The Africa-EU partnership: effective or not?

In response to yesterday’s annual college-to-college meeting of the African Union Commission (AUC) and the European Commission, hold in Ethiopia, I thought it would be nice for once to reflect on their connection, as we nowadays are more focused on the Middle-East part of the world.

Establishments

Europe and Africa have close historical, cultural and geographical ties. Their relationship is based on the 2000 Cotonou Agreement with African, Caribbean and Pacific (ACP) countries. It was established in 1975 at the Lomé Convention. The main financial instrument for development cooperation in ACP countries is the European Development Fund (EDF) which was created by the Treaty of Rome (European Union External Action, 2016). Last year, there was a public consultation held by the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy, to discuss key questions pertaining to the partnership and relations with the ACP group after 2020, as the current one lasts until 2020.

The Euro-Mediterranean Partnership, was established in 1995 and its main objective is to create a deep Euro-Mediterranean Free Trade Area which aims at removing barriers to trade and investment between both the EU and Southern Mediterranean countries (with the exception of Syria and Libya). Together the region represents 8,6% of total EU external trade.

The Joint Africa-EU Strategy, is another essential fundament of their partnership. This strategy was adopted, as the first and only intercontinental partnership strategy of the EU, at the EU-Africa Summit of Lisbon in 2007 and reaffirmed at the Summit of 2014. They want to strive together towards 2 unions and 1 vision, as a partnership between equals, and align common issues in order to solve them as soon as possible.

Financing the Partnership

The EU and its Member States together remain the biggest aid donor of Official Development Assistance (ODA) to Africa worldwide. It also remains Africa’s top trading partner even if Africa is expanding its economic relations with other continents. Around 20 percent of all foreign direct investment in Africa comes from EU firms. Funds are to be provided not only through the EU budget, but also by EU Member States and where possible, through AU Member States and African instruments and institutions like the African Development Bank. The Africa-EU partnership is currently governed by Roadmap 2014-2017. The bond between the two continents has been very effective thus far, it has delivered results in various areas of cooperation, including peace and security, democratic governance, infrastructure, and Millennium Development Goals (MDG’s). For example, in infrastructure many projects have received financial support of the EU, for a total value of €6.5 billion and it was estimated that the return on investment was 12 times what had initially been invested. The European Union contributes and supports more than 80% of the African Union Commission programme budget. Since 2013, the European Commission alone spend approximately €1.7 billion to the African Union. The Pan-African Programme (Panaf) is an initiative of the EU and operates as a funding instrument in order to help integrate African countries and regions better. The Panaf amounts to €845 million for the period of 2014-2020. ‘’The Programme allows to better addressing the needs of the Africa-EU partnership, focussing on trans-regional and continental challenges in Africa as well as supporting activities of common interest at the global level (The Africa-EU Partnership, 2016).’’ The EU has concluded several successful negotiations for Economic Partnership Agreements (EPAs), in particular with West and Southern Africa in 2014 and with the East African Community in 2015.

All this promises to be very well for the economic prosperity of Africa, but how about the current migration crisis of refugees from Africa who flow daily into Europe. Is there still enough money to give to the least developed countries (LDCs), such as the African continent? More and more European ‘’donor’’ countries are cutting aid from their national foreign aid budget which was reserved for the LDCs, this is especially dangerous as the global goals for sustainable development are set to meet less poverty in those areas by 2030. As Adrian Lovett, Europe executive director for the ONE campaign, said: ‘’As more aid is diverted to offer vital help to the increasing numbers of refugees arriving in richer countries, people in desperately poor nations are paying the price.’’   

In the graph above, you can see the percentage of aid spent on in-country refugees. It dates from 2013, but Sweden is still the country which spends most of its aid budget on refugees. I think it is understandable that Italy and Greece spend almost the entire aid budget on refugees, as they have had austerity measures forced upon them due to amongst other things; the Eurozone crisis. However, I believe that other European countries need to deal at first with refugee’s cause of having a lack of opportunity to have a decent life in their own countries, and not treat solely the symptoms. In other words, invest more in LDCs instead of in refugee camps as Europe no longer can bear the burden. In previous years, money supply disappeared due to political corruption that’s one of the reasons why EU member states rather choose for using the oversees aid budget on the refugee crisis in their own country. Many of the migrants are not worst-off in their home countries, which became clear in a Frontex report. Besides, the vice-president of the European Commission, Frans Timmermans, said earlier that around 60% of the so-called refugees are actually Africans, including Moroccans and Tunisians, who are leaving their own countries for ‘’economic reasons’’ and not for emergency reasons such as war or poverty. Many people are convinced that it is just a question of logical reasoning when it comes to relocating aid money, as people flee from North-Africa it is natural that the aid money is following them to the EU migration crisis.

To conclude,

The entire development assistance system is fragile at a time when demands for aid are increasing. Of course, all these cutbacks in financial foreign aid put a certain pressure on the Africa-EU partnership and these matters were addressed once more at yesterday’s meeting.

 Please leave your comment in the section below.

-Maxime Helgers

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Turn your attention to Russian funded right-wing parties

The stability of Europe is threatened not only by regional disputes such as a civil war in Syria: The looming potential Brexit, a rapid increase of refugees, an unsolved financial problem, but also Russian expansionism as well as a rise of nationalism which is taking the center stage of politics. People tend to focus on European areas when they think about the current financial situation in Europe, however, they should turn their eyes more to Russia.

The nationalism currently overwhelming Europe has its roots in funding from Russia towards the extreme right-wing parties in each country. In the United Kingdom, the government refuses to make a definite promise of receiving refugees because of popularity of United Kingdom Independence Party who supports Putin (the President of Russia). Although Syrian government troops are invading to retake the city Aleppo which anti-government forces controls, Russia supports government troops through bombardments. It makes the peace process more difficult.

Such Russian action did make a slight contribution to the stock market. Many stock markets in the world plunged in the beginning of 2016, but almost improved later on. Russian and Turkish stock markets raised their stock prices to double figures since the beginning of 2016, and currency and bonds are rallying. However, European stock is falling behind the stocks of other countries. Consider the Stoxx 600 index (which consists of 600 main enterprises in Europe), the rise and fall rate since the beginning of 2016 is still down 6.7%. Especially European bank stocks were heavily damaged. Its drop rate reached 19.5%. The European economy is not in very bad condition. ECB (European Central Bank) announced a quantitative easing policy that ended up working better than expected by financial market in March 2016. On the other hand, even though the headwind still blows from overseas, it is getting weak.

However, I think that there are risks remaining inside Europe. Its refugee crisis response made investors realise the awkwardness of policy making. The pending British referendum could be a further risk. There are still fears that the Greek problem comes to the surface again. When it comes to the euro zone, the acceleration of economic growth is still a desire, not reality. S&P (Standard & Poor’s, a rating firm headquartered in the United States) revised its expectation of the growth of the eurozone by 1.8% to 1.5%. This means that Europe is still waiting for continuous growth. Europe should not wait for so long because it can make investors decrease their eagerness about investment. Furthermore Europe also should make Russia stop funding to extreme right-wing parties.

Anzu Imamura

How sustainable energy evolved from being a moral issue to an economic one

I remember the day An Inconvenient Truth came out on DVD. I was home, still oblivious to many things, and me and my parents decided to go for a documentary. I always had a soft spot for documentaries, but I heard about this particular one often on the news and reviews. An hour and a half later we were not quite the same, the way the movie was put together and the way it communicated the message was masterful, and that message weighed heavily on my personal morals. As it turns out, I was not alone as showed by this study by Nielsen:

“Sixty-six percent of viewers who claimed to have seen An Inconvenient Truth said the film had “changed their mind” about global warming and eighty-nine percent said watching the movie made them more aware of the problem. More importantly, three out of four (74%) viewers said they changed some of their habits as a result of seeing the film.”

To me, although global warming had been an existing issue for a long time, this documentary brought it to the main podium. Our lives could not continue on the current path, and we needed to change habits drastically.

But it felt hard to do. Furthermore what does it change if I become more environmentally friendly? If others don’t do it, why should I? Businesses would just continue doing what they do best, which is business as usual.”. Deep down we would know it, feel it weighing on our sense of morality, but the scale of the challenges was such that it felt like being just a speck of dust on a beach. The USA didn‘t even ratify Kyoto, twice.

But something did change over the years. Awareness and attitudes changed, leading to a change in behavior. I like to think that change took place in Germany. In fact as early as in 1991, Germany passed the Erneuerbare Energien Gesetz, or the Renewable Energy Act, the goals of which are pretty self-explanatory. Over the years the act got constantly revised and more complex to keep the technicalities and legislation up to date, but it helped Germany set the course to become a solar-energy powerhouse on an international scale, despite the fact that Germany is not known for being a sunny country. In June 2014, solar energy managed for the first time to provide 50% of German energy demand, which is massive, not to mention way ahead of other countries. How massive exactly? Roughly 23 Gigawatts, or roughly 19 times the amount needed for Marty McFly and Doc to travel back in time.

Great Scott!

 
But what is really interesting is that although initiatives can be traced early in Europe, the reduction in costs and the explosion of solar panels ending up on the rooftops of Germans and other areas may never have been viable if it weren’t for China. China! The world’s biggest polluter! They are helping the world fuel the energy of tomorrow by driving down the global manufacturing costs with its army of factories and heavy subsidies. And the result of that is that today, solar energy now costs cheaper than fossil fuels, although the Chinese were doing so well one might say they overdid it, outcompeting western companies to bankruptcy, sadly.

Moreover although investors were timid in renewables, like children learning to swim in the water, this also changed with big names like Warren Buffet and Elon Musk warring over control of the market. When these guys are investing in a particular market, you know they’re onto something.

Solar farms in Dubai can offer less than 6 US cents per KiloWatts/Hour, and are currently expanding to bring it even lower. Assuming the price for solar is 5.84 cents per KW/h, it would cost 706,64 US dollars to keep the energy needed for the time traveling DeLorean over the course of an hour, or roughly 2 US dollars per second. Who here fancies a trip?

Time-travel dreams aside, it is clear that renewable energy is no longer a moral incentive, but an economic one, Being eco-friendly has now become part of economic policy for businesses and governments alike. For the European Union, there is definitely a huge stake in energy efficiency. According to the Commission the EU imports more than half of its energy, and because there is no common structure on energy policy between countries, the bill ends up being higher too. The EU outlined its goals as early as 2008 in its integrated energy and climate change strategy, aiming for a 20% increase in energy coming from renewables, as well as for a 20% reduction of consumption and greenhouse emissions for 2020. While it provided a framework for promoting the shift to renewables, it was also the starting point of its vision for an “integrated energy”, and later an energy union. In order to boost energy efficiency and revitalize its energy market, the EU introduced many strategies and goals such as its 2030 energy strategy.

If you take a look at this map:

What you see here is one neat, beautiful map underlining the potential solar energy can have over Europe. See how most of the countries who happen to have the biggest potential are those who were in the deepest of economic troubles during the Crisis: Portugal, Spain, Italy, Greece… Even France gets a chocolate chunk of the cookie. These are areas suffering from high unemployment, so investing in these areas where there is such a high potential can help revive their economies and close the gap between north and south. Seeing Germany’s performance, imagine how well southern countries could do, not to mention eastern countries like Bulgaria and Romania. The money-saving potential is just immense! Not to mention that another advantage is that the price for renewables is more stable than shifting oil prices, or gas, because there is no finite resource. Solar will last as long as the Sun exists, wind or geothermal will continue to supply energy as long as planet Earth exists. Although some days there may be less wind or less sun than others, with data analysis, statistics and forecasts we can easily predict average output, it’s easier to figure out than consumer behavior through CRM.

Lastly, making the EU more energy independent has also a political incentive: Russia. Despite recent events from previous years the EU still currently imports most of its energy from Russia, giving them political leverage. Switching to renewables as fast as possible might perhaps be more effective than applying more sanctions.
For anyone who might be interested to know more, I wholeheartedly reccomend this abridged documentary made by Tegenlicht. Despite the fact that some parts may be in Dutch, English speakers shouldn’t be worried.

-Max.

The Economic Impact of European Border Controls

In this blog the following problem will be broad addressed and examined, refugee crisis causes a reintroduction of checkpoints. I have chosen this topic to be up for discussion because I was wondering what the actual economic consequences were of having so much security checks present nowadays at the highways.

In 1985, the European Union was able to establish a so-called Schengen Agreement which entails that from then on European citizens of various countries could travel without encountering any fuss of long traffic hours due to the disappearance of border controls at the EU’s internal borders. The border-free Schengen Area guarantees free movement to more than 400 million EU citizens, as well as to many non-EU nationals, tourists, or other legal persons present on the EU territory. It also entitles every EU citizen to travel, work and live in any EU country without special formalities. I am proud to be a EU citizen and to have this luxury of free movement throughout Europe. The Schengen zone is active for many years now and everyday people are passing through and crossing borders for all kinds of purposes. In Freilassing, Germany, the traffic along one of Europe’s most busy expressways backs up many miles due to a newly installed checkpoint. Germany introduced limited, temporary border checks in November. For now, they are set to expire in May.

It is just a question of using your common sense when thinking about the consequences of the reintroduction of border checks, it will obviously generate economic costs. Police at the border checking your vehicles, with lines of trucks waiting to be investigated before they are allowed across, causes friction in goods transport. Wares arrive late at their destinations, companies have to maintain bigger inventories in warehouses to make sure they don’t run out of stock; commuters take longer to get to work across borders; tourists decide not to go for a day-trip across the border. Currently, I am living in a small town in the south of the Netherlands. Normally, I should have taken my car and pass through a part of Belgium in order to get to the University in Maastricht as it is the fastest way possible but my routine travel plans have changed due to the risk of being stuck in traffic for hours. In general, a lot of Belgians and Germans come and visit the weekly Friday’s market of Maastricht. Last week I recognized a huge difference between before and after the implementation of border checks. The market was far less crowded than I was used to in the past.

In a study, the French government’s official think-tank indicated that a permanent return to frontier controls in Europe would cost countries about 110 billion euros over the next decade. France Stratégie, investigated the matter and concluded that the drop in cross-border tourism and trade brought on by a permanent end of the free-travel area would cost Europe 0.8 percent of economic output over 10 years. “Over the long term, the generalisation of permanent border controls would be equivalent to a 3 percent tax on trade between countries in the Schengen area, which would lead to a structural decline in trade of 10 to 20 percent,” they wrote. Half of the cost would be due to a drop in tourist visits, 38 percent because of the impact on cross-border workers and 12 percent to the additional cost on freight transport, they said.

Six members of the Schengen area including Germany have reinstated temporary border checks as hundreds of thousands of migrants try to reach at an unstoppable pace the most wealthy nations. However, the introduction of border controls isn’t only implemented because of the massive influx of refugees but also in order to combat terrorism. After the Wednesday’s attacks in Brussels, countries like the Netherlands increased even more airport and border security. Others like Tory peer (who is campaigning for Britain to quit the EU) argue that Schengen is like ‘’hanging a sign welcoming terrorists to Europe.’’ Since there is no end in sight for the current migrant problem in Europe, some national governments are fighting to increase the number of checkpoints and to extend their use for up to two years. This shift from no border control to many border checks is putting a strain on Europe not only politically, but also in terms of social cooperation. President of the European Commission, Jean-Claude Juncker, warned the European Parliament that “one after another, we close the borders, and once they are all closed, we will see that the economic cost is huge.” The most central question is; will Schengen remain or disappear for good? It all depends on the ability of Europe to afford these border controls.

We don’t know exactly how much re-establishment of border controls will cost, we can only make some estimations. Presumably that’s why the France Stratégie report ends with the boilerplate warning that border controls present a “risk to the future of the European project.’’ EU Commission President Jean-Claude Juncker made the same point in more vivid language a couple of months ago: “Whoever kills Schengen will effectively have carried the single market to its grave.”

 

If you would like to follow a controversial discussion about this topic, than it is very interesting for you to watch the video below:

 

 

-Maxime Helgers

 

The Euro crisis of Greece- through the eyes of an Eurosceptic Englishman

Greece has been for many years now experiencing a severe debt crisis. Is it fair to blame it solely on the euro? Do the Greek inhabitants prefer to go back to the dragma currency? All these questions will be answered in this article linked to the BBC documentary ‘’The Great Euro Crisis” wherein the British presenter Michael Portillo portrays Greece’s current problems as a cause of joining the Euro.

The Maastricht Treaty was the beginning of a successful or valuable economic prospect especially for Greece. Twelve countries, including Greece, signed this treaty which led to the creation of the single European currency. Unfortunately, it took only 10 years after joining the Euro that Greece is faced with bankruptcy. There had to come an end to lending money at a low interest rate and spending money without limitations. Why did the European Union in the first place introduce the euro, single currency. Well, it was supposed to help weak economies like Greece in order to catch up with richer Eurozone partners. In the past when the dragma currency was still used Greece encountered dramatically high interest rates.

After joining the Euro, Greece became very wealthy it had a lot of money to spend but it was actually not owned by Greece so they had to pay it back over time. Greece became uncompetitive and could not live up to the European level of expectations, Germany as an economic wealthy and stable country is too dominant present. In the first few years people’s living standards increased enormously and they started to import luxury goods excessively like expensive cars, yachts, villas etc. However, not only the citizens of Greece increased their spending behaviour but also the government of Greece did. Whole Greece was impressed by the availability of cheap credit. The government purchased and build new tramlines, railways and trains. Many of the expended infrastructure materials had to be imported so Greece needed to borrow even more money to pay of course the German companies. The 2004, Olympic games construction was the biggest expenditure, 12 billion euros. Greece has weak institutions and a corrupt political system. It is hard for them to have a good working tax collecting system which means that it was possible for citizens to avoid paying taxes. Severe austerity measures are currently implied on Greece.

All the persons interviewed in the documentary believe and are convinced that the Euro has done good things for their country highlighting the sudden wealth and prosperity, they even won’t go back to the Dragma (original currency of Greece). The Dragma is the past and the Euro is the future. Despite the convictions and expressions of the British presenter and Eurosceptic, citizens maintain their positive point of view towards the Euro. The people blame the corrupt government and the weak institutions. Citizens of Greece don’t feel that it is the fault of the Euro but instead that the government made the wrong decisions. Even though they now need to trade their expensive Porsche cayenne for a small smart Mercedes car, remarkably, they stay with the same imported country of Germany for their choice of vehicles.

The Greek inhabitants do feel now the consequences of severe austerity measures and they keep protesting and demonstrate against these inhumane government actions. ‘’The doctors of the world’’ is an organisation which is normally active in Africa and nowadays it is settled and started a small local hospital in Greece in order to provide medical aid to citizens who can’t afford the hospital bills anymore. We need to keep in mind the seriousness of this problem and the European Union together with all participating countries needs to search for a possible solution. However, the majority of Germans is against the idea of giving them financial support because they feel unfairness towards the equal level of hard working for your own money concept.

In my own opinion, I don’t think the European Union will come up fast with an effective solution. It is such a difficult problem that they will be oriented on the long-term.

The remaining question is when will this euro crisis finally be over?

Below you can find a graph about the comparison between Greece and Eurozone average level of debt.

 

Below it is also possible to watch the whole documentary:

 

                                                                                -Maxime Helgers

How a Brexit affects the refugee problem

“If the United Kingdom really leaves the EU, the British economy will meet a serious economic shock and about a million employees might lose their jobs.”

CBI (Confederation of British Industry) published in a report issued on on 20^th March 2016.

The UK will implement a referendum that asks about whether the country stays within the EU or not on June 23^rd 2016. According to the current survey of public opinion, about 20% of the British people still haven’t decided their opinion yet. CBI showed that the UK suffers £100 billion in financial losses by 2020 if the Brexit was realized. This amount corresponds to 5% of GDP (Gross Domestic Product) for the UK.

Speaking about problems for the EU, there’s is not only Brexit, but also the problem about refugees. These problems are related to each other. European countries are confronted with the solution for increasing refugees. As the political deterioration of Syria and Iraq continues, the number of refugees who head to the European Continent to seek peace reached a million (UNHCR: Office of the United Nations High Commissioner for Refugees) only in 2015. The number is still increasing and already became more than 130,000 people (at the beginning of March, 2016). Alarmingly, the more refugees entered the European countries, the more troubles occurred between them and the local people. This fact leads to stronger support for far right-wingers who declare themselves as “anti-refugees” or “anti-EU.”

France is one of the countries which has to deal with refugee problems. In Calais, refugees coming from Afghanistan and some other countries started to come and cross the English Channel to go to the UK since 2000. The lax camp was called “jungle” and oppressed local people’s life. Emmanuel Macron, the Minister of Economy in France, placed a remark, saying that “If the UK leaves the EU, all refugees in Calais will leave.” (in the interview with Financial Times on 3th March, 2016). This seems like a warning that France stops border administration in Calais and make refugees flow out to the UK if the UK leaves the EU. David Cameron, the Prime Minister of the UK, stated the same purpose and is appealing to the British people to stays behind the EU. In the end, refugees are holding leverage in the upcoming UK referendum.

The UK is not joining both the Schengen Agreement and the euro zone because there are many EU-skeptics. Furthermore, the UK may put itself in isolation on a political, economic and military scale. Since this refugee problem is also a humane problem, it seems very difficult for the EU to ignore or drive them off irresponsibly.

Do you think that the UK should stay behind the EU? Or should they leave it? How should the UK deal with this problem?

 

<References>

http://www.telegraph.co.uk/business/2016/03/20/brexit-could-cause-100bn-short-term-shock-to-the-economy-warns-t/

http://www.theguardian.com/world/2016/mar/11/france-uk-border-guards-help-deter-calais-refugees-asylum-rules

http://jbpress.ismedia.jp/articles/-/46371

Anzu Imamura

The implications of a EU-Japan trade agreement

“Mr.Juncker, could you give more insight into the thought process that went behind the negotiations?
-Sony VR headsets and mochi rice cakes for everyone!!”

Globalism seems to be happening whether we like it or not, economies converge with each other and seem to tie each other evermore economically as Humans from planet Earth try to get the best out of every country around the world. Consequently, the EU wants Japan to open its market more, especially in Non-Trade Barrier areas like government procurement and more specifically within that procurement, Japan’s urban transports and railways markets (In other words, the EU wants Japan to make it easier for the EU to acquire goods and services within Japan. My guess is that the EU wants to get involved with Japanese public transport without having to deal extensively with the Japanese government).

http://europa.eu/rapid/press-release_MEMO-13-572_en.htm

Japan, on the other hand, wants to get rid of trade tariffs to make it easier to export its products to the EU. This is most certainly and obviously beneficial for Japan’s automobile industry (Toyota and Lexus being the first ones coming to mind). European consumers who own a Japanese-made car, or consider buying one could also benefit as prices of car components go down. One of the other major stakeholders include Japan’s large electronics industry (Think of Sony who is increasingly reliant on the PlayStation and betting on its VR headset, as it is increasingly struggling and falling behind in markets it was once a highly respected player in, such as the phone industry. Reducing export costs would certainly be of good news).
I would also think such an agreement could boost science in the EU as Japan is a major player in high-tech, particularly in areas such as robotics. Hopefully, the EU can start competing soon in giant robot death matches: 
http://edition.cnn.com/2015/07/07/tech/giant-robot-fight-challenge-accepted/index.html 

The Japanese ministry of economy, trade and industry also communicated another interest which is the “free movement of persons and other barriers” within the EU, so Japan has a key interest in trying to get Japanese citizens to enjoy the same kind of essential basic rights EU citizens do under EU law:
http://www.meti.go.jp/policy/trade_policy/epa/epa_en/eu/

Strategic geographical locations is especially of great interest to  both countries. Japan is a trade hub in the Pacific whereas the EU is a trade hub in the Atlantic. Increased cooperation means both oceans would be more accessible to both sides. Furthermore this puts the Americas, and especially the US on the spotlight as they could play a role as an intermediary, a bridge between both worlds (which is probably why the US started the TTIP shortly after the first round of Japan-EU negotiations started in April 2013.)

On a personal level this could also mean easier access to Japanese products than ever before. This is just speculation and dreamery, but as an amateur of Asian food myself I’d love be able to buy ingredients like mirin, shoyu (soy) and sake for cheaper. Perhaps I might finally crack and try the legendary (and expensive) Kobe beef in a restaurant that managed to reduce its price because of such an agreement. Who knows, people at my local candy store might actually try out KitKat green tea as it wouldn’t cost €6 for a small mini pack.

Seriously KitKat, what the hell

More seriously though, there are concerns with this partnership agreement. Free trade agreements tend to have an ecological cost due to increased global trade, according to the Commission Japan and the EU’s exports would increase by 32,7% and 23,5% respectively, and with a rise of nationalist sentiment as demonstrated by the rise of far right movements within the EU such agreements might not be seen as positively as both negotiators might hope.

-Max.

EPA – the pivot of economic cooperation between the EU and Japan

The negotiations on the Japan-EU Economic Partnership Agreement (EPA) were held in Brussels, Belgium, from February 29 to March 4, 2016. This was the fifteenth round and has been agreed in the outline. The topic was put on a wide range of subjects such as trade in goods, trade in services, intellectual property rights, non-tariff measures, government procurement and investment.

Japanese People tend to perceive TPP (Trans-Pacific Strategic Economic Partnership Agreement) as the most important agreement for activation of Japanese economy, but they should focus more on the future of EPA between the EU and Japan.

The economic scale of the entire EU exceeds the one of the U.S. single market where people, goods, services and capital move freely can be seen as a great effect. If Japanese corporations set up and strengthen their foothold in the EU area, it could be surely meaningful.

Currently, the EU imposes export duties as 10% for motorcars and 14% for colour televisions on Japan. Japan demands its abolition to the EU. On the other hand, the EU demands of Japan to abolish export duties about agricultural produce and wine.

When it comes to wine, the difference of bottle size also became a focus. Japanese producers use the bottle of 720ml size in general, while the EU insists on the use of 750ml one. The EU expects that Japan meets their standards.

The schedule of the next round will be arranged accordingly, and the week of April 11 in Tokyo is currently under construction. The world is trying to cooperate with each country on the economic aspect. However, it is not by the whole world but by each area. AEC (ASEAN Economic Community) can be seen as one of the examples. This is also called “Asian version of the EU.” Although it does not have a single market such as euro-zone, its Gross Regional Product is more than 2,000,000 million dollars and working-age population is still huge. The current AEC is rather FTA (Free Trade Agreement) than a community, but its potential as a great economic effect is highly expected.

If this kind of partial cooperation is further promoted, how is the economic condition in the world going to be changed?

Anzu Imamura

 

 

 

 

 

 

 

 

Human capital: Why we should teach economics, finance and many other current university exclusives to children in primary school.

“Today the United Nations held its emergency meeting scheduled  one week ago, as global financial policies hit its biggest crisis in history. Top name scientists have gathered in front of the UN assembly to announce the discovery of a force with a greater impact on the world economy than even climate change: Education.
US Ambassador Donald Trump, appointed by himself, boycotted the meeting.”

---

I’m going to share with you a little secret: Although today I like to space out and enjoy the simple things in life, when I was a kid I was one greedy brat.

Money was my god.

I loved my pocket money, I loved finding change on the ground, I loved negotiating and finding ways to get the best out of it. I have a few stories I could talk about but if there’s one that would be most illustrative of all: It was doing business with my dad. While I would be playing Age of Empires on the PC, or be absorbed by Spyro and Crash Bandicoot (best games ever) on my PlayStation, my dad would on rare occasions come and ask me if he could borrow some of the money I saved for buying my next video game. Conversations would usually, in a nutshell, go like this:
“Hey Max, can I ask you a favour? I need to go get some things urgently but the ATM is really far away, do you think I can borrow 10 florins from your savings? You will get it back the next day.
-Sure, but that will cost you an extra 5.“

Before I even learned about the concept, I had invented the (astronomical) interest rate. I would’ve made an excellent banker. An admittedly spoiled one.

After moving to France I became a different person however, eventually just daydreaming and losing my passion for math (They used a completely different system for calculating algebra and wouldn’t accept my way. Also I didn’t understand a damn thing most of the time.). English was what I was good at and I stuck to it. Today I am in a university, and after getting to meet with subjects like finance and marketing, advertising I found once again an interest in the business world. But every now and again I wonder:  If I knew this kind of stuff when I was a kid what would I have been able do with it?

I would probably have started concocting my plan for world domination, like a cute little villain. Maybe even join the Illuminati.

So fast forward back to the real world and here I am. I have sort of rekindled with the old me but, and despite starting to get the picture of roads laid down ahead of me I’m still figuring out where to go from here. People often ask people from my generation that one question: “So do you know what you wanna do later in life?” What I always found remarkable were blank stares or indecisiveness. I always had the opinion that my generation was institutionalised in an outdated model of the something 20’s or 30’s, only now teachers can’t beat you and segregation is illegal. School institutionalised us in a way which killed our creativity: Get up in the morning, sit down, absorb information of everything, repeat. It’s frighteningly similar to brainwashing when you think about it. In school’s case, it’s brainwashing you into being normal. “Doe normaal” like they say here in the Netherlands. To top it off, we tend to study to pass exams and not for knowledge itself. Behold the frustration of the teacher, finally reunited with her students only to realise they’ve forgotten most of what they learned.

“Ze cat eats ze mouse, ze mouse has been eaten by ze cat.”

– My French middle school teacher since forever.

This is why I love it when I encounter the kind of stories the one of Tommie Rose. In 2011, Tommie Rose, 12 at the time, was suspended by his school for reselling snacks and soft drinks he got from shops at higher prices (the issue being he was counterproductive to the school’s health initiative). At just 12 years old he would make sometimes up to £200 a week. Tommie Rose was an OG hustler in every sense of the word. He would’ve made for the perfect mascot for the flag of capitalism in red white and blue, and his school suspended him.
I think we need more kids like Tommie Rose. He knew something others didn’t, took advantage of it and cashed in an amount that would be a wet dream for his fellow students. Tommie rose was no scientist. He was no linguist. He was no artist. Maybe he was a good mathematician, but above else, Tommie was a salesperson.

And the Art of Selling is not taught in school.

We all say children are fast learners, so why not try and make more subjects accessible to them? We’re often told to start looking for what we want to do around high school, but we can only test it out, get a feel of how the field is once we are in university, so why not make middle and high schools more flexible? European countries say they are innovation driven, but then why won’t they update education, invest in human capital instead of slashing funding? If only we dare imagine the explosive potential where, instead of training kids to become professors, we nurture their ambitions and imagination?

…And the second is academic ability, which has really come to dominate our view of intelligence, because the universities designed the system in their image. If you think of it, the whole system of public education around the world is a protracted process of university entrance. And the consequence is that many highly-talented, brilliant, creative people think they’re not, because the thing they were good at at school wasn’t valued, or was actually stigmatized. And I think we can’t afford to go on that way.

-Ken Robinson.

 

We could keep essentials like basic math, history and languages, and leave more room for introductory courses at an earlier stage. Personally, I would’ve killed for social psychology courses in middle and high school to fight my awkwardness and shyness. I would totally have dropped calculating the value of f(x) to dedicate that time to something related to languages or marketing, all for the glory of the one true God in this world:

All hail Gabe Newell, God of PC Gamers.

Max Mücher.

References:
Watch Ken Robinson’s TED presentation here: http://www.ted.com/talks/ken_robinson_says_schools_kill_creativity/transcript?language=en#t-713180
Rock on, Tommie Rose: http://www.bbc.com/news/uk-england-manchester-15248021

What about monetary policy?! – Is it trendy enough for you?

Monetary policy is such a fancy word but what exactly does it mean…  Let’s first discuss the basic elements before you’ll make up your mind.

Monetary policy consists of the actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. The main objective of monetary policy is all about maintaining a price stability. The principal way to influence price stability is for the European Central Bank (ECB) to raise or lower interest rates. It is idealistic to keep inflation rates at levels below but close to 2 percent over the medium term. To control these interest rates, the ECB employs a two-pronged strategy; the money-supply growth and the economic indicators. Heavily rising prices (inflation) or falling prices (deflation) cause insecurity and harm the economy. So, price stability is a necessary precondition for a healthy economy. Monetary decisions are made by the ECB Governing Council, which consists of the central bank governors of the sixteen euro countries plus the ECB Executive Board. The Eurosystem uses three monetary policy instruments to influence the liquidity position of the banking sector. These instruments help maintain price stability by steering the short-term money market rate to the key policy rate determined by the ECB.

The three policy instruments are:                                               

• Minimum reserve requirements                                                                 
• Open market-operations
• Standing facilities

The Bank of England, the European Central Bank, and the Bank of Japan have all pursued similar policies. For example quantitative easing, a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

This is all very interesting to know of course, but how exactly does it influence your own personal life? Everybody certainly can recall the euro crisis. Due to the 2008 financial crisis interest rates have been low and in many cases near zero. Do we as students or as European citizens contribute to this system of money control? We certainly felt the consequences, or at least I heard and still hear some people complain about the euro crisis and the suddenly increased prices. Although when I look around I constantly see people buying and spending money if it is no big of a deal.

Yesterday I attended a trade fair in Amsterdam. The annual household fair targets at especially housewives between the age of 30 to 45 years old. According to my own experience people tend to buy products with ease when they are in the sale. Their buying behaviour becomes more aggressively when there is a shortage, demand overrates supply. When analysing the spending behaviour of the ordinary European citizen it is recognizable to see that we tend to save money by spending less but on the other hand it is better to spend more because it will eventually stimulate the economy.

What about you!  Do you stop spending money on luxury products in a time of recession?

When clicking on this link you can watch a defined explanation of the ECB and Eurosystem which might be interesting for you! > https://www.youtube.com/watch?v=TAlcFwGIQBg

                                                                                                      Maxime Helgers

References

http://www.investopedia.com/terms/m/monetarypolicy.asp

http://www.investopedia.com/terms/q/quantitative-easing.asp

http://www.dnb.nl/en/interest-rates-and-inflation/monetary-policy/interest-rates/index.jsp

https://www.cer.org.uk/in-the-press/strategic-consequences-euro-crisis

http://www.economywatch.com/files/story/MonetaryPolicy.jpg