A refreshing summer break may have taken your mind off what’s going on in the EU trade agenda. The clock is ticking for the EU and the US to avert duties on steel and aluminium. CBAM is about to kick in, although gradually, while the European Commission could open new trade negotiations with the Indo-Pacific and is trying to progress existing talks. 

We have collated everything you need to know for September in the hope of making your return gentler.  

One Big Thing.

A steel deadline to prevent EU-US duties   

Besides the IRA, another trade issue is forcing a transatlantic wedge. For the past two years, after finding a temporary arrangement, the EU and the US have been negotiating a deal to facilitate and decarbonise trade in steel and aluminium. The stakes are high. Remember Trump’s duties on those sectors, followed by Brussels’ retaliation on iconic products like Bourbon and Harley-Davidson? They will be back again, if the parties don’t find an agreement by October 31. 

The positions differ fundamentally. The US wants to establish a “club” of countries, starting with the EU, agreeing on common standards for steel and aluminium. A “trade fortress” that charges a common tariff on countries with a polluting or subsidised metal production. Washington aims at tackling the over-supply problems and reducing dependencies on China (together its environmental and geopolitical goals). By contrast, Brussels is seeking the permanent removal of the US duties, and proposes a system inspired by its landmark Carbon Border Adjustment Tax. Duties (pardon, adjustments) would be paid not based on the sector’s emissions, but on company ones. However, the proposal would imply that the US implements some sort of carbon pricing, which the Congress would find  hard to digest.  

The take: Solving this dispute is a necessary step for transatlantic initiatives to make trade “greener”. Sure, a solution to the IRA spat would also help ease transatlantic trade relations.  

The next: Procrastination could come to both parties’ rescue. A feasible scenario could be an extension of the deadline, to give the parties time for a lengthier discussion while still claiming continuous cooperation. 

The plus: A permanent removal of the duties is tricky for US President Joe Biden, who wants to show strenuous support to the industrial constituencies as the Presidential elections approach.  

Second in line.  

CBAM Mid Fall 

Speaking of carbon and trade, October is near and so is CBAM. The Commission adopted the implementing rules of the regulation in August, detailing how the transitional reporting obligations will work, also informing WTO members. Nothing too worrying yet, as the regulation will be phased in gently. As of October 1, companies will need to collect data on the emissions embedded in imports linked to cement, iron, steel, aluminum, fertilisers, electricity and hydrogen. However, the first submissions are only due on 31 January 2024. 

Ever happy to help at TradeViews,  here are the Commission’s reporting guidance and templates. Watch this space as the next phases of CBAM will gradually kick in all through 2024 and 2025, with the first adjustments due to be paid in 2026. 

Beef is still on the EU-Australia negotiation table 

Did the (northern hemisphere) summer break soften EU and Australian negotiating positions? We’ll see soon, as they resumed trade talks on August 31, after the failure of the last round in Brussels. In any case, it seems clear that they won’t make it by the original deadline – wrapping up the FTA by the end of summer. EU Trade Commissioner Valdis Dombrovskis recently talked about concluding the negotiations in the “coming months”.  

Brussels and Canberra continue to diverge on familiar lines. Australia is determined to have more market access for its agri-food sector, with beef, lamb, dairy and wine on the front line. EU farmers are resistant, as they push to maintain the current tariff and protect European geographical indications on the Australian market. 

Yet, there are significant pulling factors. The EU is in desperate need of minerals for its green investments, which would be a boon for Australia’s exports, given its abundant reserves. An FTA would also benefit the Australian mining sector by facilitating the arrival of European investments. Equally, both parties seek trade diversification amid tensions with China. Will like-mindedness overcome agri-food frictions? Watch France! 

New trade talks in the Indo-Pacific? But mind the gap 

In July, the Commission announced that it is mulling restarting free trade agreement discussions with the Philippines. Manila’s fast economic growth and abundance in critical minerals couldn’t pass unnoticed, as the Commission tries to strengthen the EU position in the Indo-Pacific and stabilise its supply chain.  

Not a moment too soon. The Asian country currently benefits from facilitated trade with the EU under the Generalised Scheme of Preferences (GSP). The scheme removes import duties on products originating from developing countries, provided that they respect the main labour and environmental conventions. And therein lies the problem, as the Philippines is on track to reach the status of an upper-middle income country. The European Parliament and Member States are currently discussing the GSP renewal. If this is unsuccessful, and FTA discussions are not  concluded – hopefully by 2028 – we may witness gaps in EU-Philippines trade. Not a perfect start to an EU strategic partnership in the Indo-Pacific. 

More delays on border checks, but not the Horizon 

If you think Brexit took a long time to conclude, buckle up for the post-Brexit border checks on EU goods (not the other way round, as those procedures are already in place). Controls on food, plant and animal produce arriving in the UK have been postponed – for the fifth time until the end of January 2024 –. This is good news for businesses, as traders have more time to adjust to the new rules. However, the real reason for the delay might be the British government’s attempts at cushioning the cost of living crisis and inevitable border check-induced inflation. 2024 is gearing up to be the year of border controls, with physical checks and safety declarations set to be gradually introduced

The tide has turned for British participation in the Horizon Europe programme, however, with the UK government finally announcing a deal. As we mentioned before the summer break, the tug of war on British contributions has been delaying the negotiations. The parties now agreed that London won’t pay for the 2,5 years of not being a part of the current programme, making its first contributions in January 2024. Just in time to retain the young cancer researchers who were reportedly ready to jump the UK ship in favour of Horizon! 

EU-India talks spice up the TTC agenda 

Economic talks between the EU and India are in full swing. After the G20 trade meeting in late August, Trade Commissioner Dombrovskis has rekindled interest in bolstering trade relations with India through the Trade and Tech Council (TTC), reminiscent of that with the US. To refresh memories, the first EU-India TTC took place on May 16. The key outcome was the commitment to collaborate on quantum computing, AI, 5G, and digital skills, as well as research for sustainable technologies. Additionally, the EU and India aim to work on waste management, battery recycling and obviously trade, amid the ongoing FTA negotiations. 

India, with its robust economic growth and geopolitical influence, is strategic for the EU, with both parties aiming at reducing trade dependences with China. Yet, New Delhi’s protectionist policies hinder FTA talks, while Europeans are eager to increase manufacturing exports and have more access to the country’s procurement. But talks on market access can come at a later stage, while the parties get to know each other better through the TTC, with the next one scheduled in early 2024. The G20 in India, taking place on September 9-10, will provide a further opportunity for talks, with the involvement EU Commission President Ursula von der Leyen and Economy Commissioner Paolo Gentiloni.  

Data Tango with Yango. India follows the flow.   

If you thought that after the EU-US adequacy decision the discussion around data flows with third countries was done, you’re wrong. European privacy authorities have decided that Russian ride-hailing platform Yango can continue sending the data of its Finnish and Norwegian users to Russia, despite concerns about a new Russian security law, which would allow Russian authorities to request customer data from taxi companies. The final decisions will depend on established facts and legal assessments.  

A country that seems getting ready for the next EU data flows negotiation is India. The Digital Personal Data Protection Act of India was swiftly passed and published in August 2023, making India the 19th G20 member with comprehensive personal data protection legislation. The law has a broad scope, applying to all entities handling personal data and featuring GDPR-inspired definitions. Could this be a first step to facilitating digital trade discussions with Brussels? 

On our radar.

12-15 Sep I High-level trade policy-makers and academics will gather for the 2023 WTO Public Forum. Main topic: how trade can contribute to sustainability. We’ll keep an eye on the outcomes for you.  

13 Sep I Time for the State of the Union address by Commission President von der Leyen. We’ll keep an eye on any trade-related mention. 

18 Sep I Back to school meeting for INTA. Important dossiers now resurface: ratification of the FTA with New Zealand, state of play of Mercosur talks, reform of the Generalised Scheme of Preferences. Plus, the Spanish Presidency will present its trade priorities.   

19-20 Sep I The Economist will bring its Global Trade and Supply Chains Summit to Dubai, which will cover anything from de-risking supply chains away from China, to managing data in digital trade and sustainability.   

25 Sep I European Ombudsman Emily O’Reilly will moderate #BrusselsCalling debate on changing of the EU institutional guard, starring Henry Foy (Financial Times), Lisa O’Carroll (Guardian) and Stanley Pignal (Economist).

4 Oct I Back to school trade conversation with Trade Commissioner Dombrovskis at Friends of Europe.  

25 Oct I For our next #BrusselsCalling media panel, we host European Ombudsman Emily O’Reilly. She will moderate a debate on the changing of the EU institutional guard in 2024, starring Henry Foy (Financial Times), Lisa O’Carroll (Guardian), Stanley Pignal (Economist) and Aoife White (POLITICO).  

What we’re reading.

The August break brought new trade friction between the EU and Indonesia. Jakarta initiated a WTO complaint against the EU’s duties on biodiesel, which Brussels had adopted claiming that Indonesia was subsiding these exports. If the WTO accepts the complaint, the parties will start talks to seek an agreement and avoid a formal trial. In any case, it’s not a pleasant development for the ongoing bilateral trade talks, already undermined by the divergence on the EU deforestation regulation. 

The Delors Institute takes a deep dive on digital trade, mapping Brussels’ ongoing bilateral negotiations. While maintaining its safeguard for consumers, the EU should work more to open new markets, the paper argues. 

The Financial Times explores the indirect costs for European businesses caused by the war in Ukraine (starting with Delhaize). Securing their supplying chains is become an imperative, as consumers are already facing the prices. 

But let’s conclude with somepositive news. The EU sees a trade surplus, albeit small, after 18 months. The main causes are the gradual normalisation of energy prices and the slowdown in China’s exports.  

Still have questions? Drop a message.   

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