Refurbed Regulatory Update October I

Ukraine sues Poland, Hungary and Slovakia - or does it?

Ukraine’s Trade Representative Taras Kachka announced this step on September 18th. The three countries are going against the will of the European Commission, which decided to again allow Ukrainian grain sales across the EU. Brussels on September 15th, decided to end its temporary ban of sales of Ukrainian grain in neighbouring Poland, Hungary, Slovakia, Romania and Bulgaria. The ban was meant to protect farmers and allow markets to adapt to the surge in products from Ukraine, following Russia’s blockade of Ukrainian ports on the Black Sea. Poland, Hungary and Slovakia said they would impose their own bans on Ukrainian grain following the Commission’s decision to end its restrictions. Kyiv said they would sue the countries at the World Trade Organisation — an international body — rather than via its own trade accord with the EU. Brussels hopes to solve the fight by getting Kyiv to impose its own restrictions on exports in the case of sudden surges.

On 21 September, Poland escalated the dispute further by announcing that it will no longer transfer weapons to Ukraine, “because we are now arming Poland with more modern weapons,” prime minister Mateusz Morawiecki stated.

But then: Ukraine backed down on September 22nd, saying they needed more time and are working on a mechanism to counteract any sudden surges in grain exports from their country.

Franco-German proposal for EU Reform

Paris and Berlin presented a joint paper with concrete proposals on how to keep the EU governable with 30 or more members — as Ukraine, Moldova and the Western Balkans prepare to join the Union. Crucially, if EU countries fail to agree on treaty change and necessary reforms, the paper proposes that a coalition of willing countries move ahead with a “‘supplementary reform treaty’ between willing Member States.” This is basically proposing the idea of a “multi-speed Europe”. The paper proposes that the EU move forward in four concentric circles: “1. The Inner Circle; 2. The EU; 3. Associate Members; 4. The European Political Community (a loose association of European leaders that meet twice a year to talk).”

The authors (a group of experts) also endorse the target date of 2030 for EU enlargement, arguing the next Commission “should commit to the goal of 2030 and agree how to make the EU enlargement ready by then.” The paper includes several options on how to run a larger EU, ranking from more ambitious to second best. The authors propose a bigger EU budget, linking EU payouts more strictly to rule of law conditions, moving toward more majority voting instead of unanimity in the Council (including by rebalancing the threshold of qualified majority toward smaller EU countries, which may not be liked by France and Germany) and creating a new watchdog that would probe the financial integrity of people working for EU institutions.

Does it actually matter? Yes. And no. It’s complex. It has no direct and immediate impact on us at refurbed, but it has huge potential implications. One of them being: more members in the EU, more countries in the Single Market with common rules, potential to access new markets and opportunities. Another one being: some of the proposed actions would mean a quite drastic overhaul of the European governance system as we know it today. This opens up a whole new playing field to get creative on and tackle underlying problems that no one dared to touch due to their complexity (did anybody say imports, taxes, decision-making procedures and a re-shift in the informal balance of power?). But don’t get too excited yet - we are at the very beginning of a possible process of EU reform. I’ll keep you up to date on any developments 🙂

Getting tough on China?

After Ursula von der Leyen announced an investigation into the Chinese subsidy practices on electric vehicles, the EU trade commissioner Valdis Dombrovskis this week spurred rumours about possible additional investigations into two more sectors: the medical sector as well as the rail sector. In both cases, the European market is much more open than the Chinese is. Dombrovskis concluded a visit to China this week, where he also urged China to take a stronger stance on the raging war in Ukraine.

Strong headwinds blowing

It seems like the times of more ambitious climate policies may be over soon. From Paris to Berlin to London, the self-proclaimed world leaders on climate action are starting to lose their environmentally friendly-powered steam. Across the EU, governments fear a popular backlash against climate measures. Case in point: French President Emmanuel Macron is set to announce an additional €7 billion to boost green policies in next year’s budget, as well as additional measures for the coming years. But in a TV interview last Sunday, he made clear he had decided against banning gas boilers for residential buildings. His Ecological Transition Minister Christophe Béchu said he was worried about “soaring indicators of climatoskepticism, or climatorelativism.” Germany also walked back a plan to ban gas boilers and fossil-fuel heating, after massive government infighting and public outcries that coincided with the far-right party AfD’s rise in opinion polls. In an interview earlier this month, Finance Minister Christian Lindner slammed Brussels for seeking stricter efficiency rules for buildings, warning that such plans could spark a dangerous voter backlash and fuel the rise of the far right. The UK and even Sweden have just recently rolled back some of their green policies and climate commitments - because of protests.

This comes just two months before the next U.N. climate talks in Dubai where countries are to commit to making significant additional efforts to hit their 2030 goals. Even though Europe has made massive progress in cutting greenhouse gases, it nevertheless risks missing its 2030 targets, according to the European Court of Auditors, which warned last month that current measures could be insufficient. Case in point 2: On Monday, 25 September, EU ministers reached a deal on the update of non-CO₂ car pollution standards. The countries’ compromise considerably watered down the Commission’s proposals — despite the fact most EU capitals have air pollution levels well above limits recommended by the WHO. In fact, the text doesn’t look much different from current emissions standards. On exhaust emissions limits and testing requirements for cars and vans, especially, it’s basically a copy-paste of the older Euro 6 norm.

Belgium sued over climate policy shortcomings

The non-profit group ‘Affaire Climat’ and over 70,000 citizens again called on the courts to impose binding emissions reductions on the Belgian government after the last ruling to reduce greenhouse gas emissions was largely ignored by the state. In June 2021, the Brussels Court of First Instance condemned the federal government and the three regions for their inadequate climate policies. After six years of proceedings, the court found that Belgium’s climate policies were largely insufficient and did not respect “the duty of care required of a State and therefore infringe the fundamental rights of the plaintiffs“. That’s a great precedent to set!