Tag: State aid

Briefing wars escalate as nervous EU and Britain enter Brexit endgame

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LONDON — Whisper it softly, but the Brexit endgame has arrived.
Eighteen months after Brussels and London reopened talks on the contentious Northern Ireland protocol — and more than three years after Britain actually left the EU — panicked officials on both sides of the English Channel are frantically trying to manage expectations as reports of a technical-level deal between the two sides emerge.
“They’re still in calls with the EU, but it’s literally just lawyers tidying up bits of text,” one senior British government official said Wednesday, in reference to the U.K. negotiating team. “We’re done.”

Multiple reports suggest U.K. Prime Minister Rishi Sunak now has a draft technical deal on his desk to consider, despite a wave of both official and unofficial denials from politicians and diplomats on all sides.
“I suspect it is more the technical shape of a deal than a deal per se,” said a second person close to the talks on the U.K. side, “which might be giving them wriggle room to deny it.”
Denials of an outright agreement were still coming thick and fast Wednesday night after the Times reported that London and Brussels had indeed reached a deal on the key customs and governance disputes that have dogged talks over the protocol. Crucially — and most contentiously — its front page story suggested the EU has given ground on the role its top court will play in resolving future disputes.
That followed earlier reporting late last week by Bloomberg News that technical-level solutions on customs, state aid and checks were indeed within touching distance.
Talks on smoothing the operation of the Northern Ireland protocol have been ongoing since the summer of 2021, with negotiators long targeting a deal this month, ahead of an expected visit to Ireland by U.S. President Joe Biden in April.
The protocol arrangement, agreed as part of the Brexit divorce deal, sees Northern Ireland continue to follow the EU’s customs union and single market rules, in an effort to avoid a politically-sensitive hard border with the neighboring Republic of Ireland, which remains an EU member state.
Yet Northern Ireland’s unionist politicians have long objected to the protocol, with the Democratic Unionist Party boycotting power-sharing and arguing that checks on goods moving from Great Britain to Northern Ireland effectively separate the region from the rest of the U.K. They’re backed by critics in Sunak’s governing Conservative Party who resent the Court of Justice of the European Union’s place in protocol governance.
Selling a deal to those domestic audiences represents an almighty political challenge for a prime minister already battling to keep his fractured party together.
The official line
Officially, both sides are sticking to the script and insisting that talks continue.
European Commission President Ursula von der Leyen told reporters Wednesday: “I’m very sorry, but I cannot give partial elements — because you never know in the very end how the package looks like.”
In Downing Street, Sunak’s official spokesperson tried to steer journalists away from what he called “speculative” reporting.
“No deal has been agreed, there is still lots of work to do on all areas, with significant gaps remaining between the U.K. and EU positions,” the spokesperson said. “Talks are ongoing on potential solutions including on goods.”
But the senior U.K. official quoted before said the message from No. 10 that negotiations are ongoing only applied at a political level.
They added: “It’s now up to politicians to decide ‘yay’ or ‘nay.’ Rishi could have further technical talks with Ursula von der Leyen and [EU Brexit point-man] Maroš Šefčovič and stuff like that, but officials are done. It’s plain as day.”
According to the second person close to the talks, Sunak has been receiving regular updates on the evolving technical shape of the deal.
“As far as I know, he hasn’t given it the green light yet,” they said. “But it is all being quite ‘secret squirrel’ in the [U.K.] Cabinet Office. So I don’t think many people will be fully in the loop.”
In Brussels and in London, EU diplomats were busy rubbishing reports of an imminent resolution, while acknowledging that information on the state of play is being kept tight. European ambassadors were briefed on Wednesday morning that a breakthrough is yet to be reached, and that the CJEU issue remains particularly tricky.
Even inside the U.K., claim and counter-claim were flying. Another British official close to the talks said it was “just wrong [that a deal] is close,” with “fundamental” issues outstanding “including making sure there isn’t a border.” They would not, the person added, “expect anything in the short term.”
One EU diplomat summed up the mood: “If somebody tells you they know what’s happening, they’re lying.”
In truth, a final agreement on Brexit has never looked so close.

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#Briefing #wars #escalate #nervous #Britain #enter #Brexit #endgame
( With inputs from : www.politico.eu )

January 31, 2023
Dutch PM Rutte wants EU to play it frugal in face of mega US subsidies

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Don’t inject fresh money into the European Union — just reform national policies, says Dutch Prime Minister Mark Rutte.
That’s the best way to prevent EU industry from getting wiped out by U.S. companies under Washington’s major new green subsidies scheme, Rutte told a group of journalists at the office of the Dutch embassy to the EU in Brussels on Tuesday.
“There’s so much money at this moment in the system,” Rutte said shortly after meeting with European Commission President Ursula von der Leyen and Belgian Prime Minister Alexander De Croo. He also argued for deeper reforms, stressing how some European countries spend so much on their pension systems — “all money you cannot spend on innovation and green tech.”
Rutte is often viewed as the key leader of the so-called “frugal” group of European countries, comprised of like-minded fiscally conservative nations. The group, which also includes Denmark and Sweden, has been reluctant to increase national contributions to EU coffers — at least until the coronavirus pandemic forced them to partly adjust that line.
The discussion among EU decision-makers on how to preserve the bloc’s industrial base is taking place ahead of a meeting of EU leaders next month as the U.S. moves to roll out a $369 billion industrial subsidy scheme to support green industries under the so-called Inflation Reduction Act.
The U.S. legislation has stoked fears about consequences for European industry and sparked calls to revisit rules on state aid. Another concern is that such subsidies put the EU’s single market at risk by conferring an outsized advantage to countries with larger fiscal capacity, such as Germany, which have more space to financially maneuver.
Rutte, who was recently in Washington to visit U.S. President Joe Biden, said: “There are a number of consequences to this Inflation Reduction Act (IRA) — but unintended.” The IRA “forces us to think about how we organize ourselves” to remain competitive, he added.
On the one hand, he sees U.S. attempts to meet climate targets as a positive development. On the other hand, he pointed to risks to having a level playing field, like with electric mobility. “Companies might shift investments from the EU to the U.S.,” he said, parroting a much-repeated fear.

But EU subsidies should remain unaltered, Rutte argued. Regarding calls to adapt to the IRA by changing EU aid rules, he conceded: “I can accept some changes as long as they are limited.”
Rutte was clear on his belief that no fresh EU money should be put on the table. “I mean, not grants, but even not loans,” he said. “There’s so much still around” — for example loans in the Recovery and Resilience Facility, the centerpiece of the EU’s pandemic recovery plan.
A draft of the text that leaders would seek to agree on at their upcoming European Council meeting hints at opening up new sources of EU funding. The draft, seen by POLITICO, makes calls “to take work forward building notably on the success of the SURE programme,” referring to the EU’s loans-based program to support employment floated by Rome and others.
Rutte stressed that he would not like to see this proposal in the text, which will be discussed by EU ambassadors on Wednesday.
On the question of whether he’d be in favor of a new SURE program, “My answer would be that we have serious doubts,” he said.
Barbara Moens contributed reporting.

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( With inputs from : www.politico.eu )

January 24, 2023
Scholz upbeat about trade truce with US in ‘first quarter of this year’

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PARIS — German Chancellor Olaf Scholz raised optimism on Sunday that the EU and the U.S. can reach a trade truce in the coming months to prevent discrimination against European companies due to American subsidies.
Speaking at a press conference with French President Emmanuel Macron following a joint Franco-German Cabinet meeting in Paris, Scholz said he was “confident” that the EU and the U.S. could reach an agreement “within the first quarter of this year” to address measures under the U.S. Inflation Reduction Act that Europe fears would siphon investments in key technologies away the Continent.
“My impression is that there is a great understanding in the U.S. [of the concerns raised in the EU],” the chancellor said.
Macron told reporters that he and Scholz supported attempts by the European Commission to negotiate exemptions from the U.S. law to avoid discrimination against EU companies.
The fresh optimism came as both leaders adopted a joint statement in which they called for loosening EU state aid rules to boost home-grown green industries — in a response to the U.S. law. The text said the EU needed “ambitious” measures to increase the bloc’s economic competitiveness, such as “simplified and streamlined procedures for state aid” that would allow pumping more money into strategic industries.
The joint statement also stressed the need to create “sufficient funding.” But in a win for Berlin, which has been reluctant to talk about new EU debt, the text says that the bloc should first make “full use of the available funding and financial instruments.” The statement also includes an unspecific reference about the need to create “solidarity measures.”
EU leaders will meet early next month to discuss Europe’s response to the Inflation Reduction Act, including the Franco-German proposal to soften state aid rules.
The relationship between Scholz and Macron hit a low in recent months when the French president canceled a planned joint Cabinet meeting in October over disagreements on energy, finance and defense. But the two leaders have since found common ground over responding to the green subsidies in Washington’s Inflation Reduction Act. Macron said that Paris and Berlin had worked in recent weeks to “synchronize” their visions for Europe.

“We need the greatest convergence possible to help Europe to move forward,” he said.
But there was little convergence on how to respond to Ukraine’s repeated requests for Germany and France to deliver battle tanks amid fears there could be a renewed Russian offensive in the spring.
Asked whether France would send Leclerc tanks to Ukraine, Macron said the request was being considered and there was work to be done on this issue in the “days and weeks to come.”
Scholz evaded a question on whether Germany would send Leopard 2 tanks, stressing that Berlin had never ceased supporting Ukraine with weapons deliveries and took its decisions in cooperation with its allies.
“We have to fear that this war will go on for a very long time,” the chancellor said.
Reconciliation, for past and present
The German chancellor and his Cabinet were in Paris on Sunday to celebrate the 60th anniversary of the Elysée treaty, which marked a reconciliation between France and Germany after World War II. The celebrations, first at the Sorbonne University and later at the Elysée Palace, were also a moment for the two leaders to put their recent disagreements aside.
Paris and Berlin have been at odds in recent months not only over defense, energy and finance policy, but also Scholz’s controversial €200 billion package for energy price relief, which was announced last fall without previously involving the French government. These tensions culminated in Macron snubbing Scholz by canceling, in an unprecedented manner, a planned press conference with the German leader in October.
At the Sorbonne, Scholz admitted relations between the two countries were often turbulent.
“The Franco-German engine isn’t always an engine that purrs softly; it’s also a well-oiled machine that can be noisy when it is looking for compromises,” he said.
Macron said France and Germany needed to show “fresh ambition” at a time when “history is becoming unhinged again,” in a reference to Russia’s aggression against Ukraine.
“Because we have cleared a path towards reconciliation, France and Germany must become pioneers for the relaunch of Europe” in areas such as energy, innovation, technology, artificial intelligence and diplomacy, he said.
On defense, Paris and Berlin announced that Franco-German battalions would be deployed to Romania and Lithuania to reinforce NATO’s eastern front.
The leaders also welcomed “with satisfaction” recent progress on their joint fighter jet project, FCAS, and said they wanted to progress on their Franco-German tank project, according to the joint statement.
The joint declaration also said that both countries are open to the long-term project of EU treaty changes, and that in the shorter term they want to overcome “deadlocks” in the Council of the EU by switching to qualified majority voting on foreign policy and taxation.

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( With inputs from : www.politico.eu )

January 21, 2023