Sweden among winners in future EU-US deal

Sweden is second in line to benefit the most from an EU free-trade deal with the US, for which negotiations were finally given the all-clear in a move welcomed by pro-business groups in Sweden.

Sweden among winners in future EU-US deal

“It will be a win-win situation, a simple fact because this is trade,” Olof Eriksson, spokesman for the Swedish Confederation of Enterprise (Svenskt näringsliv – SNS), told The Local.

With talks now due for next year, the Munich-based non-profit Bertelsmann Foundation has calculated which EU member countries will reap the largest benefits. Top of the list is the United Kingdom, which according to the study could see a 9.7 percent increase in its GDP thanks to a free-trade agreement, with Sweden trailing in second place at 7.3 percent.

At present, $3 billion a day changes hands between Europe and the United States thanks to trade. Statistics Sweden’s trade tally shows that the US is already the fifth biggest export market for Swedish companies. Some 13 percent of imports to Sweden come from the US.

“SNS took the initiative to launch talks on a free-trade agreement between the EU and the US as early as 2007, when it became clear that the prospects for a successful Doha Round was very small,” Urban Bäckström, CEO of the Swedish Confederation of Enterprise, stated on the lobbyists’ website.

“The resistance was then surprisingly compact, the Swedish government rejected the idea.”

The pro-business group on Monday welcomed that the path to future talks had been cleared, after France was granted a culture-sector exception that unlocked the process.

SNS spokesman Eriksson said the immediate benefits for Swedish consumers, were the agreement to be signed in the future, were difficult to predict.

“We can’t say say if goods will be cheaper in Sweden thanks to this future agreement, (but) we can see a definite impact on the economy” Eriksson told The Local, adding that he agreed with the German report about such a deal’s potential to create several hundreds of thousands of jobs across the European continent.

Watch Dr. Ulrich Schoof, Project Manager of the German study, describing consequences of this future free-trade agreement for the world economy.

The Swedish National Board of Trade (Kommerskollegium), which contributed to the Germany study, predicted that a free-trade deal would increase Swedish exports to the US by 35 percent, while American imports would increase by 29 percent.

Food and beverages, insurance, auto, and metals were identified as export business sectors in Sweden standing to benefit from a future agreement.

The effects of a free-trade agreement could be dampened if negotiators agree to retain some trade tariffs, observers warned. The Germany study said that removing all trade barriers between the EU and the US had the potential to unlock double the trade growth than a more limited deal that retained some tariffs could.

Elodie Pradet

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Explained: Why is Sweden so worried about the EU’s minimum wage plan?

EU labour ministers meet in Brussels on Monday to discuss the European Commission's planned minimum wage directive. Why is the proposal causing such unease in Sweden?

Explained: Why is Sweden so worried about the EU's minimum wage plan?
Customers visit a branch of McDonalds in Stockholm. Photo: Stina Stjernkvist/TT

What’s happening on Monday? 

EU ministers responsible for employment and social affairs, including Sweden’s Eva Nordmark, will meet in Brussels for a two day meeting at which they hope to adopt a European Council position on a directive imposing “adequate minimum wages” on all EU countries. Once the Council, which represents member states, has agreed a common position, it will begin negotiations with the European Parliament and the European Commission. 

What’s Sweden’s position on the minimum wage directive? 

Sweden has been, along with Denmark, one of the most vocal opponents of the directive, arguing that it threatens the country’s collective bargaining model, in which unions and employers set wages without government interference. 

But on Friday, the government dropped its opposition, together with country’s umbrella union, the Swedish Trade Union Confederation, arguing that a compromise proposal put forward by the European Commission would protect Sweden’s wage autonomy. 

A majority of the members of the Swedish parliament’s employment committee are backing the government’s new stance, but three opposition parties, the Moderates, the Christian Democrats, and the Sweden Democrats, are opposed to the change in position. 

“I am extremely happy that there is broad support and majority backing for us to continue with the negotiations, to stand up for what we have come to so far, and do everything we can to protect the Swedish wage-setting model,” Sweden’s employment minister Eva Nordmark (S) said after a meeting with the employment committee on Friday. 

READ ALSO: Why Sweden doesn’t have a minimum wage and how to ensure you’re fairly paid

Why did Sweden make its dramatic last-minute u-turn? 

Sweden’s government judges that, after the compromise, the directive will no longer mean that Sweden is forced to bring in a statutory minimum wage. 

“I consider, together with experts in the civil service and experts in the unions and employer organisations, that there is no requirement for Sweden to bring in a statutory minimum wage,” Nordmark told TT. 

She added that agreeing to sign up to the directive would give Sweden the ability to take a deeper part in the negotiations giving it the power to make sure that important exceptions are made for Sweden. 

Denmark, however, is still resolved to say ‘no’ to the directive. 

Surely a minimum wage is a good thing? Isn’t Sweden supposed to be a high-wage economy? 

Sweden is certainly a high-wage economy, but that is largely thanks to its model of collective bargaining, under which wages are generally set by negotiations between employees and employers for each sector. 

If the directive sets a precedent allowing governments, either at a national or EU level, to interfere in this process, or for those who disagree with the result of the collective bargaining agreement to appeal to government entities, it could undermine the Swedish system. 

Who is still worried? 

More or less everyone. While the Swedish Trade Union Confederation is supporting the government’s decision, its vice chair Therese Guovelin, described the European Commission’s compromise proposal as simply “the least bad compromise proposal” the union had seen.

She has previously described the European Parliament’s position that the directive should apply to the entire European Union as “a catastrophe”.

“That would mean that a disgruntled employee who is not part of the union, could take their case to court, and would then end up at the EU Court, and it would then be them who would decide on what should be a reasonable salary,” she explained. “In Sweden, it’s the parties [unions and employers’ organisations] that decide on that.”

Tobias Billström, group leader for the Moderate Party, said he was concerned at the role of the European Court in the directive. 

“There are big risks with this,” he told TT. “The EU court might decide to interpret this directive as applying across the board, and then we might end up with what we wanted to avoid. The Moderates have as a result been against this development, and it’s important that Sweden gets to decide itself on the Swedish labour market.”

What might happen now? 

The European Parliament might try to remove the wording and the exemptions which Sweden hopes will allow its employers and unions to retain control of wage-setting. 

Mattias Dahl, chief executive of the Confederation of Swedish Enterprise, which represents employers’ groups, said that the government needed to stand its ground in the upcoming negotiations, reiterating that he would have preferred that the European Commission had not sought to give itself such a role in the Labour Market.  

Nordmark said that Sweden did not intend to back down to the parliament. 

“These are important red lines for us. If there are demands from the European Parliament that push in a different direction, we can lean on the Swedish opinion and what we stand for,” she said.