Post-war rules-based system is up for negotiation, Eurogroup president tells Euronews
Irish Finance Minister and Eurogroup President Paschal Donohoe believes that the institutions that emerged after World War II are being challenged by the United States. In an exclusive interview with Euronews, he warned that history shows that "progress can decline".
READ MORE : http://www.euronews.com/2025/05/15/post-war-rules-based-system-is-up-for-negotiation-says-eurogroup-president
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Irish Finance Minister and Eurogroup President Paschal Donohoe believes that the institutions that emerged after World War II are being challenged by the United States. In an exclusive interview with Euronews, he warned that history shows that "progress can decline".
READ MORE : http://www.euronews.com/2025/05/15/post-war-rules-based-system-is-up-for-negotiation-says-eurogroup-president
Subscribe to our channel. Euronews is available on Dailymotion in 12 languages
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NewsTranscript
00:00Welcome to the Europe Conversation. My guest this week is Pascal Donoghue, Finance Minister
00:12of Ireland and President of the Eurogroup of Eurozone Finance Ministers. He says his
00:17country and several others are against the idea of a digital tax on the tech sector in
00:22response to Donald Trump's widespread tariffs, despite the fact that this is a very popular
00:27move in other countries like France. Pascal Donoghue, President of the Eurogroup and Finance
00:33Minister of Ireland, thank you very much for joining us on the Europe Conversation.
00:37Shona, thank you for having me on.
00:39Well, look, let's start with the EU-US trade negotiations. We know that the EU has for some
00:45time now being offered a zero for zero tariff rate, but the US is not satisfied with that.
00:51It wants much greater access to the EU's markets when it comes to agriculture and other areas.
00:55And a lot of people would say that they'd like to see huge deregulation when it comes
00:59to the tech sector, the DSA, the DMA. Can you say that the EU is not for that, not for lowering
01:06standards for the sake of a deal?
01:09So we're not for lowering standards for the sake of that. And we do have to have a debate
01:15and an assessment within the European Union regarding our competitiveness and the degree
01:20to which decisions that we have taken may have contributed to our competitiveness declining
01:26with an impact on our growth, the impact on the number of jobs we may create in the future.
01:31So through that prism, it is important that we assess the regulations that we have and whether
01:37they are proportionate. But while I am convinced that an agreement between the EU and US is in the
01:45best interests of both, I certainly would take great care for a degree of deregulation being
01:53part of such an agreement.
01:54So when you say competitiveness, then what could it look like without lowering standards, without
02:00reducing what's in the DSA and the DMA? What could it potentially look like in theory?
02:06So I think there's a few strands for what it could look like. It could look like the efforts
02:10that we have in relation to the exchange of goods and the tariff levels for that. And what
02:17the EU have outlined as zero for zero is a very ambitious, but I believe important recognition
02:23of the value of trade and how it could be driven further. It could also look like commitments
02:28that we would have to buy more from each other in particular areas. And it could also look at
02:35what we could do in terms of the mutual recognition of the standards that each other have. And while
02:41that is easily and better understood with regard to goods, it could play a role with regard to services.
02:47This is a relationship, as you know, that's worth billions of euros every single day. And any change
02:54at all, no matter how small, that eases with the flow of that exchange of goods and services on a daily
03:00basis, on an annual basis could be worth a big improvement to both of us.
03:04We know that when the EU announced a couple of weeks ago its potential tariffs in the event that
03:10there's no negotiation led to, that digital services wasn't on that yet, but it potentially is on the
03:16table. Do you think that the reason why that's not there is because it's really a controversial
03:21part of the negotiations between the two sides?
03:23So I believe it is understood as a move that if it were to be applied, it could have larger
03:31spillover effects. It could at that point become difficult to look at what would be paths for
03:36further de-escalation. And it could make a trade relationship, which is obviously facing a very big
03:45challenge at the moment, face an even bigger one. Ireland and I have longstanding concerns regarding the
03:52role and use of digital services taxes. And my sense is that in the debate that is now taking
03:58place at the moment, it is understood as an option, but it's also understood as an option
04:04that could have very significant consequences.
04:08Indeed, but countries like Germany and France, particularly France, would push for something like that.
04:12And I think it's inevitable in a negotiation like this, that it's taking place,
04:18that different members of the European Union will have different views. That is, after all,
04:23I believe our strength. And what we will do is listen to each other and find a balanced outcome
04:29regarding options that we may need to take now and other options that we might need to consider in
04:34the future. But I think it is fair to say that there are a group of countries within the European
04:39Union that would have significant concerns regarding the use of DSTs and the spillover effects that it
04:46could have on the trade negotiations and the health of the economic flows between the EU and US.
04:52We know that the EU is also saying that regardless of what is the outcome of the next negotiations,
04:57it needs to seek stronger association with other markets, whether it's Canada and so on. But do you
05:03see there might be a renewal of the EU-China relationship as part of this?
05:07We have acknowledged that China can be a partner in many areas, but we have also acknowledged that
05:15in other areas they do pose challenges for the European Union. And I think that continues to be
05:21the right balance. It is absolutely inevitable as we look at the unfortunate trade tension that is
05:28taking place between the US and the European Union. The European Union will look at other ways in which it
05:35can generate and deepen trade. We'll do that twofold. Firstly, through our own single markets and our
05:41trade with each other. And secondly, looking elsewhere in the world and looking at deeper
05:45trading relationships that we can have there. I think it's important, however, to be realistic,
05:51to say that new trading agreements with other parts of the world, at least in the short term,
05:57are incomparable to what we might be able to get out of the single markets.
06:00On the broader issue around trade with the EU and other countries trying to dash to not quite
06:06make up, but in some ways get stronger trade links across the world, do you think that there's a fear
06:12that the issues around global warming, human rights and other elements that used to be part
06:16of the priorities of a trade deal, that they will just be eliminated in the demand for making up for
06:23what we're losing out at the moment? That risk is definitely there. And it is part of how the EU
06:31needs to be agile in responding back to a world that has changed so much. But we do have to stand
06:38by particular values and ways of engaging with the world that are important to us. I think it is likely
06:46in trade negotiations that will happen elsewhere, that the reference that those particular issues would
06:52have got will, I fear, go down. But in what we need to do here in the EU, I certainly want to still ensure
07:00they have a high value. And I believe we can do that. And I believe we should do that.
07:04So just moving on to defence, which obviously is the most important issue almost at the moment.
07:10You very much supported common borrowing when it came to COVID, because obviously you saw the
07:15impact it was having across Europe. Do you support the same for this existential crisis? Do you support
07:20common borrowing for defence? I think in the time ahead, the most likely way in which further spending
07:29on defence will happen will be both at a national level in terms of the use of own national resources.
07:36And then secondly, in the new framework that the EU have brought forward, where we would look at the
07:41use of the National Escape Clause where needed. And we would also look at new forms of lending to each
07:48other to help with new forms of spending. So where's the trade off? Because the defence spending has to go
07:55way up. And does that mean you take it out of cap? Or where does it come from? Cohesion funding?
08:01So I think in the time ahead, national defence spending will continue to be the larger component
08:07of how we respond back to Europe's security needs. I hope and I expect from the discussions that I can
08:15see happening, that that will be happening in a more coordinated way that has happened in the past.
08:20And I also think it's likely that progress will be made in areas of procurement. Therefore,
08:26that means that if there is a defence dimension to the next MFF and the EU budget, I still think
08:33it's likely to be smaller than the national contribution that members make to their own
08:39security and the security of the EU. And therefore, it is possible that the knock-on effect that it will
08:45have on other priorities within the EU budgets may be smaller than we think at the moment.
08:51But, you know, when you speak to any Prime Minister, Foreign Affairs Minister,
08:54Defence Minister across Europe, they all say the same thing, that this needs to be a unified European
09:00response to this existential threat. That it actually has to be much bigger than what has been sort of
09:05offered in RE-ARM and that it has to be European-wide.
09:10It's difficult to have that debate and not divorce us from the broader reality that, firstly, we'll be
09:16negotiating a budget for the new European Union. Secondly, next generation EU, which is the new form of
09:24common borrowing that we have to deal with the crisis of a number of years ago of the pandemic.
09:29That that is still happening and still being evaluated. And death in relation to all of that
09:35both still has to issue and still has to be refinanced and dealt with at some point in the future.
09:41All of those things are going to come together.
09:43What's your assessment of the fact that Europe really has to do this alone now because
09:47the US is telling Europe we were shifting the burden, we're not sharing the burden,
09:51we're shifting the burden of European security to the European continent alone?
09:55I think that logic applies to so many elements now of the European Union, which is why I made
10:03the point to you there, Shona, that we can't have the debate about defence and security as existential as
10:08it is, but have that debate without reference to very other big things that are going to happen now
10:15with regard to the EU. But a theme of what is now happening is the rules, the institutions that were
10:21set up in the aftermath of World War II, set up with American leadership. They're now being challenged,
10:27they're being contested. The institutions that we know, the rules in relation to trade and tax,
10:33are all now open for renegotiation. That is now what is happening.
10:37Was Macron and Draghi right when they said Europe is mortal and it could die?
10:41All political order is mortal. All political order, if not capable of dying, is capable of declining.
10:50That is one of the many lessons that we have from the study of history. The European Union is no
10:54different. If you believe progress is inevitable, you're on your way to seeing that progress decline.
11:00OK, just finally, you're coming up to the end of your second term as president of the Eurogroup. You're
11:06running for a third term. Have other countries declared that they're going to run against you or
11:12what's the situation?
11:13So no formal declarations have happened yet, but of course, it's open to every country to decide
11:18do they want to put forward a candidate or how do they want to vote? I'm really encouraged by the level
11:25of support that I have at the moment. But really, all my focus is on completing my current mandate,
11:31which takes me all up to July. And then on the basis of my track record, asking countries to
11:36continue to support me in that work. And we have a few weeks to go before we get to that point. And as
11:41we have just discussed, an awful lot can happen in a number of weeks in the world that we're in.
11:46But I am encouraged by the support I've currently received.
11:48OK, well, Pascal Dunneau, Finance Minister for Ireland and President of the Eurogroup,
11:52thank you very much for joining us on the Europe Conversation. Thank you, Shona.