EU Preferences Research Articles

European fiscal reform preferences of parliamentarians in France, Germany and Italy

Using data from a unique survey of members of parliaments in France, Germany and Italy in 2018, we estimate the effects of three dimensions on EU and Euro Area fiscal reform preferences: nationality, political ideology and populism. We predict and confirm that a German populist party on the right is most opposed to a more developed European fiscal union, while a non-populist politician on the political left in France or Italy is most integrationist. Furthermore, the relative position of French and Italian policymakers is issue dependent and the left dimension outweighs the German dimension in two out of seven reform issues. Finally, populism intensifies the polarizing impact of national interests.

The Future of the European Fiscal Union: Survey Results from Members of National Parliaments in France, Italy and Germany

Using data from a unique survey of members of parliaments in France, Germany and Italy in 2018, we estimate the effects of three dimensions on EU and euro area fiscal reform preferences: nationality, political ideology, and populism. We predict and confirm that a German populist party on the right is most opposed to a more developed European fiscal union, while a non-populist politician on the political left in France or Italy is most integrationist. Furthermore, the relative position of French and Italian policymakers is issue dependent and the Left dimension outweighs the German dimension in two out of seven reform issues. Finally, populism intensifies the polarizing impact of national interests.

EU Trade and Regulation: Economic and Political Dynamics

The EU’s new generation of deep and comprehensive free trade agreements not only promote EU trade but also have a bearing on the shape of the European model and in consequence on the sustainability of the integration project. They reach much further than conventional free trade agreements. Their benefits hinge on the abolition of non-tariff and regulatory barriers and enter into areas that are member state competences. Much depends on the agreements in question and similarity of preferences between trading partners. It is up to the EU, ultimately for the sake of the sustainability of its political integration project, to explicitly contemplate not only trade impacts but impacts on the Union’s economic model instead of letting rather than being pushed further down the road by unfolding trade dynamics. Keywords: Comprehensive free trade agreements; EU regulation and preferences; subsidiarity.

Explaining High Unemployment in ECCU Countries

In recent years, unemployment rates in some ECCU countries have been among the highest globally. This paper evaluates several factors that could explain them, finding that high unit labor costs, in a context of strong unionization, are significantly associated with high structural unemployment, while the global crisis added a cyclical component. Our analysis also suggests that high-paid jobs in the public and tourism sectors, which have been growing considerably in recent decades, could have increased the reservation wage and lowered labor force participation. We find no indication that high structural unemployment is related to the phase out of EU preferences on bananas/sugar exports or to a skills mismatch. As expected, unemployment has been substantially, but only temporarily fueled by large natural disasters.

Brexit and the Future of UK Capitalism

Brexit and the Future of <scp>UK</scp> Capitalism

Explaining High Unemployment in ECCU Countries

In recent years, unemployment rates in some ECCU countries have been among the highest globally. This paper evaluates several factors that could explain them, finding that high unit labor costs, in a context of strong unionization, are significantly associated with high structural unemployment, while the global crisis added a cyclical component. Our analysis also suggests that high-paid jobs in the public and tourism sectors, which have been growing considerably in recent decades, could have increased the reservation wage and lowered labor force participation. We find no indication that high structural unemployment is related to the phase out of EU preferences on bananas/sugar exports or to a skills mismatch. As expected, unemployment has been substantially, but only temporarily fueled by large natural disasters.

Boundedly rational expected utility theory

We build a satisficing model of choice under risk which embeds Expected Utility Theory (EUT) into a boundedly rational deliberation process. The decision maker accumulates evidence for and against alternative options by repeatedly sampling from her underlying set of EU preferences until the evidence favouring one option satisfies her desired level of confidence. Despite its EUT core, the model produces patterns of behaviour that violate standard EUT axioms, while at the same time capturing systematic relationships between choice probabilities, response times and confidence judgments, which are beyond the scope of theories that do not take deliberation into account.

The Caucasus 3 Plus the Baltic 3 and Economic Cooperation with China

Abstract This study analyses China’s One Belt, One Road (OBOR) initiative for the Baltic and South Caucasus countries. Trade, Foreign Direct Investments and transit potential are taken as main factors for the cooperation. A clash of China and the West in pursuing economic leadership is taken into account. The study suggests a new, alternative route for the OBOR initiative through the Caucasus, which has all the needed infrastructure and readiness for being started. Moreover, Georgia is not new to the EU preferences, it has experience of GSP+ and now the unique achievement of free trade regimes with the EU and China is also taken as an alternative route and an advantage for the Caucasus and the Baltic States.

Brexit, the EU and its Investment Banker: Rethinking Equivalencee for the EU Capital Market

The EU/UK negotiations on Brexit are now imminent following the formal notification by Prime Minister May of the UK’s intention to leave the EU in the ‘Article 50 letter’ delivered to European Council President Tusk on 29 March 2017. The treatment of financial services will be a critical element of these negotiations. Prime Minister May had previously indicated in her 17 January 2017 speech on the UK’s negotiating objectives that the UK is to leave the single market and confirmed this position in the Article 50 letter. Under current EU financial law the UK will accordingly become a ‘third country’ on Brexit. UK financial firms and actors will lose the ability to ‘passport’ into the single market in financial services from the UK – unless passporting rights are preserved under any new EU/UK arrangement, an outcome which is highly unlikely. This paper considers the risks to the EU from its oft-described ‘investment banker’ becoming a third country and explores the regulatory remedies which may be available and the preferences which may shape these remedies. The paper adopts a legal-institutionalist perspective, which draws on the insights of comparative/international political economy, to examine the implications of the UK’s future status as a ‘third country’ for the EU capital market and for its current flagship Capital Markets Union (CMU) agenda. The extent to which EU regulation is transformative is contested in relation to the development of the EU capital market. But the EU regulatory regime which governs third country access to the EU capital market is likely to be a significant determinant of the strength of the EU’s capacity to absorb the loss of the UK from the single EU capital market and to contain related stability, liquidity, and efficiency risks. Drawing on international experience with access arrangements and on EU preferences and incentives, the paper considers the likely future of the current third country regime and how it might be re-configured so that third country access is based on a more secure footing.

Boundedly Rational Expected Utility Theory

We build a satisficing model of probabilistic choice under risk which embeds Expected Utility Theory (EUT) into a boundedly rational deliberation process. The decision maker accumulates evidence for and against alternative options by repeatedly sampling from her underlying set of EU preferences until the evidence favouring one option satisfies her desired level of confidence. Notwithstanding its EUT core, the model produces patterns of behaviour that violate standard axioms, while at the same time capturing the systematic relationship between choice probabilities, response times and confidence judgments, which is beyond the scope of theories that do not take deliberation into account.

Are EU trade preferences really effective? An impact evaluation assessment of the Southern Mediterranean Countries’ case

This work assesses the causal impact of the EU trade preferences granted to the Southern Mediterranean Countries (SMCs) in agriculture and fishery products over the period 2004–2014. It overcomes some of the weaknesses of previous assessments and presents several methodological improvements. Firstly, it relies on a continuous treatment – i.e. preferential margins – to capture the ‘average treatment effect’ of trade preferences, rather than on a binary treatment based on dummy variables. Secondly, it uses highly disaggregated data at sectoral level in order to evaluate properly the preferential treatment. Thirdly, it applies a non-parametric matching technique for continuous treatment – specifically, a generalized propensity score matching. The results show, on the one hand, that the impact of the EU preferences is positive and significant on SMCs trade and is better evaluated using impact evaluation techniques. On the other hand, they demonstrate that the relationship between preferences and trade flows is asymmetric and warn against the risk of providing too much of a good thing. These results raise important issues for policy-making. First, they demonstrate that raising the level of preferences is not the solution to foster the SMCs trade towards EU. Second, that the policy-makers should put more emphasis on complementary factors other than trade barriers.

Parties' Positions on European Integration: Issue Congruence, Ideology or Context?

This paper models the correlates of parties’ positions on the issue of European integration, asking why some parties are in favour of European integration, while others are less favourable or even opposed to it. The paper builds on existing work which has identified three sets of explanatory factors predicting parties’ positions on integration: the electorate, parties and party system characteristics. By employing multilevel modelling using data on over 220 parties in 14 Western EU member states for the years 1984 to 2006, the effects of party- and context-level predictors of parties’ positions on EU integration are assessed. The findings demonstrate that parties’ positions are primarily influenced by EU preferences of the general electorate, parties’ left–right ideological extremes and incumbency status. The results also show that the impact of party characteristics is moderated by the electoral context in which parties operate. Moreover, the interaction between both levels offers further insights as to the nature of these associations. Specifically, party size is a robust predictor of integration position only when accounting for the levels of party system's fractionalisation and polarisation. Additionally, parties oriented towards the centre of the ideological spectrum are even more likely to favour European integration within highly polarised systems.

Explaining Low Turnout in EP Elections: Voter’s Perceptions of the European Parliament

This paper utilizes data from the 2009 European Election Study to investigate how experience with parliamentary traditions at the national level and perceptions of the European Parliament at the European level interact to influence voting behavior in European elections. More specifically, I argue that individuals who are accustomed to strong parliaments and who view the EP as weak within the EU infrastructure will be more likely to abstain from EP elections or subordinate EU issues to national concerns. Much of the earlier research on EP elections uses contextual variables to demonstrate that governing parties suffer losses in EP elections, particularly in the middle of the election cycle; this research concludes that voters do not understand or care about EU issues and act according to national concerns in EP elections (Reif and Schmitt 1980, Marsh 1998, Hix and Marsh 2007). More recent studies rely on survey data to demonstrate that concerns over both national and EU level preferences influence voting behavior in EP elections (Hobolt, et al 2008, Clark and Rohrschneider 2009). This paper seeks to explain the discrepancy between the macro and micro-level research by identifying national-level conditions that might discourage voters from acting on EU preferences in EP elections.

Path Dependency in EU Enlargement: Macedonia’s Candidate Status from a Historical Institutionalist Perspective

This article argues that EU enlargement policy and actions within that field are guided by the logic of path dependency. By studying the decision to confer candidate status on Macedonia in 2005, which was granted despite important shortcomings regarding democracy and rule of law, we can reveal key aspects of the decision–making process regarding the enlargement policy. The Macedonian crisis in 2001 was instrumental in shaping EU enlargement policy as a foreign policy tool to promote peace and stability in the Western Balkans. The peace agreement that ended the conflict, in turn, became an important reference for measuring reform progress in Macedonia. The enlargement policy thus became locked in a path–dependent pattern, where the implementation of the peace agreement from 2001 has become very important. The strong commitments by the EU towards Macedonia are identified as a particularly strong mechanism influencing the path dependent pattern. Where other influential theories cannot explain contradictions between EU Member State voting and preferences, or ignorance of democratic shortcomings, historical institutionalism offers tools to make such theoretical inconsistencies intelligible.

Are EU Non-Reciprocal Trade Preferences Passé?

A substantial body of opinion argues that, at best, trade preferences for developing countries have had little or no trade stimulating effect. This paper argues that this view fails to distinguish between the effects of EU and US preferences and, in the case of EU preferences, can be rejected on the basis of recent empirical evidence. The implications of the Appellate Body ruling on EU special preferences and the Commission's proposals for the reform of the rules of origin are then examined. The paper concludes with an examination of proposals to increase the effectiveness of the GSP+.

The Utilisation of EU and US Trade Preferences for Developing Countries in the Agri-Food Sector

We calculate various indicators of the utilisation of preferences granted to developing countries by the EU and the US in the agricultural, food and fisheries sector. We conclude that only a very small proportion of the imports eligible to these preferences is actually exported outside a preferential regime. The rate of utilisation is therefore high. However, the flow of imports from poorest countries remains very limited in spite of rather generous tariff preferences, which leads to question the overall impact of the preferential agreements. In addition, preferential regimes overlap, and in such cases some regimes are systematically preferred to others. We use econometric estimates of the (latent) cost of using a given preference in order to explain why particular regimes are used. We focus on possible explanations, such as the cumulation rules (that restrict the use of materials originating from other countries), fixed administrative costs, and differences in the preferential margin.

Preference Erosion and Multilateral Trade Liberalization

Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. The authors examine the actual scope for preference erosion, including an econometric assessment of the actual utilization and the scope for erosion estimated by modeling full elimination of OECD tariffs, and hence full most-favored-nation liberalization-based preference erosion. Preferences are underutilized due to administrative burden-estimated to be at least 4 percent on average-reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern.

Preference Erosion and Multilateral Trade Liberalization

Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. We examine the actual scope for preference erosion, including an econometric assessment of the actual utilization, and also the scope for erosion estimated by modeling full elimination of OECD tariffs and hence full MFN liberalization-based preference erosion. Preferences are underutilized due to administrative burden — estimated to be at least 4% on average — reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern.

Dynamic Representation

This article asks two questions: first, why are party voters less favourable towards specific EU policies than party elites?; second, how does political representation of EU preferences actually work, is it an elite- or a mass-driven process? The data-sets of the European Election Studies 1979 and 1994 are analysed which involve both an elite and a mass survey component. In contrast to earlier research, it appears that political representation of EU preferences works rather well regarding the grand directions of policy making, and that party elites behave responsively in view of changing EU preferences among their voters.

Do non-expected utility choice patterns spring from hazy preferences? An experimental study of choice ‘errors’

Individuals often have only incompletely known preferences when choosing between pair-wise gambles. Particular presentations of the choice problem may then passively encourage the use of some choice method to clarify the preference. Different presentational displays can then lead to choice patterns predicted by one or other Generalised Expected Utility theory. When a preference is not or cannot be constructed, choices will be arbitrary. I run an experiment that uses three different presentational displays and incorporates a ‘strength of preference indicator’. The experiment investigates regret theory as an example of a Generalised Expected Utility theory. As preference strength is found to vary by display, regret effects, event-splitting effects and choice reversals are all found to be display dependent. It is suggested that the evidence is best explained by assuming incomplete EU preferences which are clarified by constructive heuristics, rather than some Generalised Expected Utility model coupled with an error term.