Trends of 2019: Western Europe and Canada
WEUC Editor Alejandra Rocha contributed to this Trends of 2019 piece.
Canada will likely experience several adjustments in its trade relationships this new year given the tariffs the United States levied in 2018 and the upcoming ratification of the United States-Mexico-Canada Agreement (USMCA). David MacNaughton, Canada’s ambassador to the United States, is positive that USMCA, a renegotiated version of the North American Free Trade Agreement (NAFTA) of 1994, will be passed by America’s Congress and that Canadian Prime Minister Justin Trudeau will be able to convince Washington not to levy taxes on steel and aluminum—tariffs that absurdly classify Canada as a national security threat to the United States. The greatest source of uncertainty for Canada, however, is President Donald Trump’s threat to pull out of NAFTA if Congress does not speed up the ratification of the revised trade accord. If this threat becomes a reality, the United States, Mexico, and Canada would lack clear trade rules, which would imperil new negotiations.
While Canada prepares to face challenges that could thwart effective trade negotiations, transatlantic trade relations will remain troubled in 2019. In talks between the European Union (EU) and the U.S., negotiators will struggle to avoid new tariffs and reconcile their incompatible priorities on key industries. As the EU’s trade surplus with America continues to grow, European officials worry the trend will incite a protectionist backlash from an erratic Trump administration.
Last year, the enactment of Trump’s steel and aluminum tariffs greatly affected the EU. It avoided a trade war by initiating negotiations, which culminated in an agreement between Trump and European Commission President Jean-Claude Juncker. The EU has since imported more U.S. natural gas and soybeans; German automakers have promised to increase investment in the U.S.; and the EU has moved to increase the U.S.-sourced share of its beef imports.
Trump promised that he will exempt European car manufacturers from future U.S. tariffs—but only as long as EU-U.S. trade negotiations stay open. If negotiators do not make headway early in 2019, appeasing the president will prove difficult, and certain topics are already shaping up to be non-starters.
The Trump administration has responded to pressure from domestic farm groups by asking the EU to reduce or eliminate tariffs on U.S. agricultural products and do the same for non-tariff barriers. Partly because of the French farm lobby, the EU currently refuses to consider adding an agricultural provision to any trade deal with the U.S.
Fearing that an impasse over agriculture would test Trump’s patience and prevent progress on any front, the EU will likely avoid large provisions, focusing on narrower conditions and prioritizing general removal of barriers to trade. The EU wants a regulatory “conformity assessment agreement” that would have the EU and U.S. recognize each other’s testing, inspection, and certification of certain industrial products.
U.S. officials are open to such an agreement, but the Trump administration’s ambitions exceed the EU’s. The U.S. wants a larger trade agreement and may not shy away from pressing stickier issues. If negotiations falter and the EU’s surplus reaches yet loftier heights, Trump may impose tariffs on European cars before an agreement materializes.
A No-Deal Brexit
Yet unstable trade relations between the U.S. and EU will produce only a fraction of the economic woes the EU will suffer if and once its divorce from Britain ends in tears. Barring dramatic new developments, the U.K. will likely leave the EU in early 2019 without a withdrawal agreement. After British Prime Minister Theresa May’s Brexit deal suffered the widest margin of defeat for a government-proposed measure in modern parliamentary history, the internal disagreement between the various Brexit factions seems to have sealed the U.K.’s fate.
EU leaders previously stated that they will not consider any amendments to the agreement as finalized in November during negotiations between EU and U.K. representatives, insisting that May’s deal is the only deal. Now that the agreement has failed dramatically in the House of Commons and the March 29 deadline looms, the EU may consider minor tweaks. However, May would first have to determine what combination of amendments and assurances, if any, would appease a majority of members of Parliament (MPs).
As she returns to the drawing board, she still faces the intra-party factionalism that sank her first agreement. Despite narrowly surviving a motion of no-confidence—winning by a margin of 19 votes after losing the withdrawal agreement by 230—May lacks command over even her own Conservative Party. Brexit hardliners among the Conservatives are unwilling to approve any deal they believe keeps the U.K. too close to the EU; meanwhile, they are entirely willing to suffer the consequences of a no-deal departure.
Willingness, however, does not correlate to preparedness. The U.K.’s plan to deploy the military prior to the March 29 deadline indicates just how much discord a no-deal outcome would generate. Without the withdrawal agreement’s planned transition period, during which the EU would treat the U.K. as a member state and sustain normal trade relations, EU laws would stop applying to the U.K. overnight.
As a “third country,” or non-member state reverting to World Trade Organization (WTO) terms of trade, Britain’s access to the EU single market would immediately constrict with no cooperative trade agreements in place. The sudden nullification of thousands of financial and legal procedures would paralyze almost every sector of the British economy. In other words, a logistical nightmare would ensue.
In the absence of all but the most fundamental regulations and processes, which the EU has designed as contingency measures, the exchange of goods and services between the U.K. and EU would slow to a snail’s pace. As massive backlogs accumulate in the traffic of goods and persons, essential food and medical supplies would not reach their destinations on time.
The flight of banks and businesses from the U.K. to the continent is already hurting the British financial services sector; a no-deal Brexit would throw the sector into disarray and accelerate the exodus. The union would not escape the fallout: the IMF projected that a no-deal Brexit would reduce EU economic growth by 1.5 percent by 2030.
A lack of a withdrawal deal also means no backstop for the border between Northern Ireland, a constituent country of the U.K., and the Republic of Ireland, an EU member, requiring a hard border with customs checks on both sides that would directly contradict the 1999 Good Friday Agreement that ended decades of sectarian violence. With the memory of separatist violence still fresh in Ireland, the return of checkpoints would add cultural factors to broader logistic quagmires and economic slowdowns caused by a no-deal Brexit.
Such crises would overwhelm the British government’s executive capacity but would hardly prevent parliamentary infighting. The deadlock over withdrawal conditions will merely yield to disagreements over the future relationship with the EU. All the while, faction leaders will blame one another for the consequences of leaving without a deal.
Opposition Labour Party Leader Jeremy Corbyn already admonishes the Conservative government at every opportunity. In the event of a no-deal Brexit, he will capitalize on public disappointment with May’s performance to improve Labour’s electoral prospects as the country slogs toward a general election that must be held by 2022 at the latest.
A no-deal Brexit will cast a shadow over the remainder of 2019, creating innumerable inconveniences in the everyday lives of travelers and British citizens, perpetuating dysfunction and frustration within British politics, and leaving both the U.K. and the EU in worse economic shape.
EU Institutional Shakeup
Despite the serious consequences of a no-deal Brexit on both sides of the Channel, a busy agenda will force the EU to put the U.K. on the backburner by late spring as it turns toward internal affairs. Elections for the European Parliament (EP) and the replacement of key figures on the European Commission will dominate the political discourse on the supranational level.
In the elections, new forces on the left and right and in the center will try to subvert the existing power structures in the EP. Historically, the center-right European People’s Party (EPP) and the center-left Social Democrats (S&D) have collectively controlled a majority of seats in the legislature. This year, challengers will appeal to electorates with sweeping alternative visions of Europe’s future, aiming to break establishment dominance.
However, these challengers may spend more time targeting each other. Populists, Eurosceptics, and nationalists, capitalizing on recent traction at the domestic level, will search for a foothold in the very institution they have critiqued. Liberal forces will rise to meet them, although the new champions of integration must chart and sell their own trajectory for Europe.
Much of the French electorate may disapprove of President Emmanuel Macron as a defender of the status quo, but he wants his party, the centrist Forward! (EM), to inject fresh blood into the EP. EM’s head of European affairs asserted that a coalition with other liberal groups would prioritize “democratic institutions, climate change, social inclusion, and collective security.”
However, EM seems to have put on hold its plan to partner with the Alliance of Liberals and Democrats for Europe (ALDE) and the “Team Europe” slate of liberal candidates. Pressure from domestic populist movements discourages Macron from showcasing his fraternity with other pro-European liberals, who may move on without him.
Meanwhile, Italian Deputy Prime Minister Matteo Salvini’s right-wing League (formerly, the Northern League) will try to rally populists and Eurosceptics. The populist parties diverge on migration and security policy, meaning that, like EM’s involvement in the liberal collaboration, the prospects for Salvini’s coalition are ambiguous.
For his part, Salvini demands more national autonomy to determine fiscal and foreign policy, but he does not skewer all EU institutions equally. He suggests increasing the influence of the EP relative to the European Commission, which he identifies as the main source of supranational bureaucratic overreach.
The results of the parliamentary elections could very well determine the leadership of the European Commission. Parliamentary committees vet and confirm individual commissioner candidates from each member state; however, the Commission presidency will truly captivate MEPs.
According to the Spitzenkandidat, or “lead candidate,” process, first applied in the 2014 European election, each coalition nominates a candidate for the presidency. Precedent suggests that the European Council will choose the candidate from the largest parliamentary bloc to become the new president of the European Commission.
Enjoying more seats, the EPP and S&D support the precedent as a means to preserve their influence and project it into other EU institutions. Even if new coalitions form and syphon support from the establishment, the EPP will likely still seat the most members of the European Parliament (MEPs), meaning one EPP lead candidate, Manfred Weber, would replace another, incumbent President Jean-Claude Juncker, who, conveniently, happens to be the architect of the selection process.
If the challengers undercut the clout of establishment parties within the legislature only for an establishment prodigy to assume the presidency, they will likely launch accusations of a rigged system. Eurosceptic politicians already characterize the EU as overly bureaucratic, unrealistic, and unresponsive to the concerns of the public. The dissonance between anti-establishment momentum and validation of the status quo would weaken the EU’s ethos and create an acrimonious environment.
Technically, Weber is not guaranteed the presidency as the Council is not legally bound to nominate the largest group’s candidate and could ignore precedent. Parliament also holds veto power over the nomination. However, for Parliament to negate a Council decision favorable to the EPP, the challengers would need to meet two lofty prerequisites: they must break the combined majority of the EPP and S&D in the election, and they must successfully unite disparate parts of the political spectrum in an alliance of convenience.
Neither Macron’s liberal center nor Salvini’s populist right approve of the lead candidate system, but their enmity for one another, not to mention unresolved internal differences, could prevent them from organizing against a common institutional obstacle.
Fragmentation between the far left, Macron’s liberal center, the weakened establishment, and Salvini’s populists will make for a less effective Parliament at odds with the Commission’s leadership. The resulting gridlock would create a brutal feedback loop as dysfunction within polarized EU institutions fulfills Eurosceptic claims of impracticality and incompetence at the EU.
The Transformation of Populism
Populism has not only gained strength but also consistency and discipline in its ideals. Nationalism, Euroscepticism, and general frustration with the disconnect between leaders and ordinary people will continue to connect populist movements from Western Europe to Canada.
Populism will continue to reject the idea of a supranational European government but not Europe itself. Unlike the U.K.’s Brexiteers, populists in other Western European countries want to secure devolved power for their nation states rather than leave the European Union entirely. They favor their respective national identities over their European identity. Nationalism will take center stage, exiling Europeanism to the background. The political center will likely struggle to integrate an increasingly disunited Europe, while populists will continue to channel nationalist sentiment in pursuit of less rigid ties with the EU. Understanding populists’ priorities is crucial for the political center to learn to find a balance: putting sovereignty and national identity on the foreground and countering the rejection of the European project.
For Italy’s populists, with their “Italians First” agenda, nationalism will continue to expand. The tension between the French and Italian governments will escalate as Salvini’s “sovereignist” agenda targets Macron’s liberal, pro-integration ideals. As Salvini strives to resuscitate cultural pride, he will employ nationalism to admonish both France and the EU for disrespecting Italy. Last year, the EU objected to the Italian budget’s violation of deficit limits until the populist government cut spending on flagship social programs; meanwhile, the EU has not enforced fiscal regulations in response to France’s deficit. Italy claims that the EU’s partial treatment delegitimizes EU leadership and argues that member states must take back autonomy.
Even in the absence of nationalism, populism will continue to blossom where leaders are out of touch with their citizens’ everyday realities. In France, nationalism was never on the Yellow Vests’ agenda, only respect for popular demands for economic security and increased purchasing power. Macron’s pro-European politics distance him from the French people, not because the electorate resents the EU but because European affairs seem to preoccupy Macron more than his citizens’ quality of life. Macron’s neglect of domestic sentiment allowed the Yellow Vest movement to take root.
After requiring all provinces to enforce a minimum carbon price, Canada now has its own French-inspired Yellow Vest protests. Yellow Vests Canada’s mission, according to their Facebook page, is “to protest the carbon tax and the treason of our country’s politicians who have the audacity to sell out our country’s sovereignty over to the globalist UN and their tyrannical policies.” Like in France, sectors of the Canadian working class are discontent with an executive they believe prioritizes global concerns over the necessities of Canadian citizens.
Europe and Canada can and must learn from France. Leaders must weigh the immediate concerns of their citizens as heavily as they do global ambitions for the future. In political environments with unaddressed grievances, policy farsightedness is as dangerous as policy myopia: it risks escalating indignation and frustration into turmoil. The impact of populism in 2019 will depend on how well governments in Western Europe and Canada recognize popular sentiment and signal the executive’s solidarity with everyday concerns.
The rise of populism will force Western Europe and Canada through a climactic political realignment. Playing defense, liberal leaders will question the primacy of the European idea or the global consensus in order to close the gap between themselves and ordinary citizens.
The tension between migration trends and political trends in Western Europe creates one of the paradoxes of 2019: despite falling migration rates, political conflict over migration policies will intensify. Each year since the 2015 refugee crisis brought millions of refugees into E.U. countries, the number of migrants crossing the Mediterranean to enter the E.U. has decreased dramatically. However, migration will continue to define political debates on the national and supranational level.
As populists and Eurosceptics attempt to rally ahead of national and European parliamentary elections, they will portray EU migration policy as a threat to national sovereignty. Despite the reality of decreased migration rates, their highly misleading narrative will claim a continuing crisis in order to dominate the discussion and focus national and supranational politics on an issue at which they have historically excelled.
If Salvini manages to unite populist and nationalist parties and Macron creates a liberal coalition, then the two incipient forces changing the power dynamics of the EP will hold utterly incompatible stances on migration. The migration debate would become an even more persistent sticking point in a fragmented legislature.
Because national electorates have become hyper-sensitive to the perceived consequences of inclusive migration policy, accepting even small groups of migrants expends significant political capital. Now, a single boat can open rifts between countries and within governments: a migrant ship waited off the Maltese coast from December 2018 to January 2019 as the seemingly straightforward task of redistributing its passengers among EU countries devolved into political quarreling.
Only nine of the 27 EU members eventually agreed to take in migrants from among the passengers and a group that had previously arrived in Malta. Many European countries are prioritizing their support on the domestic front and questioning the logic of shared responsibility within the EU.
Considering how the migration debate has destabilized national governments, unwillingness to risk a popular outcry is understandable. When the Belgian government approved a UN migration accord in December 2018, groups on the political right withdrew their support for the government, and protests broke out.
The conservative New Flemish Alliance party (N-VA) left the governing coalition, leaving the centrist government vulnerable and eventually leading to the prime minister’s resignation. Even in Italy, where the populist government enjoys widespread support, migration decisions drive a wedge between key officials. Salvini has resented Prime Minister Giuseppe Conte’s decision to accept the Malta migrants. Conte is the leader of the populist Five Star Movement (M5S), which governs in coalition with Salvini’s League.
Meanwhile, Spain bucks the trend on both migration rates and the government response to them. Having received more than twice as many Mediterranean migrants in 2018 than in 2017, the country nevertheless maintains a fairly liberal border and asylum policy under the rule of Prime Minister Pedro Sanchez’s Socialist Party.
Pro-immigrant sentiment among the Spanish public makes this approach less risky, but the minority Socialist government remains vulnerable to the destabilizing effects of the migration issue. In the recent regional election for Andalusia, where most Mediterranean migrants cross into Spain, the Socialists lost to the conservative Popular Party (PP), which will form a coalition with the center-right Citizens party (C). Before they allied in Andalusia, the PP shifted right on immigration to better compete with C’s platform; now, the coalition will rely on the anti-immigrant Vox party for parliamentary support.
Across the Atlantic, the Coalition for Quebec’s Future (CAQ) won provincial elections after demanding a decrease in immigrants to Quebec and advocating the deportation of those who fail language and values tests. Players on the national level realize the utility of critiquing immigration policy and that migration grievances could undermine Trudeau’s government in upcoming national elections. The Conservatives, the main opposition party, have played up the stresses on the country’s asylum system, partly to keep their voters from joining the new, ethnocentric People’s Party of Canada.
Migrants are no longer arriving in numbers comparable to the peak of the refugee crisis everywhere, but the political crises born from their arrival have yet to peak.
The year ahead will bring trade troubles, economic and political fallout from Brexit, a more contentious EU, the expansion and evolution of popular movements, and the destabilization of party systems over wedge issues like migration. However, these issues pale in comparison to the existential threat of climate change.
A succession of developments in late 2018 suggested that responding to climate change will top the international to-do list. The Katowice Summit outlined a strategy for implementing the Paris Agreement, while a climate report from the UN’s Intergovernmental Panel on Climate Change (IPCC) tried to illustrate how global warming will end ways of life—and, in many cases, life itself—in the near future. Both the EU and Canada are renowned for their progressivism, but in the coming year, they will nevertheless struggle to respond to environmental issues while balancing their economic and political interests.
On the supranational level, the EU appears active and fully invested in environmental protection. In November, the European Commission announced a plan to reduce the EU’s net carbon emissions to zero by 2050. Earlier in the year, Green and left-of-center parties in the European Parliament allied against the EPP to advocate for stricter emissions standards for cars and vans.
Setting more ambitious targets bodes well, but with transport emissions still rising, the EU will still need to coordinate with its member states to ensure EU strategies work. EU countries vary in their current progress toward carbon neutrality, their reliance on nonrenewable industries, and their electorates’ receptivity to top-down environmental regulation.
Ironically, the union’s two core countries—Germany and France—best illustrate the domestic obstacles to advancing its environmental goals. Germany’s dependence on coal mining and car manufacturing has hindered its ability to meet EU standards within its borders: the country lags behind other member states’ carbon neutrality timelines as its industries resist regulatory remedies.
Admittedly, nonrenewable industries may lose some of their political clout in the coming year. Investigations into shady dealing by German carmakers could continue to discredit auto lobbyists. Meanwhile, the growth of Chinese manufacturing, especially of electric cars, could create a competitive incentive for Germany and the rest of the EU to invest in sustainable transport technology.
Yet even if industry resistance wanes, opposition to environmental protection measures from the general public may prove more challenging. France’s recent turmoil suggests that electorates may not support environmental protection measures if they do not trust that the costs will apply to them fairly and equitably.
Macron’s fuel tax increase sparked the Yellow Vest movement partly because some citizens associated the tax with broader globalization that had created inequities in economic growth. Many of those who did not enjoy the benefits of liberal economic expansion, including access to public transport, have no sustainable alternative technologies.
New, technologically advanced transport routes can pass up poor areas and deny their disadvantaged residents easy access to centers of wealth. As a result, unequal development can become a positive feedback loop and perpetuate dependence on the very nonrenewable technologies (cars) that measures like the fuel tax punish.
Leaders can pitch a policy as the rational and necessary choice for global salvation, but if costs fall disproportionately on vulnerable demographics that cannot afford to comply, electorates can reject what seems elite logic.
Future proposals may avoid repeats of the Yellow Vests if citizens believe the prospective benefits—whether economic growth from green tech innovation, lowered medical costs, or more efficient public transport—will compensate them for their sacrifices. When crafting and promoting environmental policy in 2019, governments may take greater pains to consider their citizens’ full range of needs, vulnerabilities, and biases.
At the same time, attempts to please all parties can produce an incoherent set of policies, satisfying fewer demographics and failing to mitigate environmental damage. Justin Trudeau has simultaneously promoted environmental protection and supported the fossil fuel industry on which Canada depends. Because both paths have attracted criticism while producing opposite climate impacts, he may ultimately secure neither his electoral prospects nor Canada’s long-term environmental sanctity.
While he enjoys support from the center, his policies have prevented him from expanding his base in either direction. Yellow Vest imitators and Conservative leaders in the provinces have agitated against his carbon tax, but he has also alienated the left by openly advancing industry interests.
His government nationalized the Trans Mountain Pipeline, purchasing the project to accelerate expansion and boost asphalt exports from Alberta. Currently, a federal court order has halted construction, citing a failure to consult with Canada’s indigenous communities, the First Nations. With the project’s future unclear, Trudeau faces national elections in October.
As the greatest challenge of 2019 and the years to come, saving the planet may require a paradox in policy-making and governance: to establish a complex balance between efficacy and respect for constituent interests, but to prevent compromises from eliminating progress.