Thursday, July 25, 2024

The Center Holds: The European Election and its Impact on the European Union’s Trade and Climate Policy Future

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The recent European parliamentary elections have brought despair for some and celebration for others after a substantial shift to the right shook the political foundations of the European Union. A stunning defeat of the Green Party, which had performed so well in the 2019 elections, also shows European voters’ declining enthusiasm for the Green Deal and other climate policies. With a potential second Trump presidency, accelerating economic competition with China, and the Russian security threat, questions remain regarding Europe’s ability to maintain its unity in the face of such forces.

While the right-wing shift was predicted, its scope underscores significant changes in the European political landscape. Calls for reform of the European Union amid the rise of “soft Euroscepticism” drew even more attention to this year’s elections. Fundamentally, the center right and far right achieved significant victories that will shape European policy for the coming five-year term.

Q1: Who are the winners and losers of the 2024 European Parliament elections?

A1: The first clear winner is Ursula von der Leyen’s European People’s Party (EPP), which has seen its strategy of leaning further right over the last two years succeed in fending off the looming wave of far-right sentiment across Europe. Von der Leyen defiantly declared that “the center is holding” to a room of reporters in Brussels after the first exit polls emerged. Despite predictions of a far-right landslide, a complete shake-up of the political landscape of the European Parliament did not come to pass, with the EPP and the Socialists and Democrats projected to gain 14 seats and lose 3 seats, respectively. Still, the shift to the right by the EPP was central to its success in remaining the largest party in the European Parliament, which potentially will put the party at odds with von der Leyen. This rift was visible, with EPP president Manfred Weber criticizing and promising to repeal the ban on the sale of internal combustion vehicles by 2035, which was proposed by von der Leyen and passed by the parliament only a year ago.

The far right also gained significant votes and seats, only seeing losses in a few countries (e.g., Finland, Sweden, and Poland). Significant victories in France, Germany, Austria, and Belgium have already led to domestic reverberations, with French president Macron calling for a snap election and Belgian prime minister De Croo resigning after his party’s defeat in both domestic and European elections. These victories also show a marked shift in the rhetoric of the far-right members of parliament who demonstrate a focus on “soft Euroscepticism” and changing EU policy from within rather than any aspirations to mimic Brexit with a Frexit or Dexit.

Macron’s Renew Europe saw a crushing defeat in France, with the party coming second to his long-time presidential rival Marine Le Pen’s National Rally and losing a projected 23 seats. This led to Macron, in a massive gamble, calling for a snap election, which could mire the last three years of his presidency in gridlock with a potentially oppositional French parliament.

The Green Party saw its impressive success in the 2019 European elections undone, losing 19 seats in the process. This result is not surprising amid the farmers’ protests taking place around Europe and the far right’s focus on the effects of green policies in their campaigns. Its policies have also become more mainstream among the center parties, cannibalizing the unique platform of the Green Party that helped it win so many seats in the 2019 election.

Most importantly, European democracy is mostly alive and well. Whatever anyone’s personal political leanings may be, the 2024 elections saw around a 50 percent voter turnout, maintaining the 2019 election’s significant increase from the 40 percent voter turnout witnessed in 2009 and 2014. While the voter turnout does not reach the scale of most domestic elections, it does alleviate some fears regarding the future of the European trading bloc and single market.

Q2: What are the implications of the 2024 European Parliament elections for EU trade?

A2: While von der Leyen is not guaranteed the European Union’s top job, she is heavily pursuing the commission president nomination. With the EPP’s dominance both within EU governments and the parliament, she is the likeliest to receive the approval of the European Council and parliament. As such, this article will assume that she becomes the president of the commission. The coalition that von der Leyen forms in the end will be central to which commissioners will be approved by the European Parliament after member states’ nominations. While the European Commission is the body most involved in trade policy and trade measures on a day-to-day basis, the European Parliament plays a role in electing the commissioners and the president of the European Commission. The potential for widespread changes within the commission, especially with Trade Commissioner Valdis Dombrovskis announcing his desire for a different portfolio, puts the European Union’s ongoing negotiations for a trade deal with Australia at risk. It remains unclear who his replacement might be, with Denmark, Italy, and France all eyeing the trade portfolio.

How von der Leyen manages trade if she is hobbled by significant opposition from within her own coalition, especially against new trade agreements, is yet to be seen. Crucially, von der Leyen’s bid in 2019 only succeeded by a margin of nine votes. Now, with a grand coalition that has collectively lost seats, her majority is even narrower, and she may need the votes of the Greens or Meloni’s European Conservatives and Reformists (ECR) party, which are in direct opposition to each other and likely will not agree to be in the same coalition. Crucially, von der Leyen needs an absolute majority of 361 votes, and while her coalition technically has this with 400 seats, this leaves a slim margin of only 10 percent. This also comes at a time when several EPP members have declared that they have no intent of supporting her candidacy. So, while von der Leyen remains the clear frontrunner for the presidency of the commission, achieving the votes necessary will require politicking and concessions.

The European Parliament’s most fundamental trade function is the approval or rejection of new trade agreements that the European Commission negotiates. Various leaders within the commission and members of the European Union have highlighted the need for new trade deals after the loss of trade with Russia and amid efforts at “de-risking” from China. A smaller overall coalition will lead to difficulty approving these trade deals, with the EU-Mercosur agreement already being criticized by European governments, parliaments, NGOs, and farmers for various reasons, from environmental worries to concern over influxes of beef from Argentina and Brazil.

The commission has already negotiated two comprehensive free trade agreements, one with Mexico and another with South American trade bloc Mercosur. Both trade deals have faced significant criticism, with Mercosur especially targeted by members of von der Leyen’s EPP and President Macron, who is already under pressure from farmer protests. Pushing current and future deals through parliament will become increasingly difficult in the coming five years. The European Commission’s ongoing negotiations with Australia may also be futile if a rejection within parliament becomes likely.

The opposition to trade deals fundamentally hinders the European Union’s economic security plans, potentially slowing down any plans of de-risking from China. This comes as new tariffs are imposed on Chinese electric vehicle manufacturers by the European Commission. This may result in retaliatory tariffs on European exports to China in various sectors, from autos to agricultural products and pork. While the parliament does not play a key role in determining tariffs or conducting investigations, which falls under the purview of the commission, it does determine the overarching economic security strategy. Adoptions of a broader range of emerging dual-use technologies for export controls in EU Regulation 2021/821 may be difficult to repeat with a narrow coalition majority in the European Parliament of only 43 seats.

The departure of Dombrovskis and Commissioner for Competition Margrethe Vestager could alter the commission’s perception of digital competition policy. Recognizing the adverse impact of the high compliance burden on small and medium-sized enterprises (SMEs) has been central to recent EU discussions of digital policy. The proposed Standard Essential Patents (SEPs) regulation is directly tied to creating a more transparent IP registration process in the technology and digital space. The way forward for SEPs now seems more arduous in the face of changes in parliament and the commission.

Q3: What are the implications of the European elections for EU climate policy and the Green Deal?

A3: A major obstacle for von der Leyen is the widespread rejection of green policies by members of her own party and potential coalition members. The European Green Deal, upon which von der Leyen staked her last term, is now at risk after the elections. The Green Deal, alongside the recently passed Nature Restoration Law and proposed agricultural carbon trading, was a significant driver of the rising support for the far right among European farmers, as they claim the burden of green policies has become too onerous. This does not bode well for Europe’s plans to halve emissions by 2030, with various climate policies being shelved in concessions to protestors. The deal could find itself in the crosshairs of intra-coalition battles, with the Greens emphasizing that the deal cannot be touched, while members within the EPP have demanded concessions on the Green Deal if they are to support von der Leyen’s candidacy. Signs of this are already apparent, as shown by the leaked agenda for the next term of the European Parliament, which removes climate policy from its five highest priorities. The parliament’s right-wing shift is already hindering Europe’s hopes of reaching its 2030 goals amid scientific evidence that it is the fastest-warming continent on the globe.

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