Express | European protectionism in Portugal
The economic model of the European Union (EU) in recent decades was fairly simple: deepen the internal market and develop an external market with globalization. More recently, Europe has committed to being the first to develop a green economy. The problem with this model, for the coming years, is that their budgets are concerned. And the alternatives are not bright for Europe.
The internal market was the most liberal economic idea of the European Union. Try to make it possible to produce and sell (or provide services) anywhere in Europe without protectionist barriers or advantages that distort competition between companies from different member states. Obviously, the execution hasn’t been perfect. And it has been living in bard, supposedly to approach the regions less identified with the average. But, generally speaking, the rule has been that.
Externally, Europe has tried to make the most of globalization, but it has also paid the associated price. For the more industrialized economies, firstly the German one, it was an entire foreign market that developed, generating enormous profits from sales abroad. For European consumers, in general, it was the possibility of buying cheaper and, therefore, accessing more than they would if production were closer but more expensive.
In recent years, especially after Ursula von der Leyen arrived at Berlaymont, the thesis in Brussels was that the interference of the green transition would allow Europeans to arrive first, and therefore in leadership conditions, to the forces of the green economy. From hydrogen, from building renovations to electric vehicles, the pressure to reduce carbon emissions was also a pressure to invest in new industries and their products and services. Along the way, attempts were made to shorten the distance between Europe and the rest of the world – namely the United States and China – in the digital economy. What has happened in recent times has called this whole process into question.
The pressure to reverse globalization, to protect the “left behind”, was already there. In the United States, Trump was the first to realize the potential of these consumers resentful of globalization. And wanting to protect them by trying to force a return of the cultivated ones to America. In Europe, the discourse on reindustrialization has also begun to make its way. The question has been how to reindustrialize. It’s not enough just to say what you want.
From the beginning of his mandate, it was clear what Thierry Breton was up to. The French commissioner believes that reindustrialization is carried out with public impetus. Either through public procurement, or with rules that promote national/European industries, or with funds that reinforce the investment capacity of these industries.
If it is necessary to depend less on Chinese production, if it is necessary to be able to compete with Chinese companies, if it is to compete with the Americans, then European companies must be supported. Which, according to the new economic mantra, means protecting Europeans and financially supporting European companies. Just as the Americans are doing with their companies, making use of the most protectionist merits of a long time ago. And suggesting to Europeans that they do the same, instead of complaining.
In a letter addressed to the Heads of State and Government of the European Union, meeting last week in Brussels, the President of the European Commission shared his vision on the subject, which is around a lot and which, it is said, is greatly influenced by Breton (who, it turns out, thinks a lot like Macron).
Themes of “adjusting our state aid rules for a few years . 🇧🇷 🇧🇷 to facilitate public investment,” he said. Endo acknowledges that “not all member states have fiscal space for state aid”, he argued that there needs to be “complementary European funding to move everyone in the same direction”. This gave rise to the idea of creating a European sovereign fund to support national governments in this process.
Everything is still very high. It is known that the richest countries do not look favorably on the common European debt that can be spent by all, instead of national expenditure depending on each one’s debt capacity. But it is also known that Germany’s enormous financial capacity scares the rest. Even the ones who are also rich. And even more so those who are not but have large economies, such as France and Italy.
In the coming months and years, two discussions of the utmost importance for the European and national economy will take place. How to govern the Eurozone, what budgetary policies can member states have, how much and how can they borrow and invest. And how will the European economy be subsidized (companies and/or consumers). With what money, what and for what?
The temptation in Portugal, the result of a long dependency, is to ask for more public spending. And expect it to be paid for by the European Union. The problem with this model is that it has not produced much wealth or reduced dependency. And besides, we know, we don’t have very deep pockets. It is not, therefore, what interests us most. But it’s popular around here.
Alternatively, and knowing that the pressure will continue to use public money and slow down international trade, we should have an opinion on where this money should come from and where it should go. If it benefits from research and innovation and if it allows fiscal competitiveness, we have more chances than financing the purchase of what is already European, produced elsewhere in Europe. We’ll see what we do. Or we won’t see it, because many times we don’t have this discussion.