ACADEMIC PREPARATION KIT THE EUROPEAN YOUTH PARLIAMENT 73RD INTERNATIONAL SESSION IN ZURICH, 2013 GLOBAL EUROPE - WORKING TOWARDS SUSTAINABLE ECONOMIES
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
73rd International Session of the European Youth Parliament in Zurich, 19th-28th July 2013
This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
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T h e E u r o p e a n Yo u t h Parliament is a programme of the Schwarzkopf Foundation.
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
ACADEMIC PREPARATION
Dear delegates, The chairs‘ team of the 73rd International Session of the European Youth Parliament in Zurich proudly presents the Preparation Kit containing all 15 overviews for the topics you will be discussing in a few days. With this we would like to warmly welcome you on board of this IS, kickoff the final phase of your preparation, share our excitement about meeting you all in a few days and give you an idea of what will be expected of you. You are all young and well educated people with a lot of potential - and your work and resolutions should reflect that! Zurich will provide you with a wonderful opportunity to prove to the world that you do have an opinion and that the youth of today isn‘t indifferent to today‘s problems! As you will see, the overviews follow a slightly different format than you might be used to since we tried to make the information that is out there more accessible and structure it more obviously. However, like any other overview they still serve as background material for your research and aim to identify the key issues at stake while synthesising the topic area. The links provided at the end of every section will hopefully facilitate your further research but are of course by no means exhaustive. The entire team of officials is here to support you in your preparation for the session in whatever way we can. We are aware that EYP demands a lot from its delegates but our aim is to help you transform these expectations into excitement and a drive to push yourself to do better than last time. The way we intend to this is is by being there for you every step along the way. Not only have the chairs spent an entire weekend discussing their topics in preparation for writing their overviews but most of them have already (or if not yet will soon) interviewed an expert on their topics and prepared an institutional chart providing an overview of all relevant actors. You will find these by clicking on the first link in the Key Actors‘ section. Every chair has also developed a committee preparation concept specifically tailored to the needs of their individual topic. So rather than just asking you all to write generic position papers they will get in touch with you within the next few days to inform you what they have deemed most appropriate to replace the traditional position paper with.
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
Aside from providing the framework for everything we will be doing in Zurich and making the session possible in the first place, the organising team has also been working very hard on inviting interesting experts for you to discuss with during the Forum Event on Monday night. The Media Team of Zurich 2013 will also enrich your academic experience and will do so through four main channels: Firstly, they are dedicating one day to each of the committees of the session on their Facebook page. The journalists have put together further materials on the topics for you to look at and discuss about via Facebook. We warmly invite all of you to participate, especially in the discussions about your own but also the other topics. Secondly, the journalists will provide thoroughly researched committee topic articles which will be published in the newspapers. The articles are meant to provide additional insight into the topic and give a unique perspective on the issue. Thirdly, an interactive discussion wall will be set up at the session during committee work. It will contain updates on the progress of the committee work discussions, questions that have arisen, and controversial ideas that need to be discussed. You will have the chance to comment on the other committees' work, discuss some of their decisions, and familiarise yourself with the other topics already at that early stage. Lastly, the fourth issue of the newspaper will be dedicated to the preparation for the General Assembly. The Media Team will publish short summations of all resolutions and a critical review by the committee journalists. All of this work requires your active participation and we invite you to make the most of the Media Team's output. We will all contribute uniquely to the success of the IS in Zurich. However, in order to make the most out of this experience, you must plan to do so, prepare to do so and expect to do so. The academic preparation is arguably the most important aspect of this and we trust that your excitement, education and eagerness will ensure you won‘t underestimate its importance. We‘ll now leave you to enjoy the topic overviews and we‘ll finish off with the obligatory cheesy quote reminding you, as Cervantes said, that the “journey is better than the inn“ and you are certainly in for an incredible journey! With great excitement, Anar, Chris, Gustaf, Dimitris, Franziska, Hans, Jan, Luca, Marius, Max, Priit, Ronan, Saki, Sophie, Sophie, Valeriia, Zahra and Kerstin
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
TABLE OF CONTENTS
Videos and Other Media Introducing the EU‘s Work and the Committee
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Work Topics List of Topics
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Committee on Employment and Social Affairs (EMPL)
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Committee on Economic and Monetary Affairs I (ECON I)
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Committee on Constitutional Affairs I (AFCO I)
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Committee on Economic and Monetary Affairs II (ECON II)
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Committee on Economic and Monetary Affairs III (ECON III)
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Committee on Civil Liberties, Justice and Home Affairs (LIBE)
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Committee on Constitutional Affairs II (AFCO II)
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Committee on Women’s Rights and Gender Equality (FEMM)
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Committee on Culture and Education (CULT)
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Committee on Internal Market and Consumer Protection (IMCO)
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Committee on Environment, Public Health and Food Safety I (ENVI I)
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Committee on Development (DEVE)
104
Committee on International Trade (INTA)
111
Committee on Industry, Research and Energy (ITRE)
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Committee on Environment, Public Health and Food Safety II (ENVI II)
128
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
VIDEOS AND OTHER MEDIA INTRODUCING THE EU‘S WORK AND THE COMMITTEE WORK TOPICS
This section will provide delegates with insight and valuable information to the aims, processes and rules of governance of the European Union. The generic videos introduce key aspects of EU procedural mechanisms and provide fundamental information in many of the current topics on the EU agenda.
1. INTRODUCTORY VIDEOS •
The EU Institutions Explained by their Presidents A view from the inside: the Presidents of the main European Union institutions share their views on how the EU actually works. Who does what? What's specific to each institution? What is the role of President? How do they see Europe's future?
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How it works: European Laws This animated video guides the viewer through the Ordinary Legislative Procedure and highlights the procedures that lead to the adoption of a new piece of legislation. The animated guide also clearly distinguishes the areas of jurisdiction of all the institutions included in the EU legislative procedure.
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How it works: European Parliament European Parliament explained: who its Members are, how their work is organised, what powers they yield and the impact of all this on the daily life of Europeans.
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How It Works: What will the Lisbon Treaty change for the Parliament? The EP stands to gain the most from the Lisbon Treaty. Not only will the number of MEPs increase, but also their powers to decide together with the Council on matters such as agriculture, justice and home affairs, and the budget. The EP's political control of the Commission will also be strengthened.
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
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How it works: The European Central Bank EuroparlTV investigates the functions and relationships of the European Central Bank with other institutions. This video also provides information regarding the organisational structure of the ECB and its impact on monetary policy across the EU.
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How it works: The Stability and Growth Pact EuroparlTV goes to the Belgian Royal Mint to explain exactly how the agreement designed to limit budget deficits in the members of the Eurozone works. The Stability and Growth Pact was originally created to help Member States avoid economic sliding and allowing for cross-country economic instability.
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How it works: What makes for a good single currency? EuroparlTV investigates the Fiscal Compact and the changes it has brought to the rules of economic governance of Member States. The Fiscal Compact builds on the principles of governance of the Stability Pact.
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How it works: European Stability Mechanism EuroparlTV looks at ESM, a tool shaped for assisting crisis-ridden members of the eurozone and stabilising the area itself.
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The Crisis of Credit Visualized This video traces the origins of the credit crisis of 2008 and the elements that led to an international financial turmoil. This video uses visual assistance to explain the complicated financial processes that led to an international crisis.
2. TOPIC-SPECIFIC VIDEOS COMMITTEE ON EMPLOYMENT AND SOCIAL AFFAIRS (EMPL) Mitigating skills and qualification mismatch with Europe‘s labour market requirements: how can Europe best satisfy the demands of its employers and future employees in order to improve the employability and prospects of younger generations?
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Solving the Skills Mismatch Some places have more jobs that can be filled and some industries can't find skilled workers to fill open positions. Solving the skills mismatch means matching up open positions with skilled workers, while providing the right job and behaviour skills to workers in each market.
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Youth Unemployment: Europe’s Shame Employment in a crisis and the ‘lost generation’ of the young and unemployed.
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS I (ECON I) The faulty set-up of the Eurozone? Should the EU compensate for its Member States‘ lost ability to shape monetary policy and how can the issue of macroeconomic imbalances within the Union best be addressed? •
Eurozone crisis: big doubts, questions remain German and French Finance Ministers face grilling from MEPs on latest Greek debt agreement, the strength of the French economy and the perils of a two-club Europe.
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The Eurozone's Challenges Beyond the Currency Union Stratfor Europe Analyst Adriano Bosoni explains how some Eurozone members would be under duress even if they had not joined the currency union. He focuses on the differences in macroeconomic stability and the need for economic reforms to battle pressure from financial markets.
COMMITTEE ON CONSTITUTIONAL AFFAIRS I (AFCO I) The creation of a powerful institution with monetary and supervisory powers at the heart of Europe: which role should the European Central Bank (ECB) best play in the Single Supervisory Mechanism (SSM) and how can effective, fair, transparent and democratically accountable supervision of the European banking sector be guaranteed? •
Steps on Banking Supervision MEPs move to restore public confidence in banks, advancing European Central Bank responsibility for supervising Eurozone credit bodies.
COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS II (ECON II) Culture change within the banking industry: how can the EU support a sector that works better for the general public without driving investment and bankers out of Europe? •
Steps on Banking Supervision MEPs move to restore public confidence in banks, advancing European Central Bank responsibility for supervising Eurozone credit bodies.
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How Bad Is Culture in Banking? Richard Quest interviews Chris Roebuck, professor of Leadership at Cass Business School, with regards to how greed and unethical activity has reshaped the banking culture and the tendency of individuals to bend the rules within the industry.
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RBS CEO Comments on Bank’s Reputation and Banking Culture RBS CEO comments on how the financial crisis has led to a transition in the culture of the banking industry and the need of banks to ensure customer satisfaction, ethical profitability and the unifying theme of economic stability.
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David Cameron: 'We have to deal with UK banking culture' UK Prime Minister David Cameron analyses the reasons that led to an opaque, establishmentarian banking culture in the UK and provides an insight to the aims of a revised banking culture.
COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS III (ECON III) Off-shore tax havens within and outside Europe: how can Europe jointly address the criminal avoidance of taxes while respecting the citizens’ right to privacy and foreign states’ sovereignty? •
Tax Havens 101: The High Cost of Going Off-Shore This video provides information regarding the tax-avoiding activities of companies and individuals and the locations that offer lax regulation and anonymity. It also informs viewers on the elements that lead to the establishment of tax havens.
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Talking point: Tax evasion MEPs square up to stopping the haemorrhage of hundreds of billions of euros to tax fraud and evasion.
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Interview: Tax havens Is the EU doing its utmost to fight tax evasion and tax havens? And what's the best way to keep money in the EU and in taxpayers' pockets?
COMMITTEE ON CIVIL LIBERTIES, JUSTICE AND HOME AFFAIRS (LIBE) The fear of rising ‘benefit tourism’: anticipating the removal of the restrictions to free movement for Bulgarian and Romanian citizens in 2014 and bearing in mind complaints of unequal access to social benefits within the Union, how should basic EU liberties be safeguarded whilst considering the socio-economic pressures placed upon the welfare systems of Member States? •
Benefits Tourism: Europe scared of mass internal immigration There's a growing spat within the European Union over so-called 'benefit tourism'. Four Member States are calling for a curb on welfare payments to EU citizens making claims outside their home country. Austria, Germany, the Netherlands and the UK all say there's growing pressure on an already crisis-hit benefits system.
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Employment minister: we had no idea about the level of 'benefit tourism' Chris Grayling says new figures showing the number of migrants on the dole will help cut down fraud and "benefit tourism"
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Nigel Farage visits Bulgaria UKIP leader Nigel Farage travels to Bulgaria to see if fears about benefit tourism are justified.
COMMITTEE ON CONSTITUTIONAL AFFAIRS II (AFCO II) Lobbying the European Parliament (EP) for the common welfare? In the light of discussions about the introduction of a legislative footprint and increased civic participation, what strategy should the EP adopt towards interest representation and Non-Governmental Organisations (NGOs) as legitimate partners in policymaking? •
NGOs can influence policies in the EU Roche TD, Minister for European Affairs on how NGOs can influence policies in the European Union.
COMMITTEE ON WOMEN’S RIGHTS AND GENDER EQUALITY (FEMM) ‘Glass ceiling’ effect vs. low public pan-European support for gender quotas: learning from the early lessons of the Commission’s strategy for equality between men and women 2010-2015 and the Council of Europe’s (CoE) Gender Equality Programme of 2012, how should European stakeholders seek to achieve gender parity across the continent? •
Protecting your rights - Gender Equality Sometimes women face barriers to their rights and their freedom to move across Europe. The European Union is working to make sure everyone benefits from the same rights in everyday situations.
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Gender Equality Index The Gender Equality Index is a unique measurement tool that synthesises the complexity of gender equality as a multi-dimensional concept into a user-friendly and easily interpretable measure. It was developed by the European Institute for Gender Equality.
COMMITTEE ON CULTURE AND EDUCATION (CULT) Working with the watchdogs: responding to recent concerns about media regulation in the United Kingdom and Hungary, how should European decision-makers in tandem with the ‘fourth estate’ achieve free and pluralistic media that sustain European democracy? •
Barroso to Hungary: Media freedom is sacred European Commission President Jose Manuel Barroso requested more clarity from Hungary Wednesday on a new media law, which some claim was misrepresented to Brussels.
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Media freedom and pluralism in Europe Media freedom in Europe is severely threatened. In Italy, Hungary, Romania and Bulgaria, but also in the UK and France, this core element of democracy is under threat. Hear about it from the participants to the Transnational Forum on Media freedom organised by European Alternatives as part of the People, Power, Participation project.
COMMITTEE ON INTERNAL MARKET AND CONSUMER PROTECTION (IMCO) Linking the objectives of the Europe 2020 strategy to public procurement policy: building on current reform proposals modernising tendering in the EU to guarantee ‘best value for money', which criteria and instruments should the EU and its Member States use in order to ensure transparent, efficient and competitive use of public funds? •
WTO - Government Procurement agreement revised The World Trade Organisation's General Procurement Agreement is an international agreement regulating procurement between states. It was initially adopted in 1994, but was formally revised on 30 March 2012. This video includes an explanation of the revised Agreement by the Chair of the Committee, Nicholas Niggli, including comments on its scope and consequences by a number of contributors.
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PEPPOL: making procurement better in Europe Pan-European Public Procurement Online provides processes and platforms for the modernisation of the public procurement policies within the EU by utilising technological innovations and networking capabilities
COMMITTEE ON ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY I (ENVI I) Beyond Gross Domestic Product (GDP): in the light of the ‘Trio Programme’ priority for Europe to look beyond growth in capital, how should Europe consider environmental progress, well-being and other indicators alongside more traditional measures of development? •
Beyond GDP: How to Measure Progress Stavros Dimas, Commissioner in charge of Environment, explained in a press conference that GDP was not intended to be a measure of wellbeing and does not pick-up on issue that are vitally important to the quality of lives such as a clean environment, social cohesion or even how happy people are
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Joseph Stiglitz talks about going beyond GDP Discussion continues about improving traditional assessments of economic progress. Nobel Prize-winning economist Joseph Stiglitz talked about the new means of measuring progress well-being and sustainability during a recent visit to the OECD.
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON DEVELOPMENT (DEVE) A framework for ‘common but differentiated global responsibilities’: how should Europe contribute to a fair distribution of the costs for climate mitigation and adaptation between the developed and the developing world? •
Common but differentiated responsibilities: a cognitive toolkit for climate change Explanation of the concept of CBDR which is gaining increasing importance in international law. It was produced by DIPLO‘s Climate Change Community as part of their course discussion on cognitive tool kits for climate change.
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Climate change adaptation: it‘s time for decisions now Watch this video prepared on behalf of the International Climate Change Initiative of the Federal Ministry for the Environment, Nature Conversation and Nuclear Safety of Germany for a general discussion of the effects of climate change and the importance of adaptation.
COMMITTEE ON INTERNATIONAL TRADE (INTA) China’s monopoly on rare earth elements (REEs): how should Europe help to guarantee sustainable supply of REEs, whilst ensuring the viability of reserves and reducing the environmental impact of their mining worldwide? •
What Are Rare Earth Metals - Malcolm Gissen Explains All
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The rare earth metals industry is big business and investing in rare earth metal investments is a new investment trend. Malcolm Gissen explains the applications of rare earth elements and the international supply that is mostly govened by China. EU Trade Chief Pushes China on Rare Earths EU trade chief Karel De Gucht called for China to change its policy on rare earths after meeting with his Chinese counterpart. China is where some 97 percent of rare earths are found. They're crucial to global electronics, defense and renewable energy industries
COMMITTEE ON INDUSTRY, RESEARCH AND ENERGY (ITRE) Emission trading vs. carbon tax in the absence of an international agreement: working towards a decarbonised European economy whilst trying to maintain global competitiveness, which reforms and policies should the EU pursue at home in order to further reduce greenhouse gas emissions? •
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Good for the planet, bad for the pocket? MEPs debate new carbon tax proposals aimed at cutting CO2, but many fear they'll raise the cost of diesel and therefore of other goods. (EU-ETS) The EU Emissions Trading Scheme Explained This video explains how the EU ETS works and forms part of the Environment Nexus project.
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY II (ENVI II) Bearing the risks and reaping the benefits of genetically modified crops: what stance should Europe take considering both their potential to boost agricultural production and efficiency worldwide as well as the environmental, public health and socio-economic impact of their application? •
GMOs: Cultivation bans on firmer ground
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MEPs think Member States should be able to cite environmental reasons for banning the cultivation of EU-approved GM crops, but the issue is far from resolved. Yes or no to GMOs
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In the hands of the Member States. Though some GM crops are considered safe to grow, EU countries could ban them based on environmental concerns. EFSA: Understanding risk assessment An EFSA expert goes back to basics with GM plants and also talks about the role EFSA plays in evaluating their safety.
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE TOPICS
1. Committee on Employment and Social Affairs (EMPL): Mitigating skills and qualification mismatch with Europe‘s labour market requirements: how can Europe best satisfy the demands of its employers and future employees in order to improve the employability and prospects of younger generations? 2. Committee on Economic and Monetary Affairs I (ECON I): The faulty set-up of the Eurozone? Should the EU compensate for its Member States‘ lost ability to shape monetary policy and how can the issue of macroeconomic imbalances within the Union best be addressed? 3. Committee on Constitutional Affairs I (AFCO I): The creation of a powerful institution with monetary and supervisory powers at the heart of Europe: which role should the European Central Bank (ECB) best play in the Single Supervisory Mechanism (SSM) and how can effective, fair, transparent and democratically accountable supervision of the European banking sector be guaranteed? 4. Committee on Economic and Monetary Affairs II (ECON II): Culture change within the banking industry: how can the EU support a sector that works better for the general public without driving investment and bankers out of Europe? 5. Committee on Economic and Monetary Affairs III (ECON III): Off-shore tax havens within and outside Europe: how can Europe jointly address the criminal avoidance of taxes while respecting the citizens’ right to privacy and foreign states’ sovereignty? 6. Committee on Civil Liberties, Justice and Home Affairs (LIBE): The fear of rising ‘benefit tourism’: anticipating the removal of the restrictions to free movement for Bulgarian and Romanian citizens in 2014 and bearing in mind complaints of unequal access to social benefits within the Union, how should basic EU liberties be safeguarded whilst considering the socio-economic pressures placed upon the welfare systems of Member States? 7. Committee on Constitutional Affairs II (AFCO II): Lobbying the European Parliament (EP) for the common welfare? In the light of discussions about the introduction of a legislative footprint and increased civic participation, what strategy should the EP adopt towards interest representation and Non-Governmental Organisations (NGOs) as legitimate partners in policy-making? 8. Committee on Women’s Rights and Gender Equality (FEMM): ‘Glass ceiling’ effect vs. low public pan-European support for gender quotas: learning from the early lessons of the Commission’s strategy for equality between men and women 2010-2015 and
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
the Council of Europe’s (CoE) Gender Equality Programme of 2012, how should European stakeholders seek to achieve gender parity across the continent? 9. Committee on Culture and Education (CULT): Working with the watchdogs: responding to recent concerns about media regulation in the United Kingdom and Hungary, how should European decision-makers in tandem with the ‘fourth estate’ achieve free and pluralistic media that sustain European democracy? 10. Committee on Internal Market and Consumer Protection (IMCO): Linking the objectives of the Europe 2020 strategy to public procurement policy: building on current reform proposals modernising tendering in the EU to guarantee ‘best value for money', which criteria and instruments should the EU and its Member States use in order to ensure transparent, efficient and competitive use of public funds? 11. Committee on Environment, Public Health and Food Safety I (ENVI I): Beyond Gross Domestic Product (GDP): in the light of the ‘Trio Programme’ priority for Europe to look beyond growth in capital, how should Europe consider environmental progress, well-being and other indicators alongside more traditional measures of development? 12. Committee on Development (DEVE): A framework for ‘common but differentiated global responsibilities’: how should Europe contribute to a fair distribution of the costs for climate mitigation and adaptation between the developed and the developing world? 13. Committee on International Trade (INTA): China’s monopoly on rare earth elements (REEs): how should Europe help to guarantee sustainable supply of REEs, whilst ensuring the viability of reserves and reducing the environmental impact of their mining worldwide? 14. Committee on Industry, Research and Energy (ITRE): Emission trading vs. carbon tax in the absence of an international agreement: working towards a decarbonised European economy whilst trying to maintain global competitiveness, which reforms and policies should the EU pursue at home in order to further reduce greenhouse gas emissions? 15. Committee on Environment, Public Health and Food Safety II (ENVI II): Bearing the risks and reaping the benefits of genetically modified crops: what stance should Europe take considering both their potential to boost agricultural production and efficiency worldwide as well as the environmental, public health and socio-economic impact of their application?
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON EMPLOYMENT AND SOCIAL AFFAIRS (EMPL)
Mitigating skills and qualification mismatch with Europe‘s labour market requirements: how can Europe best satisfy the demands of its employers and future employees in order to improve the employability and prospects of younger generations?
by Zahra Runderkamp (NL)
1. KEY TERMS •
Unemployment: Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labour force.
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Labour market: The market in which workers find paying work, employers find willing workers, and wage rates are determined. Labour markets can be national or international in their scope, and are made up of smaller interacting labour markets for different qualifications, skills, and geographical locations.
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Workforce: Total number of a country's population employed, plus those unemployed people who are actually seeking paying work.
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NEETs: An acronym for youngsters Not in Employment, Education or Training.
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Vocational Training: Training that emphasises skills and knowledge required for a particular job function.
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Flexicurity: The flexicurity model is a combination of easy hiring and firing, providing flexibility for employers, and high benefits for the unemployed. This must be combined with training to increase job mobility.1
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Beveridge curve: The Beveridge curve shows the negative relationship between unemployed workers and job vacancies.23
Links: •
Please read up on how the labour market works if you are unsure of the mechanisms at stake: http://www.cfee.org/en/pdf/labourstudent2.pdf
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More information on NEETs: http://www.eurofound.europa.eu/emcc/labourmarket/youth.htm
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More on the changing nature of the labour market: http://ftp.iza.org/dp5285.pdf
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An elaborate analysis of the Beveridge curve: http://www.tau.ac.il/~yashiv/beveridge.pdf
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Solving the Skills Mismatch, a comprehensive video: http://www.youtube.com/watch?v=bRdBZwF9G44
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Youth Unemployment: Europe’s Shame: http://europarltv.europa.eu/en/player.aspx?pid=5bc300d7-0e1a-4286-8f33-a1e80131982e
2. RELEVANCE AND EXPLANATION OF THE PROBLEM “Too many young Europeans are asking if they will ever find a job or have the same quality of life as their parents.” José Manuel Barroso, President of the European Commission. While the economic crisis is still lingering around Europe, it has over the past few years not only taken over our economies, but also the housing market as well as the labour market. More and more people are unemployed, and especially young people, one of the worst consequences of the crisis. The labour market has drastically changed over the last years. With the EU’s focus on smart growth, the labour market is asking for different skills, such as entrepreneurship, 1 Flexicurity is widely discussed, from its definition to its implementation. Flexicurity must be combined with training to increase job mobility. For a comprehensive overview, please refer to http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/flexicurity.htm 2 The position of the economy on the curve gives an idea as to the state of the labour market. The underlying theory is the search and matching model, with workers and firms engaging in costly search leading to random matching. 3 From: http://www.cepr.net/index.php/blogs/cepr-blog/the-beveridge-curve-and-structural-unemployment
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multilingualism and digital competence. Though the jobs that are being created do not necessarily ask for the skills of the unemployed. Employability has been the most important factor in the fight against youth unemployment. Therefore, youngsters are asked to gain more skills, but if the necessary employment infrastructure is not in place, do we need more skills or more jobs to suit our current skills? The European Commission has set youth employment high on its agenda and has recently decided to make €6 billion available to tackle youth unemployment. The most recent agreement made on a European level is the “Youth Guarantee”. Herewith, the Commission wants to guarantee youngsters some sort of training, education or job. On a structural level, a skills mismatch has been observed between those youngsters coming out of education, and their potential jobs. It is clear that what we learn at school and university may not always be directly relevant to many job-sectors. Moreover, skill mismatches are a “waste of human capital and productivity”.4 What skills should the EU focus on in the upcoming decades? What skills do we need to build a more competitive economy or can we accomplish smarter growth with? Links: •
Euroactiv reports on the Youth Guarantee Scheme: http://www.euractiv.com/socialeurope/eu-ministers-give-green-light-yo-news-518157
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The EU Skills Panorama looks into tackling skills mismatches on the labour market and combines both European and national research findings on skills and jobs: http://euskillspanorama.ec.europa.eu/ The Youth Guarantee is largely based on the Finnish example: http://www.adapt.it/englishbulletin/docs/hoffren_youth_guarantee.pdf
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Strengths and weaknesses of the Youth Guarantee in light of its earlier implementation in Sweden and Finland: http://www.eurofound.europa.eu/pubdocs/2012/42/en/1/EF1242EN.pdf
3. KEY QUESTIONS •
Whose responsibility is it to provide you with a job – is that for instance a national government, or businesses themselves – is it anyone’s responsibility but your own at all?
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What can we do to make youngsters better qualified for the labour market?
4 Employment and Social Development in Europe 2012: http://register.consilium.europa.eu/pdf/en/13/st05/st05571ad09.en13.pdf
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How is Europe’s labour market changing, and what skills is it calling for?
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How can we develop vocational training in Europe further?
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What can we do for Member States where youth unemployment has been rising even higher than in other regions?
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What can we do to tackle youth unemployment on a structural level?
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Interview with two experts on the topic: http://issuu.com/economicsustainability/docs/interviews_empl? workerAddress=ec2-23-22-109-94.compute-1.amazonaws.com How to tackle youth unemployment in times of crisis: http://library.fes.de/pdf-files/id/ipa/09516.pdf Analysis on skills mismatch: http://www.cedefop.europa.eu/EN/Files/3056_en.pdf
4. KEY FACTS AND FIGURES Youth unemployment rates have been rising to a spectacular level over the last few years. The most recent numbers indicate a 23.2 per cent youth unemployment rate in the 27 Member States, compared to the unemployment rate for all ages, which is 11%. It is only normal that youth unemployment rates are higher than ‘normal’ unemployment rates, as joining the labour market is more difficult than staying on there 5 These numbers show us that youngsters have major difficulties finding a job 6 Moreover, it has become clear that there is a large shadow economy present in many Member States, which means that the unemployment numbers we get are slightly biased as these numbers only represent those in official jobs, not those that do actually work, but are not registered as such. On the positive side, this means that the market is in fact able to generate jobs, though on the negative side the shadow economy does not give any social benefits to its workers.7 8 9
5 Youth unemployment rates are more or less doubled from normal unemployment rates but the ratio is now up to 2.6 times the total rate 6 It has to be noted here that the numbers are also differently calculated; after all, not all youngsters are actively looking for a job, for instance because of full-time studies, and in that way are not part of the potential workforce. 7 How can we tackle undeclared work in the European Union? http://issuu.com/economicsustainability/docs/forum2-12focus3 8 The International Labour Association reports on undeclared work: http://issuu.com/economicsustainability/docs/ wcms_116069 9 Joining up in the fight against undeclared work in Europe by Regionplan: http://issuu.com/economicsustainability/docs/ final_report_joining_up_the_fight_a
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Links: •
Youth unemployment in rates in EU27 and EA17, from 2000 until April 2013: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php? title=File:Youth_unemployment_rates,_EU-27_and_EA-17,_seasonally_adjusted,_January_2000__April_2013.pngfiletimestamp=20130531083325
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Vocational training statistics: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/ Continuing_vocational_training_statistics#
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Unemployment statistics: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/ Unemployment_statistics#Youth_unemployment_trends
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Eurostat report on youth unemployment: http://issuu.com/economicsustainability/docs/essqr_june_2013_10_key_facts_and_fi
5. KEY ACTORS On a European level, we deal especially with the European Commission, as well as the European Parliament for European legislation. Most importantly, as legislation in this field relies heavily on national cooperation, the European Council of Social Affairs Ministers takes up an important role. On the other side, there are companies and businesses, which play a vital role in creating and maintaining job opportunities. Moreover, youngsters are represented in NonGovernmental Organisations and other lobby groups present in Brussels. Other agencies include the European Centre for the Development of Vocational Training and the European Employment Observatory. Lastly, the topic is also discussed on an international level, by for example the International Labour Organisation. Links:
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An overview of all the institutions at stake in the topic: http://issuu.com/economicsustainability/docs/inst.chart_empl
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Youth unemployment programme of the International Labour Organisation: http://www.ilo.org/employment/areas/youth-employment/WCMS_192889/lang--en/index.htm
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The European Employment Observatory: http://www.eu-employment-observatory.net/
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Think Young, one of the NGOs involved, drafted a paper on overcoming the skills mismatch: http://thinkyoung.eu/overcoming-the-skills-mismatch/
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European Centre for the Development of Vocational Training http://www.cedefop.europa.eu/EN/Index.aspx
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
6. KEY CONFLICTS When thinking about possible solutions to the problem stated in the topic, we have to keep in mind a few conflicts. First of all, whose responsibility is job provision? Moreover, are the measures we have put in place so far, such as a higher emphasis on vocational training, an easy way out, or are they actually solving the problem? Clearly, with more training, we can keep the unemployment rate low, but do we actually help youngsters to get a job. Furthermore, a certain amount of expectation management is involved. If we know that we are guaranteed a job, what does that do to our expectations and motivation, and how far can we go with our expectations for this generation? Also, we have to think about the division of national and European competences in this topic. Most of the issues that are within the social affairs are still up for Member States to decide on. This is easy to explain if we say that the European labour markets and opportunities differ so greatly that European legislation would overall not solve anything, on the other hand are our economic markets now so intertwined that we may not be able to separate job markets nationally. Lastly, we have to keep in mind possible long-term implications of youth unemployment now. Are we not developing our skills and capabilities early enough in our lives to compete on the labour market later?
7. MEASURES ALREADY IN PLACE On a European level, a lot has been done to tackle youth unemployment, and possibly even more by Member States individually. What the EU can do when it comes to youth unemployment is mostly focussed on benchmarking and soft forms of governance as to ensure that Member States take targeted action. Some examples of action taken on a European level include the Youth Guarantee Scheme.10 Moreover, there is Europe 2020, the growth strategy of the EU in different sectors, amongst other employment. Part of it is the Agenda for New Skills and Jobs,11 as well as Youth on the Move.12 These both comprise the most important work being done in the EU on this topic. Furthermore, The EU Skills Panorama, a website launched by the European Commission, shows quantitative and qualitative information on skills needed and wanted, as well as skills 10 The scheme aims at ensuring that young people without a job will get be guaranteed the opportunity of employment, training or further education. The scheme will apply to each Member State, but in is individualised to their particular needs and wishes. The European Parliament approved the scheme in January. 11 Please refer to: http://ec.europa.eu/social/main.jsp?langId=en&catId=958 12 Please refer to: http://ec.europa.eu/social/main.jsp?langId=en&catId=950
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mismatches in the labour market.13 Then there also is the Youth Employment Package.14 To further develop vocational training in Europe, the European Centre for the Development of Vocational Training has been created. Some Member States are already developing this practice further with now two-thirds of enterprises in the EU providing vocational training, but in some countries only to a limited extent.15 Links: •
European Commission starting page on youth employment, please go through all of the links: http://ec.europa.eu/social/main.jsp?langId=encatId=1036
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European Parliament on the Youth Guarantee: http://www.europarl.europa.eu/news/en/headlines/content/20130108STO05234/html/Youthguarantee-getting-young-Europeans-back-to-work
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Youth unemployment in the EU provided by the EP: http://www.europarl.europa.eu/news/en/headlines/content/20120203STO37184/html/Creating-jobopportunities-for-young-people
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The Annual Growth Survey 2013 completely: http://ec.europa.eu/europe2020/making-it-happen/annual-growth-surveys/index_en.htm Annual Growth Survey 2013, in particular the Joint Employment Report: http://ec.europa.eu/europe2020/pdf/ags2013_emplr_en.pdf
•
•
The European Centre for the Development of Vocational Training: http://www.cedefop.europa.eu/EN/Index.aspx
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Rethinking Skills for Europe initiative: http://ec.europa.eu/governance/impact/planned_ia/docs/2012_eac_014_rethinking_skills_en.pdf
13 This tool can be used to show what sectors are more job-rich than others as well as aims to tackle skills mismatches 14 The Youth Employment Package was designed to further develop the employment strategy of the European Commission in 2012. The package contained the establishment of a youth guarantee, as explained above, consultation of traineeship frameworks and announces the European Alliance for Apprenticeships and was further developed in 2013 by the Youth Employment Initiative to support youngsters in training and schooling in regions where youth unemployment is very high 15 Statistics on vocational training in the EU27: http://ec.europa.eu/education/news/20130611_en.htm
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Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS I (ECON I)
The faulty set-up of the Eurozone? Should the EU compensate for its Member States‘ lost ability to shape monetary policy and how can the issue of macroeconomic imbalances within the Union best be addressed? by Jan Václav Nedvídek (CZ)
If you feel you could benefit from a basic introduction to monetary policy making and Optimal Currency Areas, please take a look at this first.
1. KEY TERMS •
Monetary Policy: Process through which certain institutions within a state, or a group of states, control the supply of money in the market and its availability, and the cost at which money can be borrowed (interest rates).
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Fiscal Policy: The second option for a government to influence the economy. By the use of government spending and taxation governments have a direct impact on the goods market and an indirect impact on the money market.
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The Economic and Monetary Union (EMU): With its three stages, the EMU tries to converge the economies of the EU Member States. It is important to remember that all Member States are members of the EMU, and that such membership is not synonymous with the Eurozone membership.
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Macroeconomic imbalances: The large scale differences between the productivity and output of the economies of individual states. The term more specifically refers to significant deviations from the normal values of the main macroeconomic indicators, such as current accounts, difference in labour cost, employment rate, public and private debt, difference in
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real estate prices, inflation etc. These deviations can be both positive and negative. Links: •
Introduction to the basics of Monetary policy: http://backpack.tv/video/economics/economics-classroom/jason-welker/tools-monetary-policy
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Introduction to the basics of fiscal policy: http://backpack.tv/video/economics/long-road-sixth-form-college/bryn-jones/fiscal-policy
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Brief considerations about monetary and fiscal policy: http://www.investopedia.com/articles/economics/12/fiscal-or-monetary-policy.asp#axzz2HTK6vRhs
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Overview of EMU (also take a look at the sub-headings): http://ec.europa.eu/economy_finance/euro/emu/index_en.htm
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Overview of the macroeconomic indicators used for the Macroeconomic Imbalances Procedure (MIP): http://ec.europa.eu/economy_finance/economic_governance/ macroeconomic_imbalance_procedure/mip_scoreboard/index_en.htm
2. RELEVANCE AND EXPLANATION OF THE PROBLEM When a country finds itself in a difficult economic situation, it has traditionally been able to help its economy by using certain monetary policy tools, for instance trying to depreciate own currency to make its exports more competitive. The Eurozone countries, however, have been deprived of this option as the European Central Bank (ECB) is now responsible for their monetary policy – and as the ECB has to tailor its policy to 17 very different national economies, some countries have benefited, whilst others are arguably worse off as a result of this.1 After the unification of the internal market and introduction of the common currency, costs of asymmetric shocks 2 for less developed countries have been increased3.It has been argued that the 1
The ideal monetary policy has often been determined using the so called Taylor Rule, which works out how much the central bank of a country should change the nominal interest rate as a response to inflation or economic output (i.e. growth). It has been convincingly argued, however, that the interest rates as determined by the ECB have benefited successful countries (mainly Germany) whilst others have suffered from the low amount of liquidity available on the market and have had to issue government bonds with extraordinarily high interest rates and short maturities (up to 172.37% in February 2012 with 24 month maturity, as compared to 0.13% on German government bonds: http:// www.bloomberg.com/quote/GGGB2YR:IND) 2 In case of asymmetric shock (as a result of for instance a natural disaster or a run on bank deposits), only some countries in the monetary union suffer from difficult economic situation. The monetary reaction to such a shock would need to differ in countries under shock and the ones booming, which is impossible in a monetary union with unified monetary policy. In the absence of differentiated response, capital tends to flow from troubled countries into countries whose economy is booming (http://www.financialtransparency.org/2011/06/20/asymmetric-shocks-and-other-woes-of-theeurozone/) 3 Less developed countries tend to have more difficulty to adjust after a shock than richer economies. In both cases though, the difficulty stems from the low level of labour mobility - despite the popular belief, only very few people – relatively speaking, of course – actually move abroad to find a job.
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current form of the EMU’s institutional set up is not viable and that it encourages the accumulation of lasting imbalances at the expense of Europe’s least developed states. It also remains a fact that the temptation to raise public deficit grows as the interest rates of debt denominated by the common currency are lower than the ones denominated by national currencies. Monetary tools being absent, only fiscal measures could solve the problem of asymmetric demand. If a country needs more money and cannot increase its competitiveness by devaluing its currency, or by lowering wages, it has to borrow more – and therefore arguably the current institutional set up leads to an ever increasing sovereign debt.4 Large sums of money have been spent in an effort to make the large gaps between individual countries’ economies less substantial (e.g. through so called cohesion funds). However, it would appear that the increase in structural and regional development funds has failed to reduce the gap in development levels. Links: •
Interview with Prof Beata Smarzynska Javorcik, MPhil, PhD, Professor of International Economics at the University of Oxford and a fellow of Christ Church College, expert interview for ECON I: https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/ECON%20I_Interview.pdf
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Professor Philip Arestis,University Director of Research, Cambridge Centre for Economic and Public Policy, on the problems of the EMU: http://users.ntua.gr/jea/tua/journl/jea_volume1_issue1_pp1_14.pdf
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Monetary and fiscal policy interactions in a monetary union: http://www.ecb.int/pub/pdf/mobu/mb201207en.pdf (p51-64)
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The creation and flaws of the European Economic and Monetary Union: http://ebook.law.uiowa.edu/ebook/uicifd-ebook/part-6-i-creation-and-flaws-european-economicand-monetary-union
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Article in the Economist on whether a currency needs a state or not: http://www.economist.com/node/13767419
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Warning for a democratic deficit potentially caused by further economic integration: http://www.economist.com/node/21555927
3. KEY QUESTIONS •
Why was the EMU created in the first place and what were the benefits decision-makers were hoping to obtain?
4
A more substantial read: http://econ.berkeley.edu/sites/default/files/Srivangipuram.pdf
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•
Are the economic problems Eurozone countries are experiencing at the moment caused by the inherently wrong set up of the EMU institutions or by bad individual decisions taken on national level?
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Is there a need for a further strengthening of central economic governance within the Eurozone?5
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Does the monetary policy of the European Central Bank favour certain countries at the expense of other countries?
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Is Europe ultimately too divided to share a common currency?6
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Do the traditional powers of nation states have to be reconsidered if we are to keep the Euro?7
Links: •
Pros and cons of fiscal union: http://www.debatingeurope.eu/infobox-arguments-for-and-against-fiscal-union/
4. KEY FACTS AND FIGURES •
European Financial Stability Facility’s €779 billion available and its €440 billion lending capacity (see below).
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European Fiscal Stability Mechanism and it’s €60 billion of borrowing/lending capacity.
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The current budget of the Cohesion Funds Programme of €347 billion.
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Money so far provided by the various mechanisms to Greece: €240 billion.
5. KEY ACTORS First and foremost, we need to consider the European Central Bank. Whilst the main objective is the ECB is the price stability within the Eurozone, the ECB is an institution ultimately designed
5http://www.sustainablefinancelab.nl/files/2012/04/Persistent-Macroeconomic-Imbalances.pdf 6http://www.youtube.com/watch?v=7VX8mKadDQg 7http://www.youtube.com/watch?v=V72mZCDwmY0
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the collective fiscal policy of Eurozone members. It can provide for expansionary or contractionary monetary policy as needed through the system of repurchase agreements with individual banks. Secondly, there is the European Investment Bank since most importantly, it is one of the main sources of money to the EFSF. Lastly, we should not forget bodies of the Ordinary Procedure, mainly the Council because the procedure ultimately defines rules used to govern common monetary policy. The role of the Council needs to be stressed out, as arguably Member States are still very reluctant to give up their power when it comes to economic and monetary affairs. Links: • Institutional chart: https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/ECON%201%20CHART.pdf
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Who does what in EMU: http://ec.europa.eu/economy_finance/euro/emu/who/index_en.htm
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Official site of the Eurozone: http://eurozone.europa.eu/eurogroup?lang=nl
6. KEY CONFLICTS Arguably the main conflict is in fact of political rather than economical nature – unifying the EMU countries into a federal-style political system with cross-national financial transfers and budgetary federalism would very likely solve the economic problems we are currently facing8 , but is politically extremely difficult to achieve. Federalisation of the EU faces enormous criticism, is extremely ideological and virtually impossible to achieve in near or even more distant future.9 Similarly, there is a conflict between responsibilities of individual Member States’ governments visà-vis supranational institutions such as the Troika and other Member States.10 Furthermore, we can discuss the concepts of desert, fairness and equality on the field of international economy. If it is true that Germany has benefited from the institutional set up and other countries have suffered, is it fair that Germany should compensate those countries? Or is every country ultimately responsible solely for its national economy and the Eurozone is a zerosum game? Or would further policies have been necessary to allow all participating countries to benefit from the EMU? 8
‘The only way out of the problem of the Eurozone will be more federalism’. David Davies, MP; Her Majesty’s Europe Minister 1994-1997 9http://www.youtube.com/watch?v=z_TbqdOMPzo or http://www.youtube.com/watch?v=SR7n61ZExKk 10 This conflict was highlighted when German lenders provided large sums of capital to Greece, eventually claiming the right to partially form the nation’s fiscal policies: http://www.youtube.com/watch?v=I59BNSCXtg0
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Lastly, the question of budgetary flexibility is essential to answering the question at hand. Some argue that in the absence of monetary tools that national governments could use, in order to respond accurately to the needs of the different national economies with their respective economic and public-spending cultures, budgetary flexibility is key. Some do not believe in the effectiveness of excessive austerity in times of a bad economic situation and spending regulations like e.g. the Stability and Growth Pact while others claim that the incorporation of strict budget rules is the only way to deal with the moral hazard problem posed by the monetary union. Links: •
Report by President of the European Council, ‘Towards a genuine Economic and Monetary Union’: http://www.google.be/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CFUQFjAA&url=http %3A%2F%2Fconsilium.europa.eu%2Fuedocs%2Fcms_data%2Fdocs%2Fpressdata%2Fen%2Fec %2F131201.pdf&ei=NSv3T76RMIegAb7u5XgBg&usg=AFQjCNHfeaTgc83H9ZMH41LBf5IpOmALDg
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Proposing a fiscal union: http://www.bruegel.org/publications/publication-detail/publication/646-what-kind-of-fiscal-union/
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Arguing for a fiscal union: http://www.imf.org/external/np/speeches/2012/110112.htm
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Wolfgang Kasper, Senior Fellow with the Centre for Independent Studies, being skeptic about the monetary union: http://www.econlib.org/library/Columns/y2011/Kaspereuro.html
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Arguing against a fiscal union: http://www.theatlantic.com/business/archive/2011/11/fiscal-union-cannot-save-the-euro/249093/
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A European fiscal union?: http://ftp.iza.org/pp39.pdf
7. MEASURES ALREADY IN PLACE The Macroeconomic Imbalance Procedure: Established in 2011, it is a procedure which aims at identifying possible risks of macroeconomic imbalances and preventing them, as well as tackling the already existing ones. Acting as mainly a preventive entity, it establishes the Excessive Imbalance Procedure which is mainly a corrective body, with the ultimate authority to sanction countries should they fail to follow their obligations. 11 The Stability and Growth Pact (SGP): It outlines certain budgetary rules that Member States need to comply with. In essence the SGP says that all countries in the euro area should aim to
11http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm
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keep their annual budget deficit below 3% of GDP, and keep total public debt bellow 60% of GDP, the deficit criterion applies to all EU Member States. Sixpack: Introduced in 2012, the Sixpack is a set of legislative measures aimed at strengthening the economic governance within the Eurozone.12. Broad Economic Policy Guidelines: Also known as the Maastricht or convergence criteria, those serve to determine a country’s suitability to enter the Eurozone and remain in it. The set caps on the budget deficit or the sum of sovereign debt in relation to the national GDP. Structural and Cohesion Funds: Essentially a financial transfer mechanism aimed at reducing disparities in terms of wealth and production. The economic development of poorer countries is thus subsidised by wealthier countries. European Financial Stability Facility: A temporary rescue financial mechanism created to ensure the fiscal solvency of EMU countries. The EFSF’s mandate is to safeguard financial stability in Europe by providing financial assistance to euro area Member States within the framework of a macroeconomic adjustment programme. The money this mechanisms lends is provided by Eurozone countries. European Fiscal Stability Mechanism: Similar to the above, but the money provided is borrowed and then lent by the European Commission. European Stability Mechanism: Builds on the EFSF and the EFSM, but institutionalises the prerequisites and changes the ad hoc basis of the entire scheme into a long term capital reserve.13 Links:
12
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A paper on the Stability and Growth Pact by the European Central Bank: http://www.ecb.int/pub/pdf/scpops/ecbocp129.pdf
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A fiscal compact for a stronger Economic and Monetary Union, monthly bulletin ECB May 2012 (p79-94): http://www.ecb.int/pub/pdf/mobu/mb201205en.pdf
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Overview of EU economic governance in light of Europe2020: http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/priorities/economic-governance/ index_en.htm
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Memo of the EC about a fiscal union: http://europa.eu/rapid/press-release_MEMO-12-483_en.htm#PR_metaPressRelease_bottom
To be fair, it does not really dramatically change the provisions of the Stability and Growth Pact, but it ensures that the sanctions it institutes are imposed more frequently and more consistently to enforce budgetary and fiscal discipline. 13http://www.esm.europa.eu/
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COMMITTEE ON CONSTITUTIONAL AFFAIRS I (AFCO I)
The creation of a powerful institution with monetary and supervisory powers at the heart of Europe: which role should the European Central Bank (ECB) best play in the Single Supervisory Mechanism (SSM) and how can effective, fair, transparent and democratically accountable supervision of the European banking sector be guaranteed? by Rónán O’Connor (IE)
This video provides a basic explanation of how banks work. Understanding this material is crucial to underpin this topic’s discussions.
1. KEY TERMS •
Single Supervisory Mechanism: a supranational financial supervisory authority that will be responsible for the regulation of Eurozone banks.
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European Stability Mechanism: a replacement for the European Financial Stability Facility, this organisation acts as a firewall for financial stability of Member States, by providing funding to struggling financial institutions.
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Single Rulebook: this is the concept that the Eurozone countries should operate under common rules of financial supervision in order to create confidence in such interlinked financial sectors. This will be implemented through the introduction of the SSM.
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Legitimacy: refers to popular acceptance of an authority or system of governance.
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Accountability: is the liability that an aspect of governance bears for the consequences of its actions. It generally also includes their responsibility to give account of their actions and the procedure through which they achieved such action.
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•
Regulation: a set of legal requirements applied to all banks in the EU and enforced by the EBA.
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Supervision: a more in-depth and subjective monitoring of financial institutions to ensure their stability and solvency.
Links: •
Short explanation of the function of the Single Supervisory Mechanism: http://europarltv.europa.eu/en/player.aspx?pid=430edaff-910a-4ca3-b2a4-a1c5012e6a22
2. RELEVANCE AND EXPLANATION OF THE PROBLEM The Single Supervisory Mechanism (SSM) serves to prevent an economic crisis such as we are currently experiencing from reoccurring. It acknowledges the interconnectedness of Eurozone economies and seeks to integrate the rules that regulate these economies in a similar way. The SSM is an addendum to the European Central Bank (ECB) creating further financial integration within the Eurozone countries. The SSM will, according to Vice President of the ECB, provide “a bird’s eye view of the entire euro area banking sector”. The trade-off is envisioned as conferring powers on the SSM to monitor domestic banks in return for guaranteed access to bailout funds from the European Stability Mechanism. Critics of the SSM point out to two main concerns: 1) the potential conflict of interests within the ECB and 2) the potential loss of expertise when moving supervision from the national level to the European level. Firstly, the ECB’s singular mandate to ensure price stability in the Eurozone will be broadened with the SSM, which may undermine the credibility of Eurozone’s independent monetary policy making. The ECB will now have access to balance sheets of European banks and will be able to predict the effects that its monetary policy decisions would have on a given bank. A potential conflict of interests arises if, for instance, the macroeconomic situation in the Eurozone required the ECB to increase the interest rates to ensure price stability, but the ECB would hesitate to do this knowing that it might put a given bank into difficulty. Secondly the transfer of bank supervision to a single European level risks the loss of expertise that national supervisors possess, given their proximity to national market and the knowledge of the specificities of banking sector in given markets. The key to any supervisory institution is legitimacy.
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It must be accepted as the source of power in Eurozone banking regulation. Many question why a centralised supervisory body will make better decisions regarding Eurozone financial stability than a national body. In order to ensure that such legitimacy exists, the SSM must be established in a way that is adequately responsive to the needs of financial institutions while also remaining independent of other Eurozone policy goals. The SSM should operate in a way that is of benefit to all Eurozone financial institutions by ensuring stability and solvency across the board. Links: •
Short powerpoint presentation of the operation of the Single Supervisory Mechanism (ignore the Single Resolution Mechanism and Deposit Guarantees): http://ec.europa.eu/commission_2010-2014/barnier/docs/presentations/ 2012_09_banking_union_smm_en.pdf
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This article outlines a timeline illustrating how and why the SSM is being introduced: http://www.protesilaos.com/2013/02/ssm-morphology-eu.html
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Speech by Vítor Constâncio, Vice-President of the ECB “Towards the Banking Union“: http://www.ecb.europa.eu/press/key/date/2013/html/sp130212.en.html
KEY QUESTIONS •
Why should supervisory power be transferred to a European level?
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How should the ECB’s conflict of interests between monetary policy and bank supervision best be mitigated?
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Which principles should be prioritised in the set up of the SSM: democratic accountability, transparency, efficiency or fairness?
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What political and economic impact will the SSM have on non-Eurozone Member States?
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What policies and structures will aid the SSM in its operation, bearing in mind the scale of the European banking sector?
Links: •
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A call to redesign the European Banking Union to provide a more accountable and effective institutional framework: http://blogs.lse.ac.uk/europpblog/2012/11/13/eu-banking-union-redesign/
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
•
EP resolution for introducing the SSM (focus on pages 7-14 for rationale behind the proposal): http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fNONSGML %2bREPORT%2bA7-2012-0392%2b0%2bDOC%2bPDF%2bV0%2f%2fEN
4. KEY FACTS AND FIGURES •
There are over 6,000 banks in the Eurozone yet only 200 of these banks account for roughly 85% of all bank assets.
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Over 4.3 trillion euro has been spent in tackling the banking crisis.
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The Governing Council of the ECB will have ultimate executive power over SSM decisions.
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SSM’s power only extends to bank supervision (not including, for example, insurance companies).
Links: •
European Banking Authority’s rationale for the introduction of the Single Rulebook: http://www.eba.europa.eu/regulation-and-policy/single-rulebook
5. KEY ACTORS The ECB is central to this proposal as it comes in the wake of the crisis that the ECB feels they were ultimately held responsible for financing without having had any ability to stop it from occurring. In order for them to act as a lender of last resort1 they seek the power to regulate the institutions for whom they have responsibility. The European Parliament plays a key role in balancing the supranational interests with sovereign interests. The EP will control the appointment of the Chair and Vice-Chair of the SSM. The EP will hold the SSM accountable for supervisory decisions, according to Michel Barnier, the Internal Market Commissioner. Domestic Financial Regulators serve to lose the most power under the creation of the SSM. Yet reassurances have been given that due to the scale of the Eurozone banking sector the SSM will defer regulatory power to the domestic institutions in all but the most significant cases (those of the largest banks).
1
An institution, usually a country's central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse.
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Links: •
Institutional Chart outlining the key actors: http://issuu.com/economicsustainability/docs/afco-1-institutional-chart-overview
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Outline of EP and Council Compromise on SSM: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/136846.pdf
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Overview of the banking supervision deal: http://aspectediplomatice.ro/index.php?option=com_content&view=article&id=5493:bankingsupervision-deal-struck-by-ep-negotiators-and-irish-presidency&catid=42:rokstories
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List of key changes to SSM as created by the EP: http://www.europarl.europa.eu/news/en/pressroom/content/20130318IPR06653/html/Bankingsupervision-deal-struck-by-EP-negotiators-and-Irish-Presidency
6. KEY CONFLICTS The initial concern arises out of the conflict of interest that will arise within the ECB if its single mandate of ensuring price stability in the Eurozone is broadened by adding additional bank supervisory tasks. The relationship between the SSM and the ECB is crucial to its ability to exist as an independent authority while still maintaining transparency and democratic accountability. Since price fluctuations are highly affected by expectations 2, the credibility of a central bank is a key to guarantee low inflation. The ECB should decide on its monetary policy independently – without influence of governments or the private sector. A potential conflict of interests arises if, for instance, the macroeconomic situation in the Eurozone requires the ECB to increase the interest rates to ensure price stability, but the ECB would hesitate to do this knowing that it might put a given private bank into difficulty. The introduction of Chinese Walls within the ECB - physical and IT separation between teams deciding on Eurozone monetary policy and those involved in bank supervision - is one proposed measure to ensure such independence. Many doubt that Chinese Walls will mitigate the problem considering that the Board of Governors of the ECB is the ultimate executor of both monetary and supervisory powers. How can the independence of these two instruments be assured without a separation of executive powers? Secondly, transferring bank supervision to the European level risks losing some of the expertise of national banking supervision authorities. While the SSM might indeed offer a ‘bird’s eye view’ on the banking sector, we must bear in mind the way in which such supervision must be further removed from individual financial institutions. This disconnect works both ways however.
2 If people expect that prices will rise, they buy more. With rising demand, prices rise. In a self-fulfilling prophecy people’s expectation of price increase causes actual inflation.
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What we lose in quantitative scrutiny we gain in objectivity. This means that while we lose detailed knowledge of each institution, the SSM is also less attached in a political sense to any one institution because it does not represent national interests (which was the ultimate failing of some national regulators during the crisis, chief among them the Irish financial regulator). This balance of scrutiny and objectivity is of key importance to any supervisory body none moreso than a supranational institution such as the SSM. The democratic aspect is of key concern to the European Parliament (as the only directly elected European institution) while the ECB prioritises the streamlining of the body’s capabilities and its independence from Member State interests. The technocratic nature of the ECB means that it often is not questioned in its executive powers, as it is assumed the experts know best. Yet the politicised nature of the ECB was a serious element of the crisis itself, as the unilateral power of the ECB in setting the Eurozone inflation target lead to the credit crisis in countries such as Ireland, Portugal, Spain and Greece. Yet without political involvement we lose the democratic accountability which is the European citizen’s only tie to the SSM. How then is this proposal adapting the ECB to better regulate the stability and security of the Eurozone financial sector? The next question is the political relationship between European institutions and this supranational supervisory authority. Proponents of the SSM are of the belief that further integration of banking regulation is the only way forward when Euro area economies are so closely interlinked. The key target of the establishment of the SSM is to prevent the negative feedback loop between financial institutions and their sovereigns. This means that when a bank is struggling the ECB will be responsible for its recapitalisation, not the Member State from which that bank operates. This will cut the tie between suffering banks leading to suffering economies and vice versa. This is crucial to prevent a reoccurrence of the credit crisis, where national regulators fail and the ECB must save them. Yet the role of European political institutions in this process also raises concerns. The European Parliament will have oversight powers and access to internal information from the SSM, yet not all Member States represented in the EP will be part of the SSM. This creates a difficulty in ensuring that the SSM answers only to those it governs and not other politically motivated interests across Europe. Links:
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Outline of the pros and cons of the SSM: http://www.bis.org/review/r130201b.pdf?frames=0
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Discussion of the inherent flaws in a technocratic institution such as the ECB: http://www.brookings.edu/research/opinions/2013/05/10-balancing-technocrats-dervis
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
7. MEASURES ALREADY IN PLACE The European Commission-proposed ESM is already established as an emergency bailout fund. With the introduction of the SSM, recapitalisation would be available to banks from the ESM on condition of supervision and fiscal targets being achieved. The European Parliament has been assigned the power to elect the Chair and Vice-Chair of the SSM. The SSM, as a supervisory power, is to be established as a separate institution in all administrative capacities only overlapping with the monetary power in the executive role played by the Board of Governors of the ECB. The monetary branch of the ECB will only be involved in any advisory role that the SSM sees fit, in providing expertise on the financial sector where relevant. Links: •
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Conditions for receiving funds under OMT: http://www.ecb.int/press/pr/date/2012/html/pr120906_1.en.html
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS II (ECON II)
Culture change within the banking industry: how can he EU support a sector that works better for the general public without driving investment and bankers out of Europe? by Anar Kucera (CZ)
1. KEY TERMS •
A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank is the connection between customers that have capital deficits and customers with capital surpluses. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit.
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Risk management is the identification, assessment, and prioritisation of risks followed by coordinated and economical application of resources to minimise, monitor, and control the probability and/or impact of unfortunate events or to maximise the realisation of opportunities. The strategies to manage risk typically include transferring the risk to another party, avoiding the risk, reducing the negative effect or probability of the risk, or even accepting some or all of the potential or actual consequences of a particular risk. Certain aspects of many of the risk management standards have come under criticism for having no measurable improvement on risk, whether the confidence in estimates and decisions seem to increase.
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In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Regulatory compliance describes the goal that corporations or public agencies aspire to achieve in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and regulations. Due to the increasing number of regulations and need for operational transparency, organisations are increasingly adopting the use of consolidated and harmonised sets of compliance controls.
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2. RELEVANCE AND EXPLANATION OF THE PROBLEM “From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates and now news of yet another mis-selling scandal, we can see we need a real change in the culture of the industry.“ Mervyn King, the Governor of the Bank of England, after the Libor1 scandal.
The situation of banking industry has been a major issue in public debate in most European countries since 2008, graduating when several states had to intervene and support 2 their banks in order to save them from collapse. Many argue that this situation brought some of the countries themselves into serious financial problems 3. While opinions on whether the banks themselves are responsible for those problems differ, most see at least a partial responsibility in the culture of banking that promoted short term profits over long term impacts. The investment banks offered their employees bonuses that were substantially over the average of other economic and industry sectors. Major parts of the bonuses were given on a quarterly basis, rewarding short-term risk-taking. Furthermore a general risk-friendliness of banks without appropriate risk-management and control seems to have contributed to a situation where banks often held risk in their portfolios that after their assets were downgraded by major rating agencies by far exceeded the capital reserves of the banks, forcing the states to intervene. A very controversial question which has been highly debated both in many European countries as well as in the USA is the question of ethical values and compliance in the banking industry. While many banks had internal rules and codes of conduct that sometimes went further than legislative regulations, the bank management often deliberately ignored them. Such behaviour creates wrong incentives for bank employees possibly contributing to general diminishing of bank culture.
1 Explanation on how the Libor scandal unfolded: http://www.telegraph.co.uk/finance/libor-scandal/9754981/TimelineHow-the-Libor-scandal-unfolded.html 2 According to some source six troubled Irish banks alone received around 150 billion EUR funding from Irish Central Bank and the European Central Bank between 2008 and 2011. 3 The most prominent example is probably the state support Ireland had to provide to avoid the collapse of its major banks. The amount of resources needed then forced the country to accept loans from other EU countries and international organisations such as IMF.
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Another issue is related to the difficulties of banks operating both in investment banking 4 as well as in commercial banking 5. Some of the initially commercial banks might have been forced to involve themselves in profitable investment banking with falling profits in commercial banking due to pressure on free accounts and services and low interest rates on lending. These banks were then unprepared and without appropriate know-how in investment banking6 . At the same time, the presence of banking industry has played a significant role in economic growth of many European countries, providing many well-paid jobs. The City of London and its importance for the whole of the United Kingdom is probably the best example, generating 12,1% of total UK government receipts from all taxes 7. A functioning banking industry is essential for the economy of any country. Banks provide financing for both private consumption as well as investments of industry and commerce and they also play major role in countries financing their sovereign debt. Links: •
Financial Times commentary on the culture of banking outlines the dilemmas as well as possible solutions in an understandable manner. http://www.ft.com/intl/cms/s/0/6966893c-3847-11df-8420-00144feabdc0.html#axzz2Xb1lL8Pi
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Report by Centre for Analysis of Risk and Regulation outlines the importance of ‘risk culture’ and how to manage risks in banks and other financial organisations. It also outlines the different approach inside of the industry (risk-management) to general public (values and mindset). http://www.lse.ac.uk/researchAndExpertise/units/CARR/pdf/Risk-culture-interim-report.pdf
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Daily Telegraph explains in brief how the Libor scandal unfolded, offering an example of problems of the current banking culture and the implications it has on the economy. http://www.telegraph.co.uk/finance/libor-scandal/9754981/Timeline-How-the-Libor-scandalunfolded.html
4 Investment Bank: A financial intermediary that performs a variety of services. This includes underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganisations, and also acting as a broker for institutional clients. 5 Commercial Bank: Refers to banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. 6 This was sometimes supported by politics, especially in case of German state-owned „Landesbanken“ that used to finance small and medium enterprises but got involved in investment banking in late 1990‘s and early 2000’s. Due to lack of knowledge both in the banks as well as in the politics, the banks accumulated enormous risks without sufficient riskmanagement. Most of the banks had to be saved with enormous sums of public money when the banking crisis hit in 2008. 7http://www.cityoflondon.gov.uk/business/economic-research-and-information/research-publications/Documents/ research-2011/Total%20Tax%20Contribution%20Of%20UK%20Financial%20Services_FourthEdition.pdf
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3. KEY QUESTIONS •
How can the current banking culture be changed to more long-term perspective and focus on possible impacts of risks?
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Should regulation of bonuses for investment bankers be an option or is this a free decisions of banks how they reward their employees?
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Is a split-up of commercial and investment banking a possible solution to prevent spillover effects of risks in investment banking on regular customers?
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How can the danger of investment banks leaving EU to less regulated financial centres in Asia or Near East be limited?
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Should the state regulators aim at forcing a new internal banking culture, such as changed governance structures, ethical trainings, etc.?
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Considering the motivation of most employees in baking industry, could enforced personal responsibility (return of bonuses, removal from internal pension schemes, ban on professional employment in banking industry) be a solution to the problem?
4. KEY FACTS AND FIGURES Bonuses of bankers: While the exact sum is not easy to determine, sources estimate the average bonus of a bankers to be up to around 300000 GBP in 20078 and around 55000 GBP in 20139 . According to some analysis almost 75% of employees in banking industry agree that the payments and bonuses are excessive. It is however important to stress that bonuses may differ between banks as banks where governments intervened often offered smaller bonuses than those that managed to go through the crisis without state help. Despite the lower amount, however the base on which the bonuses are calculated have not changed, still promoting short-term profits. Investment bank profits: Many purely investment banks such as Goldman Sachs have managed to keep their profits high throughout the whole period of banking and economic crisis (with the exception of the turbulent year 2008) 10. 8 http://www.dailymail.co.uk/news/article-501486/City-bankers-5million-bonuses-avoiding-credit-crunch.html 9 http://www.bloomberg.com/news/2013-02-12/barclays-pays-annual-bonuses-of-84-439-to-investment-bankers.html 10 http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9997629/Goldman-profits-rise-on-higherinvestment-banking-revenue.html
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Links: •
Two articles by Daily Mail and Bloomberg give you an idea in how much money has been offered by banks on salaries and bonuses to the employees in comparison of the years 2008 and 2012. http://www.dailymail.co.uk/news/article-501486/City-bankers-5million-bonuses-avoiding-creditcrunch.html http://www.bloomberg.com/news/2013-02-12/barclays-pays-annual-bonuses-of-84-439-toinvestment-bankers.html
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Article by BBC on the question of ‘hidden subsidies’ for UK banks. http://www.bbc.co.uk/news/business-12447635
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Analysis by the Chartered Institute on Personal Development on the banking culture provides lots of data on why certain decisions were made and what incentives were present in the banking industry. http://www.cipd.co.uk/binaries/6214%20EO%20Focus%20Rebuilding%20trust%20(WEB).pdf
5. KEY ACTORS European institutions: Both the European Commission11 as well as the European Parliament12 seek to reform the banking culture to take a more long-term perspective. The first step was the agreed cap on banking bonuses. National governments: While many national governments support a reform proposed by the European Commission, some have a clearly different position, arguing in favour of other tools to solve the problem or no regulation at all. The most vocal opposition came from the United Kingdom as it favours measures on a national level. Investment banking industry: The investment banks reject any attempts to limit their freedom and have voiced a threat to leave the EU and base their activities in unregulated financial locations such Singapore, Hong Kong or Dubai. General public: Since many governments adopted massive support programmes for their troubled banking industry, the general public is much more interested in specific facts about the subsidy programmes. The public became an important actor by shaping opinion of politicians, creating a pressure towards more subjectively felt just redistribution of wealth in society. Links: •
Institutional Chart:
11 http://www.bbc.co.uk/news/business-21608938 12 http://www.europarl.europa.eu/news/en/headlines/content/20130318STO06610/html/Cap-on-bankers'-bonuses-riskreducer-or-witch-hunt
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https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/Institutional %20Chart%20ECONII.jpg
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The two articles outline possible steps and actors on European level. http://www.europarl.europa.eu/news/en/headlines/content/20130318STO06610/html/Cap-onbankers'-bonuses-risk-reducer-or-witch-hunt http://www.bbc.co.uk/news/business-21608938
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The link provides you with information on the Basel Committee on banking supervision, an international body that formulates supervisory standards and guidelines to promote global financial stability. While this body and its work is not directly linked to the question of banking culture its decisions have a major impact among others on risk-managements of banks. http://www.bis.org/bcbs/about.htm
6. KEY CONFLICTS The core of the problem can be focused on the question of whether regulation of banking industry, such as limiting the banking bonuses or separating commercial and investment banking would have a real influence on the culture of banking. Or whether these proposed measures would only contribute to drive banking out of Europe to even less regulated financial areas. Or is there maybe a possibility to look into steps that focus on internal banking culture? The question is if such internal measures have any implications at all or if they would just serve as a camouflage to show a willingness to solve the issue towards the outside, without any practical effects to the inside. An important decision needs to be made on whether the focus should be put on governance and legislation or on human resources aspects. Or is maybe a combination of both necessary to find a comprehensive solution? Furthermore a growing part of the industry as well as of politicians seem to favour no major changes at all, arguing that states should not regulate banking at all or that an individual mistake or illegal action of bank employees should not impact the entire industry. These voices are getting stronger as the immediate effects of banking crisis seem to be overcome, banks that needed public support are self-sustaining again13 and the general economic climate slowly improves. Links: •
Report by the House of Commons Parliamentary Commission on Banking Standards offers in-depth analysis of problems of the UK banking sector and offers a wide variety of recommendations for national legislation and other actions.
13 Some of the banks that needed state help or were partially nationalised are profitable again and able to return the borrowed money back to the state. Some countries were actually even able to realize profit with those operations.
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http://www.parliament.uk/business/committees/committees-a-z/joint-select/professional-standardsin-the-banking-industry/news/changing-banking-for-good-report/
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Commentary of the above mentioned Parliamentary Report by the Chartered Institute of Personnel and Development welcomes the Report but calls for further steps. http://www.cipd.co.uk/pressoffice/press-releases/changing-banking-for-good-all-aboutculture-190613.aspx
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Paper from London School of Economics outlines some possible measures to solve the banking crisis. http://blogs.lse.ac.uk/lseeinspain/2012/10/10/culturechange/
7. MEASURES ALREADY IN PLACE EU Bank Capital Requirements Regulation and Directive14: While the core of the Regulation and Directive deals with amount and quality of capital set aside by banks to cushion eventual risks it also focuses on bonuses paid by banks to their employees, especially in investment banking. In general the directive caps the bonuses at 200 % of the respective salary. The Single Rulebook15 : European Banking Authority is at the moment working on a single rulebook for European banking industry. A major part of the rulebook is a section on transparency of banking behaviour.
14 http://www.europarl.europa.eu/news/en/pressroom/content/20130412BKG07195/html/EU-Bank-CapitalRequirements-Regulation-and-Directive 15 http://eba.europa.eu/regulation-and-policy/single-rulebook
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COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS (ECON III)
Off-shore tax havens within and outside Europe: how can Europe jointly address the criminal avoidance of taxes while respecting the citizens’ right to privacy and foreign states’ sovereignty? by Dimitris Zacharias (GR)
1. KEY TERMS •
Tax havens – a country that provides individuals and organisations with a limited tax framework and offers a stable environment. Tax havens also provide limited information regarding deposit accounts. Lastly, tax havens do not require depositors to be nationals of the country in order to benefit from the limited tax regulations.1
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Tax evasion – the illegal non-payment of tax to the government of a jurisdiction to which it is owned by a person or an organisation that should be a taxpayer in that place.2
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Aggressive Tax Planning - taking advantage of the technicalities of a tax system or of mismatches between two or more tax systems to reduce tax liability.
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Third countries – countries in which EU nationals or European organisations own deposit accounts.
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Bank secrecy – the unwillingness of banking institutions to disclose information regarding deposit accounts and their respective holders to international tax authorities.
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Loopholes – the differences in tax regulation among Member States.
Links: •
European Parliament Channel, Interview: Tax havens
1 Identifying Tax Havens and Offshore Finance Centres, Tax Justice Network, Features of Tax Havens, Briefing Paper, p. 1, <http://bit.ly/zDg0el> 2 The Cost of Tax Abuse, A Briefing Paper on the Cost of Tax Evasion Worldwide, The Tax Justice Network, November 2011, p. 1 < http://bit.ly/vWiAic>
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•
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What are tax havens, and how does tax non-compliance impact EU finances? Tax Havens: International Tax Avoidance and Evasion, Congressional Research Service, pp. 3 – 7 What are tax havens and their characteristics? Pressure Mounts on Vaunted Secrecy of Switzerland’s Banks – The New York Times Bank Secrecy in Switzerland and the EU approach towards a transparent banking sector Europe targets Switzerland in fight against bank secrecy – Reuters International – Bank Secrecy and the fight against it Tax Havens: International Tax Avoidance and Evasion, Congressional Research Service, pp. 8 – 10 Corporate tax avoidance and respective practices
2. RELEVANCE AND EXPLANATION OF THE PROBLEM Tax evasion, tax avoidance and offshore tax havens pose a serious threat to the revenue streams of Member States and the EU as a whole. Member States’ national budgets and the EU budget are financed by such tax revenues; economic and social policies that are carried out by national governments and the EU are utilising the income generated by tax revenues. Tax evasion generates a €1 trillion gap in the EU economy, which results either in less policy financing or increased taxes for the citizens.3 In 2011, the overall EU tax-to-GDP (Gross Domestic Product) ratio was 38.8%. Non-compliance to tax regulation stems from the attractive tax framework which tax havens enforce on depositors. Lax enforcement of regulation, relative political stability, account privacy and the absence of public registries for organisations as well as favouring legislation towards foreign investors, altogether, constitute an environment that attracts capital inflows and safeguards depositors.4 In order to assess such efforts one should be aware of the conflicts regarding (1) the depositor’s right to privacy and the spill-over effect of non-compliance to public finances, (2) the distinction between legal and illegal accounting schemes, (3) the impact that tax harmonisation will have on the attractiveness of the EU economy to foreign investors and (4) the fairness of fiscal governance (fiscal equity) and Member States’ right to fiscal sovereignty. Links: •
“EU Commissioner: Time to Move 'Quicker and Harder' Against Tax Evasion” – Der Spiegel European Union Tax Commissioner Algirdas Semeta discusses the post-"Offshore Leaks" debate on fighting tax havens
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European Commission, Taxation and Customs Union, Harmful tax practices – europa.eu -
3 Eurostat, European Commission – Statistical Books, “Taxation Trends in the European Union – Data for EU Member States, Iceland and Norway”, 1 Development of the overall tax revenue in the European Union, pp. 21-24, 2013 edition, Taxation and Customs Union, <http://bit.ly/16uTzK1> 4 OECD, “Countering Offshore Tax Evasion”, Questions and Answers on the Project, OECD Centre for Tax Policy and Administration, September 2009, < http://bit.ly/128UNDp>
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Jane G. Gravelle ,Senior Specialist in Economic Policy, Tax Havens: International Tax Avoidance and Evasion, Congressional Research Service, January 2013 – Summary of individual and organisational tax avoidance practices and international attempts to stop them
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European Commission, Taxation and Customs Union, Saving Directive review – europa.eu
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European Commission, News, Economy, Finance and Tax – europa.eu – Summary of action plan encourages European governments to work together to clamp down on companies and individuals not paying their fair share.
3. KEY QUESTIONS •
What effect does tax avoidance have on the economy of the EU and its Member States respectively?
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What is the negative spill-over effect of tax avoidance on the fairness and equity of the tax framework?
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What are the factors that lead depositors to offshore tax havens and how different is the existing EU governance framework?
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Is aggressive tax planning by individuals and organisations illegal?
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Is it realistic to expect the EU to be able to regulate taxation collectively?
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How should the EU collaborate with international organisations in order to ensure that international tax governance standards are applied in third countries?
Links:
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Jane G. Gravelle ,Senior Specialist in Economic Policy, Tax Havens: International Tax Avoidance and Evasion, Congressional Research Service, January 2013 – Summary of individual and organisational tax avoidance practices and international attempts to stop them
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COM(2012) 351 final - Communication from the Commission to the Parliament and the Council on concrete ways to reinforce the fight against tax fraud and tax evasion including in relation to third countries
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COM(2012) 722 final – Communication from the Commission to the European Parliament and Council on An Action Plan to strengthen the fight against tax fraud and tax evasion
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
4. KEY FACTS AND FIGURES •
Tax fraud and tax evasion limit the capacity of EU countries to raise money and implement their economic and social policies.
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Estimates of capital lost due to tax evasion and avoidance go up to €1 trillion per year for the EU5 .
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Tax havens under European Union jurisdiction hold €9.5 trillion in global offshore wealth.
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Oxfam estimates that at least $18.5 trillion is hidden by wealthy individuals in worldwide tax havens.
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The EU allows co-operation and exchange of information among its Member States on all sorts of taxes.
Links: • •
Oxfam Says EU Tax Havens Hold $12 Trillion in Wealth - Bloomberg
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European Commission, Taxation and Customs Union, Fight against tax fraud and tax evasion – An overview of the implications of tax evasion in the EU and the respective actions of Member States and the EU to battle such practices
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Combating tax fraud and evasion ,Commission contribution to the European Council of 22 May 2013 Information regarding the actions of Member States towards tax avoidance and the attempts of the EU to centrally manage tax evasion
Tax on the “private” billions now stashed away in havens enough to end extreme world poverty twice over – Oxfam International
5. KEY ACTORS The key actors of this subject are the European Commission’s Taxation and Customs Union, the European Parliament and European Council and the Member States and their national tax authorities. International organisations (tax authorities and political conglomerates) such as the OECD and the G8/G20 are also directly linked to the matter at hand as they are assigned with the task of coordinating international efforts against tax avoidance and non-compliance. Lastly, the taxhavens (third countries that offer a favourable tax framework) themselves have a stake in this
5 Eurostat, European Commission – Statistical Books, “Taxation Trends in the European Union – Data for EU Member States, Iceland and Norway”, 1 Development of the overall tax revenue in the European Union, pp. 21-24, 2013 edition, Taxation and Customs Union, <http://bit.ly/16uTzK1>
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situation as they are the host countries of tax avoiding individuals and organisations and do not comply with international regulations of fiscal governance.6 Links: •
Combating tax fraud and evasion ,Commission contribution to the European Council of 22 May 2013 Information regarding the actions of Member States towards tax avoidance and the attempts of the EU to centrally manage tax evasion
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“Countering Offshore Tax Evasion”, Questions and Answers on the Project, OECD Centre for Tax Policy and Administration, September 2009, http://bit.ly/128UNDp
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Europe Pushes to Shed Stigma of a Tax Haven – The New York Times G8 deal on tax havens a long way off – The Guardian
6. KEY CONFLICTS One of the major conflicts in this topic relates to the need for consolidated action against tax heavens and third countries that provide anonymity and obstruct the efforts to limit tax avoidance. In essence, whilst depositors enjoy security and anonymity, governments and international organisations have limited access to information 7. Another conflict that arises from this topic is that of legal and illegal accounting practices. Moreover, the call for collective EU action against tax havens conflicts with the rights of Member States to fiscal sovereignty. Lastly, another prominent conflict in this topic relates to the impact that a potential tax harmonisation might have on the attractiveness of the EU economy. Another underlying conflict relating to the efficiency of implementing tax harmonisation policies across the EU pertains to whether the aforementioned efficiency could be maximised if such policies were carried out by individual Member States or the central EU government. Links: •
Combating tax fraud and evasion ,Commission contribution to the European Council of 22 May 2013 Information regarding the actions of Member States towards tax avoidance and the attempts of the EU to centrally manage tax evasion
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Eurostat, European Commission – Statistical Books, “Taxation Trends in the European Union – Data for EU Member States, Iceland and Norway”, 1 Development of the overall tax revenue in the European Union, pp. 21-24, 2013 edition, Taxation and Customs Union, http://bit.ly/16uTzK1
6 OECD, “Countering Offshore Tax Evasion”, Questions and Answers on the Project, OECD Centre for Tax Policy and Administration, September 2009, < http://bit.ly/128UNDp> 7 Identifying Tax Havens and Offshore Finance Centres, Tax Justice Network, Features of Tax Havens, Briefing Paper, p. 1, <http://bit.ly/zDg0el>
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7. MEASURES ALREADY IN PLACE •
EU Savings Tax Directive
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Commission Communication on concrete ways to reinforce the fight against tax fraud and tax evasion (COM(2012)0351)
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Commission Communication on An Action Plan to strengthen the fight against tax fraud and tax evasion (COM(2012)0722)
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Commission recommendation on aggressive tax planning (C(2012)8806)
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Commission recommendation - third countries to apply minimum standards of good tax governance (C(2012)8805)
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EU Tax Policy - Priorities for the years ahead" (COM (2001) 260)
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The Common Consolidated Corporate Tax Base (CCCTB) is a proposal developed by the European Commission for an optional additional new tax code to be adopted across the European Union. The CCCTB has nothing to do with setting the same common corporate tax rates, which remain to be a national competence.
Links:
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Taxation of Savings Income – Savings Directive Review
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C(2012) 8805 final – Commission recommendation regarding measures intended to encourage third countries to apply minimum standards of good governance in tax matters
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COM(2012) 722 final – Communication from the Commission to the European Parliament and Council on An Action Plan to strengthen the fight against tax fraud and tax evasion
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Combating tax fraud and evasion, Commission contribution to the European Council of 22 May 2013 Information regarding the actions of Member States towards tax avoidance and the attempts of the EU to centrally manage tax evasion
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Communication from the Commission to the Council, European Parliament and Economic and Social Committee: Tax Policy in the European Union – Priorities fir the Years Ahead
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Commission Recommendation on Aggressive Tax Planning
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The Common Consolidate Tax Base
COM(2012) 351 final - Communication from the Commission to the Parliament and the Council on concrete ways to reinforce the fight against tax fraud and tax evasion including in relation to third countries
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON CIVIL LIBERTIES, JUSTICE AND HOME AFFAIRS (LIBE)
The fear of rising ‘benefit tourism’: anticipating the removal of the restrictions to free movement for Bulgarian and Romanian citizens in 2014 and bearing in mind complaints of unequal access to social benefits within the Union, how should basic EU liberties be safeguarded whilst considering the socio- economic pressures placed upon the welfare systems of Member States?
by Gustaf Danielsson (SE)
1. KEY TERMS •
EU Citizenship – Any person who holds the nationality of an EU country is automatically also an EU citizen. The Treaty on the Functioning of the EU gives certain rights to EU citizens, including the right to move and reside freely within the Union.
•
Benefit tourism – A term used to describe the phenomenon of EU citizens who move to richer Member States in order to take advantage of their more generous welfare systems rather than to work.
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EU-27 – All current Member States (Croatia will be added before the session begins, but, naturally, all research only references the EU-27. The EU-15 refers to the fifteen countries that were members before the 2004 and 2007 enlargements. The countries that joined 2004 and 2007 are referred to as the EU 121.
•
Intra-EU migration – Migration between Member States. Migration from outside of the Union is, in this context, called “third country immigration”2.
•
Habitual residency – The EU’s test for determining if a person is actually habitually resident in the country and thus eligible for seeking benefits. The test takes into account
1 http://www.migrationpolicy.org/pubs/MPIEurope-FreeMovement-Drivers.pdf 2 ibid
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factors such as duration and continuity of presence in the country, nature and characteristics of activities pursued, housing situation and family situation3 . •
“Right to reside” – An extra test that the UK uses to determine if non-UK citizens are eligible for certain benefits4.
•
Social assistance benefits – Means tested benefits such as Income support and Housing benefits. These benefits are financed through general taxation.
•
Social security benefits – Benefits that are granted to provide cover against classical social security risks such as sickness, old age, unemployment and having to assume financial responsibility for a family.
2. RELEVANCE AND EXPLANATION OF THE PROBLEM The free movement of people is one of the four freedoms (people, goods, services, capital) that form the cornerstones of the Single Market. For EU citizens, this means that they can work, live, study and retire as well as claim certain benefits in other EU countries. In the period 1992-2006, The Single Market is estimated to have created an extra 2,75 million jobs and increased EU prosperity by more than 2 percent of GDP by tearing down internal borders and cutting down red tape5. When the two latest enlargements took place in 2004 and 2007, most of the EU-15 countries put certain restrictions on the free movement of citizens from newer Member States in order to avoid uncontrollable flows of immigrants. While migration to the EU-15 increased across the board after the enlargement, two major migration patterns took shape: Polish and Baltic flows to the United Kingdom and Ireland, and Romanian and Bulgarian flows to Spain and Italy. This is attributed partially to favourable labour market conditions, but, in the case of the UK and Ireland, it is also largely believed to be caused by the fact that they did not impose any transitional restrictions. Countries that did impose restrictions experienced a clear increase in intra-EU immigration when they expired.
3 http://www.ft.com/cms/s/0/09c7f42c-c947-11e2-9d2a-00144feab7de.html#axzz2WbH2Jzdu http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:284:0001:0042:EN:PDF 4 http://www.ft.com/cms/s/0/09c7f42c-c947-11e2-9d2a-00144feab7de.html#axzz2WbH2Jzdu 5 http://ec.europa.eu/internal_market/benefits_en.htm
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For the countries that joined in 2004, all transitional restrictions have expired, but nine 6 Member States still have restrictions in place for workers from Romania and Bulgaria. These restrictions will expire on January 1, 2014. Fearing that the lifting of these restrictions will lead to a significant increase in immigration and benefit tourism, Ministers from the UK, Germany, Austria and the Netherlands wrote to the European Commission calling for a crackdown on benefit tourism. There are also calls for stricter rules on intra-EU migration in general7 and a way to stop immigrants who have been expelled for abuse from coming back8 . At the same time, complaints have been raised that immigrants in the UK are being denied benefits that they are entitled to 9. Links: •
Article 45 (free movement of workers), article 20-26 (EU-Citizenship): http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C: 2008:115:0047:0199:en:PDF#page=10
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EC on the Single market: http://ec.europa.eu/internal_market/top_layer/
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QA on the issues concerning the expiration of the restrictions on Romania and Bulgaria: http://www.bbc.co.uk/news/uk-politics-21523319
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Article on the EC’s response to the letter from UK, Germany, Austria and the Netherlands: http://www.euractiv.com/socialeurope/commission-gets-cold-feet-push-l-news-519366
3. KEY QUESTIONS •
What is the purpose of free intra-EU movement? What are its pros and cons?
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What are the driving forces behind intra-EU migration?
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How can migration flows be controlled? Is restricting free movement the right way to go or is it more effective to address the causes for emigration in sending countries?
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Why is intra-EU migration and benefit tourism a cause for concern in certain Member States?
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What impact would restricting free movement have for the greater European project?
6 Austria, Germany, Belgium, France, Luxembourg, Malta, The Netherlands, The UK, and Spain. 7 http://www.bbc.co.uk/news/uk-politics-21523319 8http://www.ft.com/intl/cms/s/0/8cf287a8-8749-11e2-bde6-00144feabdc0.html#axzz2WbH2Jzdu 9 http://www.guardian.co.uk/uk/2013/may/30/uk-government-eu-migrant-benefits
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Links: •
Statistical overview, Oxford migration observatory: http://www.migrationobservatory.ox.ac.uk/briefings/eu-migrants-other-eu-countries-analysisbilateral-migrant-stocks
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Eurostat page on EU citizens’ cross-border activity: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/EU_citizenship__statistics_on_cross-border_activities
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European progressive policy journal analysis of the impact of intra-EU migration on labour markets during the economic crisis: http://www.social-europe.eu/2012/10/eu-labour-migration-during-the-crisis/
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Report by the think tank Open Europe on the impact and management of free movement and immigration policy in the UK. 12-29, 30-32: http://www.openeurope.org.uk/Content/Documents/Pdfs/EUimmigration2012.pdf
4. KEY FACTS AND FIGURES •
10 % of EU citizens report having worked in another EU country
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Some of the most significant flows of intra-EU migration have been between EU-15 countries.
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Intra-EU migration constitutes 38% of the total migrant population in Europe. The remaining 62% are third country immigrants.
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In absolute numbers, the biggest recipients of intra-EU immigrants are Germany, Spain, the UK, France and Italy. Relative to the population size however, only Spain and Germany make the top five. The other three are Luxembourg, Austria and Belgium.
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Since the economic crisis hit, there has been a change in migration pattern. Traditional east-west migration has decreased and instead there has been an increase in migration from southern European countries where the crisis hit the hardest to more economically prosperous countries in northern Europe.
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The biggest driver of intra-EU migration are favourable labour market conditions. The second most common reason for migrating is family (accompanying family members, family reunification, family formation) and the third is studies.
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•
Most studies show that immigration in general has a positive impact on public finances, it decreases employment prospects and wage levels of certain groups, in particular the low skilled.
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Being young, better educated, male and living in a city are attributes that are associated with mobility. Having children, being a member of a dual-earner household, owning a house and language barriers are factors that make people less inclined to move.
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A study on the fiscal consequences of immigration to the UK from the countries that joined in 2004 show that immigrants from those countries who have at least one year of residency and thus are eligible to claim benefits are 59% less likely to receive state benefits or tax credits and 57% less likely to live in social housing.
Links: •
A comprehensive study on mobility within the EU conducted by the Migration Policy Institute Europe. Here you will find information on the driving forces of migration and the impact it has on different aspect of society: http://www.migrationpolicy.org/pubs/MPIEurope-FreeMovement-Drivers.pdf
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A report by the European Commission on the impact of third country immigration on the economies, cultural contexts, and political structures of receiving countries: http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/immigration/pdf/general/ emn_immigration_2006_en.pdf
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A study on the fiscal costs and benefits of migration to the UK from the EU countries that joined in 2004: http://www.ucl.ac.uk/~uctpb21/Cpapers/DustmannFrattiniHalls2010.pdf
5. KEY ACTORS According to the Ordinary Legislation Procedure, the European Commission submits proposals to the Council of the European Union and The European Parliament. The Commission is also responsible for implementing existing laws. Under the Commission, there are two Directorates General that deal with these issues, the DG for Justice and the DG for Employment, Social Affairs and Inclusion with the former focusing on safeguarding fundamental rights for all citizens and fighting discrimination and the latter focusing on free movement of workers and coordination of social security schemes.
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In the Council, the Justice and Home Affairs Council, where countries are represented by ministers in those areas, is responsible for most issues concerning free movement. Here, the UK, Germany, Austria and the Netherlands are trying to gain support for stricter rules on intra-EU migration. At a meeting in early June, the Council tasked the Commission with putting together a report on the implementation of free movement rules and how to fight abuse10 . So far no more countries have joined the fight for stricter rules and naturally, Romania and Bulgaria are fighting any attempts to restrict the freedom of their citizens. In the Parliament, the Committee on Civil Liberties, Justice and Home Affairs is the primary committee for dealing with these matters. Links: •
Institutional Chart: https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/Institutional%20chart %20LIBE_final.pdf
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Website for the Directorate General for Justice. Here you will find information on EU citizenship and freedom of movement within the Union as well as relevant legislation: http://ec.europa.eu/justice/citizen/index_en.htm
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Website for the Directorate General for Employment. Here you will find information on free movement for workers and social security coordination as well as relevant legislation: http://ec.europa.eu/social/main.jsp?langId=encatId=1
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Protocol from Council meeting on 6-7 June 2013, p. 22: http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/jha/137407.pdf
6. KEY CONFLICTS Central to the issue is a dispute over whether benefits of free movement has outweighed the cost for the economies of Member States or if intra-EU migration has been a burden for the welfare systems of richer EU countries. The debate has been plagued by anecdotal evidence and hard facts are scarce since it is almost impossible to determine if a person is seeking to abuse the system or is simply unsuccessful in finding a job. Since the economic crisis hit, the demand for government aid has increased at the same time as countries cut back to save the national economies. The crisis has also thrown cultural and historical differences of Member States into the spotlight which has caused a rise in support for nationalist and anti-EU opinions and parties and a discussion on whether Member States should not focus on providing for their own citizens first.
10 http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/jha/137407.pdf
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Another argument that opponents of free movement often bring up is that it puts an unreasonable strain on public services such as health care and education. The pressure is extra tough on local authorities where a lot of immigrants choose to settle and a lack of accurate data and predictions on future immigration flows makes planning difficult. Whereas migration is increasingly controlled on an EU level, welfare benefits remain the responsibility of individual Member States. Diverging interests arise where these policy areas intersect. Links: •
Euractiv article on growing intolerance as reason behind calls for tougher rules: http://www.euractiv.com/uk-europe/cameron-announces-tough-measures-news-518732
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Financial Times article in questioning whether free movement is an unfretted right: http://www.ft.com/cms/s/0/57c80066-c930-11e2-bb56-00144feab7de.html#axzz2WbH2Jzdu
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The EC explains which social welfare benefits you have right to if you live or work in another EU country (explanatory videos under green-arrow links): http://ec.europa.eu/social/main.jsp?catId=849langId=en
7. MEASURES ALREADY IN PLACE Contrary to common belief, EU citizens do not have an unconditional right to reside in any Member State they like, nor are they are entitled to benefits immediately and without restrictions. Under current legislation, EU citizens have to be in employment, continually seeking employment and having a genuine chance of being engaged or be self-sufficient in order to be allowed to stay for longer than three months. Social assistance benefits are only given to EU citizens (and their family members) if they are employed or self-employed. EU citizens who are not employed should be self-sufficient and would thus not be eligible for social assistance benefits. In order to be eligible for social security benefits, EU citizens have to be either employed or self-employed or fulfil the “habitual residence test”. The UK has unilaterally imposed tougher tests on foreigners through requiring that they fulfil a “right to reside” test in addition to the EU’s “habitual residence” test to establish if an immigrant is eligible for benefits or not. The Commission claims that this is in violation of EU law and has taken the UK to court over the issue 11.
11 http://euobserver.com/social/120316
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Current restrictions in place against Romanian and Bulgarian citizens vary between Member States but include restricting access to certain professions, requiring work permits and giving priority to workers from other countries.
Links:
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The EC on straightens out common misconceptions on migration and benefits: http://blogs.ec.europa.eu/ECintheUK/getting-the-facts-straight-eu-rights-to-reside-in-anothermember-state-eu-benefit-claimants-and-nhs-treatment-entitlement/
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The EC explaining specifically what restrictions are put in place by different Member States: http://ec.europa.eu/social/main.jsp?catId=508langId=en
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An article explaining why the EC i taking the UK to court over the „right to reside“-test: http://euobserver.com/social/120316
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Guide on how to interpret and use the right to move and reside within the Union: http://ec.europa.eu/justice/citizen/files/guide_2004_38_ec_en.pdf
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON CONSTITUTIONAL AFFAIRS II (AFCO II)
Lobbying the European Parliament (EP) for the common welfare? In the light of discussions about the introduction of a legislative footprint and increased civic participation, what strategy should the EP adopt towards interest representation and NonGovernmental Organisations (NGOs) as legitimate partners in policymaking?
by Valeriia Cherednichenko (UA)
1. KEY TERMS •
Civic participation: a process whereby citizens or their representatives are able to engage and influence public processes, in order to achieve civic objectives and goals.
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Non-Governmental Organisation (NGO): a not-for-profit group, principally independent from government, which is organised on a local, national or international level to address issues in support of the public good.
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Interest representation: activities carried out with the objective of influencing the policy formulation and decision-making processes of the European institutions.
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Lobbying: the act of attempting to influence business and government leaders to create legislation or conduct an activity that will help a particular organisation.
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Lobbyists: persons carrying out such activities, working in a variety of organisations such as public affairs consultancies, law firms, NGOs, think-tanks, corporate lobby units (“inhouse representatives”) or trade associations.
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Advocacy: a process of putting a problem on the agenda, providing a solution to that problem and building support for acting on both the problem and the solution.
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•
Transparency: lack of hidden agendas and conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision-making.
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Transparency Register (TR): provides citizens with a direct and single access to information about who is engaged in activities aiming at influencing the EU decision-making process, which interests are being pursued and what level of resources are invested in these activities.
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Code of conduct for MEPs: a set of rules and principles which MEPs will need to follow in their contacts with outside interests, so as to avoid conflict of interests. At the moment it regulates what gifts or benefits MEPs may accept and how they need to declare remunerated activities.
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Legislative Footprint: a document that would detail the time, person and subject of a legislator’s contact with a stakeholder. If implemented, it would be published as an annex to legislative reports and it would give insight into who gave input into draft legislation.
Links: •
Access rights for interest group representatives: http://www.europarl.europa.eu/aboutparliament/en/0073710a27/Overview.html
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Introduction to the Transparency Register and the Code of Conduct for MEPs: http://europa.eu/transparency-register/
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NGO-EU Connect. This website is intended to introduce you to the opportunities and ways of how NGOs can contribute to forming legislation at a European level: http://www.ngoeuconnect.ie/index.php
2. RELEVANCE AND EXPLANATION OF THE PROBLEM "The public are hungry for more information about what is happening in Brussels." Helen Darbishire, founder and Executive Director of the NGO Access Info Europe
In the developed European democracies, the involvement of representatives of NGOs in the processes of decision- and law-making became common practice of public governance in the second half of 20th century. The process of involvement of representatives of various public groups
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directly reflects the main ideas of “participatory democracy1, which together with democratic equality and representative democracy constitute the three principles of democratic governance in Europe2 according to the Treaty of Lisbon3. Lobbying as such is an incredibly important part of this process as it stands for the basic principle of freedom of speech. Lobbying also contributes valuable expertise and ensures that the opinions and needs of different stakeholders are taken into account. On the other side, as a recent EU Citizens opinion poll on transparency, ethics, and lobbying in the EU4 showed, a majority of people across Europe are concerned about ethics and lobbying in European Union policy-making, and want better regulation of lobbyists, as well as increased transparency of the EU. The results come at the beginning of the European Year of Citizens (2013), which aims to stimulate dialogue between governments and society, and thereby better engage citizens in debates and decisions that affect them5 . Should this not be “a wake-up call for European decision-makers” 6? It seems that without the “minicrisis” provoked by the cash-for-influence scandal at the European Parliament (EP) in 20117, the issue of a more transparent and legitimate European Parliament would not have arisen or at least not have received as much attention as it actually has since then. Links: •
Euractiv, “Journalistic spoof traps MEPs in bribery affair”: http://www.euractiv.com/future-eu/journalistic-spoof-traps-meps-br-news-503281
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Dick Roche TD, Irish Minister for European Affairs on how NGOs can influence policies in the European Union: http://www.youtube.com/watch?v=0Jc0TcZ7E3Y
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European Year of Citizens 2013: http://europa.eu/citizens-2013/
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EU Citizens: Increasing the participation of citizens in EU decision making: www.eu-citizens.org
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How advocacy and lobbying happen at EU level, Culture Action Europe:
1 http://www.icnl.org/research/resources/ngogovcoop/partngo.pdf 2 http://europa.eu/lisbon_treaty/glance/democracy/ 3 http://europa.eu/lisbon_treaty/full_text/ 4 The survey was conducted by TNS opinion in six EU Member States: Austria, Czech Republic, France, the Netherlands, Spain and the UK. Approximately 1,000 surveys were completed online in each country from 17–23 January. The survey is part of the EU Citizens project and the results can be found at: http://www.eu-citizens.org/ noticia10.php 5 http://www.foeeurope.org/EUcitizenspoll 6 http://www.foeeurope.org/Parliament-act-potential-case-conflict-interest-091012 7http://www.economist.com/blogs/easternapproaches/2011/03/corruption_allegations_european_parliament
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http://www.cultureactioneurope.org/lang-en/advocate/advocacy-and-lobbying-at-eulevel?p=1-know-yourtargete4b73c3745ac4bc374714928e835769b=87e01a198b2f4704e08bddfcfc4ae6ea
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Pressure Groups and Lobbying in the EU: http://www.civitas.org.uk/eufacts/OS/CIT7.html
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Regulation of Lobbyists in Developed Countries, Institute of Public Administration: http://www.environ.ie/en/Publications/LocalGovernment/Administration/FileDownLoad,2048,en.pdf
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Audio-interview with Mrs. Diana Wallis, former Vice-President of the European Parliament and the Expert Interviewee for AFCO II: https://www.dropbox.com/sh/re7akjnqfrdjoik/beipW6JgoR
3. KEY QUESTIONS •
Do the existing initiatives of the EP such as the Transparency Register and the Code of Conduct for MEPs suffice to enhance the transparency and legitimacy of the EP?
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What steps should the EP take on its way to becoming the role model for parliamentary transparency in a pluralistic democracy?
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How can NGOs gain higher profile as legitimate partners in interest representation for policy-making?
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How does the input of the interest groups contribute to the work of the MEPs?
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What should be done to provide equal opportunities for all interest groups at the EU level in order to ensure that all interests are being heard?
4. KEY FACTS AND FIGURES •
At present there are thought to be approximately 3,000 special interest groups of varying types in Brussels, with up to 10,000 employees working in the lobbying sector 8.
•
The European Women's Lobby, which is the largest alliance of women's NGOs in Europe and campaigns for equality between men and women, is comprised of more than 2,500 member organisations in 30 countries, and 21 Europe-wide networks.
8 http://ec.europa.eu/civil_society/interest_groups/approche/groupes_en.htm#1
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•
The European Parliament is made up of 754 Members elected in the 27 Member States of the enlarged European Union9. Since 1979 MEPs have been elected by direct universal suffrage for a five-year period10.
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The EU Citizens opinion poll on transparency, ethics, and lobbying in the EU, completed by over 6,000 people in six European countries, reveals that three quarters (73%) of respondents are concerned that lobbyists representing the business sector have too much influence on EU decisions. 80% of those surveyed believe there should be mandatory regulation of lobbying to ensure a balanced participation of different interests in decisionmaking11 .
•
According to the Annual Report on the operations of the Transparency Register 201212, a vast majority of respondents declare they have registered in the TR primarily for the sake of transparency (92%). They also wish to interact with the EU institutions in a transparent and ethical way and believe that being registered reflects positively on their image (93%).
Links: •
“The Transparency Register: A European vanguard of strong lobby regulation?“, Justin Greenwood and Joanna Dreger: http://www.palgrave-journals.com/iga/journal/v2/n2/full/iga20133a.html
5. KEY ACTORS When the Council of the European Union (the Council) is ready to present its position on the EP amendments, even if it has not yet formally concluded its second reading, a tripartite meeting between the EP, the Council and the European Commission (Commission), known as a 'trilogue', is arranged. Trilogues have become the preferred method of inter-chamber conflict resolution in the EU legislature. The key argument is that trilogues allow the Council to negotiate directly with majority party leaders in the Parliament over important EU legislation.
9 On 1 July 2013 12 MEPs from Croatia will join the EP increasing the total number of MEPs to 766. 10 http://www.europarl.europa.eu/meps/en/map.html 11 http://www.eu-citizens.org/noticia10.php 12 http://europa.eu/transparency-register/pdf/transparency_register_report_20121029_en.pdf
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Together with the dynamic development of European institutions also rose the amount of interest organisations at European level. Interest groups on the European level can be divided in two groups: business interests and non-business interests. Business groups are widely seen as being dominant both numerically and politically in the EU arena. Players who have also clearly gained influence are NGOs, often known collectively as civil society. Decision-making in the EU, at least in the most traditional areas of policy-making, is a dynamic process which demands that actors from different institutions and interest groups collaborate and compete to secure the outcomes they desire. Actors from private 13 and public14 interest groups can be influential in shaping decision, either through formal consultation or by acting as sources of information, experts and mediators between other actors. There are also NGOs, such as Corporate Europe Observatory (CEO) 15, that work to expose and challenge the privileged access and influence enjoyed by private interest groups in EU policy-making. This particular NGO works in close alliance with public interest groups and social movements in and outside Europe to develop alternatives to the dominance of corporate power. The European Commission is an important target for interest groups due to its monopoly over the initiation of laws. Interest groups lobby Directorates General that represent the particular policy areas that their cause relates to. The European Economic and Social Committee 16 (EESC) was established to channel the interests of pressure groups into EU policy making. However, pressure groups have tended to bypass the EESC due to its lack of policy-making powers and institutional weight, and have instead pursued links with the more powerful Commission and EP. Links: â&#x20AC;˘
Institutional Chart: https://www.dropbox.com/sh/re7akjnqfrdjoik/beipW6JgoR
â&#x20AC;˘
Introduction to the European Economic and Social Committee (EESC): http://www.eesc.europa.eu/
13 A vast array of private business and economic interests are represented in Brussels. Private interest groups are mostly interested in influencing competition policy, trade policy and other areas which affect their members' businesses. Business pressure groups outnumber public interest groups by approximately four to one. An example is the Committee of European Agricultural Organisations in the EU (COPA); http://www.civitas.org.uk/eufacts/OS/CIT7.html 14 These groups tend to be non-profit organisations representing public interests such as the environment, human rights and animal welfare. An example is Human Rights Watch. Environmental groups have been particularly efficient at pursuing their causes and have effectively influenced the Commission's sustainable development policies, http:// www.civitas.org.uk/eufacts/OS/CIT7.html 15 http://corporateeurope.org/about-ceo 16 http://www.eesc.europa.eu/
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•
Co-decision and conciliation: A guide on how the Parliament co-legislates under the Treaty of Lisbon, January 2012: http://www.europarl.europa.eu/code/information/guide_en.pdf
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Lobbying the European Union, Kristina Charrad, University of Münster, 2005: http://nez.uni-muenster.de/download/Charrad_Literaturbericht_Lobbying_mit_Deckblatt.pdf
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Trilogues in the EU legislature, Research Paper, Department of European and International Studies, King’s College London, April 2012: http://raya.eu/wp-content/uploads/2012/08/Trilogues_in_the_EU_Legislature.pdf
6. KEY CONFLICTS In order to understand the key conflicts of the problem at stake, we should refer to two main questions. First, whether the measures at hand suffice to make the EP the role model for parliamentary transparency? If not, what measures should be taken for the EP to become this role model? Secondly, are the abilities of certain interests to influence the decision-making process higher than others? The topic at stake, as every medal, has two sides. Some argue that both the Transparency Register and the Code of conduct are not enough due to the following reasons. Firstly, while the TR reveals who is seeking to influence European legislation, what really matters is which pieces of legislation the listed and non-listed organisations/individuals sought to influence, and through which channels17. Secondly, despite the fact that TR covers the EP together with the European Commission, there is an important part of the puzzle missing, which is the Council, in other words, the Member States. And logically they should be included, as another part of the legislature. Thirdly, TR at the moment only covers the EP and the Commission, but not the Council where the Member States are represented and is also part of the legislature. TR is still to a large degree voluntary, except that there is an issue with the parliament lobbyists that cannot get badges unless they are only registered, so that makes it de facto mandatory if you are going to visit the Parliament. Furthermore, the Code of conduct does not provide sufficient information either, as it does not allow knowing whether remunerated activity, access, and legislative activity are closely linked. Without this information it is not possible to determine if a specific remunerated activity represents a conflict of interest or not. 17 http://aei.pitt.edu/32965/
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As opposed to the TR and Code of conduct, some suggest that a new measure in the form of introducing the legislative footprint should be taken18 . The supporters of this “device” compare it to writing an essay for University and quoting the sources used19. The opponents of this initiative argue that a legislative footprint might prevent MEPs from meeting their constituents and it might increase lobbyism by providing a reference to public affairs agencies and lobby groups. The core of this topic lies in determining how to make space for increased civic participation and welcome NGOs as legitimate partners in policy-making, while proving for the EP its role as guarantor of legitimacy in EU decision-making. Another issue that is at the core of the AFCO II topic is the issue of the existing imbalance between the opportunities of different interest groups to influence the decision-making process. Lobbying can only democratise the EU to the extent that it doesn’t replicate inequalities and it seems that it is a lot easier for the business interest groups, for instance, to push forward their interests, than for diffuse group interests (e.g. those who deal with health concerns). At the same time lobbyists from bigger Member States also seem to be more active than those from smaller Member States.20 The Commission in contrast to the EP has a “deck-stacking” strategy in place according to which it needs to consult a variety of different stakeholders. Accordingly it also financially supports different NGOs and allegations have been made that these funds aren’t always distributed fairly and used to further the Commission’s interests21. Such a policy is missing for the EP and thus, the questions that arise are: whether it is better to have no lobbying at all, rather than having an unequal representation of interests? Is this a way for the EU to further its own interests? How to ensure equal access for all interest groups for them to be able to influence the decisionmaking process of the EU? Links: •
A legislative footprint submitted by Mrs. Diana Wallis, former Vice-President of the European Parliament and the Expert Interviewee for AFCO II: http://dianawallismep.org.uk/en/search?query=legislative+footprint
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CEPS Policy Brief No. 256: A Call to Members of the European Parliament: Take transparency seriously and enact the ‘legislative footprint’, Lukas Obholzer, October 2011: http://aei.pitt.edu/32965/
18 Ibid. 19 From the interview with the expert for AFCO II, Mrs. Diana Wallis. 20 A study about lobbying practices in health care with a particular focus on the “equal access” debate: http:// faculty.washington.edu/cadolph/articles/eulobbies.pdf 21 http://www.iea.org.uk/in-the-media/press-release/european-commission-spending-millions-on-pro-eu-lobby-groups
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Transparency and Lobbying in the European Institutions, pros and cons from a former MEP’s perspective: http://dianawallismep.org.uk/en/page/diana-s-work-in-improving-transparency-in-the-europeanparliament
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European Union Lobbying Post-Lisbon: An Economic Analysis, Henry Hauser, 2011: https://www.dropbox.com/sh/re7akjnqfrdjoik/beipW6JgoR
7. MEASURES ALREADY IN PLACE Following the bribery scandal at the European Parliament in 2011, when several MEPs accepted money in exchange for legislative favours, such as the introduction of amendments 22, the European Parliament has introduced two concrete initiatives to enhance its transparency and legitimacy: the Transparency Register and first ever Code of Conduct for MEPs. Firstly, Transparency Register was adopted by a large majority of MEPs in May 201123 . According to the Transparency Register, lobbyists need to make comprehensive information available on their affiliation, turnover and clients of the organisation, and are only allowed to enter the European Parliament non-accompanied if registered. Essentially, the transparency register reveals who is seeking to influence European legislation. As mentioned at the official website of the European Union: “Transparency Register has been set up to provide citizens with a direct and single access to information about who is engaged in activities aiming at influencing the EU decision making process, which interests are being pursued and what level of resources are invested in these activities.” 24 Secondly, the first ever Code of conduct for MEPs was approved by the Conference of Presidents on the recommendation of the Bureau25 on 7 July 201126. The code regulates what gifts or benefits MEPs may accept and how they need to declare remunerated activities 27. In accordance with the Annual Report 2012 of the Advisory Committee on the conduct of members 28, during the year 2012, only one case of an alleged breach of the Code of conduct was referred to 22 Euractiv, “Journalistic spoof traps MEPs in bribery affair”, last updated 29 March 2011, http://www.euractiv.com/futureeu/journalistic-spoof-traps-meps-br-news-503281 23 http://europa.eu/transparency-register/index_en.htm 24 http://europa.eu/transparency-register/about-register/transparency-register/index_en.htm 25 The Bureau is the body that lays down rules for Parliament. It draws up Parliament’s preliminary draft budget and decides all administrative, staff and organisational matters.The Bureau consists of the President of the European Parliament, the 14 Vice-Presidents and the five Quaestors. 26 Mrs. Diana Wallis, Expert Interviewee for AFCO II was one of the Vice-Chairs during the mentioned meeting. 27 http://europa.eu/transparency-register/about-register/code-of-conduct/index_en.htm 28 http://www.europarl.europa.eu/pdf/meps/Annual_Report_2012_FINAL_2013_02_19_EN_rev.pdf
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the Advisory Committee by the President. The latter was of an administrative character and thus, there have been no direct violations of the rules under the Code of conduct during the first year of its coming into effect. In addition there are several civil society initiatives, such as ALTER-EU29 or LobbyPlag30, which allows you to track requests, made by lobbyists and learn which impact they would have on the proposals being discussed. Links: •
Video “EU Lobbying, Ethics and Transparency: “Do”-s and “Don’t”-s” provided by the European Training Academy: http://www.eu-academy.eu/freeresources/eu-lobbying-ethics-and-transparency-do-s-and-dont-s/
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Annual Report on the operations of the Transparency Register 2012: http://europa.eu/transparency-register/pdf/transparency_register_report_20121029_en.pdf
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Rules of Procedure of the European Parliament, 7th parliamentary term - May 2013, particularly see Annexes I, X and XVI: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+RULES-EP+20130521+TOC +DOC+XML+V0//ENlanguage=EN
29 http://www.alter-eu.org 30 http://lobbyplag.eu/lp
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COMMITTEE ON WOMEN‘S RIGHTS AND GENDER EQUALITY (FEMM)
Glass ceiling effect vs. low public pan-European support for gender quotas: learning from the early lessons of the Commission’s strategy for equality between men and women 2010-2015 and the Council of Europe’s (CoE) Gender Equality Programme of 2012, how should European Stakeholders seek to achieve gender parity across the continent?
by Sophie Hall (CH)
1. KEY TERMS •
Gender equality: “an equal visibility, empowerment, responsibility and participation of both women and men in all spheres of public and private life” 1. In other words the complete absence of discrimination on the basis of a person’s sex.
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Gender parity: an equal level of both genders in education, employment or other disparate areas. The term is used primarily in conjunction with education (as part of the Millennium Development Goals, for example), and is more numerical than gender equality, often leaving out factors like the quality of the education received or the (socio-cultural) conditions of work2 .
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Gender mainstreaming: Making a gender analysis of public policy issues “mainstream”, so that the norm is to assess the implications for women and men of any and every planned public policy action at all levels 3.
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Gender quota: a legally specified proportion of a certain gender employed, for example on company boards or public office.
1http://www.coe.int/t/dghl/standardsetting/equality/02factsheets/Gender%20Equality%20Fact%20Sheet%20FINAL %2021%209%202012%20hyperlinks.pdf 2 http://www.ungei.org/resources/files/UNGEI_Booklet.pdf 3 http://www.iaea.org/technicalcooperation/programme/policy-context/Gender/What-is.html
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Parental leave: paid or unpaid leave from work for new parents, but with a huge bandwidth of conditions regarding the time allowed, pay and flexibility of division between mothers and fathers.
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Glass ceiling: metaphorical description of the barrier keeping qualified women from highranking positions in organisations and companies 4.
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De jure equality: Legal or formal equality, i.e.. equal legal status and rights.
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De facto equality: Actual equality in all areas of life.
Links: •
More definitions and explanations can be found in the European Commission glossary: http://ec.europa.eu/justice/gender-equality/glossary/index_en.htm
2. RELEVANCE AND EXPLANATION OF THE PROBLEM “Equality between men and women must be ensured in all areas, including employment, work and pay.” 5 Article 23 of the Charter of Fundamental Rights of the European Union. European Institutions from the EU to the Council of Europe to national governments agree that gender equality is both a basic human right and a democratic principle. Achieving gender equality has been a fundamental principle of the EU ever since the inclusion of equal pay for equal work in the Treaty of Rome (1957), and the commitment to it has been strengthened by provisions in all the treaties and a number of directives. The Council of Europe, too, has emphasised the value of achieving gender equality, describing its own role as helping European states to achieve de jure gender equality and guiding their efforts to achieve de facto equality6 .
4 http://www.economist.com/blogs/graphicdetail/2013/03/daily-chart-3 5 http://www.europarl.europa.eu/charter/pdf/text_en.pdf 6 http://www.coe.int/t/dghl/standardsetting/equality/02_GenderEqualityProgramme/Programme/Index_en.asp
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In 2013, the European Institute for Gender Equality (EIGE) first published its Gender Equality Index, finding that the EU is only halfway to achieving gender equality7 . Equal rights have not translated to equal opportunities although there are more than cultural and ethical reasons to pursue gender equality. Europe is faced with a declining working population which can be dealt with by having those who already work work more (raising the retirement age), by bringing in more labour (targeted immigration) or by increasing labour market participation within Europe8 . The Europe 2020 Strategy sees gender equality goals as a largely economic necessity to deal with the ageing population and global competition, aiming for an employment rate of 75% for women and men (20-64) by 20209. The focus for the Committee on Women’s Rights and Gender Equality in Zurich will therefore be on economic empowerment and the workforce. Links: •
Gender Equality page of the European Commission DG for Justice: http://ec.europa.eu/justice/gender-equality/index_en.htm
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The DG for Justice’s page on gender equality legislation with a list of all recent legislation http://ec.europa.eu/justice/gender-equality/law/index_en.htm
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Interactive version of EiGE’s Gender Equality Index: http://eige.europa.eu/content/gender-equality-index
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An overview from the Irish Government on European Union actions and policies for gender equality:" http://www.justice.ie/en/JELR/Pages/EU_Gender_Eq
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Key points of the gender dimension in the Europe 2020 strategy: http://www.eesc.europa.eu/?i=portal.en.soc-opinions.23970
3. KEY QUESTIONS •
Why does Europe need gender equality?
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Why have the extensive existing legal provisions for gender equality not yet succeeded in ensuring it? Are women unable to exercise their rights or are they choosing not to?
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Which steps can or should the Council of Europe, the European Parliament and the European Commission take to eradicate gender inequalities in Europe? Are drastic measures like quotas necessary to break the “glass ceiling” or will time and incremental change do so?
7 http://eige.europa.eu/content/gender-equality-index 8 http://hup.sub.uni-hamburg.de/opus/volltexte/2012/118/pdf/HamburgUP_HWWI5_Elitok_Migration.pdf 9 http://www.justice.ie/en/JELR/Pages/EU_Gender_Eq
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•
What are men’s rights, responsibilities and role in achieving gender equality?
Links: •
European Commission study on the role of men in gender equality (2012): http://ec.europa.eu/justice/gender-equality/files/gender_pay_gap/ 130424_final_report_role_of_men_en.pdf
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„The Opt-out revolution“ – A controversial article by Linda Belkin in which she argues that American women are choosing not to work: http://www.nytimes.com/2003/10/26/magazine/26WOMEN.html?pagewanted=all:
4. KEY FACTS AND FIGURES •
The average gap between the percentage of women and men in full-time employment in EU Member States is just over 15% (2010)10.
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The average gender gap in mean monthly earnings in EU Member States: 20% (2010)7.
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88% of Europeans believe that women should be equally represented in company leadership positions, with 68% finding that they have less freedom because of family responsibilities 11.
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When given the possibility to choose between three options to achieve gender balance on company boards, only 26% of Europeans were in favour of binding legal measures, with the rest preferring self-regulation with internal targets (31%) and voluntary measures like non-binding corporate governance codes (20%) 12.
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35% of Europeans would like measures to improve gender balance on boards of publicly listed companies to be taken on a European level and 34% on a national level12.
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After the introduction of a quota law requiring all public limited companies and state companies to appoint 40% women to their boards by 2008 there has been an increase from 6% to 36% women on company boards 13 in Norway.
10 EIGE Gender Equality Index Report 11 Women in Decision-Making Positions Report 12 http://ec.europa.eu/public_opinion/archives/ebs/ebs_376_en.pdf 13 http://ec.europa.eu/justice/gender-equality/files/quota-working_paper_en.pdf
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The working population (aged 15–64) in the Western and Central European countries is expected to decline to 302 million in 2015, and to 261 million in 2025 from 317 million in the year 200514 .
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Gender-balanced companies have a 56% higher operating profit than male-only companies (McKinsey) and earnings of companies with at least one woman on the board are significantly higher (Ernst Young) 15
Links: •
A short video explaining EIGE’s new Gender Equality Index and summarising the results: http://www.youtube.com/watch?v=ILDEUrLspdw
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European Commission Database on Women Men in Decision-making: http://ec.europa.eu/justice/gender-equality/gender-decision-making/database/index_en.htm
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Eurostat statistics on workforce participation by age and gender, including analysis of what reduces participation http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/ Labour_market_participation_by_sex_and_age#Database
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An Interactive version of the European Institute for Gender Equality (EIGE)’s Gender Equality Index: http://eige.europa.eu/content/gender-equality-index
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Different indicators used to measure gender equality summarised: http://www.oecd.org/dac/gender-development/43041409.pdf
5. KEY ACTORS Within the European Commission, the Directorate General for Justice (JUST) is responsible for implementing the Commission’s Strategy for Gender Equality 2010-2015. According to the ordinary legislative procedure, the Commission submits proposals to the Council of the European Union and the European Parliament and is responsible for implementation of said laws. Most laws in European Countries concerning e.g. equal pay, maternity leave, sexual harassment or equal access to financial services were first adopted by European Institutions16. In the Council, the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) of ministers from those areas in National Governments is responsible for most gender equality decisions. In the European Parliament, the equivalent body is the parliamentary committee on
14 http://hup.sub.uni-hamburg.de/opus/volltexte/2012/118/pdf/HamburgUP_HWWI5_Elitok_Migration.pdf 15 http://www.womenlobby.org/spip.php?article738&lang=en 16 http://www.womenlobby.org/spip.php?rubrique41&lang=en
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Women’s Rights and Gender Equality (FEMM). In 2004, both EPSCO and the European Parliament agreed on the establishment of a European Institute for Gender Equality (EIGE), a body that collects, analyses and diffuses reliable and comparable data, cumulating in the Gender Equality Index. The Commission is regularly advised by a number of entities, for example the European Women’s Lobby, the largest umbrella organisation of women’s associations in the EU. The EWL strongly supports Viviane Reding’s push for quotas 17. Whether in following government incentives or guidelines voluntarily or following legislation, employers, represented on a European level by the Federation of European Employers, of course also have a large stake in gender equality measures taken. In a European context, national governments remain at the heart of political action. Some decisions are taken on a European level, but it is still up to national governments to implement legislation and most of the relevant public policy fields, e.g. education and social welfare, remain national matters. Unsurprisingly there is therefore a large difference in national approaches and laws. In North-Western EU states the key issue is work-life balance, with Sweden and France going far beyond EU directives and Germany, Austria and Denmark bringing their national laws in line with them. In Baltic States and Southern Europe, on the other hand, domestic violence and violence against women remain highly salient18 – differing domestic law also reflects differing domestic levels of gender equality. The 28 EU Member States are joined by 19 more European countries in the intergovernmental Council of Europe (CoE). Although the CoE encompasses more countries, the differences between its members are even greater and it has no power of its own with which to tackle these since there is no delegated sovereignty. Links: • • •
Institutional Chart for the Committee on Women’s Rights and Gender Equality in Zurich: https://docs.google.com/file/d/0B32sPWjYxQ-GeXdjVEdGQXp1Wms/edit?usp=sharing Gender Equality page of the European Commission Directorate General for Justice, Fundamental Rights and Citizenship, including further links to their strategy and main foci: http://ec.europa.eu/justice/gender-equality/index_en.htm Fact sheet from the Council of Europe on its role in promoting Gender Equality: http://www.coe.int/t/dghl/standardsetting/equality/02factsheets/Gender%20Equality%20Fact %20Sheet%20FINAL%2021%209%202012%20hyperlinks.pdf
17 http://www.womenlobby.org/spip.php?article4205&lang=en 18 http://www.gwi-boell.de/web/eu-countries-comparison.html
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•
A very comprehensive and understandable report from the Commission on what kinds of EU rules there are on gender equality and how they are transposed into national law, though unfortunately from 2009: http://ec.europa.eu/justice/gender-equality/files/your_rights/ eurulesongenderequalitytranspositionfinal2009_en.pdf
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The European Institute for Gender Equality at a glance: http://www.youtube.com/watch?v=VtPlbFx_9q4
6. KEY CONFLICTS As self-evident as the goal of gender parity may seem, there are still many areas of dispute. The question of why it has not been achieved is inseparable from the question of what the actual causes are. With rights so extensively ensured legally, are there further structural issues like education asymmetries or social welfare systems which don’t support women who work and men who take domestic roles? Is it a continuing socio-cultural factor of discrimination and stereotyping? Or are women freely choosing not to take advantage of their legal equality? The dispute over how to tackle inequality has been particularly visible as the quota debate was fired up in 2012 when the European Commission proposed a gender quota of 40% for nonexecutive directors of companies that are listed in the stock markets in the 27 Member States 19. A number of European countries, including Norway and France have implemented board seat quotas 20. Quotas are however widely criticised; practically as only addressing the symptoms of endemic inequality and ideologically as discriminating against men and overregulating the private sector. Whilst there is large public support for increasing the number of women on boards, quotas remain deeply unpopular as a measure21. There are, broadly speaking, three approaches to the implementation of gender equality. Some argue that completely equal treatment in all policies is the only fair, if incremental, way to gender equality – and one which reflects current public opinion towards positive action. A more active approach to achieving equality is through positive action which recognises the existing differences between men and women’s treatment and role in society and aims for specific measures to combat problems for women. A final approach is that of gender mainstreaming and considering how existing systems can cause indirect discrimination or disadvantage.
19 http://www.euractiv.com/socialeurope/commission-gives-green-light-gen-news-516048 20 http://ec.europa.eu/justice/gender-equality/files/quota-working_paper_en.pdf 21 http://ec.europa.eu/public_opinion/archives/ebs/ebs_376_en.pdf
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Links: • • •
Euractiv video asking politicians about their take on gender quotas: http://www.euractiv.com/justice/women-day-gender-quotas-necessar-news-518345 Article from Der Spiegel on the European Commission initiative for quotas. http://www.spiegel.de/international/europe/european-commission-moves-towards-approving-boardgender-quotas-a-867181.html Al Jazeera report on the proposed EU quota: www.aljazeera.com/video/europe/2013/04/2013418191149569528.html
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EIGE’s Gender Equality Index Report. The explanation of different approaches to achieving gender equality in the introduction is particularly interesting. http://eige.europa.eu/apps/gei/content/Gender-Equality-Index-Report.pdf
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An episode of Al Jazeera’s Inside Story on gender quotas (globally, however) http://www.youtube.com/watch?v=iwGmQCG8HZo
7. MEASURES ALREADY IN PLACE Beyond the legal equality provisions in the treaties of the EU22 , both the European Commission and the Council of Europe have their own strategies to improve gender equality in the EU and the continent, respectively. The European Commission Strategy for equality between men and women 2010-2015 aims to increase gender equality within Member States with a focus on economic independence of women, equal pay, greater equality in decision-making and an end to gender-based violence23. The Council of Europe launched a new gender equality programme in 201224 aimed at increasing the impact and visibility of the legal standards which exist through most of Europe. Using extensive structures of a Gender equality commission, national focal points in each Member States and gender equality rapporteurs, the programme focuses on the elimination of violence against women, combatting gender stereotypes in media and access of women to justice. The Commission’s approach is therefore focused on bringing women into the workplace and “harder” areas of pay and employment law, whilst the Council of Europe emphasises the “softer” socio-cultural aspects of gender stereotypes and access to justice. In part, the differences could perhaps be explained through the differences in breadth of members’ national situation and in their competencies, but they highlight again the more drastic interventionist approach vs. the more popular socio-cultural one.
22 http://www.europarl.europa.eu/document/activities/cont/200907/20090728ATT59207/20090728ATT59207EN.pdf 23 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0491:FIN:en:PDF 24 http://www.coe.int/t/dghl/standardsetting/equality/02factsheets/GE%20thematic%20fiche%20-%20CoE%20EU %20Scoreboard%20meeting%20ENG.pdf
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Member States have been bound by EU directives (which set goals that Member States must meet, though leave the means up to national governments) to certain steps for gender equality, amongst others to treat women equally in statutory social security 25, conditions for pregnant workers26, working time27 and equal pay 28. Ultimately the majority of measures in place are on a national level, and a wide variety of tools are used. Childcare provisions vary in quantity and quality, with only 10 Member States having reached the targets set on childcare by the European Pact for Gender Equality29 and despite being identified as a promising tool for increasing paternal share in care activities, non-transferable paternity leave is only one month30 . The open method of coordination (OMC) sees common goals agreed on in the Council of Ministers, made into national policies by Member States and then evaluated and results compare31 . This intergovernmental approach (relying somewhat on naming and shaming) has been used, for example, to set gender equality as an objective on a European level in the European Employment Strategy whilst leaving Member States to define policies in areas still under national competence. The level of implementation of EU goals is however as varied as the national approaches towards gender equality measures in general32 – and the level of equality itself. Links: •
•
•
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An overview for members of FEMM in the European Parliament 2009-2014 of women’s rights and gender equality in the EU. It fully covers gender equality in the treaties as well as past, present and (potential) future actions by the European Commission, Council of the EU and the UN – brilliantly useful for understanding the current situation. http://www.europarl.europa.eu/document/activities/cont/ 200907/20090728ATT59207/20090728ATT59207EN.pdf The Council of Europe Factsheet on gender equality; quite extensive but also with information on other European laws, bodies and agreements: http://www.coe.int/t/dghl/standardsetting/equality/02factsheets/Gender Equality Fact Sheet FINAL 21 9 2012 hyperlinks.pdf A summary of European legislation on equality between men and women: http://europa.eu/legislation_summaries/employment_and_social_policy/ equality_between_men_and_women/index_en.htm A very nicely structured overview of the achievements and challenges for the EU in gender equality can be found on page 8-9 of this document:
25 http:// http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31979L0007:EN:NOT 26 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31992L0085:EN:HTML 27 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32003L0088:EN:HTML 28 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:204:0023:01:EN:HTML 29 http://europa.eu/rapid/press-release_MEMO-13-490_en.htm 30 http://europa.eu/legislation_summaries/employment_and_social_policy/equality_between_men_and_women/ em0031_en.htm 31 http://europa.eu/legislation_summaries/glossary/open_method_coordination_en.htm 32 http://blogs.lse.ac.uk/europpblog/2012/11/15/eu-gender-equality/
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•
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http://www.pl.boell.org/downloads/Gender_in_the_UE_WWW.pdf An overview of different national gender equality policies and laws in the EU from the Gunda Werner Institute: http://www.gwi-boell.de/web/eu-countries-comparison.html Report on Childcare provision in the Member States http://europa.eu/rapid/press-release_MEMO-13-490_en.htm Presentation from the Austrian Academy of Science (ÖAW) on the effect of Parental Leave Policy on the Gender Division of labour: http://www.econ.jku.at/members%5CWeichselbaumer%5Cfiles%5CFem%C3%96k%5CDearing.pdf
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON CULTURE AND EDUCATION (CULT)
Working with the watchdogs: responding to recent concerns about media regulation in the United Kingdom and Hungary, how should European decision-makers – in tandem with the Fourth Estate – achieve free and pluralistic media that sustains European democracy.
by Priit Piip (EE)
1. KEY TERMS •
Fourth Estate: a societal or political force or institution whose influence is not consistently or officially recognised. "Fourth Estate" most commonly refers to the news media; especially print journalism.
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Pluralistic: competing media outlets that are independent of each other, a central owner or influence, thus providing citizens with access to a variety of information sources and opinions. A pluralistic media doesn’t just favour majority opinion but also covers the views of opposition and dissidents etc.
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Freedom of speech: the political right to express any opinions or ideas – in any form or manner – without censorship or restraint. The term freedom of expression is sometimes used synonymously, but includes any act of seeking, receiving and imparting information or ideas, regardless of the medium used. The EU Charter of Fundamental Rights defines freedom of expression and information as follows: “This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. The freedom and pluralism of the media shall be respected.”1
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Watchdog journalism: journalism which acts as a protector or guardian against inefficiency, illegal practices, etc.
1 http://www.eucharter.org/home.php?page_id=18
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2. RELEVANCE AND EXPLANATION OF THE PROBLEM Following the News International2 phone hacking scandal3
in the United Kingdom, stricter
measures were called upon for the formerly self-regulatory press. Lord Justice Leveson chaired a public enquiry into the culture, practices and ethics of the British press, referred to as the Leveson Inquiry 4. The report called upon a new, independent body – backed by the state through new laws – to replace the existing Press Complaints Commission (PCC). The UK government is trying to push through a new form of regulation called a Royal Charter. It would enable the body to appoint one million pound fines to newspapers, force them to publish apologies, determine what gifts are appropriate, publishing more information about the relationship between the politicians and the press etc. The Royal Charter has been delayed since opinions are still divided: some have expressed support5 but many newspapers have also expressed their doubts and criticism6 . Between July and December 2010, the Hungarian parliament passed a succession of controversial, far-reaching laws that overhauled the regulation of the print, broadcast and online media. The final, most contentious piece of legislation was passed in December 2010, just days before Hungary assumed the rotating Presidency of the EU. As a result, the country’s entire press was more or less placed under the control of the state. After a negotiation process between the Hungarian government and the European Commission, several amendments were passed in March 2011. In December 2011, the Hungarian Constitutional Court declared significant parts of the laws unconstitutional.7 Bearing in mind the two countries highlighted in this topic, it is useful to take a look at different nations and analyse how functional the press regulation is, since there is a line between intervention and setting some ethical rules and hindering the freedom of speech and therefore the pillars of democracy. According to the Committee to Protect Journalism, 20 journalists have been killed this year all over the world8 . This reflects the influence and power they possess and the fear they can instil upon those in control, who are doing their very best to silence them. From popular culture I would refer to Alan Moore’s graphic novel ‘V for Vendetta’ – describing a mysterious masked protagonist who brings down an oppressive dictatorship – to highlight a powerful and memorable quote: “People should not be afraid of their governments, governments should be
2 http://news.co.uk/about-us/ 3 for in depth coverage: http://www.ft.com/indepth/leveson-phone-hacking; for a timeline of the events see: http:// www.bbc.co.uk/news/uk-14124020 4 http://www.levesoninquiry.org.uk/ 5 http://www.youtube.com/watch?v=F6TcrKFevKE 6 http://www.guardian.co.uk/media/2013/may/07/press-royal-charter-little-support 7 https://cmcs.ceu.hu/resources-new-media-laws-in-hungary-0 8 http://www.cpj.org/
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afraid of their people”. Press plays a vital role in democracy since a country cannot be truly free without free press. Journalists are the messengers who must bring important information to the public, so they can make informed decisions. Therefore, in the case of Hungary – where the press may have a party-political agenda – some interference might be necessary and similar examples can also be found from other EU nations (such as Berlusconi who failed to honour his promise to sell his personal assets in Mediaset – the largest television broadcaster in Italy – in order to dispel any perceived conflicts of interest9 ). In the UK’s case, it is the politicians who have had to curry favour with press barons such as Rupert Murdoch or the Barclay Brothers, rather than the press having to obey Putin or Berlusconi in providing a monopolistic mouthpiece for party-political propaganda. So the power here lies in the hands of businessmen, capable of party-political favouritism. It is important, therefore, to find the right balance with regulatory legislation. The second part of the discussion will focus on how the press might be used to sustain European democracy, and to bring our nations closer together. This is another complex question when considering criteria used to judge the relevance of news: geographical proximity, political influence, national prominence, conflict of social or cultural interests, relevance or emotional appeal to a national or local audience. On the one hand, no one can dictate to the press what needs to be printed in their newspapers, because they publish what their readers find interesting. One must bear in mind that publishers act from commercial interest and are motivated to make a profit or at the very least break even. However, low turnouts in European Parliament elections and general disinterest in European issues among common Europeans are factors that undermine a democratic and functioning European Union. Some claim that one cause of this problem is the lack of a European public sphere: different cultures and languages within borders makes for difficulty in finding common denominators. As a result, many people feel like being European is not a big part of their identity. Because of this, European politics seems distant or irrelevant in many Europeans’ lives – a fact reflected in the low voter-turnout in EP elections. In order to create a European public sphere, some claim that cross-border media coverage – and media coverage from a European perspective – must be increased so people all over the EU have equal insight into pan-European concerns. It is of high relevance to the EU that this problem is solved.10
9 http://www.economist.com/node/17732923 10
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Therefore it is important to increase the thirst for knowledge among citizens of the European Union. There are several news organisations in place that exclusively cover European Union affairs in Brussels, such as Euractiv, Euronew and EUparlTV which webcasts the European Parliament. These news sources work specifically to sustain European democracy and bring the people in Europe closer together. Links: •
A press conference with David Cameron about the charter can be viewed here: http://www.youtube.com/watch?v=fzg4OHaT8o4 and here http://www.youtube.com/watch? v=av8X8-w1mTs
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The Guardian newspaper gives an overview how public has little support for the Royal Charter: http://www.guardian.co.uk/media/2013/may/07/press-royal-charter-little-support
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A debate over press regulation: http://www.youtube.com/watch?v=F6TcrKFevKE
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Looking post Leveson; Press regulation in 21st century. A group of experts have a very interesting and useful discussion: http://www.youtube.com/watch?v=apfkkfdJCX8
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The Economist gives a good overview about the current situation of the Royal Charter: http://www.economist.com/news/britain/21573998-cross-party-deal-regulate-press-quicklydissolving-over-rubicon
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Centre for Media and Communication Studies (CMCS) has created an archive that compiles documents and important information about new media laws in Hungary: https://cmcs.ceu.hu/node/26249
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Interactive timeline explaining the process of passing the press regulation law in Hungary: http://cmcs.ceu.hu/resources-new-media-laws-in-hungary-0
3. KEY QUESTIONS •
What is the media’s role in a democratic society?
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Should politicians exert any influence over press regulation?
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Is it possible to strike the right balance between over-regulation (which may hinder freedom of speech) and under-regulation (which may allow the news media too much freedom to commit libel and intrude into private lives)?
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How is it possible to encourage interest in the current affairs of other Member States?
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How might we describe the moral incentives to media corporations? And are there any financial incentives or opportunities in reporting the current affairs of other Member States?
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Does the press cover public opinion or is public opinion and interest created by the media?
4. KEY FACTS AND FIGURES •
Press regulation is different in all 28 Member States and the European Parliament lacks the mandate to influence press regulation directly in MS.
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Whilst a majority of newspapers and radio and television stations are owned by large (inter)national corporations whose purpose is to make a profit, generally they do not intervene with content which is set by editors.
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There are several initiatives that are directly funded or being pursued by Brussels to increase their power over media (see more in Key Actors).
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According to the World Press Freedom Index of 2011/2012 (compiled by Reporters Without Borders, it yearly ranks worldwide countries based on their press freedom) 5 out of top 10 countries, and 15 from top 30 countries belong to the EU.
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Freedom of expression is a key indicator of a country’s readiness to become a member of the EU. According to Article 49 of the Lisbon Treaty, no country can join the EU without guaranteeing freedom of expression as a basic human right. It is also one of the main challenges facing ‘enlargement countries’ such as Western-Balkans and Turkey.
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20 journalists have been killed this year and 986 since 1992. The reason for most of these murders was publishing – or attempting to publish – stories that did not portray the government in a positive way.
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The European Newspapers Publishers’ Association (ENPA) adopted a resolution calling on the EU and National governments to recognise press self-regulation as the main guarantee of freedom of expression and press freedom.
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On May 25th 2009, 48 editors-in-chief, together with leading journalists from 19 countries, adopted and signed the ‘European Charter on Freedom of the Press’ in Hamburg.
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Links: •
World Press Freedom 2011/2012, Reporters Without Borders: http://en.rsf.org/IMG/CLASSEMENT_2012/C_GENERAL_ANG.pdf
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Committee to Protect Journalists: http://www.cpj.org/exile/
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EU Charter of Fundamental Rights Art 11. Freedom of expression and information: http://www.eucharter.org/home.php?page_id=18
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ENPA The Belgrade resolution, that calls upon governments to maintain press self-regulation: http://www.newspapersoc.org.uk/sites/default/files/pdf/ENPA-Belgrade-Resolution-24MAY13.pdf
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European Charter on Freedom of the Press, in ten articles the charter formulates principles for the freedom of the press from government interference: http://www.pressfreedom.eu/en/index.php
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EU Enlargement policy regarding freedom of expression and media : http://ec.europa.eu/enlargement/policy/policy-highlights/media-freedom/index_en.htm
5. KEY ACTORS In most MS, press has set up their own ethical guidelines and regulatory systems and are responsible for meeting the standards they have set. Mostly independent regulatory bodies, they oversee press and deal with the complaints and situations where the press is overstepping the ethical code of conduct. They may or may not be supervised by the government. The content and tone of newspapers or other forms of media may also be indirectly set by their mother corporations based on financial interest, but a large majority of the day to day running of the papers is up to the editorial team. There are several initiatives that are directly or indirectly funded or influenced by the European Commission or European Parliament (Mediadem, MediaAcT, Centre for Media Pluralism and Media Freedom, European Initiative for Media Pluralism, High Level Group on Media Freedom and Pluralism). All these initiatives work for greater transparency and pluralistic media across Member States. In the UK, Hacked Off media pressure group is trying to push through new legislation that would make the press fully accountable for their content. Referring back to the second part of the topic, the EU works in order to increase the amount of time spent on broadcasting European matters. Again, there is an apparent conflict between
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encouraging greater interest and hindering freedom of speech by dictating to private companies what they should include in their coverage of the current affairs. Links: •
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Institutional Chart: https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/Institutional%20Chart %20CULT.pdf Mediadem, a research project aimed at examining the factors that promote or hinder policy development for media freedom and independence: http://www.mediadem.eliamep.gr/project/summary/
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MediaAcT, a research project on media accountability: http://www.mediaact.eu/project.html
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Centre for Media Pluralism and Media Freedom: http://cmpf.eui.eu/About/Index.aspx
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European Initiative for Media Pluralism: http://www.euroalter.com/european-initiative-for-media-pluralism/
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High-Level Group on Media Pluralism: http://ec.europa.eu/digital-agenda/en/high-level-group-media-freedom-and-pluralism
6. KEY CONFLICTS Free speech is at the very foundation of democracy and the print media is often likened to an investigative ‘watchdog’. This watchdog should uncover corruption, give voice to those who are without one, and hold politicians to account. Therefore we are faced with an apparent conflict when politicians talk about freedom of speech while at the same time discussing press regulation. To what extent should politicians interfere? There are plenty of initiatives by the EU, but a number of newspapers and press authorities think that initiatives by the Commission are hindering free press: “The proposals emanating from Brussels make the Leveson Inquiry look like a Sunday afternoon picnic,” and “The EU’s attempts to win positive coverage by state regulation is reminiscent of the days of Soviet Russia.” 11 These statements reflect a more conservative stance, but we always have to take into account how far we can go with intervention. Newspapers are predominantly owned by corporations and they exist in order to make a profit, or at least to break even. For the most part, they print what their readership wants to read and
11http://www.telegraph.co.uk/news/uknews/leveson-inquiry/9992229/EU-pours-millions-into-groups-seeking-statecontrol-of-press.html
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gain the majority of their profits from advertising. If there was not any interest from the public in celebrity lifestyle, there would be no commercial gain in intruding on the private wedding of a pop star. It is important to distinguish where to draw the line between private and public. News channels cover European affairs that directly affect their audience, but the EU would like to see more coverage on matters that is solely affecting other countries. For example, would greater media scrutiny of homelessness in the EU12 be of mutual benefit to Member States? The highly dramatic protests in Turkey may have been prominent on news channels, but what about less dramatic yet nonetheless controversial issues? Recently the German government threatened to scale back automotive production in Member States if MPs in other European countries didn’t support weakened carbon emission rules, it is certainly interesting to consider what effect a cohesive and pan-European coverage would have had. Links: •
Members of the German government pressured EU MS to support weakened carbon emissions rules and warned them that failure to act so might result in German automakers scaling back or halting production in their countries. This controversial issue did not find wide coverage in the press: http://www.guardian.co.uk/environment/2013/jun/18/germany-eu-car-emissions-law
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Newspaper article claiming that the EU quietly supports groups in favour of state backed pressregulation: http://www.telegraph.co.uk/news/uknews/leveson-inquiry/9992229/EU-pours-millions-into-groupsseeking-state-control-of-press.html
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Issue paper on the importance of media freedom and pluralism commissioned by the Council of Europe: https://wcd.coe.int/ViewDoc.jsp?id=1881589
7. MEASURES ALREADY IN PLACE Whilst we are discussing press regulation, it’s important to remember that the European Union does not possess the mandate to interfere with press regulation in Member States. All changes must be made on a national government level. Therefore, the press regulation in Europe varies greatly. Most countries adhere to self-regulatory systems: in Scandinavia, government makes sure that the press abides by their own rules; in Germany an apology for libel must have the same prominence in the newspaper as was given to the original article etc. The only media related guideline from the EU is the audio-visual policy 13 that sets certain standards and expectations on 12 http://www.feantsaresearch.org/IMG/pdf/feantsa_2009statsreview_en.pdf 13 http://europa.eu/legislation_summaries/audiovisual_and_media/l24101_en.htm
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televised programmes and acts as a cornerstone for the European Union’s audio-visual policy. There are also several initiatives in place (look at part 5 Key Actors). Additionally, there are initiatives that work on a national or pan-European level in order to maintain high standards of press. For example in 2009 European Parliament suggested a program that can be referred to as “Erasmus for journalists” in order to boost media pluralism with increased press mobility. However in 2011 it was decided not to create a new independent program. High Level Group on Media Freedom and Pluralism, appointed by the European Commission, published a report earlier this year on “Free and pluralistic media to sustain European democracy” that outlined the current situation and recommended more EU competence in this area. The report suggests, among other things, that the EU implement media monitoring. Furthermore, at the end of May, the EP adopted a resolution ‘EU Charter – Standard settings for media freedom across the EU’, stating that "changes in EU Member States’ media laws that make it easier for governments to interfere in the media should be monitored every year at EU level". Ivar Rusdal, president of the European Newspapers Publishers Association (ENPA), commented on the proposed changes: “The very idea that EU legislators should - or could - define ethical or other standards for a sector whose purpose is to hold the legislators themselves to account, is totally counterproductive. “Newspapers should be allowed to decide voluntarily about their editorial content and business structures and be limited solely by national legal frameworks. An independent press should never be subject to EU monitoring,” he added. Links:
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Television broadcasting activities: "Television without Frontiers" (TVWF) Directive: http://europa.eu/legislation_summaries/audiovisual_and_media/l24101_en.htm
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Feasibility study for the preparatory action “ERASMUS for journalists”: http://ec.europa.eu/information_society/media_taskforce/doc/mobility/erjo_part2_report.pdf
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Report of the High Level Group on Media Freedom and Pluralism “A free and pluralistic media to sustain European democracy. Please make sure that you familiarise yourself with the summary”: https://ec.europa.eu/digital-agenda/sites/digital-agenda/files/HLG%20Final%20Report.pdf
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Article in Committee to Protect Journalists blog that describes resolution and changes in MS media laws that enable governments to interfere in the media and states that they should be monitored yearly: http://www.cpj.org/blog/2013/05/european-parliament-reaffirms-principles-but-actio.php
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The Belgrade Resolution by the ENPA: http://www.newspapersoc.org.uk/sites/default/files/pdf/ENPA-Belgrade-Resolution-24MAY13.pdf
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â&#x20AC;˘
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Quite informative blog post by the London School of Economics can be found on this link that concentrates on human rights and reinforcing political legitimacy: http://blogs.lse.ac.uk/mediapolicyproject/2013/02/12/media-freedom-and-pluralism-discussed-inrelation-to-human-rights-and-to-reinforcing-political-legitimacy-of-the-eu/
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON INTERNAL MARKET AND CONSUMER PROTECTION
Linking the objectives of the Europe 2020 strategy to public procurement policy: building on current reform proposals modernising tendering in the EU to guarantee ‘best value for money', which criteria and instruments should the EU and its Member States use in order to ensure transparent, efficient and competitive use of public funds?
by Marius Aure (NO)
1. KEY TERMS •
Europe 2020 is the European Union’s ten-year growth strategy plan seeking smarter, more inclusive and sustainable growth. It sets out five targets 1 to be reached by the end of the decade.2
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Tendering can be defined as the act of inviting a given firm or organisation to make a bid, offer or a proposal to provide a specific good or service.
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Public Procurement can be defined as the process by which a state, regional or local authority or body governed by public law purchases works, goods and services from the private sector. The process is often intended to ensure fair competition, reduced prices and better quality of services for citizens.3
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‘Best value for money’ can in this context be understood as the best possible procurement outcomes for the least possible investment in terms of time and public money.4
1:
1. Employment, 2. Research & Development, 3. Climate change and energy sustainability, 4. Education, 5. Fighting poverty and social exclusion The 5 targets for the EU in 2020 http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/targets/index_en.htm 2 Europe 2020 in a nutshell http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/ 3 Public Procurement as it is understood in EU legislation http://europa.eu/legislation_summaries/internal_market/ businesses/public_procurement/ 4 Green Paper on modernisation of EU public procurement policy (p. 5) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0015:FIN:EN:PDF
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•
Transparency can in this case be defined as citizen’s access to information that a public authority holds about its activities and decisions.5
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Private Public Partnerships (PPP) a long term contractual relationship between a public authority and the private sector, which is usually characterised by having features such as a bundling of functions, exchange of resources, shared responsibility, risks and rewards, and is arranged with the aim to provide a public service/asset.6
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Concessions are partnerships between the public sector and mostly private companies, where the latter exclusively operate, maintain and carry out the development of infrastructure (ports, water distribution, parking garages, toll roads) or provide services of general economic interest (e.g. energy, water and waste disposal). Concessions are the most common form of PPPs 7. The public sector role in concession is as the granting authority of rights
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Corruption can be defined as the abuse of power for private gain. This is a broad definition used by the United Nations Global Programme against Corruption that notably includes both the public and the private sector, i.e. it does not only focus on the abuse of public positions.8
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E-procurement refers to the use of electronic communications by public sector organisations when buying supplies and services or tendering public works.9
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Pre-commercial procurement (PCP) is a particular approach of procuring Research & Development (R&D) services to address challenges of public interest for which there is no technological solution available on the market yet. PCP enables the sharing risks and benefits between the public procurers and the companies involved, without it being State aid.10
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Public procurement of innovative solutions (PPI) is when contracting authorities act as the lead customer or early adopter by procuring 'innovative' solutions (not the R&D to
5Enhancing
Integrity in Public Procurement in Public Procurement: A Checklist (p. 47) http://www.unpcdc.org/media/ 12074/checklist%20for%20enhancing%20integrity%20in%20public%20procurement.pdf 6 Jakutyte, Jurgita (2012), Analysing Public-Private Partnership, Master Thesis, MSc in Finance and International Business, Aarhus University –http://pure.au.dk/portal-asb-student/files/48150942/MSc_thesis_Jurgita_Jakutyte.pdf [Accessed 26.06.2013] 7 Definition from the Commission’s proposal on the award of concession contracts http://europa.eu/rapid/pressrelease_MEMO-11-932_en.htm?locale=en 8 Commission Communication on a Comprehensive EU anti-corruption policy (p. 6) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2003:0317:FIN:EN:PDF 9 E-procurement in the EU http://ec.europa.eu/internal_market/publicprocurement/e-procurement/ 10 Policy related FAQs on PCP and the link with PPI (p. 2, 21) http://cordis.europa.eu/fp7/ict/pcp/docs/faq-v9.pdf
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develop them) that are newly arriving on the market but that are not yet available on large scale commercial basis due to a lack of market commitment to deploy. 11 •
Small and Medium sized Enterprise (SME) is a category distinguishing firms that employ fewer than 250 persons, with an annual turnover that does not exceed €50 million, or with a balance sheet total of less than 43 million euros.12
2. RELEVANCE AND EXPLANATION OF THE PROBLEM The economic crisis has triggered large cuts in public spending, general budgetary constraints and a shift in competitiveness from Europe to rising powers in Asia. This has made initiatives that spur competitiveness, transparency, growth and innovation some of the most important issues of our time. It has become clear that the political or redistributive aspect of public procurement is a very valuable tool for legislators in terms of setting the criteria, e.g. ensuring social, economic and environmental sustainability considerations, that determine who gets what and how much, across which sectors, markets, and Member States.13 When discussing this topic, at least five different aspects need to be addressed. First, it is necessary to determine what underlying political criteria or ‘horizontal’ considerations if you will, to apply in redistributing public resources. Should they be based on existing frameworks and goals or should new ones be developed? Second, the resources that go in to public procurement are huge. Thus, even minor adjustments to the current legal procedures or the introduction of a new, more efficient public procurement policy has the potential to free up billions of euros 14 for Member States and the EU at a point in time when every euro counts. Third, a clear stance will have to be taken on a series of hot topics regarding what public procurement tools to use. What should be the role of public private partnerships (PPPs), pre11
Policy related FAQs on PCP and the link with PPI (p. 21) http://cordis.europa.eu/fp7/ict/pcp/docs/faq-v9.pdf DG Enterprise and Industry – What is SMEs http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/smedefinition/ 13 Single Market Act 1, Lever 12 - Public Procurement (p. 19) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0206:FIN:EN:PDF 14Single Market Act: EU public procurement framework has saved around 20 billions euros http://europa.eu/rapid/pressrelease_IP-11-785_en.htm 12
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commercial procurement (PCP), public procurement of innovative solutions (PPI), Eprocurement, and what considerations should be taken into account when approaching small and medium sized enterprises (SMEs)? Fourth, huge amounts of public expenditures are lost to corruption in the European Union every year. The Committee will have to consider how to ensure better application and enforcement of public procurement policies in order to tackle favouritism and corruption. Fifth, EU legislation on public procurement does have a global impact. Hence, changes to certain aspects of the public procurement policy automatically entail renegotiating the same aspects in international organisations such as the World Trade Organisation (WTO) and in bilateral agreements with other states. The economic weight the European Union carry could be utilised to increase European competitiveness, to promote a set of specific procurement policies15, or to set a global example on e.g. fairness, transparency or sustainability. At the same time, depending on the procurement policy at hand such an approach can be criticised for being unfair to other states, for introducing potential trade barriers that are against the basic principles of free and open markets, for being a vexing and difficult strategy to follow through, or for being outside the competence of the EU. Links:
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EU Public Procurement Law: An Introduction (p. 44-53): http://www.nottingham.ac.uk/pprg/documentsarchive/asialinkmaterials/ eupublicprocurementlawintroduction.pdf
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Commission proposals to modernise the European public procurement market - Frequently Asked Questions: http://europa.eu/rapid/press-release_MEMO-11-931_en.htm?locale=en
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Transparency International (TI) contribution to EC public consultation on modernising public procurement: http://www.transparencyinternational.eu/focus_areas/eu-public-procurement/
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OECD Principles for Integrity in Public Procurement 2009 (p.9-15): http://www.oecd-ilibrary.org/governance/oecd-principles-for-integrity-in-publicprocurement_9789264056527-en
Why Europe's new international public procurement instrument will open markets worldwide http://eeas.europa.eu/ delegations/australia/press_corner/all_news/news/2012/20120328_public_procurement.htm
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3. KEY QUESTIONS •
What redistributive or ‘horizontal’ goals should the EU’s public procurement policy seek to achieve?
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What should be the role of Public Private Partnerships in public procurement, and to what degree should they be regulated?
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Should there be more or less Pre-Commercial Procurement (PCP) and/or Public Procurement for Innovative Solutions (PPI) within the modernised public procurement framework?
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How should the EU’s public procurement policy approach Small and Medium Enterprises, should they be given top priority and exceptions to the rules or should the rules be more strictly enforced?
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What role and what impact should the EU have in the field of public procurement policy globally?
Links:
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Public Procurement Regulation: An Introduction (p. 4-20): http://www.nottingham.ac.uk/pprg/documentsarchive/asialinkmaterials/ publicprocurementregulationintroduction.pdf
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Public-Private Partnerships: Effective and Legitimate Tools of International Governance? Tanja A. Börzel and Thomas Risse 2002 (p. 14-20): http://userpage.fu-berlin.de/~atasp/texte/021015_ppp_risse_boerzel.pdf
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Why Pre-Commercial Procurement is not Innovation Procurement, Edquist, Charles 2012 (p. 1-6 and 17-25): http://www.circle.lu.se/upload/CIRCLE/workingpapers/201211_Edquist_Zabala.pdf
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European Small Business Alliance position on Modernisation of public procurement: ensuring better access for SMEs: http://www.esba-europe.org/pdf/SubSubSection-163.pdf
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DG Trade on EU Trade Policy and public procurement: http://ec.europa.eu/trade/policy/accessing-markets/public-procurement/
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Public procurement markets: Where are we? Patrick A Messerlin, Sébastien Miroudot 2012: http://www.voxeu.org/article/public-procurement-markets-where-are-we
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4. KEY FACTS AND FIGURES •
Public procurement constitute somewhere between 19.4% of gross domestic product (GDP) 16 and 18% in Europe17, or roughly €2.3 trillion.
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The EU considers public procurement policy important as it prominently feature in the Europe 2020 Flagship Initiative ‘Innovation Union’ as commitment 1718 and is one of the twelve actions set out in the Single Market Act19.
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Open and competitive public procurement has been estimated to have driven down costs by around 4%, generating savings of approximately €20 billion, while the costs administrating the added bureaucracy remains at €5 billion20.
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Corruption has been estimated to constitute €120 billion21 , or as much as €323 billion22 every year in the 27 EU Member States.
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There are about 21 million SMEs in the EU, and they are estimated to create about 85% of net new jobs in the EU’s private sector23.
Links:
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Press Release for the proposal of Modernising European public procurement to support growth and employment: http://europa.eu/rapid/press-release_IP-11-1580_en.htm?locale=en
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Europe 2020 in a Nutshell: http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/targets/index_en.htm
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The Good, the Bad, and the Ugly: Controlling Corruption in the European Union. Hertie School of Governance in Berlin Advanced Policy Paper (p. 3-8, 10-16, 20-23, 45-48): http://www.againstcorruption.eu/wp-content/uploads/2013/03/ANTICORRP-Policy-Paper-onLessons-Learnt-1_protected1.pdf
Commitment 17 – Public Procurement in the Innovation Union http://i3s.ec.europa.eu/commitment/21.html 17 EC – Press Release - Modernising European public procurement to support growth and employment http://europa.eu/ rapid/press-release_IP-11-1580_en.htm?locale=en 18 Innovation Union, Commitment 17 (p. 17-18) http://ec.europa.eu/research/innovation-union/pdf/innovation-unioncommunication_en.pdf 19 Single Market Act, ‘Lever 12 Public Procurement’ p. 19 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM: 2011:0206:FIN:EN:PDF 20 Single Market Act: EU public procurement framework has saved around 20 billions euros http://europa.eu/rapid/pressrelease_IP-11-785_en.htm 21 EU Observer, March 6th 2013 http://euobserver.com/justice/119300 22 Euractiv, 10th April 2013 http://www.euractiv.com/general/eu-corruption-times-expected-323-news-518998 23 Press release ‘EU gives top priority to helping SMEs create jobs’ http://europa.eu/rapid/press-release_MEMO-13-606_en.htm
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5. KEY ACTORS The European Parliament’s Committee on Internal Markets and Consumer Protection (IMCO) co-legislates with the Council on the workings in the single market with exclusive competence meaning that EU legislation surpasses Member States’ legislation24. The Council of the EU Competitiveness reviews competitiveness based on analyses from the Commission, in the fields of Internal Markets, Industry, and Research, and consists of Member States’ ministers in these respective fields, meeting five or six times a year.25 The European Commission, primarily the Directorate-General (DG) for Competition initiates legislation, executes policy, and enforces the passed legislation on competition26 and the DG for Internal Markets and Services, is responsible for calls for tender, proposals and initiatives on public procurement among other things 27. The Executive Agency for Competitiveness and Innovation (EACI) is an agency under the Commission set up to help manage EU programmes in the fields of energy, transport, environment, competitiveness and innovation more efficiently and with improved results.28 EU Member States and states that are part of the European Economic Area are considered part of the Internal Market and as such are legally obligated to incorporate EU competition law into, and above, national law. Firms, Small and Medium Enterprises (SMEs), as well as Large Enterprises compete for public procurement from contracts authorities. Contract authorities are governments, or other public authorities. The World Trade Organization (WTO) General Procurement Agreement is a plurilateral agreement between 28 member states of WTO regulating government procurement internationally. Links:
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Institutional chart: https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/Institutional%20Chart %20IMCO.pdf
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General overview of WTO work on government procurement (until chapter V. only): http://www.wto.org/english/tratop_e/gproc_e/overview_e.htm
Article 3 Treaty on the Functioning of the European Union (p.17) http://europa.eu/pol/pdf/ qc3209190enc_002.pdf#nameddest=article115 25 Competitiveness Council - http://www.consilium.europa.eu/policies/council-configurations/competitiveness?lang=en 26 Competition Policy in the EU – Factsheet http://ec.europa.eu/dgs/competition/factsheet_general_en.pdf 27 DG Internal Market and Services - Our Mission http://ec.europa.eu/dgs/internal_market/mission/index_en.htm 28 EACI – Facing Tomorrow http://ec.europa.eu/eaci/
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6. KEY CONFLICTS Determining who gets a public contract, boils in many ways down to the core question of what role government is to play when it comes to the use of public funds. Where does public sphere meet the private one? What capacity does a government, municipality or other public authority have in assessing efficient use of public funds? The two proposals under consideration on public procurement in the EU both state that they have two complementary objectives; first a simplification and increased flexibility of the existing public procurement rules, among other things, intended to increase SMEs’ access to public contracts 29, second a more efficient use of procurement in support of common societal goals, i.e. the redistributive or ‘horizontal’ considerations. These two objectives and their consequences, in essence less regulation for the former and more regulation for the latter, have to be balanced up against each other. Regarding the second objective, an order of preference will have to be decided upon since ‘protection of the environment, higher resource and energy efficiency, combating climate change, promoting innovation, employment and social inclusion and ensuring the best possible conditions for the provision of high quality social services’30 31 are difficult aims to reach at one and the same time. Strategic use of public procurement cannot be a catch-all-solve-all solution, if it is to be effective it is crucial to prioritise. Fundamentally, the issue at hand is also a question of whether you can legislate your way out of most undesirable contemporary issues in one broad sweep. Are there perhaps more effective improvements to be made in the enforcement phase, why are wasteful spending and corruption not better tackled? Perhaps newfound insights into wasteful public spending, corruption, job creation and the like in individual Member States are where the solutions are to found, and not at the supranational EU level?32 Links: •
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Public Procurement in Europe – Cost and Effectiveness A study on procurement regulation. Prepared for the European Commission, March 2011 (p.1-17, 41-44, 58-59, 89, 125):
European Small Business Alliance – Mixed Response of SMEs to New Public Procurement Rules http://www.esba-europe.org/sub-sub-section.asp?SectionID=4&SubSectionID=15&SubSubSectionID=172 30 Proposal on public procurement (p. 2) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0896:FIN:EN:PDF 31 Proposal on procurement by entities operating in the water, energy, transport and postal services Sectors (p. 2) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0895:FIN:EN:PDF 32 http://trans2.demo.mujo.be/wp-content/uploads/2012/11/ENIS-policy-paper-1-Public-Procurement.pdf
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http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/costeffectiveness_en.pdf
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The reform of the EU’s public procurement directives: a missed opportunity? (p. 1-14, 29-34, 44-48): http://www.etui.org/News/Reform-of-EU-s-public-procurement-directives-a-missed-opportunity
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Transparency International Recommendations on Public Procurement Directive: http://www.transparencyinternational.eu/wp-content/uploads/2012/08/2012-TI-Recommendationson-Public-Procurement.pdf
7. MEASURES ALREADY IN PLACE Competition rules and other aspects related to the Internal Market have had a central position within the EU treaties for decades. Currently the competition rules regarding the Internal Market are the exclusive competence of the EU (Article 3, The Functioning of the EU). This means that EU has the power to legislate in a very comprehensive manner on the issue. Nonetheless, the EU is still bound by the General Procurement Agreement of the World Trade Organisation33 and several bilateral agreements. The two Directives currently in place regulating public procurement in the EU are, directive 2004/17 – procurement in the water, energy, transport and postal services sectors (2004/17)34, and directive 2004/18 - procurement contracts for public works, public supply and public service (2004/18). 35 Several concrete measures are already in place such as the Public Procurement Network (PPN) that facilitates European-wide co-operation on public procurement 36, Tenders Electronic Daily (TED) 37 the online tender publishing tool of the EU, and SIMAP an information system on European public procurement 38 Interesting advancements and proposals have been made regarding pre-commercial procurement (PCP) and public procurement of innovative solutions (PPI). These tools for spurring and procuring Research & Development (R&D) are not brand new, but they have been argued to be underutilised in Europe and some argue that they bring about plenty of potential benefits for industry, citizens and policy-makers.39
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http://www.wto.org/english/tratop_e/gproc_e/gpa_overview_e.htm http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0001:0113:en:PDF 35 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:134:0114:0240:EN:PDF (especially p.13-15 and onwards) 36 Public Procurement Network http://www.publicprocurementnetwork.org/ 37 Tenders Electronic Daily http://ted.europa.eu/TED/main/HomePage.do 38 SIMAP http://simap.europa.eu/index_en.htm 39 Policy related FAQs on PCP and the link with PPI (p. 2-4 and 8-9) http://cordis.europa.eu/fp7/ict/pcp/docs/faq-v9.pdf 34
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Links:
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Policy related FAQs on Pre-Commercial Procurement (PCP) and the link with Public Procurement of Innovative Solutions (PPI): http://cordis.europa.eu/fp7/ict/pcp/docs/faq-v9.pdf
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Ongoing EU Commission work related to PCP: http://cordis.europa.eu/fp7/ict/pcp/policy_en.html
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EU Public Procurement Legislation: Delivering Results Summary of Evaluation Report (p. 6-9): http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/executivesummary_en.pdf
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Exempt Markets – Postal and Energy (Skim page, in order to get a quick overview of exempt markets): http://ec.europa.eu/internal_market/publicprocurement/rules/exempt_markets/index_en.htm
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Proposal for a Directive on procurement by entities operating in the water, energy, transport and postal services sectors (skim relevant parts): http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0895:FIN:EN:PDF
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Proposal for a Directive on public procurement (skim relevant parts): http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0896:FIN:EN:PDF
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY (ENVI I)
Beyond Gross Domestic Product (GDP): in light of the “Trio Programme” priority for Europe to look beyond growth in capital, how should Europe consider environmental progress, well-being and other indicators alongside more traditional measures of development? by Sophie Scannell (IE)
1. KEY TERMS •
Trio Programme is an 18-month plan prepared by the next three countries due to hold the EU Council Presidency, designed to outline the key objectives of the Council over the duration of the three full terms. The current Trio Programme was drawn up by Ireland, Lithuania and Greece to cover the period from January 2013 until June 2014.
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Gross Domestic Product (GDP) is the total dollar value of all goods and services produced within a country over a specific time period (usually a year). When GDP is adjusted for inflation we call it real GDP.
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An indicator is a statistic that gives information about the current state of a particular variable, and allows us to make predictions about its future state. GDP, life expectancy and the unemployment rate are all important examples of indicators.
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A development index is a measurement of some indicator, or collection of indicators that quantifies the level of development of a country. Some important examples of frequently used indicators are given in Section 4.
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Beyond GDP is an EU initiative aiming to improve measurements of social, economic and environmental progress as well as wealth and well-being, and determining how these can best be used to make decisions.
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Links: •
List of environmental indicators as given by the European Union: http://europa.eu/legislation_summaries/environment/sustainable_development/l28127_en.htm
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News article comparing GDP and GNI: http://www.oecdobserver.org/news/archivestory.php/aid/1507/GDP_and_GNI.html
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Official website of the Irish EU Presidency, explaining the current Trio Programme aims: http://eu2013.ie/ireland-and-the-presidency/about-the-presidency/ trioprogrammeirelandlithuaniaandgreece/
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Website of the Beyond GDP Initiative, beginning with the background page: http://www.beyond-gdp.eu/background.html
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Video released by European Commission on how best to measure progress: http://www.youtube.com/watch?feature=player_embedded&v=CAwRKrSz-9M
2. RELEVANCE AND EXPLANATION OF THE PROBLEM Progress indicators are tools used by the European Union as aids to policy-making. These indicators measure the success of Member States in reaching targets set by various EU strategies, as well as determining which countries are eligible for funding and other benefits. Traditionally, the main indicator used to measure economic development was the Gross Domestic Product of a particular country, and economic development was used as a proxy indicator for overall development. However, GDP has a number of weaknesses; it does not account for non-market activities, like the work done by stay-at-home parents; it does not tell us how wealth is distributed within an economy; it does not account for wealth that is sent out of the economy, like the repatriation of the wages of migrant labourers, and these are just a few of its shortcomings as an economic indicator. As a measure of overall development, look anecdotally at the GDP of countries that have experienced natural disasters, where GDP actually rises thanks to the work created in post disaster reconstruction. Despite its weaknesses, GDP is still the indicator of choice for governments setting economic targets, but whether it is possible to separate economic policy aims from overall development goals is debatable. Alternative measures of development are available, like the United Nation's Human Development Index, which ranks countries according to an aggregate index based on income, education and life expectancy. The Social Progress Index is another composite index, aggregating fifty-two individual indicators to produce an overall index of countries according to their social and environmental provisions, and more recently, statisticians have moved toward incorporating environmental indicators and measures of “happiness” in development indices, as in
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the Happiness and Happy Planet Indices. In some countries, movements have been made toward normalising the use of the Genuine Development Indicator (GDI) as the industry standard. The European Union makes use of these indicators when determining eligibility for a number of its programmes, the EU Regional Policies require of Member States a certain minimum GDP in order to be entitled to funds; regions qualify for the European Regional Development Fund and the European Social Fund provided they have a GDP of less than 75% of the Union average, and for the Cohesion Fund provided they have living standards at less than 90% of the Union average. In the opposite direction, the contributions required of Member States are based upon Gross National Income. In order to provide the most accurate reflection of the level of development of any country, it must be recognised that no one indicator alone is sufficient. GDP was never intended to be a measure of welfare, merely economic production, but it has come to be relied on as such. The most accurate indicators are those that collect data on several measures of development, and aggregate these to form a total measure. As we attempt to realise the goal of creating and using an indicator that goes beyond GDP we must ensure we can measure “progress, wealth and well-being“ 1 in such a way that policy decisions based on these indicators are ones in which we can be confident. Links:
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Report commissioned by European Parliament on alternative indicators, excellent and thorough: http://www.beyond-gdp.eu/download/bgdp-bp-goossens.pdf
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Report by Canadian government explaining GDP and other economic indicators: http://publications.gc.ca/Collection-R/LoPBdP/BP/prb0022-e.htm#D
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Report released in advance of Beyond GDP conference: http://www.beyond-gdp.eu/download/bgdp-bp-mbgdp.pdf
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Book published by Social Justice Ireland on how to measure prosperity: http://www.socialjustice.ie/sites/default/files/file/SPC%202009/SPC%202009%20-%20full %20book.pdf
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Video in which Joseph Stiglitz (of the World Economic Forum) discusses going beyond GDP: http://www.youtube.com/watch?v=G4d_-zaJXuA
http://www.beyond-gdp.eu/FAQ.html
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3. KEY QUESTIONS •
What are the strengths and weaknesses of economic indicators as measures of development?
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What do the terms “progress“, “wealth“ and “well-being“ mean to you?
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How can progress, wealth and well-being be measured?
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How can we incorporate these measurements to form an overall indicator of progress?
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In what way should the European Union base policy decisions on development?
Links: •
Report by OECD economists on alternative ways to understand well-being http://www.beyond-gdp.eu/download/oecd_measuring-progress.pdf
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In defence of GDP, an essay featured on Vox EU (with extra links and resources) http://www.voxeu.org/article/defence-gdp-measure-wellbeing
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Tabloid-style piece on the importance of various economic indicators http://moneymorning.com/2013/06/07/the-7-critical-economic-indicators-you-need-to-check-everymorning/
4. KEY FACTS AND FIGURES •
The Human Development Index (HDI) is a composite index compiled by the United Nations, comprising life expectancy, education and income.
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Genuine Progress Indicator (GPI) is a measure similar to GDP that incorporates other indicators that represent the cost of the negative effects of economic activity (like crime, environmental damage, resource depletion etc.)
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Social Progress Index (SPI) is a ranking of social and environmental progress published annually by the Social Progress Imperative, a working group of the World Economic Forum.
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Happy Planet Index (HPI) is an index of well-being and environmental impact published every three years by the New Economics Foundation.
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Gini Index is a measure of statistical dispersion measuring inequality among values of a frequency distribution. It is most commonly used to measure income inequality.
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Environmental Pressure Index is an on-going project to create and refine a composite index measuring a number of indicators of environmental pressure. The project is a collaboration between Eurostat, the DG Environment and Ecologic, a think tank specialising in applied environmental research and policy analysis.
Links: •
Explanation of how the Human Development Index works: http://hdr.undp.org/en/statistics/hdi/
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Gapminder is a website that explains most indicators, how they are used and crucially, allows you to see visualisations of the statistics, please do explore: http://www.gapminder.org/
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Theory behind Environmental Pressure Index Project: http://esl.jrc.ec.europa.eu/envind/theory/handb_01.htm
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Environmental Pressure Index Project in detail: http://esl.jrc.ec.europa.eu/envind/idm/idm_e_01.htm
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Report on the initial findings for the Environmental Pressure Index Project: http://biogov.cpdr.ucl.ac.be/communication/papers/tepi99rp_EN105.pdf
5. KEY ACTORS Most of the movement toward incorporating more holistic measurements in the indices that we use has come from those actors with responsibility for the environment, public health and food safety. In line with this the primary force behind moving beyond GDP within the institutions of the European Union has been the Directorate General (DG) for the Environment. Working in cooperation with the DG are several other internal actors, including the European Parliament Committee for the Environment, Public Health and Food Safety, Eurostat, the central statistics agency of the EU that aggregates data collected by national Central Statistics Offices and the European Environmental Agency. Outside of the EU institutions, a primary actor is the Organisation for Economic Cooperation and Development (OECD), an international organisation that aims to help countries stimulate their own economic progress, and encourage international trade. The OECD releases development statistics for its Member States, but thus far has mainly relied upon GDP based measures. The Ecologic Institute is an independent think tank, which has cooperated with the DG Environment and Eurostat to create the Environmental Pressure Index, and the European Sustainable Development Network (ESDN) is, at the moment, an informal network of
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sustainable development experts from inside Europe who provide quarterly commentaries on the progress of EU Member States. Links: •
Chart showing the connections between Institutions and non-institutional actors http://issuu.com/economicsustainability/docs/institutions? workerAddress=ec2-75-101-205-174.compute-1.amazonaws.com
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Factsheet explaining the work of the DG Environment: http://ec.europa.eu/environment/pubs/pdf/factsheets/dg_environment.pdf
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Publications of the DG Environment from the Commission bookshop (all free): http://bookshop.europa.eu/en/directorate-general-for-the-environmentcbr1sKABstjgMAAAEjvIYY4e5K/?SearchParameter=%26%40QueryTerm%3D* %26CorporateAuthors%3Dr1sKABstjgMAAAEjvIYY4e5K%26%40Sort.LatestYear %3D1%26%40Page%3D1&PageSize=100&SortingAttribute=PubYear_DESC
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Statistics Directorate of the OECD: http://www.oecd.org/std/oecdmaineconomicindicatorsmei.htm
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Eurostat website (please feel free to explore more than just the environmental portal): http://epp.eurostat.ec.europa.eu/portal/page/portal/environment/introduction
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Case studies portal of the ESDN: http://www.sd-network.eu/?k=case%20studies
6. KEY CONFLICTS The main criticism of the use of GDP as an indicator leaves aside its weaknesses as an economic indicator, but instead points out that GDP was never intended to be more than that. Scientists and policy-makers alike point out that we cannot hope for it to be representative of a more nuanced view of development, because it was never created with that purpose in mind. The debate on its value as an economic indicator is much more balanced, and is articulated very nicely in previous links, most notably the paper by the Canadian government. Moving to other indices, we look at the debate that has existed for many years on the value of including various measurements in an indicator. One of the most frequently heard criticisms of GPI is that it fails to account for political freedom, which many believe to be an important criterion for development. On the other hand, many economists argue that the benefits of political freedom are included within self-reported levels of happiness, and so including it separately would be to double count it. This is just one of the examples of a contested indicator.
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Economists and researchers alike also frequently debate the accuracy of certain measurements used to compile indicators; adequate statistics on air quality can be difficult to tie to a geographic area; “happiness“ is often measured by survey, where participants rank their satisfaction on some scale; many countries lack the infrastructure to conduct trustworthy measurements. Even in countries where complete and accurate measurements are available, aggregate indicators must determine some method by which to weight the component indices, allowing for manipulation of data. Links: •
In depth discussion of the GDI, including criticism: http://rprogress.org/publications/2007/GPI%202006.pdf
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Explanation of why reliable statistics are so important: http://www.dst.dk/~/media/Sc4/Guide/about-international-consulting/ the_importance_of_statistics_for_development_v2_001-pdf.pdf
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Submission from UN Division on environmental statistics: http://www.uncsd2012.org/content/documents/695UNStatistics.pdf
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Paper on setting weights in aggregate statistics: http://www.cgdev.org/doc/event%20docs/10.23.03%20GDN%20Conf/Chowdhury%20and %20Squire%20%20Setting%20Weights%20for%20Aggregate%20Indices.pdf
7. MEASURES ALREADY IN PLACE Some alternative progress indicators have already been instituted by the EU in an effort to move away from previous reliance solely on economic data. The Sustainable Development Indicators and Structural Indicators introduced by the EU Sustainable Development Strategy and the EU Lisbon Strategy respectively are measurements of how well Member States meet the targets set out in the links provided in Section 1. The Beyond GDP Conference was organised in 2007, was an effort to develop an indicator that would be as easy to measure, use and understand as GDP, and has encouraged a number of other think tanks to join the battle to make policy making in Europe more informed, by creating an index more suitable than GDP alone. In 2006, the European Commission had renewed the existing Sustainable Development Strategy, and set out new targets for countries to meet. Reviewed by the DG Environment, policy papers and compliance reports are produced regularly. A further commitment to the process was the announcement of the Environmental Pressure Index, a collaborative effort between the EU and think tank Ecologic. More recently, the 6th Environment Action Programme, a set of strategies was proposed by the European Parliament. These
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indicators measure environmental sustainability and have been developed in cooperation with the European Environmental Agency and national authorities. Links:
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Factsheets produced by Beyond GDP: http://www.beyond-gdp.eu/factsheets.html
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Monitoring report of the SDS: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-31-11-224/EN/KS-31-11-224-EN.PDF
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Eurostat report (2009) on sustainable development: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-78-09-865/EN/KS-78-09-865-EN.PDF
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Interview with Dr Finbarr Brereton, University College Cork https://dl.dropboxusercontent.com/u/33205723/Interview%20with%20F%20Brereton.wav
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
COMMITTEE ON DEVELOPMENT (DEVE)
A framework for ‘common but differentiated global responsibilities’: how should Europe contribute to a fair distribution of the costs for climate mitigation and adaptation between the developed and the developing world? by Maximilian B. Kiehn (DE)
1. KEY TERMS •
Common but differentiated global responsibilities (CBDR): A principle used in international environmental law, designating that all states are equally responsible addressing climate change adequately. However adequate measurements differ regarding the countries different economic development. This principle recognises the historical differences under which each party has contributed to the development of climate change.
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Climate mitigation: The efforts taken to reduce or prevent emissions of greenhouse gases through a variety of methods such as new technologies and products, renewable energy sources, and energy efficiency improvements for existing systems. Other long-term improvements to mitigate the impact on climate change include all areas of modern society for instance climate-friendly city planning or renewed consumer behaviour.
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Climate adaptation: The ability to respond to current or expected impacts of climate change in order to reduce potential harm or even anticipate potential benefits.
Links: • •
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A short description of the Encyclopaedia Britannica about the CBDR: http://www.britannica.com/EBchecked/topic/1917951/common-but-differentiated-responsibilitiesCBDR A short but precise video definition on the differences between mitigation and adaptation: http://www.youtube.com/watch?v=QjnV8-oo12A
Preparation Kit - 73rd International Session of the European Youth Parliament in Zurich 2013
2. RELEVANCE AND EXPLANATION OF THE PROBLEM At the last climate conference 2012 in Doha, Qatar only 37 out of 192 parties have signed up for a legally binding second commitment period (2013-2020) of the Kyoto protocol with the aim of reducing greenhouse gas (GHG) emissions. In a manner of speaking there is no common global agreement set up to tackle climate change in this decade and beyond. Even though all 192 parties have agreed to take responsibility, the crucial question is in fact who should be held accountable? As a consequence the equitable distribution of the economic and structural burdens caused by GHG emissions reduction is the core issue of this topic and needs to be constituted1. While on the one hand most early-industrialised, developed countries 2 have contribute to a greater extend to the evaluation of climate change, the vulnerability to climate change is the highest in developing countries 3. Any kind of adaptation and mitigation strategy has a strong impact on a country’s economic situation. Following many developed countries assume to cause more harm than benefit by applying those strategies, while at the same time developed countries could benefit would highly benefit from a reduced environmental impact. . The question raises how the loss of wealth in developed or developing countries should be compared and compensated for and for whom it is then worth adopting more adaptation and mitigation strategies. Taking further into account that over the last 150 years most developed countries have highly benefit from a climate-damaging development, the question of equitable distribution of the needed reductions raises again, as it is questionable whether one country can be held accountable for what has happened 150 years ago. Further the principle of a CBDR needs to be evaluated. In the light of developing countries with emerging economies creating a constantly growing impact on the environment, one might question the separation of all countries in two groups of ‘developed’ and ‘developing’, perhaps it’s time to diversify these definitions of these groups and the responsibilities therein.
1
A short introduction into the equity debate: http://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch2s2-6-4.html Early-industrialised countries are defined as in the UNFCCC Appendix I: Parties include the industrialised countries that were members of the OECD (Organisation for Economic Co-operation and Development) in 1992, plus countries with economies in transition (the EIT Parties), including the Russian Federation, the Baltic States, and several Central and Eastern European States. (http://unfccc.int/parties_and_observers/items/2704.php). 3 The Term Developing countries groups all countries that are not part of the UNFCCC Appendix I. 2
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It seems to be highly unlikely that a common and centralised global solution can be reached in this decade as international negotiations seem to be stuck4 . The European Union could aim to set up more ambitious goals beyond its European 20-20-20 strategy 5, promote solutions between countries on a multilateral level, such as the Zafarana windfarm 6, in order to exchange technologies and expertise. Such projects allow Europe to reach out to companies on a lower level than setting international targets
to promote a more climate friendly
development from the bottom up. Links: •
An advertisement video of the European Climate Foundation that promotes Europe to take a stronger stance and show more commitment for climate change: http://www.youtube.com/watch?v=7OcTAvm8cXo
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National Geographic has set up a web site to visualise the effects of global warming: http://environment.nationalgeographic.com/environment/global-warming/gw-impacts-interactive/
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The press release of the Dutch government, about the outcome of the last climate conference includes a short evaluation of the CBDR principle: http://www.government.nl/news/2012/12/11/kyoto-protocol-extended.html
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The article “Which nations are most responsible for climate change“ published in the Guardian provides useful background facts and figures: http://www.guardian.co.uk/environment/2011/apr/21/countries-responsible-climate-change
3. KEY QUESTIONS •
Who should be held responsible for the current situation of the climate and the resulting damages caused by climate change?
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Who is polluting the environment the most at the moment and who will be doing so in the future?
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Should the European Union promote a binding international agreement to reduce the emission of GHGs (and if so how)?
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What new measurements could the European Union find to promote climate adaptation and climate mitigation concepts both inside the Union and outside its borders?
4
The journalist Bryan Walsh (The Time) comments on why International Climate Negotiations are stuck (http:// www.time.com/time/health/article/0,8599,2100430,00.html) 5 The European 20-20-20 strategy aims to cut emission of GHGs by 20 per cent in 2020 compared to the 1990 level (http://ec.europa.eu/clima/policies/package/index_en.htm) 6 The Zafarana wind farm Project is a cooperation between the Danish, German, Spanish governments to support Egypt to set up a wind farm near the Gulf of Suez (http://www.renewableenergyfocus.com/view/2467/european-governmentshelp-egypt-to-build-zafarana-windfarm/)
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Links: •
Expert interview with Prof. Dr. Antje Bruns about the impact of climate change: https://dl.dropboxusercontent.com/u/23504448/interview_bruns.pdf
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Already in 2009 the economist has pointed out how climate change effects the poorest countries in the world the most: http://www.economist.com/node/14447171
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A paper from the university of London by Rafael Leal-Arcas for new approaches on climate change negotiations: http://www.iadb.org/intal/intalcdi/PE/2012/10379a05.pdf
4. KEY FACTS AND FIGURES •
Only 37 out of 192 parties have signed a binding legal agreement to combat climate change and thus a decreasing number since the last COP in Doha, Qatar 2012.
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There is no agreement linked to the principle of a CBDR that only obliges developed countries to set binding agreements to reduce GHG emissions.
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The impact of climate change affects developing countries more than developed countries, due to lacking capacity to adapt and geographic circumstances, such as high vulnerability in costal areas7.
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The European Union is the only supranational body that is part of the UNFCCC and a full member of the Kyoto protocol.
Links:
7
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The Guardian’s interactive map, visualises all essential facts about climate change: http://www.guardian.co.uk/news/datablog/interactive/2012/mar/29/carbon-map-infographic-world
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The European Union’s website summarising the efforts of the Union and the respective entities in charge: http://europa.eu/pol/clim/index_en.htm
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The NASA has summarised the effects of climate change for different regions of the world: http://climate.nasa.gov/effects
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The World Bank’s article summarises how climate change effects the poorest regions of the world: http://www.worldbank.org/en/news/feature/2013/06/19/what-climate-change-means-africa-asiacoastal-poor
Countries in Sub-Saharan Africa, South Asia and South East Asia are exposed to the effects of climate change such as rising sea levels and water shortages to a much higher extend, due to their geographic position in already extreme climates.
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5. KEY ACTORS Since the early 1990s the United Nations Framework Convention on Climate Change (UNFCCC) has been the major driving force to set up an international legal binding agreement for climate protection. However after the first commitment period (2008-2012) of the Kyoto Protocol, which has been set up by the UNFCCC, Canada has been withdrawing from the treaty, while Japan, New Zealand and Russia have not set up new targets for the next commitment (2013-2020) period and the United States still has not considered to ratify the agreement. Thus the impact of the Kyoto Protocol and the influence of the UNFCCC can be considered to decrease constantly. The European Union represents the only supranational institution, thus represents every Member States and the Union’s overall interest as a full member of the treaty at all Climate Conferences of the UNFCCC. Currently only EU Member States, Australia and Ukraine have binding agreements for the second commitment period of the Kyoto protocol (2013-2020). Important developing economies such as India and China have singed the agreement but based on the principle of the CBDR have no legal binding targets yet to fulfil and have not shown interest to do so in the future. Links: •
Institutional Chart – A visualisation of all key actors involved at the UNFCCC: https://dl.dropboxusercontent.com/u/23504448/chart_unfccc.pdf
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The list of all Parties & Observers of the UNFCCC: http://unfccc.int/parties_and_observers/items/2704.php
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The European Unions advertisement for its Climate Policy: http://www.youtube.com/watch?v=8hdL3QcIJSs&list=PL076DFAC291E71024
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A critical comment from The economist on the current climate change debate inside the USA: http://www.economist.com/blogs/democracyinamerica/2013/06/climate-change
6. KEY CONFLICTS The conflict at the heat of this problem is who’s responsibility it is to pay for the ever increasing costs of climate mitigation and adaptation. Is it nation states or should the burden be shared globally. In case of the latter, an evaluation of the current situation seems necessary to modernise the existing principle of the CBDR. The division of all countries into two groups, either developed or developing countries, hardly seems to fit anymore. Hand in hand with their extensive economic growth, developing countries, such as China or India, have had increasing
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greenhouse gas emissions, and their impact on climate change cannot be denied. Thus a reconsideration of the CBDR seems to be inescapable. How likely is it that the European Union will be able to promote a legally binding international agreement to reduce greenhouse gas emissions, in times where only two Non-EU countries have signed the Kyoto protocol and even most of former parties have left the agreement? Is the pursuit of a single, comprehensive global regime still appropriate should negotiations proceed in a more flexible, decentralised manner, involving multiple agreements and/or smaller groups of countries or private-sector parties (for example, like- minded states or companies)? Beyond Europe’s 20208 and 20509 targets, how could a realistic aim look like in order to move the international negotiations forward? How could the commitments set up be improved as until now pollution is only measured by quantity of GHG emissions? Are there no better suited measurements, e.g. technology standards? Would it indeed be more beneficial to fight climate change by sharing technology and improving adaptation strategies world wide with the aforementioned multinational approach? What would a fair distribution of Europe’s expertise look like and should Europe accept financial setbacks in order to promote new methods or should Europe aim to reduce Europe’s climate impact first? What is Europe’s role in this debate? Can it provide leadership as a well being an example for the rest of the world? Links: •
The EU’s climate change programme: http://ec.europa.eu/clima/policies/eccp/index_en.htm
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An interesting debate about how should be held responsible: http://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch2s2-6-4.html
7. MEASURES ALREADY IN PLACE The United Nations Framework Convention on Climate Change (UNFCCC) provides all international actors with the needed platform for debate. The EU Commission has a member solely responsible for climate change, Commissioner Connie Hedegaard, who promotes the EU’s Climate Action Plan and closely cooperates with the Commission’s Directorate General for Climate Action in order to coordinate the joint effort of all Member States.
8
The targets set up by EU leaders in 2007 to move Europe towards an low-carbon economy (http://ec.europa.eu/clima/ policies/package/index_en.htm) 9 The EU Commissions road-map for a low-carbon economy in 2050 (http://ec.europa.eu/clima/policies/roadmap/ index_en.htm)
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The European Union with its climate and energy package 10 has set up a framework to support the Member States to reach the ambitious targets it has set for itself in e.g. the 2020 strategy. Links:
10
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Expert interview with Dr. Jochen Harnisch: https://dl.dropboxusercontent.com/u/23504448/interview_harnisch.pdf
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The EU Commissions mission to combat climate change: http://ec.europa.eu/dgs/clima/mission/index_en.htm
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The EU Commissioner Connie Hedegaard presenting her work: http://ec.europa.eu/commission_2010-2014/hedegaard/about/work_en.htm
http://ec.europa.eu/clima/policies/package/index_en.htm
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COMMITTEE ON INTERNATIONAL TRADE (INTA)
China’s monopoly on rare earth elements (REEs): how should Europe help to guarantee sustainable supply of REEs, whilst ensuring the viability of reserves and reducing the environmental impact of their mining worldwide?
by Hans Maes (BE)
1. KEY TERMS •
Rare earth elements (REEs)1: A group of seventeen chemical elements of the periodic table, mainly lanthanides2. Although these elements are relatively plentiful in the Earth’s crust, they scarcely form extractable minerals, thus severely limiting exploitable (mineable) ore deposits.
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China’s monopoly: Although only 23-30% of proven global REE reserves are in Chinese territory, in the autonomous region of Inner Mongolia, China accounts for about 90% of global supply.
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Export quota: The limit a state sets on the number of units of a good that may be exported over a period of time, usually instituted in order to maximise the domestic supply, which helps to keep prices low within the country.
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Urban mining: The process of reclaiming compounds and elements from products, buildings and waste. Frequently used to recycle REEs.
Links:
1
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A website advocating the possibilities of urban mining: http://urbanmining.org/2010/07/07/how-urban-mining-works-2/
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Investor Malcolm Gissen explaining REEs:
REEs are frequently categorised as Raw Materials (RM) and more specifically as Critical Raw Materials (CRM) 2 The lanthanides are a group of fifteen chemical elements, starting with Lanthanum, with atomic number 57 to 71.
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http://www.youtube.com/watch?v=PJbmkrJqoug
2. RELEVANCE AND EXPLANATION OF THE PROBLEM Todayâ&#x20AC;&#x2122;s society thrives on technology. As it gets ever more important, it also becomes more complex and expensive to produce. Plenty of devices, such as electronic products, hybrid cars and wind turbines, contain a substantial amount of REEs because of their specificity, versatility and unique properties. Especially in the EU, with an overall industry that is highly oriented towards high-tech products and finished consumer products, supply of the necessary materials is critical.3 Thus, the global demand for REEs has rapidly increased over the last two decades, and will continue to do so in a spectacular way. The problem now at hand is that global demand has surpassed global supply. Due to the limited provision of mineable minerals, and the far reaching negative impact on the environment4
when excavated, there is a major geographical
imbalance of REE supply. In 2013 China, generally known for its high industrial production ratio and for having a disregard for environmental consequences thereof, produced 90% of the global REE supply. The Chinese government has been reducing export quota for the past couple of years, claiming they want to safeguard domestic supply and combat the negative environmental impact of REE excavation. As a result, trading prices have skyrocketed whilst limiting supply to other industrial regions, such as USA, EU and Japan. This has put a strain on international trade relations, and has resulted in a complaint with the World Trade Organisation (WTO) filed by the USA, EU and Japan against China5.
3
More on the RM need of European industry and the expected growth thereof can be found here: http://ec.europa.eu/ commission_2010-2014/tajani/hot-topics/raw-materials/ 4 In China, this impact is mainly felt in the Bayan Obo mining district. A very alarming video on the environmental conditions can be found here: http://www.youtube.com/watch?v=TGLC59rCCDc 5 The ruling of the WTO, and related links, can be found here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=774
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Source: DE BOER, LAMMERTSMA, Scarcity of Rare Earth Elements, KNCV, Amsterdam University, 2012, 99. 13
Source: DE BOER, LAMMERTSMA, Scarcity of Rare Earth Elements, KNCV, Amsterdam University, 2012, pp. 16
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Links: •
Incredibly comprehensive paper on REEs (in English but with a summary in Dutch and English). Especially page 5, the summary in English, is a very good starting point to comprehend the problem: http://www.kncv.nl/Uploads/2012/7/SREE-KNCV-rapport-02.07.pdf
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Another comprehensive paper, slightly more extensive: http://www.oakdenehollins.co.uk/media/205/lanthanide_resources_and_alternatives_may_2010.pdf
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Library briefing to the ITRE rapporteur on ‚An effective raw materials strategy for Europe, Reinhard Bütikofer, also very comprehensive: http://www.europarl.europa.eu/RegData/bibliotheque/briefing/2013/130514/ LDM_BRI(2013)130514_REV1_EN.pdf
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Study on Rare Earths and their recycling by the Öko-Institut for The Greens/EFA in the European Parliament: http://www.oeko.de/oekodoc/1112/2011-003-en.pdf
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Article on problems with urban mining: http://www.abc.net.au/news/2013-06-13/researchers-worried-precious-metals-lost-in-e-wasterecycling/4750774
3. KEY QUESTIONS
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With several possible directions to go in, where should the EU’s priorities lie in tackling the REE issue?
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Which approach should the EU take towards China as world largest REE producer and exporter?
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To what extent can the EU alleviate tight supplies trough enhanced exploration and development?
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Where do the possibilities in research and development (R&D), resource efficiency, re-use, recycling and substitution lie?
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What role can the EU play in safeguarding the environmental impact of REE mining worldwide?
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4. KEY FACTS AND FIGURES
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5. KEY ACTORS In 2010 the European Commission properly addressed the issue for the first time, with a report from the Ad-hoc Working Group on defining critical raw materials, a sub-group of the Raw Materials Supply Group chaired by the Commission’s Directorate-General Enterprise and Industry. This working group assessed which elements were most critical, and included an extensive list of recommendations for EU policy. These recommendations were taken up by the ITRE committee of the European Parliament in 2011, when they presented a report on an effective raw materials strategy for Europe. It should be noted that the production of this report, was heavily influenced by lobby groups, mostly concerned about mining, e.g. Eurometaux and Euromines 6. The motion for a resolution included in the report was later adopted by the Parliament. Within the European Parliament, there are several other committees with a substantial interest on the topic, most important among them the INTA and ENVI committees. Of course, there is also a global perspective to this topic. First and foremost, the key actors are the big REE producers and consumers, like China, the EU, the USA and Japan. Supervising the international trade between those is the World Trade Organisation (WTO). Links:
6 7
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Institutional chart: http://issuu.com/economicsustainability/docs/inta_institutional_chart? workerAddress=ec2-54-226-232-132.compute-1.amazonaws.com
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An article of Euractiv on the raw materials plan of the EC: http://www.euractiv.com/sustainability/commission-unveils-updated-raw-m-news-501842
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The video of the debate held on the effective raw materials strategy in the European Parliament General Assembly of September 2011 7:: http://www.europarl.europa.eu/ep-live/en/plenary/video?debate=1315845323470
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Transcription of the same debate, especially interesting are the opinions of the shadow rapporteurs from the DEVE, INTA, ENVI and AGRI committees: http://www.europarl.europa.eu/sides/getDoc.do? type=CRE&reference=20110912&secondRef=ITEM-021&language=EN&ring=A7-2011-0288
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A list with key actors, and key events: http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2011/2056(INI)
This procedure, the influencing by lobby groups, is very common in the European Parliament. With the possibility of watching the debate translated in 23 out of 24 official languages of the EU.
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6. KEY CONFLICTS The first and foremost key conflict is the trade conflict between China and other industrially developed or developing countries the rest of the world in the production of REEs and the reduction of export quota. This is proven by the resulting complaint with the WTO. Secondly, there is the question of sustainability, where demand of scarce and exhaustive resources exceeds supply. Opinions differ on priorities on the topic, mainly between improving REE extraction and alternative ways to recycle and re-use REEs. Thirdly, there is the question of the environmental impact REE mining has. Concern has been raised that the increasing pressure to open new mines might encourage mining corporations to disregard environmental safeguards. Links: •
An article of Euractiv addressing the views of global raw materials players and the WTO complaint: http://www.euractiv.com/sustainability/eu-us-japan-cooperate-rare-earth-news-501917
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NTDTV News Item on EU Trade Commissioner Karel De Gucht’s reaction on the WTO Ruling: http://www.youtube.com/watch?v=siAKI9FMEGw
7. MEASURES ALREADY IN PLACE As mentioned above, the EU has already dealt with this issue to a certain extent. The first big step was the report on defining critical raw materials for the EU by the European Commission. This report included a lot of research into the topic. The second big step was the adoption of the resolution on an effective raw materials strategy for Europe by the European Parliament. Although these steps are quite extraordinary, to quote MEP Julie Girling, ‘This is clearly just the beginning of a long road.’8 Additionally, the Directorate-General for Trade of the European Commission has established an EU Trade Policy for Raw Materials, setting out the main strategy guidelines when it comes to raw materials.
8
Debate on An effective raw materials strategy for Europe, 12/09/2011.
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Lastly, businesses have also identified this problem and tried to tackle it on their own by taking steps to address supply-side risks through recycling activities, vertical integration (e.g. acquiring or merging with mining companies) and material substitution.9 Links:
9
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EC Report of the Ad-hoc Working Group on defining critical raw materials (2010): http://ec.europa.eu/enterprise/policies/raw-materials/files/docs/report_en.pdf
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EP Report on an effective raw materials strategy for Europe (2011): http://www.europarl.europa.eu/sides/getDoc.do? type=REPORT&reference=A7-2011-0288&language=EN#_part1_def1en
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Final resolution of the European Parliament on An effective raw materials strategy for Europe. In this resolution, pay special attention to clauses 43 and 59 and the general domains the resolution utilises: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7TA-2011-0364&language=EN&ring=A7-2011-0288
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The Second Activity Report on the EU Trade Policy for Raw Materials: http://trade.ec.europa.eu/doclib/docs/2012/may/tradoc_149515.pdf
Metals in a Low-Carbon Economy: Resource Scarcity, Climate Change and Business in a Finite World, Report by the Stockholm Environment Institute and the business leader initiative Combat Climate Change (3C): http://www.seiinternational.org/mediamanager/documents/Publications/SEI-ProjectReport-DawkinsMetalsInALowCarbonEconomy-2012.pdf
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COMMITTEE ON INDUSTRY, RESEARCH AND ENERGY (ITRE)
Emission trading vs. carbon tax in the absence of an international agreement: working towards a de-carbonised European economy whilst trying to maintain global competitiveness, which reforms and policies should the EU pursue at home in order to further reduce greenhouse gas emissions?
by Chris Hall (UK)
1. KEY TERMS •
Emissions Trading Scheme: The process of capping the amount of carbon emissions, allocating carbon limits, and allowing the trading of surplus allocation, in an attempt to incentivise innovation and lower overall emissions.
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EU Emissions Trading Scheme: The largest Emissions Trading Scheme in the world, covering 31 countries across Europe.
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Carbon Tax: A tax levied on fuels based on their carbon content.
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Greenhouse Gas Emissions: Gases which trap heat in the atmosphere and contribute to global warming
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Kyoto Protocol: An international agreement linked with the United Nations Framework Convention on Climate Change, which commits its Parties by setting internationally binding emission reduction targets.1
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Global competitiveness: How successfully European firms can buy and sell on a global market.
1United
Nations, “Kyoto Protocol to the United Nations Framework Convention on Climate Change” (United Nations, With multiple revisions 1998), http://unfccc.int/resource/docs/convkp/kpeng.pdf.
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Carbon pricing: The act of considering the cost required to outlay the negative externalities of producing a tonne of CO2.
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Over-allocation: Allocating more carbon allowances in a cap-and-trade system than required, resulting in a surplus of allowances, creating profits.
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Backloading: The now agreed process of withdrawing the newest carbon allocation from the ETS to provide a scarcity of allocations and drive up price.
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Carbon Leakage: A simple explanation would be the loss of Carbon producing industries to states which do not have as strict emissions policies, resulting in great CO2 emissions in the external country. (A more detailed explanation can be found in the links below)
Links: •
A YouTube video outlining how the ETS works: http://www.youtube.com/watch?v=5YCftIlYLyw
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Very simple explanation of Carbon Taxing and its benefits: http://science.howstuffworks.com/environmental/green-science/carbon-tax1.htm
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An explanation of Greenhouse Gases, in particular Carbon Dioxide: http://www.epa.gov/climatechange/ghgemissions/gases.html
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UN Framework Convention on Climate Change, including full text of Kyoto protocol: http://unfccc.int/kyoto_protocol/items/2830.php
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YouTube video produced by the 'yes' campaign for Australia's proposed Carbon Taxing, a one sided view, but explains basics: http://www.youtube.com/watch?v=weVU0-fEvjc
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Intergovernmental panel on climate-change's definition of carbon leaking: http://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch11s11-7-2.html
2. RELEVANCE AND EXPLANATION OF THE PROBLEM Europe has always been considered one of the more forward looking actors with regards to fighting climate change and greenhouse gas emissions. As a binding member of the Kyoto Protocol, the EU has targets of diminishing its emissions of greenhouses gasses to 20% below 1990 figures, and 20% of those 1990 figures by 20502. The EU Roadmap to a low-carbon economy
2 European
Commission, “What Is the EU Doing About Climate Change?,” January 2013, http://ec.europa.eu/clima/ policies/brief/eu/index_en.htm.
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by 2050 suggests that current policies will not be enough to reach these goals 3. The two major attempts to push for a decarbonised European economy have been through the EU Emissions Trading Scheme (ETS), which is a scheme which attempts to financially incentivise lower carbon emissions and alternative energy procurement, and Carbon Taxing, which is in place in many different forms in EU Member States. Whilst the ETS moves into its third and final stage4 it comes further under the spotlight with those arguing that it has developed into a wasteful and inefficient process. The changes agreed regarding the 'backloading' of the auction of further allocations, to 'use up' the surplus which already exists5 will make a difference, but many would argue that more needs to be done in terms of structural reform. Carbon Taxing is implemented across many different Member States and in many different ways, but there's no centralised EU attempt to tax either carbon fuels or energy usage. Attempts were made in the early 1990s, and again in 2010, to implement such a tax, but opposition industrial lobbyists meant it could go no further. Carbon tax levies a tax on the production, distribution or use of fuels based on how much carbon their combustions emits. Economists argue that Carbon Taxing is a more efficient and simple way of curbing carbon emissions, whilst others suggest that the ETS is theoretically the better system, hit by implementation issues in the current economic climate. It’s been argued that the two policies are exclusive; having one means that you can’t have the other. This isn’t necessarily the case, but one would need to consider the affects that a Carbon Tax would have on the price of allocations within the ETS, the long term economic outcomes and whether these higher costs would be passed on to the consumer. When considering the future of all environmental policy within the EU, one has to consider the economic effects, especially considering the economic reconstruction that the entire continent is facing. Although it would seem logical that the higher pricing put in place for a tonne of CO2 would be more environmentally beneficial, that may be counteracted by the damage it may cause to certain sectors or industries hit harder by that particular policy. The final consideration would be an overall rejection to both policies. The question does however ask about policies to regulate the Carbon market, so although the reinvestment of funds into incentivising renewable energy research is viable, it is tenuous as to its connection to the topic. As with all things, a balance will need to be struck.
3The
European Commission, A Roadmap for Moving to a Competitive Low Carbon Economy in 2050, Communication from the Commission to the Parliament, Council and various committees. (Brussels: The Commission, August 3, 2011), http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0112:FIN:EN:PDF. 4European Commission, “The EU Emissions Trading System: Factsheet” (European Commission, January 2013), http:// ec.europa.eu/clima/publications/docs/factsheet_ets_2013_en.pdf. 5European Union, “Structural Reform of the European Carbon Market,” May 2013, http://ec.europa.eu/clima/policies/ets/ reform/index_en.htm.
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Links and figures:
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Guardian article on attempts to continue the Emissions Trading Scheme: http://www.guardian.co.uk/environment/2013/apr/17/europe-climate-chief-vow-save-emissionstrading
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The Carbon Tax Centre; an unofficial hub of information on Carbon Taxing: http://www.carbontax.org/
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EU Commission report into attitudes towards climate change: http://ec.europa.eu/public_opinion/archives/ebs/ebs_300_full_en.pdf
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Report into how Airlines are profiting from changes to the ETS: http://www.transportenvironment.org/sites/te/files/publications/ CE_Delft_7931_Costs_and_Benefits_Stopping_Clock_Final.pdf
3. KEY QUESTIONS •
What are the major strengths and weaknesses of both the Emissions Trading Scheme and Carbon Taxing?
•
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Could both Carbon Taxing and the ETS work in tandem?
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If Carbon Taxing was to be implemented, what would be the most efficient and all-encompassing manner?
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How do they both affect the global competitiveness of international EU firms?
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Are other policies based on individual and personal carbon responsibilities a viable alternative?
Links: •
A report into the current problems with the EU ETS and potential ways to rectify them (Extremely important link to understand the weaknesses in the current system, please read and take notes.) http://viessmanncentre.ca/wp-content/uploads/2011/05/Weishaar.pdf
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Very simple explanation of Carbon Taxing and its benefits: http://science.howstuffworks.com/environmental/green-science/carbon-tax1.htm
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Detailed overview of the ETS and how it has changed moving into its third stage: http://www.tandfonline.com/doi/abs/10.1080/14693062.2006.9685586#.UcGjYPmceSo
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Study into the impacts of a Carbon Tax on the EU: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/ economic_studies/energy_tax_study.pdf
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Report into the impact of Emissions Trading on firm profits and market prices: http://www.civil.ist.utl.pt/~martinez/PDF/MobiCredit/Paper9.pdf
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Report on Economic implications of Carbon Taxing: http://www.erc.uct.ac.za/jesa/volume22/22-1jesa-Winklermarquard.pdf
4. KEY FACTS AND FIGURES •
In 2011 the EU's greenhouse gas emissions hit 18.4% below 1990 levels, in data submitted as part of the Kyoto Protocol6 .
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The ETS covers 31 Countries, over 11,000 heavy energy installations and approximately 45% of the EU's greenhouse gas emissions 7.
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It's estimated that there are approximately 1.7 billion tonnes of surplus allowances in the ETS.8
6 EU
Joint Research Centre, “EU Greenhouse Gas Emissions Lowest Since 1990,” n.d., http://ec.europa.eu/dgs/jrc/ index.cfm?id=1410&dt_code=NWS&obj_id=16950&ori=RSS. 7European Commission, “The EU Emissions Trading System: Factsheet.” 8Multiple, EU ETS at a Crossroads: Recalibrating an Oversupplied Market to Spur Investments and Innovation, January 2012, http://www.sandbag.org.uk/site_media/pdfs/reports/ EU_ETS_at_a_crossroads_NGO_briefing_01.2013_FINAL.pdf.
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A Carbon Tax of €10 per tonne of CO2 is thought to cause a 0.23% shrinkage in European GDP between now and 20309.
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Currently Carbon allocations are priced at 6.60 Euros per tonne, it's estimated they will need to be priced at 150 Euros a tonne for the EU to meet hits emission goals for 205010.
5. KEY ACTORS The key actors regarding change to European greenhouse gas emissions policies are most obviously the European Commission, and within that the Directorate General (DG) of the Environment (ENV). Cooperating with the DG for Environment are Parliamentary Committees on Industry, Research and Energy (ITRE), and the Environment, Public Health and Food Safety (ENVI). The European Environmental Agency (EEA) is also a major player in any environmental policies, as it provides impartial and up-to-date information for the Commission to base it suggested policy on. These will all be looking to improve current methods of regulating carbon pricing and lowering greenhouse gas emissions across the Union. National Governments would be imperative to the success of any emissions policies. Although all national caps on allocations under the ETS were approved by the Commission, national governments still had a major say on the allocation and the implementation of the ETS. Furthermore, any carbon tax levied on the European Market would again need the support of National Governments. Outside of EU Institutions one would find the Climate Group, an international NGO, leading the charge for a low-carbon economy. With offices across the globe, they aim to lower carbon emissions by producing new evidence and reports, working with major leaders and a coalition of companies, and inspiring a narrative of change 11, although their work in Europe has been somewhat limited. A major actor for sustainable change, but considering firms' needs to maintain global competitiveness is the World Business Council for Sustainable Development, who also have many aims outside that of de-carbonising the global economy. European Lobbyists have had a major interest in affecting climate change action in the past, with Oxfam naming both BusinessEurope and the Alliance for a Competitive European Industry as having brought European energy and climate change policy in line with their own12 . It is clear that 9Nikos
Kouvaritakis, et al., Impacts of Energy Taxation in the Enlarged European Union, Evaluation with GEM-E3 Europe (European Commission, November 7, 2005). 10 EurActiv, “Yvo de Boer: Put €150 Per Tonne Price on Carbon,” EurActiv, n.d., http://www.euractiv.com/climateenvironment/yvo-de-boer-put-150-tonne-price-news-516383. 11The Climategroup, “The Climategroup - About Us,” n.d., http://www.theclimategroup.org/who-we-are/about-us/. 12 Oxfam, Crying Wolf: Industry Lobbying and Climate Change in Europe (Oxfam International, July 2010), http:// www.oxfam.org/sites/www.oxfam.org/files/crying-wolf-eu-lobbying-climate-change-media-briefing-231110.pdf.
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European industry can have a huge impact on the successful legislative implementation of environmental policy, and whilst it's impossible to completely appease all third party interests, it is certainly something which will need to be considered for any progress to be made. Links: •
Institutional Chart: https://dl.dropboxusercontent.com/u/33205723/Institutional%20Charts/ITREInstitutionalChart.pdf
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Factsheet on the DG for Environment: http://ec.europa.eu/environment/pubs/pdf/factsheets/dg_environment.pdf
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The climategroup's website: http://www.theclimategroup.org
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World Business Council for Sustainable Development: http://www.wbcsd.org/Pages/Adm/GlobalSearch.aspx
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Oxfam report on lobbying efforts regarding climate change, with specific examples of the ETS: http://www.oxfam.org/sites/www.oxfam.org/files/crying-wolf-eu-lobbying-climate-change-mediabriefing-231110.pdf
6. KEY CONFLICTS The question is asking for a decision to be made regarding the EU's policy on environmental policy, more specifically our approach to curbing greenhouse gas emissions. Many would argue that this comes down to a choice between established policy methods such as the EU Emissions Trading Scheme and Carbon Taxing. It has been suggested that the Emissions Trading Scheme has been preferred so far due to the numerous political upsides it has for national governments13, despite the issues that there have been with over-allocation and windfall profits (to name but two). But proponents of the ETS laud its two-sided approach to energy innovation, and that now it's entering its final period (2012 -2020) we will begin to reap further benefits. Carbon Taxing is considered a simple and elegant solution to the problem; however issues arise regarding the implementation of the tax, the price of carbon and fears that it may disproportionately damage the welfare of those earning the least amongst us. It is, however, successfully implemented in a number of countries, and if implemented in a considered way may make an able replacement, or compliment for a reformed ETS. No matter what emissions curbing scheme, or schemes, are heralded as the best for the EU's future, it is vital that rather than just the environmental impact, one must also consider the economic impact that they would have, especially considering how it 13Samuel
Frankhauser, “A Practitioner’s Guide to a Low-carbon Economy: Lessons from the UK,” Climate Policy 13, no. 3 (October 12, 2012): 345 – 362, doi:http://www.tandfonline.com/doi/abs/10.1080/14693062.2013.749124#tabModule.
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may damage an EU firm's ability to be competitive in the global market, against firms which may not face the strictures of environmental legislation. It's worth remembering that whilst this question does need to consider the aims of environmental and low carbon sustainability, it is a question about the competing methods of how to regulate our internal carbon market, not a question about environmental policies in general. Links: •
Study into the impacts of a Carbon Tax on the EU: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/ economic_studies/energy_tax_study.pdf
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Report into the impact of Emissions Trading on firm profits and market prices: http://www.civil.ist.utl.pt/~martinez/PDF/MobiCredit/Paper9.pdf
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Report on the considerations of lowering the Carbon output of National Economies: http://www.tandfonline.com/doi/pdf/10.1080/14693062.2013.749124
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NGO reports into failings of ETS and how to restructure it in the future. (Extremely helpful to understand in simple terms how the ETS could be restructured): http://www.sandbag.org.uk/site_media/pdfs/reports/ EU_ETS_at_a_crossroads_NGO_briefing_01.2013_FINAL.pdf
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Download link for report on lessons from the ETS: http://www.climatestrategies.org/component/reports/category/61/204.html
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British report into the viability of Personal Carbon Trading: http://www.publications.parliament.uk/pa/cm200708/cmselect/cmenvaud/565/565.pdf
7. MEASURES ALREADY IN PLACE The most obvious measure already in place is that of the EU ETS, of which plenty of information is available through the links on this document. The Commission has suggested two major changes to the ETS, one being the Back-Loading of the phase three auctions, and the other is a major structural change to the way that the ETS is implemented14 . Carbon Taxes are in place across various different European States, but there is currently no centralised EU Carbon Tax, despite movement from the Commission in 2010. The Commission has outlined the major ways that it would like to update and modify environmental policy across the Union with its Roadmap to a lowcarbon Economy, wherein it states that National Governments should form their own roadmaps in line with the Commission's.
14European
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Union, “Structural Reform of the European Carbon Market.”
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Links:
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EU Roadmap to a low carbon economy by 2050: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0112:FIN:EN:PDF
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EU Website on restructuring the Carbon Market: http://ec.europa.eu/clima/policies/ets/reform/index_en.htm
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Page contains a group of links to the suggestions from the DG for Environment and Climate change (very helpful – especially for restructuring of the ETS): http://www.euractiv.com/climate-environment/yvo-de-boer-put-150-tonne-price-news-516383
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COMMITTEE ON ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY II (ENVI II)
Bearing the risks and reaping the benefits of genetically modified crops: what stance should Europe take considering both their potential to boost agricultural production and efficiency worldwide as well as the environmental, public health and socio-economic impact of their application? by Saki Shinoda (CH)
1. KEY TERMS •
Genetically modified organism (GMO) -- Defined in EU legislation as "organisms in which the genetic material (DNA) has been altered in a way that does not occur naturally by mating and/or natural recombination".1 The modification can result in new properties such as “a plant’s resistance to a disease or insect, increased crop productivity, or a plant’s tolerance of a herbicide.” 2
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Biotechnology -- Technology that uses biological systems and processes to make useful products. Interpreted in a narrow sense, agricultural biotechnology refers to new techniques such as genetic modification, DNA typing, cloning, or Marker-Assisted Breeding (MAB).
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Food security -- “When all people, at all times, have physical and economic access to sufficient safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life.” 3
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Food safety - Food is safe when it does not cause harm when consumed or prepared as intended. Hazards to food safety can be introduced at any point in the food chain, through production, processing and preparation.
1 European Commission Joint Research Centre Institute for Health and Consumer Protection, “The EU Legislation on
GMOs: An Overview”, March 2010, http://ihcp.jrc.ec.europa.eu/our_activities/gmo/eu-legislation-gmos 2 Website of the European Commission Directorate-General for Agriculture and Rural Development, http://ec.europa.eu/
agriculture/gmo/index_en.htm 3 From the Food and Agriculture Organisation (FAO) World Food Summit in 1996
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Agricultural productivity – The ratio of agricultural output to input; how efficiently agriculture uses resources, especially natural resources such as land, to produce yields.
Links: •
European Food Safety Authority summary webpage on GMO’s: http://www.efsa.europa.eu/en/topics/topic/gmo.htm
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World Health Organisation topic page on GM food: http://www.who.int/topics/food_genetically_modified/en/
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GMO Compass glossary: http://www.gmo-compass.org/eng/glossary/
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Food and Agriculture Organisation statement on biotechnology (from 2003): http://www.fao.org/biotech/fao-statement-on-biotechnology/en/
2. RELEVANCE AND EXPLANATION OF THE PROBLEM “Tackling the challenges of food security, economic development and energy security in a context of ongoing population growth will require a renewed and re-imagined focus on agricultural development.” Alexander Mueller, Food and Agriculture Organisation (FAO) Assistant Director-General for Natural Resources.4 The world population is growing, global incomes are rising, and diets are becoming more resourceintensive. While undernourishment and lack of access to food will remain significant challenges as they are today, the availability of food in the future is a global concern. According to the latest estimates by the Food and Agriculture Organisation of the United Nations (FAO), agricultural production in 2050 will have to increase 60% over levels in 2005/2007 to meet increased demand. Land, water and genetic resources5are being degraded at an alarmingly unsustainable rate, and additional arable land and water is scarce. Faming is currently and will be increasingly challenged by increased resource competition and increasingly volatile and extreme weather patterns due to climate change. Increased production will require greater productivity to produce more from 4“Innovative agriculture key to meeting future demand for water and energy” http://www.un.org/apps/news/story.asp?
NewsID=40423#.UchrVZyO6dk 5 Genetic resources refers to biodiversity, the variability of living organisms in an ecosystem, which is essential for
agricultural and food production.
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less land; however, growth in agricultural production is slowing. Intensified cropping and increasing yields will be necessary, especially in developing countries were productivity is relatively low, but this will come with environmental, socioeconomic and health costs, and require either the adoption of existing agricultural technology such as pesticides, or development of new solutions. In this global landscape, GM crops could greatly contribute to food security, food safety, and sustainable farming, but these benefits among others are counterbalanced by risks and potential negative impacts that have been widely publicised. To date, GM crops have already been produced for a range of purposes, including: pest or pesticide resistance for increased productivity and, arguably, safety (Bt insect-resistant6 or herbicide-resistant7 crops); increased shelf life for consumer convenience and reduced food waste (FLAVR SAVR tomato8); increased nutritional value (e.g. ‘bio-fortification’ and Golden Rice9); or for the production of industrial or pharmaceutical products (e.g. industrial use starch potato, pharming10). Links: •
FAO Working Paper “World agriculture towards 2030/2050”: http://www.fao.org/economic/esa/esag/esag-home/en/
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FAO Report “How to Feed the World in 2050” http://www.fao.org/fileadmin/templates/wsfs/docs/expert_paper/ How_to_Feed_the_World_in_2050.pdf
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Food Security explained by the World Health Organisation: http://www.who.int/trade/glossary/story028/en/
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Explanation of breeding aims from GMO Compass: http://www.gmo-compass.org/eng/agri_biotechnology/breeding_aims/
3. KEY QUESTIONS •
Considering the lack of academic consensus, to what extent can the potential risks of using GM technology in agriculture be justified by the benefits?
6 http://www.gmo-compass.org/eng/agri_biotechnology/breeding_aims/147.pest_resistant_crops.html 7http://www.gmo-compass.org/eng/agri_biotechnology/breeding_aims/146.herbicide_resistant_crops.html 8 http://ucanr.org/repository/CAO/landingpage.cfm?article=ca.v054n04p6&fulltext=yes 9 http://www.guardian.co.uk/environment/2013/feb/02/genetic-modification-breakthrough-golden-rice 10 http://www.gmo-compass.org/eng/agri_biotechnology/breeding_aims/150.pharming.html
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Considering the global implications of the EU’s stance, is current GMO policy sustainable and is there a need for reform?
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How can policy continuously reflect the evolving understanding of the impact of GMO’s, as well as rapid technological progress in the applications?
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Given the state of public opinion, the prolonged deadlock in the GMO debate, and the growing gap between the EU and the rest of the world, what can be done to move the EU forward?
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Considering all of the above, is current legislation adequate to support the stance the EU should take, and if not, what changes need to be made?
Links: •
Debate on GM crops in the New Internationalist: http://newint.org/sections/argument/2012/11/01/gm-crops-argument/
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Scientific American opinion editorial on GM crops in the future: http://www.scientificamerican.com/article.cfm?id=farming-the-future-gm-crops
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EurActiv Interview with European Commission Chief Scientific Advisor, Anne Glover: http://www.euractiv.com/innovation-enterprise/commission-science-supremo-endor-news-514072
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European Commissioner for Agriculture and Rural Development commenting on his personal opposition to GM crops: http://www.euractiv.com/cap/eu-farm-chief-gm-food-meets-qual-news-504488
4. KEY FACTS AND FIGURES •
As of August 2011 there were 39 GM products approved in the EU: 37 for import and 2 for cultivation. 11
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At the end of 2007, the number of products pending approval was 51. By August 2011, this number had increased to 72, consisting of 51 GM products for import/processing and 21 for cultivation.
11 EuropaBio report, “Approvals of GMO’s in the European Union”, http://www.europabio.org/sites/default/files/report/
approvals_of_gmos_in_eu_europabio_report.pdf
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Only six EU Member States have planted GM crops: Spain, the Czech Republic, Portugal, Romania, Poland and Slovakia, about 95,000 hectares in total in 2009, compared to 134 million hectares worldwide12.
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Six EU Member States have bans on GMOs using the ‘safeguard clause’13 : Austria, France, Germany, Greece, Hungary and Luxembourg. Italy has said that it will defy the EC and refuse to allow GM crop to be grown, but has not done so formally.
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The estimated cumulative economic benefit from GM crops in the period 1996-2011 worldwide totals US$98.2 billion, with US$49.6 billion in developing countries and US$48.6 billion in industrial countries.
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In the period 1996-2011, GM crop use is estimated to have reduced CO2 emissions by 23.1 billion kg, saved 108.7 million hectares of land, and reduced pesticide use by 473 million kg of active ingredient.
Links: •
International Service for the Acquisition of Agri-biotech Applications (ISAAA) report on the global status of commercialised GM crops: http://www.isaaa.org/resources/publications/briefs/44/executivesummary/default.asp
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Commission: EU agriculture – Statistical and economic information report 2012: http://ec.europa.eu/agriculture/statistics/agricultural/2012/index_en.htm
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GMO Compass country reports: http://www.gmo-compass.org/eng/news/country_reports/
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Allianz Top Ten Facts and Figures on GM crops compilation: http://knowledge.allianz.com/environment/food_water/?500/gm-crops-facts-and-figures
5. KEY ACTORS A 2010 Eurobarometer survey on biotechnology revealed an overall suspicion of GM foods among the European public (see Figure 1). The same survey revealed similar levels of scepticism against the EU and the biotechnology industry, with more respondents believing that environmental groups were doing a good job for society (see Figure 2). The strong negative perception of GM technology by the European public is thought to be the major contributor to the 12 Report to the European Commission Directorate-General for Research, accompanying the 2010 Eurobarometer
survey on biotechnology http://ec.europa.eu/public_opinion/archives/ebs/ebs_341_winds_en.pdf 13 Member States can temporarily restrict or prohibit the use and/or sale of a GM product on their territory. They need to
justify this decision, i.e. that the GMO in question is a risk to people’s health or the environment (Art. 23 Dir. 2001/18/EC). http://ec.europa.eu/food/plant/gmo/safeguards/index_en.htm
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politicisation of GM crop regulation, and consumer safety is considered the paramount concern in GM regulation. Consumers are represented at national and European level by consumer associations and networks 14.
Figure 1: Attitude towards genetically modified foods, Eurobarometer Special Survey 341, page 18, http://ec.europa.eu/public_opinion/archives/ebs/ebs_341_en.pdf
Figure 2: Attitude towards those responsible for biotechnology, Eurobarometer Special Survey 341, page 19, http://ec.europa.eu/public_opinion/archives/ebs/ebs_341_en.pdf
14
More information on consumer associations and networks relevant to EU policy: http://ec.europa.eu/consumers/ empowerment/cons_networks_en.htm
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Six large companies15 have developed the vast majority of commercial GM crops. It takes on average US$136 million and 13 years to develop a new GM trait16 , inevitably restricting access to this industry to large, multinational corporations and incentivising them to strictly enforce their intellectual property rights on their developed products to recoup their investment in research and development (R&D). The industry to date has mostly targeted farmers rather than end-consumers, and it has been suggested that the lack of public support for GMO’s is related to the lack of direct benefits for consumers which could justify the potential consumer risks. Due to the stringent requirements and protracted timelines of EU regulatory approval for GM crops, many companies have stopped developing products for European cultivation and only submit dossiers in the EU for feed and food use of imported GM crops approved and grown abroad. 17 Often overshadowed in the debate about GMO’s are the main users of the technology, the producers. Farmers are represented to European policy-makers by COPA-COGECA, a federative association of national farmer and farmer co-operative lobbies. GM crops are currently marketed with advantages for farmers. Additionally, the EU is highly dependent on imported animal feed, which often contain genetically-modified ingredients.18 The comparatively stringent regulation on GMO’s in Europe can be a competitive disadvantage, and the current proposals to allow Member States more flexibility in national legislation has been opposed by COPA-COGECA as potentially restricting the internal market. Farmer opinions tend to vary between countries: in some of the six countries with bans on GM cultivation, a majority of farmers indicated that they would not use GM crops even if they had the choice, while in others respondents reported they would19. Policy on GMO’s and GM crops involve many institutions beyond those directly involved in the GMO approvals process. At the European level, the key institution is the European Commission, under which the most significantly involved body is the Directorate-General on Health and Consumers (DG SANCO), though other Directorates-General are related through specific areas of GMO policy. The European Commission is responsible for proposing new legislation to be passed by the European Parliament (EP) and the Council of the European Union, where the
15 Monsanto, Dow, Syngenta, Bayer, BASF and Dupont 16 Syngenta report, “Our Industry 2013”, statistics from Philips McDougall (independent consultants), http://
www.syngenta.com/global/corporate/SiteCollectionDocuments/pdf/publications/our-industry-2013-syngenta.pdf 17 EurActiv, “Disgruntled GMO firms start pulling out of EU market”, http://www.euractiv.com/cap/disgruntled-gmo-firms-
start-pull-news-510378 18 GMO Compass, “Feeding the EU’s Livestock”, http://www.gmo-compass.org/eng/grocery_shopping/processed_foods/
153.animal_feed_genetic_engineering.html 19 AgBioForum, “Do European Union Farmers Reject Genetically Modified Maize?”, http://www.agbioforum.org/v15n3/
v15n3a02-skevas.htm
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relevant configuration consists of agriculture and fisheries ministers of Member States. The European Food Safety Authority (EFSA), and to a lesser extent the European Environmental Agency (EEA), both independent agencies of the European Union, play important consultative roles in both policy making and implementation of policy. Member States also have their own national regulatory bodies to evaluate risks, implement policies, and participate in the EU approval processes. These are referred to in legislation as competent authorities (CAs) as their set-up differs between Member States. Links: •
Institutional chart showing actors involved in the issue of GM crops in the EU: http://issuu.com/sakishinoda/docs/envi-ii_institutions_final
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Eurobarometer Special Survey Report on Biotechnology (pg. 13-32, 153): http://ec.europa.eu/public_opinion/archives/ebs/ebs_341_en.pdf
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Eurobarometer Special Survey Report 336 on Europeans, Agriculture and the Common Agricultural Policy (pg. 73) http://ec.europa.eu/public_opinion/archives/ebs/ebs_336_en.pdf
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European Association for Bioindustries (EuropaBio) “Voice of the European biotech industry” (lobby for biotechnology), including some excellent if inevitably biased factsheets and FAQs: http://www.europabio.org/agricultural
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Most recent legislative debate on allowing MS to ban cultivation of GM crops and speed up EU-level authorisation process, “Positions” section is very interesting: http://www.euractiv.com/cap/eu-gmo-proposals-draw-widespread-news-496263
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Friends of the Earth (environmental NGO) topic page on GMO’s: http://www.foeeurope.org/gmos
6. KEY CONFLICTS The controversy over the cultivation and consumption of GM crops is a debate over the acceptability of trade-offs and a conflict between costs and benefits. The main conflicts fall broadly into three categories: socioeconomic, environmental, and public health. GM crops have tremendous potential to boost agricultural productivity. With greater precision than conventional breeding, GM can create crops with resistance to pests, diseases, or environmental stressors such as frost, heat or drought, enabling higher yields. Current insecticideresistant varieties reduce production costs by decreasing the amount of pesticide that has to be used, a reduction that is still significant even when the higher cost of seed is taken into account. However, the industry is controlled by large corporations, with foreseeable consequences including limited farmer access to plant material and intellectual property
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rights slowing public research and expansion to developing countries. There is also the concern that GM crops benefit only industrial farmers with large monoculture farms in developed countries, and could have a negative impact on labour and employment. The current EU regime also has international implications beyond reduced competitiveness of EU producers, as the slow and slowing approval process for GM crops not just for cultivation but also import, processing, feed and food purposes leads to asynchronous approvals with an impact on trade20. It has been argued that GM technology is a crucial tool for sustainable agriculture. Insectresistant crops, already widely used worldwide, can minimise environmental damage from chemical pesticides. Other potential applications include engineering crops for land rehabilitation in saline or dry terrain, increasing shelf-life to reduce transport pollution and food waste, and biofuel production. Conversely, GM crops have associated risks such as irreversible gene escape, gene mutations, adverse effects on local birds, insects, and soil biota, and impact on biodiversity. As new technologies, there are also many unknowns and additional threats may emerge in the future. Opponents of GMO’s assess these risks as being unacceptable, while proponents argue that these are manageable. GM crops are often considered with suspicion by consumers and are considered ‘unsafe’, being associated with antibiotic resistance 21 and allergies 22. The strict regulation in the EU is quick to address consumer issues, aided by the precautionary principle 23, but consumer perception often lags behind. Less well-known are the potential benefits of GM crops for human health. One clear application is ‘pharming’, where plants are engineered to produce medical products, but even in food production GM crops have significant applications. Insect-resistant crops, because they are less vulnerable to damage from insects, are less susceptible to fungal diseases that produce toxins harmful to humans. ‘Bio-fortification’, where food crops are made more nutritious, has applications in development in the fight against hunger.
20 European Commission Directorate-General on Agriculture and Rural Development, “Trade implications of GMO’s”,
http://ec.europa.eu/agriculture/gmo/trade-implications/index_en.htm 21 GMO Compass, “Position of EFSA on Antibiotic Resistance Markers in GMO’s”, http://www.gmo-compass.org/eng/
safety/human_health/126.position_efsa_antibiotic_resistance_markers.html 22
GMO Compass, “Do GMOs Mean More Allergies?”, http://www.gmo-compass.org/eng/safety/human_health/ 192.gmos_mean_more_allergies.html 23 "When an activity raises threats of harm to the environment or human health, precautionary measures should be
taken even if some cause and effect relationships are not fully established scientifically." http://www.sehn.org/ Volume_3-1.html
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Links: •
FAO webpages weighing the arguments for and against GMO’s (from 2003, but largely still valid): http://www.fao.org/english/newsroom/focus/2003/gmo7.htm http://www.fao.org/english/newsroom/focus/2003/gmo8.htm
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Report on an international workshop on socio-economic impacts of GM crops by the European Commission Joint Research Centre and the FAO http://ftp.jrc.es/EURdoc/JRC69363.pdf
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Press release and links from EuropaBio (the industry lobby) on the impact of EU GMO regulation on trade and development http://www.europabio.org/press/how-do-eu-policies-biotech-crops-impact-trade-and-development
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Three GM crop controversies – ‘super weeds’, alleged increase in suicide rates by Indian farmers after Monsanto’s entry in the market, unapproved gene escape into Mexican corn -- examined by Nature journal http://www.nature.com/news/case-studies-a-hard-look-at-gm-crops-1.12907
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COPA-COGECA position papers on GMO‘s: http://www.copa-cogeca.be/Main.aspx?page=Papers&lang=en&id=361926
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ISAAA Pockets of Knowledge on various GMO topics: http://www.isaaa.org/resources/publications/pocketk/default.asp Environmental impacts: http://www.isaaa.org/resources/publications/pocketk/4/default.asp
7. MEASURES ALREADY IN PLACE Legislation to date on GM crops fall within the policy area of health and consumer protection, and covers deliberate release into the environment of GMO’s (e.g. for testing purposes), placing on the market of GMOs (e.g. for cultivation), placing on the market of GMO food and feed or food, unintentional transboundary movements of GMOs, exports of GMOs to third countries, and labelling and traceability requirements 24. The last major reform and additions to GMO policy was in 2003, with evaluations on existing legislation carried out in 2009-2011 finding that “the legislation's objectives for safety on health and environment and the creation of an internal market remain consistent with the needs of society, but are not being fully met as intended by the legislators”25. The evaluations identified key areas of improvement.
24 European Commission memo, “Questions and Answers on the Regulation of GMOs in the European Union”, http://
europa.eu/rapid/press-release_MEMO-07-117_en.htm?locale=en 25 Question and answers on the evaluation of the EU’s GMO legislation, October 2011, http://europa.eu/rapid/press-
release_MEMO-11-742_en.htm?locale=en
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Applications for the EU approval of a GM crop can be for cultivation, for feed and food use, or for both. Once a GM crop is approved at EU level, its use is possible anywhere in the EU, unless a Member State imposes stricter regulations on their territory, which is currently a possibility only under the safeguard clause. On numerous occasions, industrial operators or the European Commission have challenged Member State governments on their bans, arguing that they are unjustified26 ; the EU has also been involved in disputes over GMO’s at the World Trade Organisation (WTO). The evaluation of legislation identified that “the EU operates an approval system built on a science-based safety assessment for products that many in Europe, including several Member States governments, object to on socio-economic and ethical grounds. There is a general understanding amongst most Member States and other stakeholders that the use of national safeguard measures, while presented as having a scientific justification, is sometimes an expression of political objections.” Recent discussions at the EU level on GM crops have been about coexistence of GM and nonGM (conventional and organic) crops in European agriculture, the “adventitious presence” (AP) or “low level presence” (LLP) of GM ingredients, and allowing Member States to ban cultivation of GM crops in their territories for reasons other than a scientifically justified risk to health or environment. Links: •
Evaluation of legislation on GMO’s in the European Union, October 2011: http://ec.europa.eu/food/food/biotechnology/evaluation/index_en.htm http://europa.eu/rapid/press-release_MEMO-07-117_en.htm?locale=en
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Introduction to agriculture in the EU and the CAP: http://europa.eu/pol/agr/flipbook/en/files/agriculture.pdf
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Overview of existing EU legislation and international agreements on GMO’s as of March 2010 (pg. 3-19): http://ihcp.jrc.ec.europa.eu/our_activities/gmo/eu-legislation-gmos/at_multi_download/file? name=gmo_overview_report.pdf
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Step-by-step animation explanation of the approval process: http://www.gmo-compass.org/flash/popup.php?lang=eng
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EurActiv coverage of GMO-related topics since 2000: http://www.euractiv.com/tag/GMO
26 Opinion article analysing the case of the French ban on GMO cultivation, http://www.euractiv.com/health/political-
bans-gmos-eu-risks-sci-analysis-513694
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