Is globalization dead?
Everything seemed to be running so smoothly. There was political and economic integration. There was trade. No customs duties or tariffs. Lorries weren’t stuck at customs. Travel was effortless — no passport required. In many places, you didn’t even need to change currency. It was bliss, says Russell Patten, UEIL secretary general and chief executive of Grayling Brussels, the organization that runs the secretariat of the Union of the European Lubricants Industry or UEIL since August 2017.
Speaking at the UEIL Annual Meeting last October in Bologna, Italy, the lobbyist proposes that the evolution of Europe has been fantastic for peace, prosperity and business. The original European Economic Community (EEC) of 1957 was designed to integrate the economies of Europe. The first major revision, the European Single Act (1986), added an objective to establish a single market by 1992. On 7 February 1992, the Maastricht Treaty was signed, officially forming the European Union (EU), and a single European currency followed seven years later. With Europe came globalization and the ability to trade ever y- where. It seemed like the “perfect world,” Patten says. Although it appears that this has now been largely forgotten.
The political landscape is changing with political risk on the rise globally, nationally, and at a regional level. Patten fears the very foundations of Europe are under threat with the rise of populism and nationalism. “For those of us living in the UK, it is quite frightening,” he says.
What exactly is this political risk? Patten cited three specific areas of concerns during his presentation. Political movements, such as Brexit and changes to American foreign policy, are disrupting trade; ever-increasing scandals, like Volkswagen’s much-publicized diesel gate, have totally undermined trust in business; and an upswing in legislative and regulator y issues are compounded by the power of the media, non-governmental organizations (NGOs) and civil society.
The decision by Great Britain to withdraw from the EU, commonly known as Brexit, is evidence of a cataclysmic change in the political land- scape. While ultimately immigration was the primary motivation for the divorce, Patten believes continued political monetary fiscal integration by the EU perhaps pushed them too far and is misaligned with the economic trade ideals of the original EEC. Poland, the Czech Republic and Hungary are also questioning the merits of a Brexit-style withdrawal as well, suggests Patten.
Europe is clearly at a crossroads. Some say globalization is already dead as well. Certainly, in Europe we are experiencing a shift from multilateral to bilateral trade deals, says Patten, citing ongoing trade negotiations with Singapore, Japan, Canada and Mexico. Though, bilateral trade agreements are a “very piecemeal, ad-hoc way of making trade deals with the rest of the world” and not really doing their job.
“How is business reacting to this increased political risk? It’s not,” Patten says, both posing and answering his own question. The EU lobbyist believes a substantial mind shift in business is necessary. Companies need to leverage the extensive expertise they possess much more. “You are the experts in what you do,” not the policy makers, he suggests.
UEIL is the unified voice of the lubricants industry in Europe, with a strong focus on lobbying and advocacy. Trade associations like UEIL possess an enormous amount of expertise. Patten believes these associations need to play an increasingly active role to bridge with policy and decision makers — ensuring better policies and laws can be made. However, Patten con- cedes influencing policy is becoming increasingly complex. “We are one among many voices,” he says. Partnerships and the support of member-states to communicate messages are crucial to the effectiveness of the organization.
The European Union is currently a union of 28 member states with headquarters located in Brussels. The union consists of seven institutions — which include the European Commission, Parliament and Council. It is the interaction of these three bodies that creates EU law. The commission is the technical body and proposes legislation, implements rules and manages the daily functions of the EU. Parliament comprises elected officials of member states, politicians not experts, whereas the council unites governments of the 28. All three primary institutions influence each other and, equally importantly, are influenced by outside sources.
Andreea Kaye, who coordinates the work of the UEIL Secretariat, outlined several live campaigns UEIL is advancing to influence policymaking and support the interests of members in the current volatile political environment.
Technical and Competition Committees are striving to improve Access to Technical Information (ATI). The committees will actively bring proceedings against car manufacturers that withhold technical information needed on the market.
In 2016, the European Commission proposed regulation that brings together provisions on repair and maintenance — an initiative promoted by the diesel gate scandal. Kaye says the organization is pursuing more precise language on lubricants in the definition for vehicle repair and maintenance, as well as extending access to repair and maintenance information prior to a vehicle’s market release by OEMs.
The Excise Movement and Control System (EMCS) is an electronic system monitoring goods that have excise duties applied to them at their point of use. UEIL believes there is some risk lubricants could be included under EMCS, due to an earlier ruling by the European Court of Justice relating to fuel additives. The inclusion of lubricants in EMCS would generate excessive costs of implementation and UEIL is actively engaging to maintain a level playing field for lubricants in the EU. Extensive work clarifying CM codes (used in customs) to ensure lubricants are well defined has played a key role in keeping lubricants out of EMCS, Kaye says.
The lubricant trade association has successfully obtained a blocking minority in Council against the proposal to include lubricants in EMCS. However, with the advent of Brexit, the organisation is appealing to new allies for support to maintain this blocking minority.
The European Commission has a legal obligation to review the Energy Taxation Directive (ETD) in mid-2018. The ETD determines minimum levels of taxation and products that should be included or exempted from taxation. UEIL has provided input into the technical review currently being undertaken by Deloitte on behalf of the commission. In her presentation at the UEIL meeting, Kaye discloses that the goal of UEIL is to include lubricants as an excise product in the ETD review, with an exemption — a scenario that would stop individual national taxation regimes, reducing fraud and taxation distortion in the market.
Europe is changing. Patten believes we need to do more to foster business and trade, and promote more fair competition. Total unity within the remaining 27 in Europe is important. While the threat of populism is very real, Patten believes Europe can continue to integrate and achieve harmony in Europe.
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