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October 2014, Volume 21, Number 4

EU: Migration, Integration, Trade

Europe, with a tenth of the world's people, has a quarter of the world's countries and a third of the world's migrants. The share of migrants in European countries averages 10 percent, but varies from less than five percent of residents in Eastern Europe to almost 30 percent in Switzerland. European leaders have three major goals: to attract more skilled migrants, keep out the uninvited, and integrate low-skilled migrants and their children who are already settled in Europe.

The EU's 28 member states had 507 million residents at the end of 2013, up a net 653,000 due to immigration. Denmark and Germany had the highest immigration rates, and Cyprus, Greece and Ireland had the highest emigration rates.

Relatively few EU nationals move from one EU country to another, and a third of the 12 million intra-EU migrants are Romanians and Poles. About 40 percent of the non-EU foreigners in the EU are from European countries such as Turkey (considered to be in Europe), a quarter are from Africa, and a fifth are from Asia. Many of these non-EU foreigners are guest workers recruited to fill jobs in the 1960s and 1970s and their descendants.

Guest workers. European countries became reluctant countries of immigration in the 1960s, when a combination of de-colonization, a delayed baby boom, expanding higher education, and earlier retirement combined with undervalued exchange rates and a "guns and butter" US economy to bolster the demand for VWs and other European goods at home and abroad. Leaders of an integrating Europe allowed labor-short employers to recruit guest workers, first in Italy and later in other southern European countries and North Africa. These guest workers were expected to work a few years and then depart to spur development from southern Italy to eastern Turkey, but this did not occur.

The demand for labor persisted, and guest workers earned the right to bring their families and settle as immigrants. Most European countries stopped recruiting guest workers in 1973-74 during the recession following oil price hikes, and tried to encourage migrants who lost their jobs to leave with departure bonuses, but most stayed. Some chose spouses "back home" who did not speak Dutch or German, leading to "integration contracts" that require foreigners to learn the local language in order to enter or stay in the country.

European countries are now struggling with the integration of low-skilled migrants. Many are not in the labor force, and the unemployment rates of Turks and Moroccans are often twice the rates of Dutch or German workers. Migrants and their children with regular jobs generally have above poverty-level incomes and access to work-related benefits, including health insurance and paid vacations. In the US, by contrast, most low-skilled migrants have jobs, but many are "working poor," with low incomes and limited access to work-related benefits. The European migration challenge is often summarized as how to get migrants into jobs, while the US challenge centers on ensuring that migrants with jobs have adequate incomes.

Talent. European leaders complain that the US gets a disproportionate share of the world's "global talent" for reasons that range from English to lower taxes and stock options. The EU's Blue Card program aims to make Europe more attractive to foreign professionals by allowing employers to hire non-EU foreigners who have bachelors' degrees and will be paid at least 1.5 times the average gross salary in the country in which they will live and work with their families, E47,600 ($66,000) in Germany. After two to three years, Blue Card holders may apply for immigrant status or move to another EU country. Most countries allow foreign student graduates of local universities to work and settle.

The minimum salary can be lower in labor-short occupations, only E37,100 in occupations such as engineer and doctor.

Asylum. Over 1,000 foreigners a day applied for asylum in the EU member states in 2013, a third in Germany and a sixth in France. Germany received 110,000 of the EU-28's almost 400,000 new asylum applications in 2013 (the US received about 90,000 asylum applications in 2013), including 15,000 from nationals of Serbia and Kosovo; 15,000 from Russia; and 12,000 from Syria. France had 60,000 new asylum applications; Sweden 54,000; the UK 29,000; and Italy 28,000.

Southern European governments where migrants arrive in boats want more burden sharing, or money from other EU member states. Northern European governments point out that most asylum seekers leave Greece, Italy and Spain and apply for asylum in northern Europe, so they are already sharing the burden of dealing with migrants crossing the Mediterranean.

Over 350 migrants died when their ship sank near the Italian island of Lampedusa October 3, 2013. In response, Italy launched Mare Nostrum, Latin for our sea, in 2014 and reported rescuing over 90,000 migrants who set off in ships from Libya for Lampedusa. Mare Nostrum cost $11 million a month. Critics say that it encouraged migrants to set out in unsafe boats in the expectation of being rescued.

Greek Dimitris Avramopoulos, the incoming EU commissioner for home affairs, in September 2014 proposed that EU countries allow foreigners to apply for asylum at their embassies around the world in order to reduce boat trips across the Mediterranean. Avramopoulos told the EU Parliament that he opposed creating a Fortress Europe but defended the fence on the Greek-Turkey land border to keep out unauthorized foreigners. He also endorsed a "charter" on legal immigration aimed at attracting more skilled workers.

New EU commission president Jean-Claude Juncker plans to create a new commissioner for immigration and integration; immigration is now included with home affairs. The goal is to help the EU's 28 member states to better control external borders, to process asylum seekers efficiently, and to return those not in need of protection quickly.

Unemployment remains high in the 18 countries that use the Euro, 11.5 percent in August 2014, meaning that 18.3 million of the 159 million-strong Eurozone labor force was jobless. Unemployment rates ranged from 24 percent or more in Greece and Spain to less than five percent in Austria and Germany.

TTIP. Trade in goods and services between the US and the EU-28 member states was $700 billion in 2013. The US ($15 trillion) and the EU ($16 trillion) account for half of global GDP of $66 trillion in 2013, a third of trade in goods, and over 40 percent of trade in services, so that a Transatlantic Trade and Investment Partnership (TTIP) could wind up setting global standards for trade in goods and services. For example, a TTIP agreement on auto safety standard could effectively become the global standard.

TTIP aims to reduce remaining trade barriers in negotiations that began in July 2013 in three major areas, that is, market access, regulatory convergence and cooperation. Firms want easier access to supply goods and services to governments, US farmers want easier access to EU markets, and corporations want faster remedies in the event of disputes.

Regulatory non-tariff barriers are considered the most difficult issues to resolve, such as food safety rules, technical barriers to trade generally and in particular sectors such as drug safety, and developing a framework to deal with disputes after TTIP is in place. TTIP negotiations are not dealing with agricultural and aircraft subsidies.

There is opposition to TTIP on both sides of the Atlantic. Democrats and unions oppose TTIP, fearing job losses, while many Europeans fear TTIP will open doors to GMO food products. Chemicals, motor vehicles, pharmaceuticals and food each raise issues because standards and attitudes differ.

One issue is investor-state dispute settlement (ISDS) courts that would allow firms to sue governments for violations of trade rules outside normal courts; the US wants ISDS courts included in TTIP. UNCTAD reported that, of 568 cases brought over the past five decades, 53 percent were begun by firms based in the EU and 22 percent by US firms.