CER Bulletin - Macron's Europe By Charles Grant - Centre for European Reform
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CER Bulletin
Issue 138 | June/July 2021
Macron’s Europe
By Charles Grant
Hurrah for the conference on the
future of Europe!
By Camino Mortera-Martinez
Can the EU set a global rulebook
for Big Tech?
By Zach Meyers
Macron’s Europe
by Charles Grant
Alongside Germany, France has often shaped the EU’s agenda. Recently,
French influence has grown, and if President Emmanuel Macron is
re-elected in April 2022 – likely, though not certain – he will be Europe’s
pre-eminent leader for several years.
One reason is that Macron is brimming with So, if Macron wins re-election, he will have
ideas on the future of Europe, which he more heft than the new German chancellor. The
pursues energetically. The Brussels institutional economic and political travails of Italy and Spain
machinery feeds off ideas. Macron’s predecessor, limit their influence, and in any case both quite
François Hollande, came up with fewer schemes often line up with France on EU policy. Poland is
and initiatives and was a quieter voice in the in trouble for not respecting the rule of law and so
European Council. cannot set the EU’s agenda.
A second reason is Brexit. The UK led the France will use its EU presidency in the first half of
EU’s economic liberals in resisting France’s 2022 to promote its ideas on Europe. Fortunately
penchant for protectionism and an active for Macron, many of the key people in Brussels
industrial policy. Now the Dutch sometimes are sympathetic to France. Ursula von der Leyen,
try to lead the Nordic, Baltic and other the Commission president, Charles Michel, the
pro-market countries, but with less authority European Council president, and Josep Borrell, the
than did the British. High Representative for foreign policy, owe their
jobs to Macron’s support. They are at the very least
A third reason is Chancellor Angela Merkel’s open to French thinking. In Frankfurt the president
impending retirement. Her track-record in of the European Central Bank, Christine Lagarde,
crafting compromises helped to make her happens to be French. So are some important
the European Council’s most respected leader. officials in Brussels, including Thierry Breton, the
Germany is already distracted by the campaign commissioner for the internal market, and Olivier
for September’s general election, after Guersent, the director-general for competition
which the formation of a new coalition policy. In the European Parliament, too – which
government may take two or three months. France has previously not taken very seriously
Then the new chancellor – whether Armin – the French have become more influential.
Laschet or Annalena Baerbock – will need Macron’s MEPs are the largest component of the
time to establish themselves as a substantial centrist Renew Europe formation, one of the three
figure in EU politics. groups that run the Parliament.
INFO@CER.EU | WWW.CER.EU
CER BULLETIN
ISSUE 138 | JUNE/JULY 2021
Those inside the French government argue platforms behave responsibly. The French doubt
– with some justice – that it is not their they can conclude the Digital Markets Act and
machinations and string-pulling that ensure Digital Services Act – which they strongly support
French influence, but rather the fact that the – during their presidency, but expect to make
world is changing. COVID-19 and the new good progress on both. They expect this pair to
emphasis on the need for resilient supply set global standards for the regulation of Big Tech.
chains have made more people sympathetic to
Macron’s idea of ‘strategic autonomy’. Broadly The French like Joe Biden’s plans for a minimum
defined, the term means that Europe develops rate of taxation for large companies. The US is
not only the capacity to pursue its own interests also working on an OECD-wide tax that would
in defence and security, but also safeguards apply to most of the world’s largest multinationals
its independence in areas like energy, trade, – whether digital giants or not – and replace
financial services and critical technologies. the unilateral taxes that several countries have
imposed on the revenues of digital giants. The
The French are happy that the Commission is French worry that this could still allow some digital
increasingly willing to stand up to China on firms to avoid proper taxation, and have not yet
economic issues. Thus the Commission has decided whether to support the Commission’s
produced a policy paper on the need for the EU own plans for an EU-wide digital levy – in addition
to gain better access to supplies of rare earths to whatever the OECD agrees. If they do support
(currently dominated by China). It has proposed the Commission they could annoy the US.
legislation that could exclude foreign firms (for
example, from China) that receive distortive The second priority is to show that the EU
subsidies from taking part in European public can make a difference to climate change by
procurement or from acquiring European firms. implementing a carbon border adjustment
The EU’s foreign investment screening regulation mechanism (CBAM). The French know that many
has been in operation since October 2020. The of Biden’s people oppose a CBAM, and that this
Commission has become more supportive of alone will cloud the views of some European
industrial policy, for example by encouraging leaders, including in Germany. But the French are
Franco-German efforts to foster an electric-vehicle not deterred.
battery industry. And its trade policy now places
greater emphasis on reciprocity and the ability to The French talk of creating a climate club that
act unilaterally against unfair practices. All these would include the OECD countries and others
steps reflect French priorities. that adopt effective emission-reduction policies.
Trade between the club’s members would avoid
Some of the Nordic and Baltic countries are carbon-related charges, but goods from countries
uncomfortable with these shifts – but many with laxer climate policies, like India, China and
member-states go along with a lot of French Russia, could face them. Apparently the OECD
ideas. German opinions are divided but some likes this plan, while US climate envoy John
key figures such as Peter Altmaier, the economy Kerry, though initially sceptical, is now willing to
minister, agree with the French on the need for consider it. But French officials insist that the EU
‘European champions’. The leaders of Germany’s should not wait for the OECD before pressing
Green party seem to like the idea of increasing ahead with a CBAM.
Europe’s strategic autonomy.
The EU will need to find about €15 billion a year
In foreign policy, too, French ideas often prevail. to repay the debt that is funding the RRF. Both
Take the European Peace Facility, a new fund a CBAM and a digital levy are candidates to
over which – because it is outside the EU budget provide the EU with fresh ‘own resources’, as is
– the European External Action Service and the Emissions Trading Scheme. The CBAM could
the member-states have more sway than the in theory be decided by qualified majority, as
Commission. France will probably ensure that a an environmental measure – but any matter
big chunk of the money goes to its priority of the concerning own resources would require
Sahel, for example to train and equip troops. unanimity.
French officials say the first three months of Macron will probably have to battle both
their EU presidency must produce ‘concrete American and European opponents to get his way
deliverables’, to help Macron to win re-election. on the CBAM and digital taxes. But, as one former
They talk of progress on European defence, adviser notes, “his chutzpah and self-confidence
making a success of the Recovery and Resilience are extraordinary”.
Facility (RRF) and starting to reform the EU’s fiscal
rules. But they mention two priorities in particular. Charles Grant
One is to show that the EU is making digital Director, CER @CER_Grant
Hurrah for the
conference on the
future of Europe!
by Camino Mortera-Martinez
If done right, the conference on the future of Europe can help bring
about meaningful reform in the EU – even if that means changing
the treaties.
At first sight, the conference on the future of The conference’s main strength should be as a
Europe, an EU-wide consultation lasting nearly platform for citizens who may otherwise remain
a year, may not seem the most straightforward unheard. A mostly digital conference may boost
way to generate change and boost democracy. the participation of digital natives and people
In fact, with three presidents and a complex generally used to interacting through a screen.
governing structure made up of over 400 But it will discriminate against less digitally able
people, the conference may not seem the most people, like the elderly, and against those living
straightforward way of doing anything at all. in rural or remote areas with shaky internet
Many think that is the point of the exercise. And connections. A predominantly digital format
yet, with a few tweaks, the conference could end also makes it hard to engage with local civil
up challenging everybody’s exceedingly low society groups who may raise issues that are
expectations – and become the first step towards important to many people, and who already
much needed reform in the Union. normally struggle to get a hearing in Brussels.
Aware of this bias, the Commission has hired a
The conference’s main, and most overlooked, private company to randomly select 108 citizens
problem is timing. It should have started at the who will represent the voice of ordinary people.
beginning of 2020 and finished in spring 2022. But that alone will not be enough to ensure the
But the COVID-19 pandemic intruded and the conference reaches out beyond urban, educated
start of the exercise had to be delayed. French elites – there is no explanation of what criteria
President Emmanuel Macron, who is behind the will be used to choose these people and what
idea, wants to have the whole thing wrapped up incentives will they have to participate.
by March 2022, in the middle of France’s rotating
EU presidency. Macron himself faces re-election One way to solve this problem would be to
at home in April and hopes that the conference make the conference a rolling exercise. The
can help to amplify some of his ideas on how to EU institutions could commit to hold citizen
make the EU work better. This means that the consultations on a regular basis and to filter
conference will be shorter, and also that and review proposals every two or three years.
©European it will mostly happen online because of This would not require expensive consultants,
Union COVID-19 restrictions. complicated bureaucracy or eminent experts.INFO@CER.EU | WWW.CER.EU
CER BULLETIN
ISSUE 138 | JUNE/JULY 2021
Possibly the most effective way to understand Union temporarily suspended its fiscal rules
what citizens really think is to have a coffee with and agreed on a recovery fund that includes
them. Of course, no EU leader could ever find the issuing of EU debt. The pandemic has also
the time to have coffee with over 500 million exposed a darker side: the crisis led to more
people. But they can travel to EU countries and border checks and temporary restrictions to
engage with local communities, as national the free movement of people in the EU; and
politicians do. A recent EU poll shows that most COVID-19 laid bare the EU’s dependency on
Europeans would be willing to participate in the other parts of the world for the procurement of
conference if given the chance. The EU should health equipment and medicines, at a time of
exploit this interest by using every possible increased international tensions.
means to connect with its citizens, from school
campaigns and expert panels to prime time TV While restrictions on travel will ease as the
and town hall meetings. This should be part of pandemic recedes, the wider debate on the
the Union’s DNA in the years to come. role of the EU in times of crisis will not. The
Commission is considering setting up a Health
A more obvious but less serious problem Union, to deal with public health emergencies
is the conference’s complicated governing better, for example, by jointly developing
structure. An executive board made up of vaccines. Such a union would take health
representatives of at least six EU institutions will competences away from member-states, which
decide how the conference will operate and would, in turn, require treaty change. If the
oversee its work with the help of a common recovery fund works, EU governments may be
secretariat. The conference plenary, consisting willing to make it permanent and to overhaul
of representatives of parliaments, citizens and the Union’s debt and deficit targets. This too,
the EU institutions, will meet every six months will require rewriting the treaties.
to discuss the ideas put forward by citizens.
The leaders of the Commission, the European Beyond the pandemic, the EU may want to
Council and the European Parliament will jointly rethink other issues that matter to citizens.
preside over the conference. If that sounds like According to EU polls, a large majority of
too many cooks, that’s because it is. But this Europeans want the EU to have a common
need not be an issue. The problem is not how foreign and security policy. But the EU often
many presidents the conference has, or even finds itself paralysed because one country can
who gets to lead it. The problem is whether veto common action. Changing this would
or not the governing structure, however require a unanimous decision of the European
abstruse it may be, will be able to spot the Council. Similarly, the conference could help
most important issues for citizens, and crucially, with another complex matter: how to run the
do something about them. Previous soul- 2024 European elections. While voter turnout
searching attempts, like former Commission in 2019 was the highest since 1994, the result
President Jean Claude Juncker’s white paper on satisfied no one – EU leaders ignored the
the future of Europe, failed because, ultimately, Parliament’s lead candidate system (whereby
nobody was responsible for addressing the the candidate of the party with the most seats
problems identified. should become Commission president) but
ended up with Ursula von der Leyen – no one’s
To be successful, or at least, credible, the first choice.
conference should consider all the available
means to act on citizens’ concerns, including, Changing the treaties – or even tweaking some
possibly, treaty change. Most EU governments rules – will not be easy. But if doing so would
do not want to risk changing the treaties, which make the EU more effective, then EU leaders
would require unanimity and referendums should not waver. After months of a trying
in several countries. That is a legitimate health and economic crisis, EU citizens could
concern, as EU leaders fret about mounting be forgiven for wondering what the value of
euroscepticism – and reopening the treaties the EU is. The conference should help to answer
may cause serious political crises in countries that question.
with EU-hostile governments. But leaders
should not shy away from treaty change.
The COVID-19 pandemic has shaken the
continent in previously unthinkable ways.
For the first time, the EU negotiated a deal
with vaccine makers on behalf of its member-
states. To weather the economic crisis, the Camino Mortera-Martinez
Senior research fellow, CER @CaminoMorteraCan the EU set a
global rulebook for
Big Tech?
by Zach Meyers
The EU is angling to set a rulebook for digital markets which could be
adopted around the world. To achieve this, its draft regulations need
improvement.
The EU has a renowned ability to leverage its both sides of US politics. Many Republicans
market size in order to influence regulatory were outraged by President Trump’s ban from
standards beyond its borders – the so-called Twitter and Facebook; many Democrats believe
Brussels effect. For example, the US is now closer that digital platforms have tolerated and even
than ever to adopting a comprehensive federal encouraged the dissemination of right-wing
privacy law, demonstrating the global influence misinformation. These concerns have contributed
of the EU’s General Data Protection Regulation. to a growing belief that Big Tech is too powerful
The EU now wants to set global standards for and unaccountable. In October 2020, the US
digital platforms such as Facebook and Google, House of Representatives’ antitrust subcommittee
to make the markets they operate in fairer and proposed the potential break-up of some firms.
more contestable. Digital markets may well be Both Republican and Democratic subcommittee
susceptible to the Brussels effect: many countries members agreed that tech giants had acted
are considering new regulations, and the large anti-competitively.
technology firms that operate globally do not
want regulatory fragmentation. But the Union’s In the meantime, competition authorities and
attempt to develop and export its digital rulebook policy-makers elsewhere have taken up the case
will require refinement if it is to succeed. against Big Tech. Regulators in Australia, Japan,
Mexico and India have conducted studies critical
Previous EU antitrust cases against American tech of large digital platforms. Chinese authorities have
giants and its proposals for regulation caused also begun taking action against the country’s
transatlantic tension. The Obama administration own large digital firms.
viewed large American tech firms as national
champions. President Trump was also critical of Despite the growing global consensus, few
the EU’s attempts to discipline them: “Your tax countries have yet formulated precise proposals
lady, she hates the US”, he said of competition to address the problem. President Biden has
commissioner Margrethe Vestager. However, appointed antitrust scholars renowned for their
the academic and political consensus in the US criticisms of Big Tech to his administration, but
has now shifted towards the European position. a detailed policy is yet to emerge. Competition
In 2019, an influential report by the US’s Stigler authorities around the world have launched
Centre confirmed many of the EU’s concerns. antitrust proceedings, but these will be case-
Since then, large technology firms have alienated specific. The UK has well-developed thinking, butINFO@CER.EU | WWW.CER.EU
CER BULLETIN
ISSUE 138 | JUNE/JULY 2021
not yet published draft legislation for its proposed one business model in Europe, and a different
regulatory framework. model in the rest of world.
The European Commission is therefore leading the The DMA is better than proposals – many,
world, having drafted a Digital Markets Act (DMA). ironically, emanating from the US – which call for
The DMA would set a rulebook for the largest tech large technology firms to be ‘broken up’. Under the
firms, requiring them to change their business DMA, the Commission could only break up a firm
models in various ways. The rules are intended in extreme cases, after repeated non-compliance.
to ensure fairness for businesses which rely on This reasonable approach should make the DMA
the largest tech firms, and also intend to give more acceptable to mainstream political thought
potential competitors more chance of success. in the US and elsewhere. Other parts of the DMA,
however, could cause conspicuous harm to
Several aspects of the DMA suggest the consumers and reduce competition. For example,
Commission wants to introduce it quickly, many consumers value Apple’s tight control over
ensuring that the law is implemented before other which apps run on iPhones, and consider that
jurisdictions have finalised their own proposals. this control delivers greater security; consumers
First, the Commission wants the DMA to come are free to choose a more ‘open’ ecosystem on
into force in 2022 – an ambitious timetable by EU Google’s Android phones. The DMA could force
standards. Second, the Commission has designed Apple to relinquish this control. That would
a streamlined process for identifying the digital remove an important competitive differentiator
platforms (referred to as ‘gatekeepers’) which will between Google and Apple’s businesses. Other
need to follow the new rulebook. The process countries might not accept a regulatory approach
relies on simple criteria and tries to avoid detailed which limited consumer choice in that way. Apple
analysis. Third, the DMA bypasses the normal steps would probably limit its compliance to Europe,
used in most models of economic regulation. For rather than voluntarily changing its business
example, the DMA imposes an initial set of rules model on a global scale. MEPs should therefore
on all gatekeepers, without careful analysis and add more flexibility to the DMA’s rules to avoid this.
consultation about which are appropriate for each
gatekeeper’s particular business. Some MEPs are also proposing to restrict the
DMA’s application to just a handful of gatekeepers.
The desire for speed is understandable: the This would be double-edged: such changes
Brussels effect could deliver important benefits would make the DMA more targeted, but also
for Europe. If the EU’s regulatory standards were risk ensuring that the only gatekeepers were
adopted in other countries, or voluntarily adopted American – an outcome which could reignite
by large technology firms on a global basis, EU transatlantic tensions, and therefore make other
digital businesses could expand globally more countries less willing to follow the EU. The EU
easily. They would know they could rely on the could more easily justify all gatekeepers being
same rights when dealing with large technology American if the DMA focused on one category of
firms outside the EU as they enjoy inside the EU. business, such as Facebook and Google’s digital
advertising; that would look more reasonable
The EU cannot simply act quickly and unilaterally, that regulating a larger number of firms which all
however, if it wants its rules to be adopted happen to be American. That would also bring the
elsewhere. The proposed rules must be DMA closer to the UK’s approach, which would
comprehensive within Europe – the EU must have other advantages: the UK has a significantly
dissuade member-states from ‘supplementing’ the larger number of successful digital businesses
DMA with their own national laws, as Germany has than the EU, so if new regulation delivers benefits
done. The rules need to produce visible benefits to digital businesses, those benefits might be
for European consumers or businesses – and avoid readily observable in the UK. Foreign – especially
any obvious negative consequences – so that American – lawmakers might be more easily
consumers and lawmakers elsewhere demand persuaded to copy the EU’s rulebook if the UK and
the same outcomes. Finally, the rules need to be EU were already aligned.
cost-effective – so that large technology firms (and
foreign law-makers) see sense in avoiding the costs The Commission has the opportunity to set a
of operating different business models in different global standard that works for Europe. But care,
regions. The EU has not always achieved these not just speed, is necessary to prepare a rulebook
objectives. For example, the Union’s requirement that other countries will follow.
that payment card companies separate different
parts of their businesses imposed large costs,
provided little benefit to competition and failed to Zach Meyers
gain global traction. Card companies now operate Research fellow, CER @Zach_CERINFO@CER.EU | WWW.CER.EU
CER BULLETIN
ISSUE 138 | JUNE/JULY 2021
CER in the press
The Guardian hinders their ability to of Brexit” assessment that our overseas territories, it’s
25th May use tax policy to attract UK trade was taking an hugely damaging,” he said.
The slump in UK-EU goods investment,” said Zach additional hit, on top of the
trade this year shows the Meyers of the CER. 10 per cent reduction in UK The New York Times
impact of Brexit, [tweets] exports relative to what they 17th April
John Springford of the CER: The National would have been since the “They [the German Green
“The ONS: trade in goods 13th May 2016 referendum. party] want a world without
with the EU down 23 per Luigi Scazzieri of the CER nuclear weapons, but
cent in the first quarter of says a Turkey-style deal was The Telegraph acknowledge that it will take
2021, compared to the first out of the question because 19th April time to get there – they’ll
quarter of 2018. That accords it would involve housing Sam Lowe of the CER, says first have to find other ways
with my estimate – Brexit migrants in Libya. “The way businesses are caught to reassure eastern and
has reduced total UK trade the deal with Turkey works is between tough regulations central European partners,”
by 11 per cent (both with EU that migrants and refugees and unmanageable costs. said Sophia Besch of the CER.
and the rest of the world).” who arrive in Greece and did “Lots of companies are still
not qualify for asylum were struggling because they The New Statesman
BBC News returned to Turkey,” he said. can’t get advice. They can’t 16th April
22nd May get customs agents to do it Against a backdrop of
“Imports into Northern Financial Times for them. They’re struggling pandemic, climate crisis
Ireland can only make use 9th May to provide the necessary and favourable shifts in the
of the UK's trade deals if “[The Madrid election] information, or they just party-political landscape,
the difference between the was an election fought in can’t take on the additional the circumstances have
applied UK tariff and the bars,” said Camino Mortera- cost when it comes to never been as ripe for it:
applied EU tariff is less than Martinez of the CER, who trading with Europe.” “This could be the chance
3 per cent of the value of thinks it would be hard for the Greens to take the
the goods,” said Sam Lowe of to replicate elsewhere in The Sunday Times chancellery,” asserts Christian
the CER. Spain, let alone in Europe. 18th April Odendahl of the CER.
“The stance Díaz Ayuso Another British error was
Public Finance Focus took completely destroyed allowing “Londongrad” to The Economist
20th May party lines. It was borderline be corrupted by its embrace 3rd April
“The OECD proposals will populist if not populist of new wealth from Russia, While in America gross fixed
probably not eliminate altogether.” heedless of the criminal capital formation grew by
tax competition between and KGB forces behind it, just under 1 per cent a year in
member-states, so some The Times according to Ian Bond of 2016-20, in Europe it shrank,
member-states will probably 28th April the CER. “We have allowed according to an analysis by
continue to hold out on John Springford of the a kleptocratic system to be Christian Odendahl and John
an EU-wide proposal that CER estimated in his “cost run through our real estate, Springford of the CER.
Recent events
19 May 12 May 5 May
Bruegel/CER/Elcano Royal Institute/ISPI Webinar on CER/AIG webinar on
T20 webinar on 'The future UK-EU relationship: An Irish 'Forging a middle way: How can the EU
'After COVID-19: A most wanted recovery' perspective' navigate the US-China digital divide?'
Speakers: Franco Bruni, Paul De Grauwe, Speaker: Thomas Byrne Speakers: Aynne Kokas,
Maria Demertzis, Elena Flores, Christian Caroline Meinhardt and Alexander Roth
Odendahl and André Sapir 10 May
CER/Clifford Chance webinar on
18 May 'Curbing Big Tech? How the EU should
Webinar on regulate gatekeepers'
'Securing Europe's economic recovery' Speakers: Isabelle de Silva, Andreas
Speaker: Céline Gauer Mundt, Pedro Rodrigues Duarte and
Andreas Schwab
For further information please visit
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