L'articolo Here is the best answer to Trump’s tariffs: in the general silence of everyone, no one noticed that last week in Strasbourg the FRUGAL front collapsed and was approved by 303 votes in favor, 289 against and 62 abstentions, an amendment (n. 101) to the text on the EU defense strategy (rapporteur Nicolás PASCUAL DE LA PARTE), which calls on the Commission to increase the EU’s common debt to ensure that the Union has the necessary budgetary capacity to borrow in exceptional and crisis situations proviene da Bubble report.

L'articolo Lady Ursula’s plan for European rearmament is the usual German delaying tactic: each state will put up the money for itself, a little from the EIB, a little from some other fund with a fancy name, and then we’ll see who survives. Of course, even with the separation of military spending from that great idiocy called ‘Stability and Growth Pact’, the heavily indebted states won’t be able to do much more than they’ve been doing. Nobody is talking about serious matters: if we really want Europe to become a credible political subject, we have to start by changing the treaties in a framework that includes the United Kingdom proviene da Bubble report.

China and the EU are back in dialogue on cars three months after tariffs on Dragon e-cars came into force, but a new trade spat is on the horizon, this time in the medical devices sector. European Council President António Costa yesterday held his first telephone conversation with his Chinese counterpart Xi Jinping, insisting that Beijing must ensure a “level playing field” and reduce “existing trade and economic imbalances” caused by competition-distorting subsidies.

Such as those confirmed yesterday by the EU Commission in a detailed report following an investigation into China’s healthcare equipment market launched in April a year ago. There is “clear evidence” that the People’s Republic favors domestic industry in the procurement of hospital supplies, limiting imports to cases of absolute necessity, the report says.

The EU executive is relying primarily on negotiations “to remove discriminatory measures,” but is preparing for a new wall-to-wall as in the automotive sector and “decisive action to defend fair competition” also in the health sector, warned Trade Commissioner Maros Sefcovic. In retaliation, Brussels could indeed impose penalties on Chinese companies bidding for contracts in the EU, even to the point of excluding them from government contracts altogether.

L'articolo China has also caught up with Europe in pharmaceuticals, where we used to boast primacy, and is ready to kick our asses: of the 90 new molecules launched in the year of China’s overtaking, 28 are “made in the US,” 25 come from China, and only 12 from Europe. Today, between 80 and 90 percent of the active ingredients in antibiotics used in Europe come from China. Whereas 25 years ago half of all new treatments were “made in the EU”, today it is only one in five. That is why the Sino-EU dialogue is resuming on cars, but late as usual, it is finally intensifying on pharmaceuticals.  proviene da Bubble report.

“Let NATO and the EU be two institutions working in parallel, and the first steps are in the right direction. It is necessary to think about defense not only from the military aspect, but also including social and diplomatic interventions. In this aspect, the Parliament can be very helpful”. This was said by Forza Italia MEP and President of the Delegation for relations with the NATO Parliamentary Assembly, Salvatore De Meo, during his hearing with NATO Secretary General Mark Rutte.

“It is necessary to emphasize this awareness, so that investment in defense is not only seen as an obligation, but there is an awareness that it is a means to be able to improve not only defensive capabilities, but also social welfare.

NATO Secretary General Mark Rutte said it was an illusion to believe that it would be possible to create a European NATO “for ideological reasons” in the next decade.

“As far as a more autonomous European defense is concerned, it would be great to have some kind of European NATO, but in that case it’s not 2% (of GDP to be spent on defense), it’s 8, 9 or 10% that’s needed (…). It will take 15 to 20 years to build a European NATO without the United States,” he told MEPs. He pointed out that the United States spends “more than 60% of all the money spent on NATO territory. According to Mr. Rutte, “it is an illusion to think that you can build a European NATO in the next 10 to 15 years. Mr. Rutte said he was opposed to such a project of a NATO without the United States, and also said he was convinced that the United States would remain an ally despite the Trump administration’s threat to leave the alliance.

Asked about defense spending, the secretary general pointed out that 2% was not enough and said the allies would work on the issue with the aim of reaching an agreement in June, before the summit in The Hague. “We need to spend better, we need to do joint procurement, we need to innovate, but we also need to spend more. If spending doesn’t go up, (you should) take Russian language courses or go to New Zealand,” he added.

And while the Europeans are still discussing the EDIP program and eligibility criteria, the Secretary General warned against creating new barriers between the Allies. “We must avoid creating new barriers between Allies, which means additional costs and difficulties in production. We must involve the other Allies, and cooperation in this area is becoming increasingly fundamental,” he warned, stressing the need for complementarity.

Mr. Rutte also highlighted efforts to bring NATO closer to the EU with the creation of a task force, adding that in these “troubled times in terms of security” it was necessary to strengthen cooperation.

“We must act, we must invest much more in defense, in defense capacity, in strengthening our resilience, in continuing our support for Ukraine to turn the situation around and to prevent further Russian aggression,” Rutte concluded. 

A retreat to prepare for the future. At the same time, the President of the European Council, António Costa, formally invited European leaders to an informal retreat on European defense on February 3 at the Château de Limont (Belgium). Rutte will attend the luncheon and British Prime Minister Keir Starmer will attend the dinner.

“The purpose of this meeting is to prepare the ground for the decisions we will have to take and to give guidance to the Commission and the High Representative in their preparation of a White Paper on the future of European defense,” Costa said in his invitation letter.

The President intends to base the discussion on two principles: the fact that the EU must take greater responsibility for its own defense “in order to become more resilient, more effective, more autonomous and a more reliable security and defense actor”; and the common interest in closer cooperation at European level “to maximize economies of scale and reduce costs, to ensure interoperability, to ensure stable and long-term demand – to give more predictability to our industry – and to avoid duplication”. The discussion will focus in particular on defense financing.

To structure the discussion, the President posed a series of questions to his counterparts. He wants to know which defense capabilities should be developed as a priority and how they should be defined, given their importance for the EU’s collective security.

“Do we agree to spend more and better together? How can we accelerate the mobilization of private funding and through which EU instruments? How can we best use the EU budget in the short, medium and long term? Given the significant financing needs, what additional joint options can be considered?

Finally, Mr. Costa wants to know how to further strengthen and deepen existing partnerships and what the objectives and priorities should be with European partners outside the EU.

Defense will be discussed again at the European Council in March, in particular from the point of view of financing, and in June in a broader context with a view to developing a strategy.

L'articolo Yesterday we published an article explaining that one of the causes of the halving of Europe’s influence on the stock markets is the lack of a unified European defense. A message that has now been clarified and reiterated by, among others, the President of the European Council, António Costa, the Vice-President of the European Commission, Stéphane Séjourné, and the MEP and Chair of the Delegation for relations with the NATO Parliamentary Assembly, Salvatore De Meo. This nicely sums up a hypothesis that is beginning to circulate among the palaces in Brussels in order to avoid a trade war with the U.S. and to calm their anger over Germany’s and China’s structural current account surpluses at the expense of the U.S. economy. That is, common European debt for common defense proviene da Bubble report.

In short, some have lost weight and others have gained weight. It is true that Europe will be overtaken by the emerging markets in terms of global market capitalization by the end of 2024, if the addition of small caps is maintained. To sum up, the scenario is as follows: the equity markets “Made in Europe” have lost a lot of weight, giving way to those of the United States and being overtaken by the emerging markets. So much for the percentages and the trends. But what are the reasons for this dynamic? A first cause is the role of technology and publicly traded high-tech companies. The knowledge economy that dominates our lives has accelerated, especially in recent years, as a result of digitalization, the computerization of processes, and issues such as artificial intelligence (AI). All areas in which the largest companies in the world (from Microsoft to Alphabet, from Apple to Nvidia) are based in the US and listed on the US stock exchange. A state of affairs that, through the explosion of their share prices, has helped to put the market capitalization of “Made in USA” into orbit. Is this surprising? The answer is no. To understand this, it is enough to go back in time to the beginnings of the chip industry, one of the “wellsprings” of the knowledge economy. In the late 1950s, microprocessors found room to expand because they were in the crosshairs of the U.S. military establishment. Of course, the initial push came from NASA, which needed chips for its computers like bread in its race with the Russians to conquer the moon. But it is the U.S. Navy’s missile contracts that line the pockets of companies like Texas Instruments. Well, it is this combination – together with the economies of scale guaranteed by the “continental US”, the large supply of brains and lots of venture capital – that contributed to the birth of Silicon Valley and the local high-tech industry. On closer inspection, this was lacking on the other side of the Atlantic. In Europe – although technology applied to industry is strong and there are many excellent projects and realities – there has not been a real broad demand related to the military (like it or not). This has led to a lack of impetus for the creation of high-tech giants. And in the absence of these – we see this in the present with Ia – the European stock markets have failed to take full advantage of the technology train.

But it is not just a question of high-tech and the military world. Another key issue is the lack of attention, if not outright hostility, to markets by politicians. In America, but also in emerging markets like India, stock exchanges are seen as essential strategic assets for social and economic expansion. This is not the case in Europe. We are inundated with regulations that stifle rather than support the development of stock markets.

All for the sake of control, the benefits of which are not clear. Nevertheless, the creation of the European single market and the euro have given a nice boost to the stock markets of the old continent, even if it is undeniable that the project is not yet complete. In this sense, the absence of a single European stock exchange is a case in point. In the United States, the reference markets are Nasdaq and Wall Street. Here, on the other hand, we have the fragmentation of the financial markets, partly because of too many parochialisms and nationalisms.

From regulation to culture. Yes, because there is also this front at the level of investors and entrepreneurs. In fact, the American world is inherently more supportive of the idea of venture capital. Star-studded households had 25.2 percent of their wealth invested in the stock market last year. This figure is not remotely comparable to that of Europeans, for example, who are characterized by a low single-digit percentage of equity. These same companies, thanks in part to the long period of zero interest rates resulting from ultra-expansive monetary policies, have then leveraged themselves heavily with debt, without favoring the stock market channel. Again, in short, an environment that facilitated the higher marginality of European markets. Not only compared to America, but also to countries like China and India. The latter, in particular, recorded a record number of IPOs (over 320) in 2024, demonstrating the extreme dynamism of the market. On the one hand, this is positive, but on the other, it creates problems. It should not be forgotten that in America, the high-tech giants that have contributed to the expansion of Wall Street also represent an unprecedented concentration of power. That is a negative. The hope? That even under a Trump presidency, antitrust will continue to strike a few blows.

L'articolo In 25 years, Europe’s weight in the stock market has more than halved. One of the reasons: in the absence of a common foreign policy and a common defense, there has been no innovation driven by military spending.  proviene da Bubble report.

A situation that has already happened to the EU during the Brexit negotiations. If you have large trade surpluses, as happened between the EU and the UK, you are not in a strong negotiating position, and even if you are much larger, you cannot dictate terms. 

With Brexit, the decline of German and European industry has begun. A decline that was first aggravated by the pandemic and then by the Russia-Ukraine war. 

The next foreseeable event is the introduction of US tariffs. This would require a change in economic policy, especially in Germany, to reduce dependence on export surpluses. 

For heaven’s sake, not all of the EU Commission’s ideas are bad, such as fighting to preserve and, if possible, strengthen the global multilateral trading system. But it would be foolish to underestimate the enormous force against multilateralism in current geopolitics. That is why even the trade agreement with MERCOSUR should be approached with caution. 

In his first term, Trump pursued a trade policy based mostly on statements of intent, but he managed to impose tariffs on steel and aluminum. The EU responded with tariffs on Harley-Davidson motorcycles (right of retaliation). What Trump is planning now seems much more radical, not least because he would have already found the legal tools to implement the tariffs without waiting for a vote in Congress, citing national security. 

Last time, Jean-Claude Juncker managed to distract Trump by promising to buy more soybeans from the United States. Ursula von der Leyen, making a grave mistake, wants to do the same by promising to buy more LNG from the US. Not to mention Friedrich Merz, who, poor deluded man, even believes that a free trade agreement can be reached with the US. Both underestimate the determination of Trump, who has learned from the mistakes that prevented him from getting what he wanted and wants: to protect American workers. 

Europe shows once again that it does not learn from mistakes and we continue to do the same as before, without change. We have gotten used to not solving problems. The problem is not Trump, the problem is us!

L'articolo Ursula and Merz: make us laugh! The two Germans are convinced that they can play Trump cleverly. The first imitates the moves of Junker, who proposed buying more soybeans from the US to distract Trump, and suggests that the EU buy more US LNG to avoid tariffs. The latter lives in a parallel universe and even fantasizes about a trade agreement with the US. Poor Europe is now a continent victimized by itself. And to think that the damage caused by the tariffs could be largely covered by issuing common debt for at least 40 percent of European GDP is unbelievable.  proviene da Bubble report.

The EU’s timeframe is always long, even when issues demand urgent answers, as is the case with boosting competitiveness and increasing investment in defense. The Swedish presidency, which will lead the EU in the first half of 2023, has already made competitiveness one of its priorities. Thus, for months, there has been talk of the huge investments the Union will need to finance the double green and digital transition, to which defense has been added. However, it was former ECB President Mario Draghi who, in his report presented in September, provided a comprehensive diagnosis of the situation and quantified the Union’s financial needs: 800 billion euros per year, between private and public funds. Draghi’s work has set the pace, even if not all of his solutions are to the liking of EU countries. For the time being, defense is the most “neutral” ground on which it seems easiest to achieve convergence.

A year ago, it was Estonian Prime Minister Kaja Kallas (Renew), who now heads EU diplomacy, who first raised the possibility of common bonds to finance defense. She immediately won the support of French President Emmanuel Macron and other liberal leaders such as Belgium’s Alexander De Croo. But whenever the issue was raised with more frugal countries, starting with Germany and the Netherlands, they insisted that Next Generation EU was a one-off. In recent days, however, Danish Prime Minister Mette Frederiksen admitted in an interview that she was “looking with fresh eyes” at joint debt and state aid to support the investments needed to defend and boost the Union’s competitiveness. The front of frugal countries that have always opposed new joint debt is cracking, with the Nordics more inclined to revise their positions. Germany and the Netherlands remain the two most difficult stumbling blocks to overcome. It will be up to the German government that emerges from the February elections to make decisions on these issues. But it is clear that Berlin will then inevitably condition The Hague as well. Chancellor Scholz, even as Merkel’s finance minister, has always been skeptical about Eurobonds, but in recent years Berlin has shown flexibility and pragmatism. And that is exactly what Frederiksen is calling for: “All countries, including a country like Denmark, which is usually part of the austerity gang,” he said, “need to put aside knee-jerk reactions and see what Europe needs, and then we need to adapt the economy to that, not the other way around. And it is her way of acting across ideological fences that won Frederiksen the 2019 election, when as a Social Democrat she took a hard line on crime and immigration, issues usually reserved for the right that she rejected on the left: “An insecure society is always a bigger challenge for people without many opportunities. If you have money, you can always defend yourself,” she reminded the Financial Times in an interview last February.

Falls taboo in Germany for reform to debt brake

In Germany, the greatest taboo has fallen. Now even the president of the Bundesbank, the temple of fiscal austerity and monetary orthodoxy, is calling for a reform of the debt brake. In an interview with the Financial Times, Governor Joachim Nagel succumbed to a “complicated” and “weak” scenario for Germany. And given the urgent need to gain more fiscal space to modernize Germany’s infrastructure and invest in defense, the Buba chief said bluntly that “it would be a very smart approach” if the “debt brake” that harnesses public accounts, inscribed in the German constitution since 2009, were revised.

A revelation that comes in the middle of a discussion that has been going on for months. The inability to circumvent the debt brake after the Karlsruhe Constitutional Court’s ruling last December rejecting 60 billion in extra-budgetary funds is the real reason for the long government crisis that led to early elections in recent weeks. Olaf Scholz’s SPD and the Greens are in favor of the reform, while the Liberals are adamantly opposed.

L'articolo God willing, they may begin to awaken from their long hibernation. Badger Europe may begin to realize what is taken for granted elsewhere. In some frugal countries, such as Denmark, the need for a common debt is beginning to sink in. And in Germany, the taboo on debt brake reform is beginning to fall. Who knows if Merz will slowly come around. There is no hope for Ferber, for whom austerity is a religion proviene da Bubble report.

The cuts in the federal budget are expected to add up to ten billion euros a year, with a further ten billion euros a year to be saved through a stricter migration policy. “The bottom line is that we need to get to 50 billion euros or more in order to ensure the country’s ability to defend itself and to relieve the burden on those who pull the cart in this country,” said the CDU politician, who was responsible for the party’s basic program. Linnemann also made a promise to maintain the debt brake: “The federal debt brake is cemented.”

Surprisingly, Linnemann also announced a new push for the failed free trade agreement TTIP. “I could well imagine that under Friedrich Merz and Donald Trump, together with Commission President Ursula von der Leyen, there will be a new attempt at a transatlantic trade agreement after TTIP has failed,” said Linnemann. A new free trade agreement would boost both continents.

He clearly rejected the emergency budget planned by Chancellor Olaf Scholz (SPD). “That is not necessary at the moment,” said Linnemann. Trust is gone. “Every day that this chancellor remains in office is a bad day for Germany,” said Linnemann. Germany’s business model was “in the greatest danger it has ever been in”.

Extract Eurointelligence:

“[…] If you want to know Europe’s true reaction to Donald Trump’s election victory, look no further than Berlin. Germany’s political leadership chose the very moment of Trump’s victory to throw their country into a political vacuum that will last for at least eight months. When Trump becomes president in January, the EU will have lame duck governments in Berlin and Paris.

It is also becoming clear that the EU will not stand up to Trump. They will instead compete for his attention. Viktor Orbán is already Trump’s biggest ally in Europe. Trump will get on very well with Giorgia Meloni. We read an interview with the general secretary of the CDU, who predicts that Merz, a long-standing Atlanticist, together with von der Leyen, would like to negotiate a free trade agreement with Trump. We think this is bordering on the delusional. They are clearly not taking Trump’s threat to impose tariffs seriously, nor his demand for Europeans to raise defence spending to 3% of GDP. Trump has not been the biggest fan of Germany, and especially not of German imports. We doubt that Richard Grenell, a former US ambassador to Germany and one of Trump’s foreign policy advisers, is prioritising a strategic alliance with Germany. Like the courtiers of a decadent monarchy, Europe’s leaders will compete with one another for the great man’s attention – only to realise that he is not interested in them. Trump does not want more German exports, he wants German companies to produce in the US.

The EU, and Germany especially, not only depend on the US for security, but also for absorbing Europe’s large and persistent current account surpluses. With Trump in power, the US will probably do less of both. Since Germany has never known any economic strategy other than industrial export surpluses, we see the German structural slump persisting.  

The way the EU is built is simply not conducive to geopolitical grandstanding.

L'articolo SOS Europe, Help! Some Germans are still struggling to open their eyes. And in the hope that Trump won’t do what he says, they are still fantasizing about unrealizable things. Like CDU secretary general Carsten Linnemann, who fantasizes about free trade agreements between Europe and the U.S. instead of thinking about how to strengthen domestic demand. If they continue their obsession with austerity this time, they will not only lead Greece into the abyss, but Germany itself and the whole of Europe. Let us hope that Weber and the true Catholics in the EPP will be able to open the eyes of their compatriots proviene da Bubble report.

In this framework, the DSA plays a crucial role in defining the perimeter of fiscal policies implemented at the national level. By defining individual countries’ margins of manoeuvre over a multi-year horizon, the new scheme is supposed to ensure that the debt ratio is “on a plausible downward trajectory or remains at prudent levels, even under adverse scenarios”. The criteria used to define expenditure trajectories require that, without resorting to further fiscal consolidation, the public debt ratio falls or remains below the 60% of GDP threshold by the end of the adjustment period and in the following ten years; the debt ratio should fall with a “sufficiently” high probability; and the fiscal deficit should fall below 3 per cent and remain there in the medium term.

In a recent study, we have raised important questions about the potential impact of the wave of consolidation that governments will have to implement to meet the new rules. We analyse the sensitivity of the official DSA assumptions on how fiscal consolidation affects growth and public debt ratios. By introducing assumptions that are in line with the scientific literature and more realistic than the official assumptions used by the EC, we show how fiscal consolidations resulting from the new fiscal framework could affect economic growth more adversely than the European Commission suggests, which will also make it more difficult to bring down public debt ratios. This is particularly true in countries with high debts.

The analysis focuses on the four largest EU economies, which comprise about three-quarters of overall economic activity in the euro area: France, Germany, Italy and Spain. The latter face different challenges in terms of deficit reduction: while Italy, France and Spain have to undertake historically large adjustments from 2025 onwards, Germany needs a much more modest adjustment plan. Under a four-year adjustment plan, Italy is required to improve its structural primary balance by about 1.08 per cent of GDP per year to meet the new parameters. France and Spain will have to make an annual adjustment of 0.94 and 0.89 per cent of GDP, respectively, while Germany’s required consolidation is much lower at 0.11 per cent per year.

Our study identifies three key elements that, in the context of the DSA model currently used by the EC, may lead to an underestimation of the negative growth effects of fiscal consolidation.

• Fiscal multiplier. In the short term, a fiscal consolidation of EUR 1 billion reduces economic output by EUR 0.75 billion (a multiplier effect of 0.75). This multiplier value is presumably too small, particularly in times of crisis and for expenditure-based consolidations, and it is also smaller than in the study to which the EU Commission refers.
• Persistence of consolidation effects. In the medium term, the EC assumes that the multiplier effect will disappear completely three years after the adjustment and that economic output will return to its previous growth path. Here too, the DSA lags behind the EC’s own publications, which discuss longer-lasting negative growth effects. The more recent literature shows that fiscal policy measures typically continue to have an effect in the medium term.
• Absence of spillover. The EC considers the effects of consolidation for each member state individually. However, the austerity measures in France, for example, may also have a considerable impact on the export-dependent German economy and therefore on German public finances due to close trade links. These spillover effects of fiscal consolidation measures are discussed elsewhere by the EC as an important influencing factor, but are currently ignored in the DSA.

The simulations presented in our study compare the DSA projections for GDP growth and the public-debt-to-GDP ratio for Italy, Germany, France and Spain based on the official assumptions with alternative scenarios obtained by modifying the basic assumptions, in line with the academic literature. The changes concern a somewhat larger fiscal multiplier (0.9 instead of 0.75), slower dissipation of the consolidation effects (5 years instead of the 3 years) and the presence of ‘spillovers’ (consolidation in one country also influences its partners based on how tight the trade links are).

If one compares the combined scenario (where all the changes just illustrated are present) with what the EC envisages, a more worrying picture emerges, particularly for those economies that currently show a high debt/GDP ratio. Although GDP returns to the original potential GDP path in all countries as early as 2033, the weak growth in the meantime leads to significantly higher public debt ratios in 2038: +3.9 percentage points of GDP in France and Italy, +3.1 percentage points in Spain and +1.7 percentage points for Germany.

In Italy and France, GDP will almost stagnate in the EC’s baseline adjustment scenario from 2025 to 2028. In our alternative scenario, economic output even shrinks over this four-year period. Due to these effects, public debt ratios will initially continue to rise despite the strong austerity measures. It is not unlikely that the consolidation targets will be missed in the political process under these conditions and that governments will therefore have to go for even larger fiscal adjustments during the economic downturn.

The large euro area countries with high public debt ratios France, Italy and Spain will have to adjust significantly more than their EU peers. These countries may experience more adverse domestic growth effects than officially expected under the new fiscal rules. In particular, this will be the case if fiscal multipliers turn out larger and/or if the negative short-run growth effects from fiscal adjustment dissipate more slowly than assumed by the EC. Although a level shift in public debt ratios need not endanger debt sustainability in the medium run, economic stagnation and a larger than expected increase in public debt ratios in the short run may erode the confidence of voters and bond investors. Should cross-country spillovers materialise, Germany and other EU countries with strong trade links will experience lower growth due to the restrictive fiscal policy stance by important trading partners. Compensating for the drag on growth due to lower import demand from EU trading partners may not be an easy task in the current environment. This is especially worrying, since the German export-led engine is now facing renewed headwinds, as highlighted by ECB’s Isabel Schnabel just a few days ago.

The results from our study suggest that a discussion about the negative growth effects of the upcoming austerity policy and the implications for public finances is urgently needed. The DSA assumptions are essential to the reformed EU fiscal rules and should be discussed scientifically and politically. With the renewed focus on austerity, expanding public investment to meet the challenges of renewing infrastructure, climate change, and European sovereignty is becoming a distant prospect. As Mario Draghi’s recent report suggests, policymakers should be open to changes that allow for more public investment, including a European investment fund.

L'articolo The return of austerity? – 2025 will be a decisive year for the Continent’s economy. The usual suspects will have to comply with the new rules: Italy is required to improve its structural primary balance by about 1.08 per cent of GDP per year to meet the new parameters. France and Spain will have to make an annual adjustment of 0.94 and 0.89 per cent of GDP, respectively. Blood and tears again, like ten years ago proviene da Bubble report.

For the coordinators of the two largest groups in Parliament, Jörgen Warborn (EPP, Swedish) and Brando Benifei (S&D, Spanish), the European Commission absolutely must continue negotiations on an alternative solution to tariffs. “Defence trade instruments should only come into effects as a last resort and should not risk harming our own industry”, stressed Jörgen Warborn.

The EPP, S&D, ECR, Renew Europe, Greens/EFA and The Left have all spoken out in favour of tariffs.

The coordinator of Renew Europe, Marie-Pierre Vedrenne (French), regretted that some elected representatives were criticising its use: “Everyone says we need fair and equal competition. And then we wouldn’t be supporting the European Commission?” She described the Commission’s investigation and findings as “proportionate”.

“The Commission must remain firm, and the Member States must not give in to Chinese blackmail”, added her compatriot Raphaël Glucksmann (S&D).

Within the PfE Group, the tone is different, with the feeling that tariffs would only harm European manufacturers. “This is not in the interests of the European automotive sector. We initially wanted to protect the sector, but it doesn’t want that. It fears retaliation. Nor am I convinced that this is in the interests of consumers, as they want access to cheaper products”, said Enikő Győri (PfE, Hungarian).

Some more nuanced voices, from the S&D and EPP Groups, have expressed doubts about the additional customs duties, fearing a trade war and excessive repercussions for the European agri-food sector, as China has launched several anti-subsidy and anti-dumping investigations into European agricultural products since January.

“The agri-food sector is often the first victim of trade wars. We must work towards an agreement and avoid that there are victims”, argued Cristina Maestre (S&D, Spanish).

The head of the European Commission’s trade defence unit, Martin Lukas, pointed out that discussions were continuing intensively between the EU and China, and that they could continue even after tariffs had been imposed.

Negotiators are currently examining the “price undertaking offers” that Chinese companies would apply in order not to export the targeted electric vehicles to the EU below a certain price.

L'articolo What do we do with the Chinese, tax them on electric cars or not, who knows! Some yes, some no. As usual, there is a nice little theatre going on in the INTA committee of the European Parliament proviene da Bubble report.