Too busy with putting up Christmas decorations and off-season FIFA World Cup? You may have missed some trade news, but worry not, Trade Views comes to the rescue! The Macron-Biden and TTC summits have shown some appeasement between the EU and US – just a bit, though, as the subsidies spat continues. The EU is also sharpening its Brexit-management tools and continues the hot pursuit of raw materials for its climate ambitions. In other news, new obligations loom for companies as the anti-deforestation and due diligence rules advance.
One Big Thing.
‘Tis the season for Transatlantic friendship… or is it?
The EU-US green subsidies spat continues (how it began and how it evolved), but waters may be calming down, as Macron’s visit to Washington on 1 December and the Trade and Technology Council on 5 December somewhat appeased the mood. Biden conceded that the (in)famous Inflation Reduction Act could be “tweaked” to make European producers benefit from the same tax credits, and reassured Brussels that he “never meant to exclude folks who were cooperating,” scoring brownie points with the EU and its electric cars. But the EU and US are not ready to ride off into the sunset yet. It remains unclear how the Biden administration would satisfy European requests, and the US Congress likes the IRA as it is: a landmark policy for the Democrats… pursuing green transition by subsidising domestic industries, what’s better? So, all options are on Brussels’ table: von der Leyen said the EU may do just the same as the US, and Macron himself has been pushing for a “Buy European Act” that would force producers to use a minimum amount of European inputs instead of imported ones – maybe even in public procurement. Berlin sympathised with the idea (but without joint EU debt, Finance Minister Lindner immediately warned). If Macron and Scholz agree, something big must be on the horizon.
Zoom In: The Business community, very much integrated across the Atlantic, keeps being caught in the middle – and is starting to make its voice heard.
Zoom Out: Remember: the main reason of the EU’s irritancy is the fear of losing green investments in favour of the US, making Brussels’ energy transition even harder.
The Plus: The 3rd EU-US Trade and Technology Council announced several joint initiatives, from telecom projects in developing countries to AI. But the green subsidy dispute overshadowed all this. For now, the Commission must settle for a taskforce to debate the issue, while von der Leyen called for an adaptation of rules on state aid (implicitly signalling support for European companies in the sustainability sector). A bit of contradiction with colleagues Vestager and Dombrovskis, who warned against a subsidy race?
Second in line.
Two pieces of legislation, a directive and a regulation walk into a bar…
Week after week, the EU is really getting serious in terms of trade compliance. This week, the European Parliament and Member States reached a provisional agreement on a regulation on deforestation-free supply chains. This will ensure that goods placed on the EU market have not been produced causing deforestation or forest degradation in third countries. Last week, Member States adopted their negotiating position on the corporate sustainable due diligence directive with a “general approach”, meaning they want the proceedings to go fast. But Member States also excluded financial services and would like for the new rules to be applied only to supply chains and not value chains, meaning that companies would be responsible for their own supply chains, but not for other downstream activities. These are two big “buts”. Trilogues will start soon, let’s see if they go at warp speed.
EU anti-Brexit tool: EU stick to make UK respect its commitments
On 30 November, the Parliament and Member States reached a deal on a Regulation to empower the European Commission to respond faster to any UK breach of the Trade and Cooperation and Withdrawal Agreements, equipping it to use sanctions like restrictions on trade, investment or other cross-channel activities. Now, Parliament and Member States have to approve the text internally before it could enter into force in early 2023. It is the EU’s response to Boris Johnson’s 2020 attempt to introduce the Internal Market Bill – which would have meant a breach of the Northern Ireland Protocol, criticised by pro-British unionists for imposing checks between Northern Ireland and Britain’s market (reminder). The EPP Irish MEP Seán Kelly led the European Parliament’s negotiating team, and stressed how EU legislators hope the measure will not be needed moving forward. The EU has acknowledged an improved tone of EU-UK relations since the arrival of PM Sunak to Number 10. Let’s hope this will translate into more stability for businesses – stay tuned for the never-ending Brexit saga.
On the hunt for more raw materials: at home and with friends
A transition towards a carbon neutral future means more… nope, it’s not only solar panels or less meat: it’s raw materials. To reduce its dependence on imports, the EU is even considering to restart mining in Europe. The middle way will include prioritising the development of refining, recycling and mining capacities, and then starting to dig, if and where necessary, the mineral-rich soils of Sweden and Finland. The Commission’s go-to expert Peter Handley says “we have to take more responsibly for what we use”. That is: raw materials must come from somewhere. The million-dollar question is how much will actually be needed. The German Mineral Resources Agency says it’s complicated, as unpredictable events are a key part of the equation. As the world shifts from a supply-and-demand-driven economy to a geopolitically oriented one, we can safely expect more deals with friends like Ukraine, Canada, Namibia, Kazakhstan, Greenland and Norway, even at higher cost – and that is only the beginning (more here).
On the menu for 2023: Chips
What about another highly strategic item: the “Chips Act”? Ministers in the Council have unanimously adopted their negotiating position on the file, while the Parliament is expected to finalise its opinion in February. MEPs are convinced they found a perfect partner: Taiwan (or, as Beijing would call it, “Chinese Taipei”). The Chips Act will thus be in the legislative pipeline throughout the entire year 2023.
On our radar.
07 Dec I The think tank EPC hosts an event on the international response to Russia’s invasion of Ukraine.
08 Dec I INTA will take stock of the last TTC summit with Commissioners Vestager and Dombrovskis.
08 Dec I European Defence Agency is organising its Annual Conference entitled Investing in European Defence.
12 Dec I Still in TTC mood? The Commission will host a meeting to inform civil society on the outcomes of the last TTC.
15 Dec I European Council.
What we’re reading.
Egmont wrote a paper advocating for (even more) progress on the EU trade defence. You can find some analysis on our “usual suspects”, like anti-coercion, foreign subsidies…
Want to know more about the context of Macron’s visit to Washington? Carnegie reflects on the state of play of France-US relations.
Tough news for shipping operators: the Parliament found an agreement to include maritime transport in the emission trading scheme (ETS). Important step for carbon pricing in the sector.
Our Victoria Main interviewed POLITICO Europe’s Editor-in-Chief Jamil Anderlini.
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