation, although that fraction falls as incomes rise thereafter. ∗ Gervais: University of Georgia, Athens, mgervaisca@gmail.com. Liu: Brock University, St. Catharines, Canada, qliu@brocku.ca. Lochner: Western University, London, Canada, llochner@uwo.ca. We thank the Statistics Canada Research Data Centres at Western University and McMaster University. Lochner gratefully acknowledge support from the Social Sciences and Humanities Research Council of Canada. 1See, e.g., the survey by Meghir and Pistaferri (2011) and references therein. 2Brzozowski et al. (2010) show that the tax and transfer system in Canada is very effective at absorbing income movements. 3Lochner, Liu and Gervais (2021) document sizable transfers implicit in the CSLP through differences in repayment by expected post-school income. Within 5 years of graduation, nearly 10% of borrowers have defaulted on their debt. In addition, borrowers can make larger payments than required should they experience unexpectedly high income: 40% of borrowers have fully repaid their student debt within 5 years of graduation. Indeed, loan payments are shown to increase in income, more so in early years and for individuals with higher initial debt. More formally, we estimate that on average, an unexpected $1,000 change in yearover-year income is associated with a $30 change in loan payment: from a $50 change the year after graduation, declining to a $20 change 5 years after graduation. Loan repayments are also used to absorb income variation that is more permanent in nature: for borrowers whose income is consistently below or above expected income at graduation, the magnitude of average repayment adjustment is similar to the average yearly response.
Topic:
Debt, Education, Economy, Insurance, and Student Loans
Political Geography:
Canada and North America

156. State Upgrading in Global Value Chains and Production Networks: A Conceptual Note

Author:
Andries Bezuidenhout and Søren Jeppesen
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
Despite the contribution and influence of the Global Value Chains (GVCs) and Global Production Networks (GPNs) perspectives on our understanding of processes of economic and social development, the understanding of the role of the state within in this framework has some limitations. Based on an assessment of perspectives on the role of the state within GVCs/GPNs, we propose that there is a need to supplement these existing understandings of the state with an analysis of ‘state upgrading’. Recognizing state upgrading as a distinct process, but related to economic and social upgrading, provides an opportunity to analyze in more detail the dynamic exchange between state institutions and GVCs/GPNs. This allows for the development of an enhanced understanding of what the substantive dimensions of the role of the state within GVCs/GPNs consists of. We suggest that such dimensions should include ‘state representational upgrading’ and ‘state institutional upgrading’. We further propose to extent the analysis to what we term the ‘upgrading nexus’ – describing the dynamic interaction between the three types of upgrading in relation to the main actors in GVCs/GPNs (the private sector/industry, the civil society/labor, and the state). With such an approach, we imply an analytical understanding of how economic, social, and state upgrading in GVCs/GPNs are either mutually reinforcing, or potentially mutually undermining. Our aim is to suggest a way of analytically addressing the role of the state within GVCs/GPNs to supplement and refine existing approaches, not to propose to develop an original theory of the state.
Topic:
Economy, Business, Networks, Institutions, Global Value Chains, Production, and State Upgrading
Political Geography:
Global Focus

157. Businesses, EU Strengthening International Supply Chains

Author:
Piotr Dzierżanowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Over the past three years, global supply chains have experienced problems on an unprecedented scale. Given the rising political tensions and changes in the perception of the role of the economy in international rivalries, a return to international economic relations based on globalisation and trade liberalisation is highly unlikely. Instead, we will witness a necessary strengthening of supply chains, both at the individual business and national levels. For Western economies, the main challenge will be the reduction of related costs.
Topic:
Globalization, European Union, Economy, Business, and Supply Chains
Political Geography:
Europe and Global Focus

158. Building a Coalition - the U.S. Faces Down Competition with China in the Chip Sector

Author:
Damian Wnukowski
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
In recent months, the U.S. has intensified its international efforts to limit China’s ability to produce the most advanced chips. The result includes the introduction by Japan and the Netherlands of restrictions on the export of modern machines for chip production. In response, China is trying to attract foreign investment and develop its own potential in this sector. The U.S. actions may significantly slow the pace of China’s technological development and economic growth and limit its potential to further strengthen its military capabilities. This may make it difficult for China to support Russia with dual-use products and render possible offensive actions against Taiwan harder.
Topic:
Economy, Production, Semiconductors, and Competition
Political Geography:
China, Asia, North America, and United States of America

159. Multipolarity After Ukraine: Old Wine in New Bottles?

Author:
Aldo Ferrari and Eleonora Tafuro Ambrosetti
Publication Date:
02-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
One year after the full-scale invasion of Ukraine, the war has exacerbated the rift between Russia and the “collective West”. While Western governments have been steadfast in punishing Russia for the invasion, other countries around the world have been more ambiguous, at times even choosing to side with Moscow politically or economically. These dynamics have revived the idea of a shift towards multipolarity along an anti-Western trajectory. Are we really heading in that direction? Are we facing increasing fragmentation due to the war or a re-consolidation of longstanding alliances? What principles underlie the formation of these blocs? What are the consequences of these dynamics for global security and the global economy? This Report aims to shed light on these questions, while also outlining the war’s possible future implications for the Russian Federation, the “West”, and the international order.
Topic:
Security, Governance, Economy, Multipolarity, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

160. The EU Indo-Pacific Bid: Sailing Through Economic and Security Competition

Author:
Filippo Fasulo
Publication Date:
04-2023
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
Over the past five years, the Indo-Pacific region's importance for Europe has grown significantly. However, the launch of the EU Strategy for cooperation in the Indo-Pacific in September 2021 and its subsequent implementation have been affected by growing polarisation between the US and China, and by a fast-changing scenario caused by the Russian invasion of Ukraine. This Report examines the state and perspectives of the EU's Indo-Pacific strategy, 18 months after its launch. Are there avenues for cooperation with regional military initiatives, such as the QUAD? How is the economic landscape changing, in particular after the start of negotiations for the Indo-Pacific Economic Framework for Prosperity (IPEF)? What are the main strategies of Indo-Pacific countries for the green transition? And how do the US, China, and ASEAN countries view and act in the Indo-Pacific region?
Topic:
Security, International Cooperation, Economy, Strategic Competition, and Russia-Ukraine War
Political Geography:
Europe, United States of America, and Indo-Pacific