2 April 2019

What might the EU elections mean for its trade policy?

by James Holland

The EU plays an increasingly important role in global trade. In fact, the signing of trade agreements have been the only major achievement of Jean-Claude Juncker’s embattled EU presidency.

EU policymakers set trading rules for millions of European businesses and, with EU elections just around the corner, one would expect the volatile swings in political fortunes we are witnessing across the West to significantly affect EU trade policy.

The EU Parliament is a fascinating institution to study in this regard. With over 150 national or regional political parties represented, views vary from free trade advocates, to defenders of protectionism.

While EU trade negotiations  remains the responsibility of the EU Commission and, to a lesser degree, the EU Council ,  MEPs can influence the passage of trade legislation. Their nuclear option is to reject a deal outright — as they did with the Anti-Counterfeiting Trade Agreement (ACTA) in 2012 — but they can also use intermediary resolutions to express their opinion on different elements of a trade negotiation.

The more technical debate takes place in the EU Parliament’s International Trade Committee (INTA), but texts must ultimately face the parliament’s full plenary, allowing all 750 MEPs to express their opinion. An analysis of these votes allows us to paint a fairly accurate picture of what different politicians, national parties and EU political groups (the coalitions of national parties that sit together in the EU Parliament) think about trade more broadly.

When Votewatch analysed votes on 15 key trade decisions between 2014-16, it found that the European Conservatives and Reformists (ECR) grouping was the most pro-free trade grouping. This is largely because the group is dominated by  the British Conservative party and the Polish Law & Justice party who are both in government. When in power, one’s interests and concerns have usually already been factored into negotiations.

The largest grouping in the EU Parliament — the christian democratic European People’s Party (EPP) — has also been largely supportive of free trade measures, although data shows that EPP parties that sit in opposition can become more protectionist.

The Alliance of Liberals and Democrats of Europe (ALDE) is also generally in favour of free trade measures. Alongside the EPP and ECR groups, they have formed a powerful free trade coalition during this parliament.

The centre-left Socialist and Democratic (S&D) grouping often played kingmaker in trade votes, assuming a more nuanced and nationalistic stance on trade issues. The German Social Democratic Party and the Spanish Socialist Workers’ Party favouring free trade, while the Socialist parties of France and Belgian being more protectionist.

The S&D sits between the pro-free trade EPP/ECR/ALDE block and more protectionist groups such as the Greens, the far-left GUE/EFA groups, and the nationalist ENF and EFDD groups. Their stance often determines the fate of closely contested trade votes.

Voting data also reveals predictors of how an MEP will vote on a trade issue. The strongest is political grouping they sit with. Less decisive, though not insignificant, factors are the nationality and age of a member: Western Europe is slightly more protectionist than the East, while younger MEPs are more protectionist than their older colleagues.

This current Parliament sees a clear preference for free trade among the parties and political groups on the centre/centre-right of the political spectrum. Protectionism begins to gain favour with the centre-left and has some of its strongest supporters on the political fringes - both left and right.

So, how will EU elections set for the 23–26 May change this balance?

What is both likely and significant is that, for the very first time, the centre-right EPP and centre-left S&D in the EU Parliament  will lose their combined majority. Pollsters expect the EPP to go from 217 to 178 MEPs, and the S&D from 186 to 132 MEPs - a damaging blow to the two forces that have traditionally dominated the European Parliament since the first European elections in 1979.

Even with the number of MEPs set to be reduced from 750 to 705 MEPs (as the UK continues its attempt to leave the EU), this still means the EPP/S&D block will go from holding 54% of the European Parliament’s seats today, to holding just 44% of seats by the time the new parliament reconvenes on 2 July.

With the addition of Emmanuel Macron’s En Marche MEPs (currently polling at 23%), ALDE is expected to increase from 68 to 93 MEPs and this could form the new dominant majority in the EU Parliament. An EPP/S&D/ALDE tripartite coalition would hold 57% of seats according to today’s polls.

As mentioned previously though, the S&D Group is a mixed bag when it comes to trade issues. Their support for trade legislation is hardly guaranteed, especially given how few socialist parties are currently in government. This new 3-way coalition may not prove so stable when it comes to votes on trade issues.

Here, the ECR’s strong support for free trade may balance out the protectionists in the S&D Group, but they are expected to go from 73 to 60 MEPs, and with the departure of the British Conservatives, the trade dynamics of that group may shift.

There is also a concern in Brussels that these elections will see a surge in support for ‘populist’ parties, which could push the EU towards greater protectionism. Politico’s poll of polls predicts 150 eurosceptic MEPs will be elected.

It probably won’t be the seismic shock some are predicting. Polls do show high levels of support for parties like Matteo Salvini’s Lega (33%) in Italy, Marine Le Pen’s Rassemblement National (21%) in France or the AFD Party (14%) in Germany. However, while these parties may be traditionally more protectionist, many of them already performed well at the last EU elections. In fact, Rassemblement National is polling lower today than the 24% they achieved in 2014.

Votewatch actually predicts that, despite all the volatility and the global trend towards greater protectionism, the share of MEPs that are generally supportive of free trade will increase. Their research reveals a potential polarisation around the topic of trade, where politicians slightly or strongly opposed to free trade increases from 22 to 24%, while politicians slightly or strongly supportive of free-trade increases from 59 to 63%.

Making predictions such as these is fraught with dangers though. Pollsters have been proved famously wrong in recent years, providing reason to doubt their updated models. Society remains highly polarised today and voters appear more unpredictable than ever.

This weekend saw the election of a political novice to Slovakia’s presidency while a comedian won the first round of Ukraine’s own presidential elections. It showed voters aren’t afraid to look outside of the mainstream to find the change they desire.

This political upheaval is leading established parties to rebrand and rethink their electoral proposals and, with 7 weeks still to go until the EU elections take place, they could still recover ground. Much could still change.

The large number of new MEPs elected in May could also be significant in shifting the balance of support for free trade. While many will sit with the same parties and groups their retiring colleagues did, their personal views on trade will remain largely unknown until significant trade votes pass through the new parliament.

Nevertheless, once all changes are taken into account, we may ultimately find a coalition in favour of free trade proportionately similar in size — albeit more polarised — than the one that existed before the elections. That would be no small feat during these tempestuous times.

James Holland

Freelance Writer on European politics for @CapX, @Reaction and @BrexitCentral and former @DanielJHannan advisor.