Beijing’s reaction + Election camp • Table.Briefings

Dear reader,

In her State of the Union address, Commission President Ursula von der Leyen announced a competition investigation into market distortions caused by Chinese subsidies for EVs. Beijing’s reaction was swift: it was “very concerned and dissatisfied” with the EU Commission, saying it was displaying “sheer protectionism”. However, the question of whether China is engaging in unfair competition with the subsidies and whether anti-subsidy duties are appropriate is not so easy to answer, analyzes Felix Lee.

In a month, Poland will elect a new parliament. The ruling PiS party is going all out in the election campaign and using its advantage over the opposition parties, as Andrzej Rybak reports: It is handing out expensive election gifts and can rely on support from the media and state-owned corporations. It is an election race between unequal opponents.

What would happen if there were European elections on Sunday? Political scientist Manuel Müller regularly investigates this question. In his current projection on the composition of the next European Parliament, he shows that the EPP’s lead over the S&D Group is shrinking – it is one of the lowest values in this election period. The ID group has made significant gains, which can be attributed primarily to the AfD’s surge in popularity in Germany.

I wish you a good start to the weekend!

Your
Sarah Schaefer

EVs: China reacts irritably to punitive tariff threats

By

Felix Lee

The reactions from Beijing were not long in coming. The anti-subsidy investigations by the EU Commission into EVs from China would have negative consequences for economic and trade relations between China and the EU, the Chinese Ministry of Commerce warned. It said the EU was concerned with “protecting its own industry” under the guise of fair competition. It went on to say that this was “sheer protectionism” that would hit the global supply chains of the automotive industry hard. They are “very concerned and dissatisfied” with the EU Commission.

Clear words in response to an equally clear announcement from Brussels: In her State of the Union address, EU Commission President Ursula von der Leyen announced a competition investigation into market distortions caused by Chinese subsidies for electric cars. The world markets are currently “flooded with cheap Chinese electric cars”, von der Leyen raged in her speech. “This is distorting our market.”

EV industry in Europe is also subsidized

In this context, it is difficult to answer the question of whether Beijing is engaging in unfair competition by subsidizing the EV industry and whether anti-subsidy duties are appropriate.

China produces e-cars cheaper than the rest of the world – according to the Commission, they are on average one-fifth cheaper than vehicles produced in Europe.
This is the result of decades of government support – CATL and BYD, for example, have succeeded in becoming the largest manufacturers of BEV batteries.
China’s government ensures low energy costs and helps with start-up financing.

However, Germany and the EU have also put a lot of money into establishing battery cell production for EVs. The EU Commission itself had approved aid of €3.2 billion for the production of batteries for electric cars in Europe in 2019. From the German side, five companies are involved, including BASF, BMW and Varta.

Chinese government support has helped CATL and BYD become heavyweights; BYD displaced VW as the best-selling brand in China this year. But subsidies do not explain the success alone.

Chinese manufacturers are more flexible

A key reason for their success is the fact that the competition from the Far East is made up of tech companies, or as in the case of BYD, battery manufacturers. Building EVs is less expensive than manufacturing vehicles with combustion engines. There is less overhead, and fewer people are needed. They don’t have a costly apparatus in tow, like traditional automakers.

The fiercest competitors of the German brands are not the traditional Chinese automakers; they are struggling with similar problems as VW or Mercedes. BMW, VW and Mercedes will be threatened by software or battery companies that can react flexibly to new market trends and bring new models to market much more cheaply.

According to Reuters, the commission’s investigation will examine preferential lending and preferential prices for land, in addition to prices for raw materials and batteries. According to estimates by consulting firm AlixPartners, China distributed $57 billion in government subsidies for electric and hybrid vehicles between 2016 and 2022.

Tesla exports cars from factories in China

The best known are purchase incentives. These were launched in 2009 and gradually scaled back by the end of 2022. However, after demand for e-cars then plummeted, the Chinese government announced a new package of the equivalent of $72 billion in June, to run over four years.

However, purchase premiums are also paid in the EU. The review would also affect foreign carmakers in China. Tesla, for example, the EV company from the USA, operates its largest production facility in Shanghai. The US group produced more than 700,000 vehicles in the People’s Republic in 2022. That corresponds to half of its total production. According to the Center for Strategic and International Studies, 40 percent of e-car exports between January and April of this year were accounted for by the US company.

The Commission has its eye on upstarts from China such as MG Motors, BYD, Nio and Xpeng, which have started their expansion into Europe. There was a first taste at the IAA. China’s trade minister is calling on the EU for “dialogue and consultation” to create a “fair, non-discriminatory and predictable market environment” for the joint development of the automotive industry.

Poland: Election campaign between unequal opponents

Several weeks before the official start of the election campaign, posters and billboards featuring politicians from the ruling PiS party appeared in many places in Poland. They did not ask people to vote for them, but wished them happy vacations or invited them to their parliamentary offices. These actions were also not financed from PiS’s official campaign pot, but from the party’s own funds, which is by far the political force in Poland with the largest financial resources. Some of these posters are still up to this day.

Poland’s parliamentary elections on Oct. 15 are free – but anything but fair. Despite all democratic customs, the PiS is using its advantage in office and its institutional advantages, while the opposition is bound by strict spending limits and rules. Since the courts in Poland are far from independent, and judges at the election court can even be removed from office by the president at any time, the opposition can register violations, but usually without consequences.

State oil company praises government

In eight years in government, Jarosław Kaczyński’s ruling Law and Justice Party (PiS) has staffed all state institutions, the public media and government-controlled state enterprises with loyal party activists, their relatives and friends. They are no longer beholden to the reason of state – but to the party alone. Within the party, they are expected to repay the favor they have shown in the election campaign.

Since the collapse of communism, there has never been an election in Poland “in which the opportunities and resources of the participating parties were so unequally distributed“, says Andrzej Zoll, former chairman of the Electoral Commission and president of the Constitutional Tribunal.

Back in the spring, the state-owned oil company Orlen, run by close Kaczyński confidant Daniel Obajtek, launched a campaign called “Orlen for Poland”, praising the government for its economic policies and sharply attacking the opposition. The oil company also bought 140 local Polska Press newspapers from German publisher Passauer Neue Presse two and a half years ago and turned them into the government’s mouthpiece.

State media defame opposition

It is well known that the top managers of state-owned corporations regularly donate part of their salaries to the party. The disreputable thing is this: The government sets the level of salaries and bonuses. Moreover, most of the heads of the corporations are party soldiers appointed by the PiS.

The ruling party also tricked the electoral law: Organizations of all kinds, foundations or private individuals are allowed to campaign for individual candidates or parties out of their own pockets, produce election spots or print flyers. Such expenditures are not controlled by the election commission – as long as the public prosecutor’s office does not raise any concerns. And it rarely does.

The state television broadcaster TVP and Polish Radio, which until 2015 endeavored to provide balanced reporting, were transformed by the PiS government into a propaganda machine that openly defames the opposition and has long since failed to meet journalistic and ethical standards. In recent years, the government massively increased the budget of “its” broadcasters and “orders the music”. At the same time, its opponents as taxpayers also finance the program. TVP employees know full well that if there is a change of power, their journalistic careers are over.

More money for children and seniors

Since the spring, the PiS government has also been handing out expensive election gifts, although the financial deficit (budget plus various state funds) has long since reached alarming levels. The forecast for 2023 is around 5 percent. First, the government announced that it would increase child benefits from 500 to 800 zlotys (about €180) starting in January 2024. Then it froze electricity tariffs, introduced free medicines for children up to 18 and seniors over 65, decided to pay pensioners a 14th pension and abolished highway tolls.

Prime Minister Mateusz Morawiecki, however, needs no detours to finance the PiS election campaign. Following the decision to increase child benefits, he handed over 10 million zloty (about €2.2 million) to the Ministry of Family and Social Policy in mid-June for the “implementation of information measures regarding the increase in child benefits”. The need for information may be doubted, mostly because child benefit recipients do not have to do anything to benefit from the increase. The money was used to finance “picnics”, which were also used by government politicians after the start of the official election campaign to rail against the opposition and to distinguish themselves.

And there is the referendum that is to be held in parallel with the elections. The government officially pretends to want to ask the citizens about future migration policy. In reality, it is creating a stage for itself to rail against the opposition’s human rights and migration policies. Without spending limits – because these only apply to the parliamentary election campaign. Andrzej Rybak

E-fuels: Commission wants 100 percent CO2 reduction

According to information obtained by Table.Media, the Commission is insisting on a CO2 reduction of 100 percent for “e-fuels only” vehicles compared to fossil fuels. This is according to a Commission draft of approval regulations for vehicles that will run exclusively on synthetic fuels even after the 2035 ban on internal combustion engines. The draft is available to Table.Media.

Initially, DG Grow had made a proposal using the definition of e-fuels in the Renewable Energy Directive (RED). This states in Article 25(2) that e-fuels must deliver a CO2 saving of at least 70 percent compared with fossil fuels. This was not enough for DG Clima. Within the Commission, it insisted that the reduction must be 100 percent.

However, the manufacturers of e-fuels point out that a reduction of 100 percent is not technically possible when considering the entire supply chain. Apparently, DG Clima has now prevailed with its position.

The legislative proposal for the approval regulations is to be presented to the member states in the Technical Committee on Motor Vehicles (TCMV). According to reports in Brussels, the proposal will be presented at the TCMV meeting in November at the earliest. For the proposal to enter into force, it will then require the approval of a qualified majority of the member states. mgr

Electricity market: Parliament adopts position

At the second attempt, the plenary of the EU Parliament adopted the report of the Industry Committee on electricity market reform on Thursday. On Monday, ECR and Left as well as several individual MEPs had initially voted against the start of trilogue negotiations. However, the majority of S&D, EPP, Renew and Greens, which had negotiated the compromise in ITRE, rejected the objection yesterday. 366 votes in favor were offset by 186 against, with ECR, Left and ID together holding only 166 seats.

Even before the summer break, Renew’s shadow rapporteur Morten Petersen had predicted a close vote in an interview with Table.Media. The reason he had given was differences of opinion about the role of nuclear energy.

There were no objections on Monday to the start of trilogue negotiations on REMIT. This second part of the electricity market package regulates measures against market manipulation in wholesale energy trading. ber

Parliament to hear Hoekstra and Šefčovič in early October

The hearings of Maroš Šefčovič and Wopke Hoekstra in the EU Parliament’s Environment Committee have been scheduled: Both will take place during the first plenary week in October. Climate Commissioner-designate Hoekstra is scheduled to be questioned on Monday evening, Oct. 2. Šefčovič is already vice president for inter-institutional relations, but is also expected to take on the role of executive vice president and coordinator of the Green Deal in the future. His questioning will take place the following day on the morning of Oct. 3.

After the interviews, the committee will take its assessment to the Conference of Presidents (COP). The Caucus Chairs will then make a recommendation, which will be voted on by the full House later that week. luk

Critical raw materials: EP adopts CRMA report

MEPs in the European Parliament laid down their position for negotiations with EU countries on the Critical Raw Materials Act (CRMA) in Strasbourg on Thursday. They called for faster licensing procedures for the extraction of critical raw materials within the EU and strategic partnerships with third countries to diversify supplies. Innovation also needs to be encouraged and small and medium-sized enterprises supported, they said.

“The course for European sovereignty and competitiveness has been set”, said the responsible rapporteur, Nicola Beer (FDP). The AfD, on the other hand, criticized the plan: “After decades of driving out entire branches of industry under the mantra of globalization, industries that fit into the corset of the EU’s Green Deal are now to be subsidized back into the EU with horrendous amounts of taxpayers’ money”, said industrial policy spokesman Markus Buchheit.

EVs, solar panels, smartphones – they all contain critical raw materials that cannot yet be reliably procured in the EU. The member states have yet to decide on their general direction. dpa/luk

Borrell accuses Kosovo of new blockade in dialogue with Serbia

For EU foreign affairs envoy Josep Borrell, it is clear why talks between Belgrade and Pristina failed to make progress even at the latest attempt on Thursday: Kosovo’s Prime Minister Albin Kurti was unfortunately not ready to take a step forward and start building the Serbian municipal union, the chief diplomat said Thursday in Brussels. Kurti and Serbia’s President Aleksandar Vučić had met at the headquarters of the European External Action Service at the invitation of Borrell and his special envoy Miroslav Lačják.

Kurti had insisted on de facto recognition of Kosovo by Serbia as a first step, Borrell criticized after more than five hours of inconclusive talks. Serbia’s President Vučić, on the other hand, had been cooperative and agreed to a plan for parallel implementation of mutual obligations. Exactly what steps Serbia would have had to take, however, remained unclear.

Kosovo fears secession

For Serbia, the creation of the association of ten Serb-populated municipalities is a priority. Kosovo’s government, on the other hand, fears that for Belgrade the association of municipalities would be a first step toward secession – at least as long as Serbia does not take steps toward recognizing Kosovo as an independent state. In an agreement reached in the spring, Belgrade pledged not to impede Kosovo’s efforts to gain membership in international organizations. Most recently, however, Serbia has voted against admitting Kosovo to the Council of Europe and has sent letters to states asking them not to recognize Kosovo.

Serbia’s President Vučić and Kosovo’s Prime Minister Kurti accused each other in front of the media on Thursday of being responsible for the blockade. Kosovo’s leadership is also finding it difficult to make the first move on the municipal union because Belgrade itself would then no longer be interested in delivering on points that are important to Pristina, such as the recognition of passports or car license plates and the mutual opening of diplomatic missions.

No solution in the dispute over mayoral elections

Also unresolved on Thursday was the dispute over the rerun of mayoral elections in the four municipalities in Kosovo’s majority Serb-populated north. Tensions had recently escalated there when Kosovo’s special police force tried to escort mayors to their town halls.

Kurti insisted Thursday that the Serb majority triggered the resignation of the four Kosovo Albanian mayors by petition process. He said this would also serve as a guarantee, or at least a sign, that the Serb majority in the north would participate in the joint institutions if it happened again. The Kosovo Albanian mayors had taken office in the majority Serb-populated north after the previous incumbents resigned on orders from Belgrade and the Serb population boycotted the elections.

Special Envoy Miroslav Lajčak informed the ambassadors of the member states in PESCO as late as Thursday evening about the failed attempt to restart the dialogue between Belgrade and Pristina. The EU had most recently adopted punitive measures against Kosovo’s government. An EU diplomat would not rule out further increasing pressure on Kurti. The EU has already restricted certain contacts with the government in Pristina and suspended programs.

Tunisia refuses entry to MEPs

At noon on Thursday, the five-member delegation of the European Parliament’s Foreign Affairs Committee (AFET) was to have departed from Strasbourg. Wednesday evening, however, delegation leader Michael Gahler (CDU) was informed that the parliamentary group would be denied entry. Gahler said: “The rulers of Tunisia have done themselves no service with this step.” The delegation of the Foreign Affairs Committee had wanted to discuss the situation two years after the coup with interlocutors from civil society.

Gahler continues: “It is urgent that the national dialogue finally gets underway, which the president has so far refused to engage in.” He criticized the Europeans for conducting business as usual with Tunisia for two years after the suspension of democracy: “The EU failed to urge a return to constitutional order after the coup and to tie the payment of aid money to the fulfillment of these conditions.”

Criticism of Tunisia’s President

The reason for the refusal of entry is likely to be that Gahler and the Green MEP Mounir Satouri expressed criticism of President Kais Saied in a joint interview a year ago. The Interior Committee and the S&D parliamentary group are also planning delegation trips to Tunisia in the near future.

The EU Commission and Tunisia have signed a memorandum of understanding for a migration agreement. However, the arrival of refugee boats from Tunisia continues unabated. This week alone, more than 10,000 people are said to have entered the EU illegally from Tunisia. mgr

OpenAI settles in Dublin

AI company OpenAI has announced it will open its first EU office in Dublin. The company plans to work from there with a team to handle organizational, market-entry, trust, security and legal matters to better serve the European market, OpenAI said.

Ireland has a lot of experience with the location of EU headquarters of up-and-coming digital companies. Alphabet (Google), Meta (Facebook, Instagram, Whatsapp) and Bytedance (TikTok), among others, have their EU headquarters on the island. However, internationally successful Irish startups have not emerged as a result.

In view of the ongoing debates on the AI Act and other topics related to artificial intelligence, the EU office in Ireland should also serve the purpose of slipping under the supervision of a supervisory authority that is perceived as less restrictive, at least when it comes to data protection. However, this is not the first European office: OpenAI had already announced in June that it would open an office in London. fst

If European elections were on Sunday…

By Manuel Müller

Manuel Müller has been regularly producing seat projections for the European elections since 2014.

Will she or won’t she run? As expected, Ursula von der Leyen did not answer the question that interests EU observers most in her State of the Union address. But even if she decides (also as expected) in the course of the next few months to run as the European People’s Party’s top candidate, she is by no means assured of a second term as Commission President. This is because the lead that the EPP holds in the polls over the second-placed Social Democratic S&D Group is melting away. In the current seat projection, it has reached one of the lowest values in this election period – it was closer only in the winter of 2021/22.

But before we get into the details, a quick technical note: This week, the European Parliament gave its approval to a Council proposal to increase the number of seats in Parliament from 705 to 720. The final decision now rests with the European Council, but is only a formality. The projection will therefore also be based on a Parliament with 720 seats in the future; in the current edition, however, both values are still given for a better understanding of the changes.

So where do the European parties stand nine months before the European elections? Since the beginning of the year, the EPP has experienced a series of somewhat weaker poll results in several member states – not a dramatic slide, but a kind of gradual descent. It is not only at the European level that the party is torn between von der Leyen’s centrist continuity course and Manfred Weber’s more aggressive and rightward open style; national member parties are also clearly struggling to find the right way to deal with their emerging right-wing challengers.

Compared with the last projection in mid-July, the EPP falls by three to 157 seats in the baseline scenario (162 in the new projection with 720 seats). However, in the dynamic scenario – which takes into account possible accessions to parliamentary groups by national parties that could win seats for the first time in the European elections – the EPP’s result is still slightly better (165 seats/171 seats in the new projection). This is mainly due to the Dutch center-right party NSC around Pieter Omtzigt, which was only founded in August and immediately became the country’s strongest force in the polls.

S&D could become strongest parliamentary group

In contrast, the European Social Democrats have recently improved their poll ratings in numerous member states, from Spain to Finland, jumping eight seats to 144 (new: 147, dynamic scenario: 144/147). This is one of the S&D’s best scores in this election period and would also be a slight improvement over the number of seats in the current Parliament. Even if the EPP remains the favorite for the time being, with a successful European election campaign the Social Democrats could well have a chance of becoming the strongest parliamentary group again for the first time since 1994.

However, it is currently unclear who will lead them in this election campaign. In any case, some potential leading candidates have recently made it clear that they have other plans: Pedro Sánchez wants to remain Spanish prime minister, Frans Timmermans has moved to the national level, and Sanna Marin has withdrawn from active politics for the time being. So there should be plenty to talk about at the Social Democratic Party Congress in November.

Among the other groups, the liberal Renew drops by four to 90 seats (new: 91; dynamic scenario: 95/96) – its worst result in a good three years. The Greens also perform somewhat weaker and would now achieve 46 seats (new: 46; dynamic scenario: 50). The Left Party, on the other hand, has recovered somewhat, gaining 42 seats (new: 43, dynamic scenario: 44/45).

Right-wing parties make strong gains

In the right-wing camp, the ECR parliamentary group experiences slight losses and now has 77 seats (new: 77). The ID parliamentary group, on the other hand, has made further gains, mainly due to the rise of the German AfD, and now has 72 seats (new: 74).

In the dynamic scenario, both groups do even better thanks to numerous right-wing newcomer parties: Here, the ECR would achieve 89 (new: 90), the ID 87 (new: 89) seats. In addition, there are 36 (new: 37, dynamic scenario: 31/32) non-factional deputies, about one-third of whom belong to right-wing and far-right parties. Overall, the right-wing parties are thus the bloc that is gaining the most in the polls compared with the current parliament.

Since there are no pan-European election polls, the seat projection presented here is based on aggregated national polls and election results from all member states. In the baseline scenario, all national parties are each assigned to their current parliamentary group (or to the parliamentary group of their European umbrella party); parties without a clear assignment are shown as “others”. The dynamic scenario assigns all “other” parties in each case to a parliamentary group that they could plausibly join, and also includes other possible changes in the parliamentary groups.

For more details on the data basis and methodology of the projection, as well as a more detailed breakdown of the results, see the blog The (European) Federalist.

What’s floating in Brussels? The price of clean water

By Claire Stam

The drought in Europe is increasing. For this reason, the issue of water utilization is becoming increasingly important, as is the reuse of wastewater – a process that does, however, come at a price.

The upcoming vote in the EU Parliament’s Environment Committee (ENVI) is about the revision of the Urban Wastewater Directive, which has not been touched for practically thirty years. According to the text available to Table.Media, the Parliament’s position is less ambitious than the Commission’s proposal. Or more conciliatory, depending on your point of view.

For behind the highly technical paper lies the question of how wastewater treatment is to be financed: Indeed, the Commission’s proposal envisages that the industrial companies that cause the pollution – mainly the pharmaceutical and cosmetics industries – should finance wastewater treatment, 100 percent of the time.

Higher costs for water

The version presented by the Finnish rapporteur Nils Torvalds (Renew), on the other hand, provides for a cost sharing of 80 percent for industry and 20 percent for the member states. Countries are therefore free to decide how they structure the financing of wastewater treatment. If this proposal were to prevail, member states could be expected to involve their municipal water utilities – and thus consumers as well. After sharp increases in energy costs, consumers would thus also have to expect higher costs for water.

Next week’s vote in ENVI, however, goes far beyond financing. It raises the question of responsibility. In a statement, the Association of Municipal Enterprises (VKU) calls the Commission’s proposal a “milestone in European water policy“. This is because extended producer responsibility would make polluters financially responsible. In addition, incentives would be created to avoid pollution, according to the VKU.

Spain is particularly affected by water shortages

But one can go even further behind the technicality of the text: Globally, only 11 percent of water is currently recycled. “This rate varies from country to country: 89 percent in Israel, 40 percent in Singapore, 15 percent in Spain and less than one percent in France”, Estelle Brachlianoff, the new CEO of French water giant Veolia, said in Barcelona in June. “Demand is growing 6 to 8 percent a year, mainly due to industrial and agricultural needs.”

It is no coincidence that Brachlianoff spoke to the press in Spain, of all places: It is one of the countries in Europe most affected by water shortages and is therefore the most advanced in terms of recycling wastewater. The example of the petrochemical companies that have joined forces in a large industrial park in Tarragona (Catalonia) and use a plant that recycles the treated wastewater from two nearby sewage treatment plants is readily highlighted there.

The proposal for a directive on wastewater treatment is a typical example of the European-Brussels dialectic: Major national and industrial challenges are hidden behind a highly technical text. Its impact should not be underestimated.

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

In her State of the Union address, Commission President Ursula von der Leyen announced a competition investigation into market distortions caused by Chinese subsidies for EVs. Beijing’s reaction was swift: it was “very concerned and dissatisfied” with the EU Commission, saying it was displaying “sheer protectionism”. However, the question of whether China is engaging in unfair competition with the subsidies and whether anti-subsidy duties are appropriate is not so easy to answer, analyzes Felix Lee.

In a month, Poland will elect a new parliament. The ruling PiS party is going all out in the election campaign and using its advantage over the opposition parties, as Andrzej Rybak reports: It is handing out expensive election gifts and can rely on support from the media and state-owned corporations. It is an election race between unequal opponents.

What would happen if there were European elections on Sunday? Political scientist Manuel Müller regularly investigates this question. In his current projection on the composition of the next European Parliament, he shows that the EPP’s lead over the S&D Group is shrinking – it is one of the lowest values in this election period. The ID group has made significant gains, which can be attributed primarily to the AfD’s surge in popularity in Germany.

I wish you a good start to the weekend!

Your
Sarah Schaefer

EVs: China reacts irritably to punitive tariff threats

By

Felix Lee

The reactions from Beijing were not long in coming. The anti-subsidy investigations by the EU Commission into EVs from China would have negative consequences for economic and trade relations between China and the EU, the Chinese Ministry of Commerce warned. It said the EU was concerned with “protecting its own industry” under the guise of fair competition. It went on to say that this was “sheer protectionism” that would hit the global supply chains of the automotive industry hard. They are “very concerned and dissatisfied” with the EU Commission.

Clear words in response to an equally clear announcement from Brussels: In her State of the Union address, EU Commission President Ursula von der Leyen announced a competition investigation into market distortions caused by Chinese subsidies for electric cars. The world markets are currently “flooded with cheap Chinese electric cars”, von der Leyen raged in her speech. “This is distorting our market.”

EV industry in Europe is also subsidized

In this context, it is difficult to answer the question of whether Beijing is engaging in unfair competition by subsidizing the EV industry and whether anti-subsidy duties are appropriate.

China produces e-cars cheaper than the rest of the world – according to the Commission, they are on average one-fifth cheaper than vehicles produced in Europe.
This is the result of decades of government support – CATL and BYD, for example, have succeeded in becoming the largest manufacturers of BEV batteries.
China’s government ensures low energy costs and helps with start-up financing.

However, Germany and the EU have also put a lot of money into establishing battery cell production for EVs. The EU Commission itself had approved aid of €3.2 billion for the production of batteries for electric cars in Europe in 2019. From the German side, five companies are involved, including BASF, BMW and Varta.

Chinese government support has helped CATL and BYD become heavyweights; BYD displaced VW as the best-selling brand in China this year. But subsidies do not explain the success alone.

Chinese manufacturers are more flexible

A key reason for their success is the fact that the competition from the Far East is made up of tech companies, or as in the case of BYD, battery manufacturers. Building EVs is less expensive than manufacturing vehicles with combustion engines. There is less overhead, and fewer people are needed. They don’t have a costly apparatus in tow, like traditional automakers.

The fiercest competitors of the German brands are not the traditional Chinese automakers; they are struggling with similar problems as VW or Mercedes. BMW, VW and Mercedes will be threatened by software or battery companies that can react flexibly to new market trends and bring new models to market much more cheaply.

According to Reuters, the commission’s investigation will examine preferential lending and preferential prices for land, in addition to prices for raw materials and batteries. According to estimates by consulting firm AlixPartners, China distributed $57 billion in government subsidies for electric and hybrid vehicles between 2016 and 2022.

Tesla exports cars from factories in China

The best known are purchase incentives. These were launched in 2009 and gradually scaled back by the end of 2022. However, after demand for e-cars then plummeted, the Chinese government announced a new package of the equivalent of $72 billion in June, to run over four years.

However, purchase premiums are also paid in the EU. The review would also affect foreign carmakers in China. Tesla, for example, the EV company from the USA, operates its largest production facility in Shanghai. The US group produced more than 700,000 vehicles in the People’s Republic in 2022. That corresponds to half of its total production. According to the Center for Strategic and International Studies, 40 percent of e-car exports between January and April of this year were accounted for by the US company.

The Commission has its eye on upstarts from China such as MG Motors, BYD, Nio and Xpeng, which have started their expansion into Europe. There was a first taste at the IAA. China’s trade minister is calling on the EU for “dialogue and consultation” to create a “fair, non-discriminatory and predictable market environment” for the joint development of the automotive industry.

Poland: Election campaign between unequal opponents

Several weeks before the official start of the election campaign, posters and billboards featuring politicians from the ruling PiS party appeared in many places in Poland. They did not ask people to vote for them, but wished them happy vacations or invited them to their parliamentary offices. These actions were also not financed from PiS’s official campaign pot, but from the party’s own funds, which is by far the political force in Poland with the largest financial resources. Some of these posters are still up to this day.

Poland’s parliamentary elections on Oct. 15 are free – but anything but fair. Despite all democratic customs, the PiS is using its advantage in office and its institutional advantages, while the opposition is bound by strict spending limits and rules. Since the courts in Poland are far from independent, and judges at the election court can even be removed from office by the president at any time, the opposition can register violations, but usually without consequences.

State oil company praises government

In eight years in government, Jarosław Kaczyński’s ruling Law and Justice Party (PiS) has staffed all state institutions, the public media and government-controlled state enterprises with loyal party activists, their relatives and friends. They are no longer beholden to the reason of state – but to the party alone. Within the party, they are expected to repay the favor they have shown in the election campaign.

Since the collapse of communism, there has never been an election in Poland “in which the opportunities and resources of the participating parties were so unequally distributed“, says Andrzej Zoll, former chairman of the Electoral Commission and president of the Constitutional Tribunal.

Back in the spring, the state-owned oil company Orlen, run by close Kaczyński confidant Daniel Obajtek, launched a campaign called “Orlen for Poland”, praising the government for its economic policies and sharply attacking the opposition. The oil company also bought 140 local Polska Press newspapers from German publisher Passauer Neue Presse two and a half years ago and turned them into the government’s mouthpiece.

State media defame opposition

It is well known that the top managers of state-owned corporations regularly donate part of their salaries to the party. The disreputable thing is this: The government sets the level of salaries and bonuses. Moreover, most of the heads of the corporations are party soldiers appointed by the PiS.

The ruling party also tricked the electoral law: Organizations of all kinds, foundations or private individuals are allowed to campaign for individual candidates or parties out of their own pockets, produce election spots or print flyers. Such expenditures are not controlled by the election commission – as long as the public prosecutor’s office does not raise any concerns. And it rarely does.

The state television broadcaster TVP and Polish Radio, which until 2015 endeavored to provide balanced reporting, were transformed by the PiS government into a propaganda machine that openly defames the opposition and has long since failed to meet journalistic and ethical standards. In recent years, the government massively increased the budget of “its” broadcasters and “orders the music”. At the same time, its opponents as taxpayers also finance the program. TVP employees know full well that if there is a change of power, their journalistic careers are over.

More money for children and seniors

Since the spring, the PiS government has also been handing out expensive election gifts, although the financial deficit (budget plus various state funds) has long since reached alarming levels. The forecast for 2023 is around 5 percent. First, the government announced that it would increase child benefits from 500 to 800 zlotys (about €180) starting in January 2024. Then it froze electricity tariffs, introduced free medicines for children up to 18 and seniors over 65, decided to pay pensioners a 14th pension and abolished highway tolls.

Prime Minister Mateusz Morawiecki, however, needs no detours to finance the PiS election campaign. Following the decision to increase child benefits, he handed over 10 million zloty (about €2.2 million) to the Ministry of Family and Social Policy in mid-June for the “implementation of information measures regarding the increase in child benefits”. The need for information may be doubted, mostly because child benefit recipients do not have to do anything to benefit from the increase. The money was used to finance “picnics”, which were also used by government politicians after the start of the official election campaign to rail against the opposition and to distinguish themselves.

And there is the referendum that is to be held in parallel with the elections. The government officially pretends to want to ask the citizens about future migration policy. In reality, it is creating a stage for itself to rail against the opposition’s human rights and migration policies. Without spending limits – because these only apply to the parliamentary election campaign. Andrzej Rybak

E-fuels: Commission wants 100 percent CO2 reduction

According to information obtained by Table.Media, the Commission is insisting on a CO2 reduction of 100 percent for “e-fuels only” vehicles compared to fossil fuels. This is according to a Commission draft of approval regulations for vehicles that will run exclusively on synthetic fuels even after the 2035 ban on internal combustion engines. The draft is available to Table.Media.

Initially, DG Grow had made a proposal using the definition of e-fuels in the Renewable Energy Directive (RED). This states in Article 25(2) that e-fuels must deliver a CO2 saving of at least 70 percent compared with fossil fuels. This was not enough for DG Clima. Within the Commission, it insisted that the reduction must be 100 percent.

However, the manufacturers of e-fuels point out that a reduction of 100 percent is not technically possible when considering the entire supply chain. Apparently, DG Clima has now prevailed with its position.

The legislative proposal for the approval regulations is to be presented to the member states in the Technical Committee on Motor Vehicles (TCMV). According to reports in Brussels, the proposal will be presented at the TCMV meeting in November at the earliest. For the proposal to enter into force, it will then require the approval of a qualified majority of the member states. mgr

Electricity market: Parliament adopts position

At the second attempt, the plenary of the EU Parliament adopted the report of the Industry Committee on electricity market reform on Thursday. On Monday, ECR and Left as well as several individual MEPs had initially voted against the start of trilogue negotiations. However, the majority of S&D, EPP, Renew and Greens, which had negotiated the compromise in ITRE, rejected the objection yesterday. 366 votes in favor were offset by 186 against, with ECR, Left and ID together holding only 166 seats.

Even before the summer break, Renew’s shadow rapporteur Morten Petersen had predicted a close vote in an interview with Table.Media. The reason he had given was differences of opinion about the role of nuclear energy.

There were no objections on Monday to the start of trilogue negotiations on REMIT. This second part of the electricity market package regulates measures against market manipulation in wholesale energy trading. ber

Parliament to hear Hoekstra and Šefčovič in early October

The hearings of Maroš Šefčovič and Wopke Hoekstra in the EU Parliament’s Environment Committee have been scheduled: Both will take place during the first plenary week in October. Climate Commissioner-designate Hoekstra is scheduled to be questioned on Monday evening, Oct. 2. Šefčovič is already vice president for inter-institutional relations, but is also expected to take on the role of executive vice president and coordinator of the Green Deal in the future. His questioning will take place the following day on the morning of Oct. 3.

After the interviews, the committee will take its assessment to the Conference of Presidents (COP). The Caucus Chairs will then make a recommendation, which will be voted on by the full House later that week. luk

Critical raw materials: EP adopts CRMA report

MEPs in the European Parliament laid down their position for negotiations with EU countries on the Critical Raw Materials Act (CRMA) in Strasbourg on Thursday. They called for faster licensing procedures for the extraction of critical raw materials within the EU and strategic partnerships with third countries to diversify supplies. Innovation also needs to be encouraged and small and medium-sized enterprises supported, they said.

“The course for European sovereignty and competitiveness has been set”, said the responsible rapporteur, Nicola Beer (FDP). The AfD, on the other hand, criticized the plan: “After decades of driving out entire branches of industry under the mantra of globalization, industries that fit into the corset of the EU’s Green Deal are now to be subsidized back into the EU with horrendous amounts of taxpayers’ money”, said industrial policy spokesman Markus Buchheit.

EVs, solar panels, smartphones – they all contain critical raw materials that cannot yet be reliably procured in the EU. The member states have yet to decide on their general direction. dpa/luk

Borrell accuses Kosovo of new blockade in dialogue with Serbia

For EU foreign affairs envoy Josep Borrell, it is clear why talks between Belgrade and Pristina failed to make progress even at the latest attempt on Thursday: Kosovo’s Prime Minister Albin Kurti was unfortunately not ready to take a step forward and start building the Serbian municipal union, the chief diplomat said Thursday in Brussels. Kurti and Serbia’s President Aleksandar Vučić had met at the headquarters of the European External Action Service at the invitation of Borrell and his special envoy Miroslav Lačják.

Kurti had insisted on de facto recognition of Kosovo by Serbia as a first step, Borrell criticized after more than five hours of inconclusive talks. Serbia’s President Vučić, on the other hand, had been cooperative and agreed to a plan for parallel implementation of mutual obligations. Exactly what steps Serbia would have had to take, however, remained unclear.

Kosovo fears secession

For Serbia, the creation of the association of ten Serb-populated municipalities is a priority. Kosovo’s government, on the other hand, fears that for Belgrade the association of municipalities would be a first step toward secession – at least as long as Serbia does not take steps toward recognizing Kosovo as an independent state. In an agreement reached in the spring, Belgrade pledged not to impede Kosovo’s efforts to gain membership in international organizations. Most recently, however, Serbia has voted against admitting Kosovo to the Council of Europe and has sent letters to states asking them not to recognize Kosovo.

Serbia’s President Vučić and Kosovo’s Prime Minister Kurti accused each other in front of the media on Thursday of being responsible for the blockade. Kosovo’s leadership is also finding it difficult to make the first move on the municipal union because Belgrade itself would then no longer be interested in delivering on points that are important to Pristina, such as the recognition of passports or car license plates and the mutual opening of diplomatic missions.

No solution in the dispute over mayoral elections

Also unresolved on Thursday was the dispute over the rerun of mayoral elections in the four municipalities in Kosovo’s majority Serb-populated north. Tensions had recently escalated there when Kosovo’s special police force tried to escort mayors to their town halls.

Kurti insisted Thursday that the Serb majority triggered the resignation of the four Kosovo Albanian mayors by petition process. He said this would also serve as a guarantee, or at least a sign, that the Serb majority in the north would participate in the joint institutions if it happened again. The Kosovo Albanian mayors had taken office in the majority Serb-populated north after the previous incumbents resigned on orders from Belgrade and the Serb population boycotted the elections.

Special Envoy Miroslav Lajčak informed the ambassadors of the member states in PESCO as late as Thursday evening about the failed attempt to restart the dialogue between Belgrade and Pristina. The EU had most recently adopted punitive measures against Kosovo’s government. An EU diplomat would not rule out further increasing pressure on Kurti. The EU has already restricted certain contacts with the government in Pristina and suspended programs.

Tunisia refuses entry to MEPs

At noon on Thursday, the five-member delegation of the European Parliament’s Foreign Affairs Committee (AFET) was to have departed from Strasbourg. Wednesday evening, however, delegation leader Michael Gahler (CDU) was informed that the parliamentary group would be denied entry. Gahler said: “The rulers of Tunisia have done themselves no service with this step.” The delegation of the Foreign Affairs Committee had wanted to discuss the situation two years after the coup with interlocutors from civil society.

Gahler continues: “It is urgent that the national dialogue finally gets underway, which the president has so far refused to engage in.” He criticized the Europeans for conducting business as usual with Tunisia for two years after the suspension of democracy: “The EU failed to urge a return to constitutional order after the coup and to tie the payment of aid money to the fulfillment of these conditions.”

Criticism of Tunisia’s President

The reason for the refusal of entry is likely to be that Gahler and the Green MEP Mounir Satouri expressed criticism of President Kais Saied in a joint interview a year ago. The Interior Committee and the S&D parliamentary group are also planning delegation trips to Tunisia in the near future.

The EU Commission and Tunisia have signed a memorandum of understanding for a migration agreement. However, the arrival of refugee boats from Tunisia continues unabated. This week alone, more than 10,000 people are said to have entered the EU illegally from Tunisia. mgr

OpenAI settles in Dublin

AI company OpenAI has announced it will open its first EU office in Dublin. The company plans to work from there with a team to handle organizational, market-entry, trust, security and legal matters to better serve the European market, OpenAI said.

Ireland has a lot of experience with the location of EU headquarters of up-and-coming digital companies. Alphabet (Google), Meta (Facebook, Instagram, Whatsapp) and Bytedance (TikTok), among others, have their EU headquarters on the island. However, internationally successful Irish startups have not emerged as a result.

In view of the ongoing debates on the AI Act and other topics related to artificial intelligence, the EU office in Ireland should also serve the purpose of slipping under the supervision of a supervisory authority that is perceived as less restrictive, at least when it comes to data protection. However, this is not the first European office: OpenAI had already announced in June that it would open an office in London. fst

If European elections were on Sunday…

By Manuel Müller

Will she or won’t she run? As expected, Ursula von der Leyen did not answer the question that interests EU observers most in her State of the Union address. But even if she decides (also as expected) in the course of the next few months to run as the European People’s Party’s top candidate, she is by no means assured of a second term as Commission President. This is because the lead that the EPP holds in the polls over the second-placed Social Democratic S&D Group is melting away. In the current seat projection, it has reached one of the lowest values in this election period – it was closer only in the winter of 2021/22.

But before we get into the details, a quick technical note: This week, the European Parliament gave its approval to a Council proposal to increase the number of seats in Parliament from 705 to 720. The final decision now rests with the European Council, but is only a formality. The projection will therefore also be based on a Parliament with 720 seats in the future; in the current edition, however, both values are still given for a better understanding of the changes.

So where do the European parties stand nine months before the European elections? Since the beginning of the year, the EPP has experienced a series of somewhat weaker poll results in several member states – not a dramatic slide, but a kind of gradual descent. It is not only at the European level that the party is torn between von der Leyen’s centrist continuity course and Manfred Weber’s more aggressive and rightward open style; national member parties are also clearly struggling to find the right way to deal with their emerging right-wing challengers.

Compared with the last projection in mid-July, the EPP falls by three to 157 seats in the baseline scenario (162 in the new projection with 720 seats). However, in the dynamic scenario – which takes into account possible accessions to parliamentary groups by national parties that could win seats for the first time in the European elections – the EPP’s result is still slightly better (165 seats/171 seats in the new projection). This is mainly due to the Dutch center-right party NSC around Pieter Omtzigt, which was only founded in August and immediately became the country’s strongest force in the polls.

S&D could become strongest parliamentary group

In contrast, the European Social Democrats have recently improved their poll ratings in numerous member states, from Spain to Finland, jumping eight seats to 144 (new: 147, dynamic scenario: 144/147). This is one of the S&D’s best scores in this election period and would also be a slight improvement over the number of seats in the current Parliament. Even if the EPP remains the favorite for the time being, with a successful European election campaign the Social Democrats could well have a chance of becoming the strongest parliamentary group again for the first time since 1994.

However, it is currently unclear who will lead them in this election campaign. In any case, some potential leading candidates have recently made it clear that they have other plans: Pedro Sánchez wants to remain Spanish prime minister, Frans Timmermans has moved to the national level, and Sanna Marin has withdrawn from active politics for the time being. So there should be plenty to talk about at the Social Democratic Party Congress in November.

Among the other groups, the liberal Renew drops by four to 90 seats (new: 91; dynamic scenario: 95/96) – its worst result in a good three years. The Greens also perform somewhat weaker and would now achieve 46 seats (new: 46; dynamic scenario: 50). The Left Party, on the other hand, has recovered somewhat, gaining 42 seats (new: 43, dynamic scenario: 44/45).

Right-wing parties make strong gains

In the right-wing camp, the ECR parliamentary group experiences slight losses and now has 77 seats (new: 77). The ID parliamentary group, on the other hand, has made further gains, mainly due to the rise of the German AfD, and now has 72 seats (new: 74).

In the dynamic scenario, both groups do even better thanks to numerous right-wing newcomer parties: Here, the ECR would achieve 89 (new: 90), the ID 87 (new: 89) seats. In addition, there are 36 (new: 37, dynamic scenario: 31/32) non-factional deputies, about one-third of whom belong to right-wing and far-right parties. Overall, the right-wing parties are thus the bloc that is gaining the most in the polls compared with the current parliament.

Since there are no pan-European election polls, the seat projection presented here is based on aggregated national polls and election results from all member states. In the baseline scenario, all national parties are each assigned to their current parliamentary group (or to the parliamentary group of their European umbrella party); parties without a clear assignment are shown as “others”. The dynamic scenario assigns all “other” parties in each case to a parliamentary group that they could plausibly join, and also includes other possible changes in the parliamentary groups.

For more details on the data basis and methodology of the projection, as well as a more detailed breakdown of the results, see the blog The (European) Federalist.

What’s floating in Brussels? The price of clean water

By Claire Stam

The drought in Europe is increasing. For this reason, the issue of water utilization is becoming increasingly important, as is the reuse of wastewater – a process that does, however, come at a price.

The upcoming vote in the EU Parliament’s Environment Committee (ENVI) is about the revision of the Urban Wastewater Directive, which has not been touched for practically thirty years. According to the text available to Table.Media, the Parliament’s position is less ambitious than the Commission’s proposal. Or more conciliatory, depending on your point of view.

For behind the highly technical paper lies the question of how wastewater treatment is to be financed: Indeed, the Commission’s proposal envisages that the industrial companies that cause the pollution – mainly the pharmaceutical and cosmetics industries – should finance wastewater treatment, 100 percent of the time.

Higher costs for water

The version presented by the Finnish rapporteur Nils Torvalds (Renew), on the other hand, provides for a cost sharing of 80 percent for industry and 20 percent for the member states. Countries are therefore free to decide how they structure the financing of wastewater treatment. If this proposal were to prevail, member states could be expected to involve their municipal water utilities – and thus consumers as well. After sharp increases in energy costs, consumers would thus also have to expect higher costs for water.

Next week’s vote in ENVI, however, goes far beyond financing. It raises the question of responsibility. In a statement, the Association of Municipal Enterprises (VKU) calls the Commission’s proposal a “milestone in European water policy“. This is because extended producer responsibility would make polluters financially responsible. In addition, incentives would be created to avoid pollution, according to the VKU.

Spain is particularly affected by water shortages

But one can go even further behind the technicality of the text: Globally, only 11 percent of water is currently recycled. “This rate varies from country to country: 89 percent in Israel, 40 percent in Singapore, 15 percent in Spain and less than one percent in France”, Estelle Brachlianoff, the new CEO of French water giant Veolia, said in Barcelona in June. “Demand is growing 6 to 8 percent a year, mainly due to industrial and agricultural needs.”

It is no coincidence that Brachlianoff spoke to the press in Spain, of all places: It is one of the countries in Europe most affected by water shortages and is therefore the most advanced in terms of recycling wastewater. The example of the petrochemical companies that have joined forces in a large industrial park in Tarragona (Catalonia) and use a plant that recycles the treated wastewater from two nearby sewage treatment plants is readily highlighted there.

The proposal for a directive on wastewater treatment is a typical example of the European-Brussels dialectic: Major national and industrial challenges are hidden behind a highly technical text. Its impact should not be underestimated.