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The CEPII Newsletter       
July-August 2019        



The French edition is slightly different as it also includes material available in French only  

Europe Monnaie & Finance Trade & Globalization Migrations Economic Policy Emerging Economies Competitivness & Growth Environment & Natural Ressources
  Focus

EU competition policy should not be sacrificed but trade policy should be strengthened

Some policymakers believe that EU competition policy prevents the emergence of industrial champions. In this post Sébastien Jean, Anne Perrot & Thomas Philippon argue that Europe’s competition policy has successfully contained the rise in concentration and excess profits, and the EU should not follow the US in weakening its approach. Instead, the EU needs to strengthen its trade policy to be more assertive on reciprocity in market access and control of industrial subsidies.  In February 2019, Margrethe Vestager, the EU Competition Commissioner, blocked the proposed rail merger between Siemens and Alstom (European Commission 2019). But, trapped between heavily subsidised Chinese firms and unregulated US giants, should the EU relax its competition policy in the hope of creating its own giants? This line of reasoning has gained traction among EU policymakers. Many fear that the region's rigid competition policy is too rigid, and a disadvantage in a world where others don’t play by the same rules. Some even argue that the Union's competition policy could get in the way of its strategic objectives.
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  Edito




Setting the Stage for RMB Internationalisation - Liberalizing the Capital Account and Strengthening the Domestic Bond Market

The financial system in China does not yet match China’s economic weight on the global stage. Nor does it reflect the geopolitical ambition that China’s leaders have demonstrated over the past few years An important reason of such a situation is the mismatch of its financial system relative to the pattern of financial globalization. This mismatch came in the limelight when the Chinese leadership started to reinforce their support to RMB internationalization through a gradual liberalization of the capital flows starting 2014. After the financial turmoil of mid-2015 to the spring of 2016, it appeared that opening the capital account should be a lengthy and progressive process.The present Policy Brief aims at understanding the sequence of this process against the theoretical framework of Mundell’s trilemma to point out the stages of this double-sided process.
Michel Aglietta & Camille Macaire
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Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure

In this paper Antonia Lopez-Villavicencio & Valérie Mignon assess whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
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ISSN: 1255-7072
Editorial Director : Antoine Bouët
Managing Editor : Dominique Pianelli