ZEW President Achim Wambach on Germany’s Council Presidency

Germany’s eventful six-month presidency of the Council of the European Union has now concluded with a trade deal with the UK and the prospect of an end to the seven-year negotiations between the EU and China on an investment agreement. Under Germany’s presidency, Europe also saw the adoption of both the COVID-19 recovery plan as well as the multiannual financial framework. The president of ZEW Mannheim, Professor Achim Wambach, comments on this matter:

“After the beginning of 2020 was marked by a regression in European integration due to the COVID-19 pandemic, with border closures, delivery stops and national solo efforts, the EU made good progress in the second half of the year, during which Germany held the Council Presidency.

The establishment of a recovery plan was an important step towards overcoming the crisis and strengthening Europe’s self-image of sharing a common destiny of unity. The fund is intended to help cushion the damage caused to the economy and society by the coronavirus pandemic. However, its design is partly contradictory. The fund is supposed to help alleviate the effects of the crisis, but a large part of the payments won’t be made until 2022 or later, when the crisis will be over. It is intended to benefit particularly affected countries, but many payments go to countries that are no more affected than others. It is meant to promote structural measures in the Member States, but without sufficient sanctioning to ensure that the measures are implemented. Only its implementation will therefore show whether this fund remains an “extraordinary, one-off effort”, as the German Chancellor Merkel says, or whether it is capable of leading the way in overcoming future crises.

The chancellor has successfully used her negotiating skills and the weight of the German economy to bring the negotiations on the recovery plan, the multiannual financial framework, a European Climate Law and the international negotiations with the UK and China to a conclusion. This was not entirely to be expected. The conclusion of the trade deal with the UK and the investment agreement with China show how attractive access to the European Single Market is for third countries. It is to be welcomed that these agreements contain rules regarding environmental protection, social and workers’ rights as well as state aid and thus contribute to ensuring that fair competition remains possible.

In addition, a number of other initiatives were launched in the second half of the year that will prove crucial for the European Single Market. For example, the EU Commission presented its proposals for a Digital Markets Act and Digital Service Act to adapt existing competition rules to the digital economy. At the same time, it presented a White Paper on dealing with subsidies from third countries, especially China, in order to counteract distortions of competition in Europe. Both developments were preceded by impulses from Germany and France. But there is still work to be done before these measures can be implemented: Portugal – Council President from 1 January – take over.”