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EU Facing Inner and Outer Challenges in 2007
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By Feng Zhouping

The European Union seems to have reached a consensus: It must solve its constitution issue before further expansion. There is no question about the long-term benefits EU will gain from a growing membership, but the decision-making elites of the alliance have realized they must balance EU's future interests within the limits of public acceptance.
So, EU's strategic focus in 2007 will be shifted from further expansion to salvaging the constitution.

Germany's assumption of the EU presidency for the first half of 2007 should provide a much-needed opportunity for this new strategy to take off.

According to the plan of German Chancellor Angela Merkel, Germany will take the opportunity of holding the six-month EU presidency to present a political agreement to the European Council which will spell out which clauses in the current EU Constitution should be revised. This will provide the basis for settling the constitutional issue in the second half of 2008, when the EU presidency goes to France.

The outcome of the French elections this April will have a crucial influence on the implementation of the new EU strategy. One of the presidential candidates Union for a Popular Movement leader and Interior Minister Nicolas Sarkozy has already said he would support an EU "mini-constitution" that only requires the approval of member countries' legislatures.

By circumventing popular votes for its legitimacy, a mini-constitution would enjoy the obvious advantage of smooth passage. But if it should differ too greatly from the existing constitution, EU countries may not be ready for this streamlining change.
It is generally agreed that, no matter how different the new constitution is from the existing version, the following articles must be included: a deciding vote by simple majority, specifying more clearly the responsibilities of member states and the European Union, establishing the post of an EU foreign minister, and extending the term of the European Council chairman from 30 months to five years.

Though there are quite a few variables in predicting the outcome of the French general elections, they will no doubt offer an opportunity for France to rethink, remake and reapply the strategy for a new EU Constitution.

Meanwhile, pollsters are finding a positive change in European sentiment toward a new EU constitution. A recent poll conducted by European Barometer showed popular support for a new EU constitution outweighing opposition in France, the Netherlands and even Britain.

Germany's assumption of the EU presidency and the French general elections will also significantly influence EU foreign relations in 2007. At the same time, the development of EU-US, EU-Russia and EU-China ties are particularly worth watching.

In reaction to the US call to war in Iraq, a so-called realistic diplomacy demanding improvement in EU-US relations and strengthening cross-Atlantic cooperation has become dominant in Europe.

Many strategic decision- makers in Europe believe the continent can exert effective influence over the world only by joining the US in playing a positive role rather than countering it. In essence, Europe seems increasingly sure of its own role: to be America's valuable ally and friendly counterbalance.

Recently, many European leaders, including German Chancellor Merkel, have again raised their voices in calling for better EU economic cooperation with the US to improve competitiveness in the global economy. Merkel reasoned that both sides must unite to face growing challenges from Asian and Latin American nations if they want to defend their own interests.

The concept of a unified Europe-North America investment market proposed by Merkel is attracting interest.

It differs from the "cross-Atlantic free trade zone" proposal that died prematurely in the mid-1990s. The focus is on establishing a set of common legal and technological standards rather than on free trade. It is aimed at expanding Europe-US trade and reducing the costs incurred by differences in standards and statutes. The goal is expanding trade and investment between Europe and the US.

Given the decisive role played by the EU and the US in the global economy, a unified standard will surely give European and US enterprises a bigger competitive edge against the rest of the world.

At the same time, improving relations with Russia is one of the most important and most challenging tasks facing the EU this year. The union has many reasons to maintain good ties with Russia, but their relationship has frequently been troubled in recent years. Although the EU-Russia relationship fared slightly better than US-Russia ties last year, it can only be described as cooling.

Russia supplies 40 percent of the natural gas, 32 percent of the petroleum and 17 percent of the coal that EU imports each year. After their row last year, the EU is increasingly worried about its dependence on Russian energy resources, fearing Moscow might one day use it as a political weapon against the alliance.

This is sufficient evidence of the deep mutual distrust between the EU and Russia. Political arm-wrestling between the two sides is expected to continue, primarily over energy issues in 2007.

Jumpy relations between Russia and some new EU members, such as Poland and the three Baltic nations of Latvia, Lithuania and Estonia, have added to tension in EU-Russia ties. For example, last November a "no" vote by Poland crushed the proposed new EU-Russia cooperation agreement. The move was in retaliation against Russia's ban on meat imports from Poland.

In the realm of EU-China relations, the most important work to be done in 2007 is negotiating a new bilateral partnership and cooperation agreement. It will cover widespread issues including political and economic relations.

Part of the mix, as French President Jacques Chirac's and British Prime Minister Blair's terms in office end this year, China is faced with adjusting to the significant leadership changes.

In general, EU's China policy will remain focused on bilateral cooperation. Two important decisions made in 2006 emphasized the significance of maintaining the strategic partnership. One is the sixth China policy document published by the European Commission on October 24. The other is the resolution on EU's China policy passed by EU foreign ministers on December 11.

It must be noted, however, that China's growing economic competitiveness has been a topic of intense debate among EU members. Pressured by southern European countries, which view themselves most affected by Chinese exports, EU's China-related economic and trade policies have hardened noticeably.

The European Commission is expected to increase pressure on China over such key areas as full access to China's service market and protection of intellectual property rights, while continuing to restrict the imports of certain Chinese products by means of anti-dumping measures.

No matter what breakthroughs are made in a new EU constitution, how to handle the China-EU trade rows properly to avoid a flare-up of economic clashes is a critical task facing both China and the EU.

Feng Zhongping is director of Institute of European Studies in the China Institutes of Contemporary International Relations.

(China Daily February 9, 2007)

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