Report

Covid-19 and the EU’s Single Market

Coronavirus, genstartEU

Summary In January 2021 Think Tank EUROPE publihed a report on the consequences of Covid-19 on the EU’s single market. It shows that the single market passed the stress test of the first wave.

"However, as with the virus, some aftereffects might pose to be a bigger test in 2021 and the years to follow. Here, the EU will grabble to rebuild the single market in view of new and reinforced national barriers to trade that include border controls, export bans and unhealthy portions of ‘food patriotism’. In a blow to the most liberal-minded among member states, Brussels’ best option is to make sure that the national barriers of 2020 become Europe’s barriers in 2021. It can do so by weaving into its concept of strategic autonomy Europeans’ rediscovered urge for self-sufficiency", writes deputy director, Catharina Sørensen.

The report is the first of two that focus on the EU’s Single Market and the corona crisis, and can be found here (in Danish) . The second will be published in May 2021. Both reports are part of a Danish project, #GenstartEU, funded by Industriens Fond. 
 

Coronavirus helps build Fortress Europe
 
Crises, the EU has survived a few. And when frustration over its tepid performance in the vaccine battle subsides, Brussels is likely to emerge stronger than ever from its encounter with the coronavirus. New powers on health and crisis management, joint loans and own taxes – mere federal dreams before corona arrived – are now reality.
 
But as with some cases of coronavirus, aftereffects may be as cumbersome as the original spell of illness.
 
A study from Danish think tank EUROPA looks back at how the EU’s single market performed during the first wave of Covid-19. Initially, EU-trade took a faster and deeper cut than at any time during the financial crisis: In April 2020, it was 33 pct. lower than the year before. But the speed with which recovery set in was also unprecedented: By August, year-on-year trade was just a few percent lower – an achievement which has set the EU’s recovery apart from that in both the United States and the United Kingdom. The single market seemed to be proving its worth.
 
But the corona-effect on the EU is about much more than trade volumes. It is the first crisis to strike right at the EU’s heart: Over the course of just a few spring days last year, the core principles of freedom of movement and non-discrimination on the grounds of nationality were set aside by national containment measures including border closures and export bans. These new barriers to trade have come with no clear expiry date and will now be the real stress test for the EU.
 
Border closures, a key concern of European companies during 2020, were the defensive maneuver of choice for a majority of member states. Reminiscent of the Brexit campaign, borders became synonymous to taking control—despite closing them not being a recommendation of the World Health Organization, or of many national health authorities. This bodes ill for the European Commission’s plans to ensure a ‘return to Schengen’ in 2021, just when the argument for maintaining border checks after the 2015 migration crisis was getting more difficult to defend given the lower secondary movements of refugees. However, Covid-19 has made border control a popular demand. 57 pct. of citizens in nine member states, including Germany and France, said in April that they have become more supportive of stricter border control as a result of the corona crisis, according to a poll commissioned by EUROPA and the European Council on Foreign Relations.
 
When corona hit Europe in spring, a majority of member states also introduced export bans on sensitive goods, such as protective equipment and medicines. For a few heated weeks, a mask war was on. Amid panic about supply chains, Poland also added diabetes drugs and painkillers to the list of goods that could not be exported. 
 
‘Food patriotism’ also became ripe in 2020. Whereas most member state governments will have grabbled with the ideal of the EU as one big home market at some point last year, encouraging citizens to ‘buy local’ to support a struggling economy, some went further than friendly advice. Bulgaria, for instance, introduced legislation to ensure that 90 pct. of dairy products on display in supermarkets were locally produced. 
 
In 2021, these new or reinforced national barriers to trade will take the EU’s flirtation with ‘strategic autonomy’ to a new level. As panic reactions to corona subside, member states, aided by the Commission’s desire to get the single market back in line with the Treaties, will draw the conclusion that it is neither sensible nor practical to maintain these barriers on a national level. It is unwise to ban exports of medicine when you do not produce enough drugs yourself. It is not feasible to control a land border when the enemy is invisible. It is imprudent to ban other countries produce, when your factories and fields brim with exportable goods. But no one will be ready to shake off the reawakened need for self-sufficiency. 
 
Hence, the national barriers of 2020 will become Europe’s barriers in 2021. Even traditionally free-trade oriented member states, such as the Netherlands and the Nordic countries (who have already lost their main protagonist to Brexit), will agree that Europe needs to become autonomous with everything from vaccine-production, face masks, asparagus pickers and paracetamol to the rare earth elements essential for achieving the Union’s digital as well as green transition. Whether the new from-farm-to-fork strategy or proposal for an industrial policy, Coronavirus will for years to come serve as justification for a Fortress Europe.

Tænketanken EUROPA indtager ikke holdninger som organisation. Denne tekst repræsenterer alene – som alle udgivelser fra Tænketanken EUROPA – forfatterens/forfatternes betragtninger.