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George M. Mangion
It was a famous remark by UK ex-prime minister Tony Blair (a devout Christian) who compared the defeat of the European Constitution to the crumbling walls of Jericho in the biblical context. In his opinion it was the voters of France and Netherlands who were blowing trumpets around the EU city walls two years ago when they rejected the constitution. Last week Tony Blair himself was among other European Union leaders who clinched a historical agreement on a mandate for a new treaty to overhaul the 27-nation bloc. Poland has resisted tenaciously and proposed an alternative voting system under which power would be based on the square root of each country’s population. This would favour smaller states rather than the larger ones.
Naturally the effect on Malta of a double majority voting system would have benefited us immensely. But this proposal was not accepted in its entirely.
Angela Merkel the German chancellor is likely to get most credit for the compromise. Merkel took a wise gamble. She threatened to launch treaty negotiations regardless of Warsaw’s objections. At the eleventh hour, leaders endorsed a negotiating mandate . Ms Merkel produced her ace card when she offered that the new voting rules would be introduced in 2014, instead of 2009 as originally planned.
Much to the disdain of the French, the 13 references to competition as a policy in the existing treaties would remain. Yet skeptical attitudes reign supreme as the British business lobby, the CBI, voiced alarm about the implications of the compromise reached with the French particularly on competition.
On another bone of contention Tony Blair insisted British businesses were keen to ensure that the workers charter was not enshrined in British law, as they feared it would encourage industrial unrest and undermine relations between workers and employers. There’s been a lingering doubt on the issue of free competition opposed by some members who favour state monopolies. France objected to one part of the reforms namely on free and undistorted competition.
There is an EU commitment in principle to foster free flow of capital across national borders to outlets where it can be most productive and be supportive of competition.
But delusion sets in when one considers the protectionist policy harboured by France.
It goes without saying that there is mounting determination among certain EU members to preserve long-cherished, sheltered national industrial icons. We notice how there exists a fierce resistance against protectionism particularly by the UK and The Netherlands.
They oppose the French attitude to influence the European court of justice in interpreting cases in favour of subsidies, trusts and cartels protecting its State-subsidized monopolies. Last year, the French Industry Ministry did state that it would reserve the right to prevent foreign takeovers of companies that had subsidiaries involved in any of the listed “sensitive sectors” and that the government would make the decision to bar a foreign takeover on a case-by-case basis. Typically it rushed to protect the country’s yoghurt maker Danone, under the threat of a PepsiCo takeover that never materialized.
Going down memory lane we may recall Malta’s ill-fated attempt in early eighties to boycott Japanese imports because they did not reciprocate to import equal volumes of our products. This resulted in Maltese consumers buying lower quality and paying more for substitutes sourced from less technology advanced countries.
Similarly,
In the 1980s France forced all Japanese imports of video recorders to be cleared by customs at an undermanned office in the remote town of Poitiers to delay as long as possible their sale to French consumers.
This was justified under the illusion that the economy was vulnerable to predatory foreign companies, spies, and terrorist groups. The government policy defended its stance by pretending to protect a national core of “economic intelligence”. Particular areas of sensitivity include aerospace, defence, nanotechnology, and information systems.
While it is obvious that France will try to argue that its protectionist measures abide by E.U. rules and regulations, there is concern that Paris’ actions could set an example for other E.U. states to apply similar ‘fortress mentality’ measures. The fact that the French have casinos listed as one of their strategic industries -- under the notion that casinos could be used for money laundering -- exemplifies E.U. concern that France’s actions are disguised protectionism. Malta has suffered from the whiplash of this protectionism when last year France banned the entry in its territory via the internet of a Malta licensed horse betting site. Much damage has been wrecked on our nascent online gaming industry when ZeTurf and BellMed its ISP were condemned of illegal entry by a court in Paris and fined thousands of euros. Certainly this was a blatant abuse by a prominent member state, which goes against the rights of establishment, and the free movement of services enshrined in the Rome treaty. It was recently decided in the Placanica ruling that such tactics go contrary to EU law.
France will no doubt try to limit the protection to cover its most vital industries so as to not draw the scorn of Brussels and in truth its horse/sports betting generates billions of tax revenue. One may well ask why is France taking such a protectionism attitude to a miniscule state such as ours?
One recalls how French interest in Malta’s economy has multiplied after investing in privatised assets such as the Freeport and other companies. This was due to an open policy encouraged by the Nationalist party. Definitely French dominance over the local economy has resulted in a mismatch of imports/exports in their favour. One can appreciate the fact that our largest manufacturing company StMicroelectonics has French interests. There are other French investments such as Accor in our privatised State owned casino and a major hotel in St Julians.
Malta’s MEP’s never objected at Commission level to the fact that the influence of France in our economy is growing while our exports are far below the massive imports of French products including cars, medical equipment, foodstuffs and ancillary merchandise.
Additionally, Malta dropped its past protectionist policy to imports and had recently dismantled all levies. Yet Paris continues to protect its domestic industries so that the country does not sustain a loss of jobs, such as happened to us in Denim, Bortex, Lloyd shoes and VF factories.
The latter did not enjoy any state subsidy and had to move operations to a cheaper cost of production in Eastern Europe or Asia. So the question arises will Mr Sarkozy the new French president follow the same protectionist route as that of Mr de Villepin the previous prime minister?
The latter was quoted to defend the need to revive French manufacturing industries sustained by state subsidies and lower the chronic high rate of unemployment. In his words he argued that when times are hard, when the world is changing, it is a question of gathering French strengths and defending France and things French. Fine, but unilateral action does not spell subsidiarity among EU members. In our case, we are morally right to claim redress from French avowed policy of protectionism, which is blocking our gaming industry in its attempts to offer Internet betting to its citizens. Furthermore, one may argue that given most of the irregular immigrants are natives of ex-French colonies it is not inconsiderate that Maltese diplomatic efforts be intensified to claim financial and logistical support to start larger scale patrols in the north African waters. On a reciprocal basis and to mend the imbalance of trade
France technically owes us bilateral aid even though we are sometimes wrongly perceived as an ex-UK protectorate. History teaches us how the French knights were always appreciated in building Valletta during the reign of Grand Master La Vallette. They turned it into a fortified city fit for gentlemen. This war arsenal stood as a bulwark against any Turkish invasion to vanquish Europe ‘s southern Christian outpost.
Now four centuries later, Malta is besieged by hordes of irregular immigrants.
Hundreds of idle refugees congregate daily outside City Gate mingling with tourists and selling wares.
We unashamedly plead again to France to stick its neck out and start contributing both logistical support and grant accommodation status to the increasing numbers of African migrants coming to our shores. This is the true spirit of co-operation that Angela Merkel toiled so hard to cement among the 27 members.
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