Your contact for new licenses
There is just over a week to go. Then the deadline set by Commission President Ursula von der Leyen for the member states to nominate their candidates will expire. Seven member states have not yet made any proposals. Italy is one of them. There is speculation that Giorgia Meloni will put forward her party colleague from the Fratelli, Raffaele Fitto, the European Affairs Minister in her government and former co-leader of the ECR group in the European Parliament.
However, it is rumored from generally very well-informed circles in Rome that Rome could also send a woman: Elisabetta Belloni. She is a trained diplomat, apparently gets on brilliantly with the Prime Minister and has been head of the Italian secret services since 2021. Von der Leyen wants to form the first commission in which there are as many women as men. From this perspective, a female candidate from Italy would be very welcome.
Incidentally, Mario Draghi gave Belloni the job as head of the secret service when he headed the technocratic government in Rome. Speaking of Draghi. His report on the future of EU competitiveness is now due to be published in September. Ursula von der Leyen has reportedly delayed its publication. The report is now to be published around the time of her State of the Union speech, which she will give in the first week of the session in Strasbourg.
The exact contents of the report are still secret. In recent months, he has given two speeches in which he offered an insight into the thrust of his report. Among other things, he wants a trade policy that provides greater protection and support for European industry in the face of state-sponsored competition from China and the USA.
Enjoy the last few quiet days in EU politics, because things will change abruptly at the beginning of September.
One day after the EU Commission imposed additional tariffs on Chinese EVs, Beijing has responded: China has launched an anti-subsidy investigation into dairy products imported from the European Union. This was announced by the Chinese Ministry of Commerce in a statement on Wednesday.
The Chinese authorities are targeting, among other things:
As a result, there is a threat of punitive tariffs on the corresponding goods from the EU, the ministry announced. The subsidies are being investigated as part of the common agricultural policy of the EU member states as well as national programs in Ireland, Austria, Belgium, Italy, Croatia, Finland, Romania and the Czech Republic, which were listed individually in the notification.
According to official information, the action is the result of a complaint from Chinese manufacturers of dairy products. Discussions on the subject were also held with EU representatives last week. The investigation is to be completed within twelve months, but could be extended by a further six months.
The move is seen as a further threatening gesture in the dispute over EU punitive tariffs on Chinese EVs. The EU Commission set the tariffs for vehicles from China on Tuesday. They amount to up to 36.3 percent and will come into force by the end of October at the latest, initially for five years.
France – which is also considered to be the driver of EU tariffs on EVs from China – would be the largest affected country by the potential punitive tariffs on certain dairy products. France is the largest exporter of dairy products to the People’s Republic within the EU this year, according to Chinese customs data. Italy and Denmark have followed in second place so far in 2024. In 2023, French dairy product exports to China amounted to €665 million, which accounts for around eight percent of France’s global dairy product sales. Excluding infant milk, export sales fall to €386 million.
The dairy market in China is also important for the German agricultural sector: last year, 294,000 tons of milk and dairy products – excluding cheese and butter – were exported to the People’s Republic. With a value of €386 million, this was the highest item within German agricultural exports to China. According to the German government, fresh consumer and processed milk accounted for almost half of this.
The German Dairy Industry Association expressed concern on Wednesday: “China continues to be an important global importer of German dairy products and ingredients, despite growing Chinese production”´, the association told Table.Briefings.
Reliable and trusting trade relations have developed between Germany and China over the years. “It should therefore be the goal for both sides that the dairy and food sector is not unduly dragged into the ongoing industrial dispute between China and the EU over electric vehicles and related technologies”, said the association, which represents around 90 milk processing companies in Germany. There were clear demands to politicians: “We expect the German government and the European Commission to work at the highest level to resolve this dispute quickly.”
Of the countries in which Beijing wants to scrutinize state subsidy programs, only Italy and Belgium voted in favor of the EU’s additional tariffs on e-cars in July. Ireland, Austria, Croatia, Finland, Romania and the Czech Republic abstained.
According to information from EU circles, negotiations with Beijing are still possible in order to avert the tariffs on EVs. So far, these talks have not produced any results. The Chairman of the Trade Committee in the EU Parliament, Bernd Lange (SPD), believes there is still “time for constructive dialog and a joint solution“. The higher tariffs “have not yet been imposed and will not apply retroactively”, he explained. There will now be further talks with the companies and negotiations with the Chinese side “on the possible elimination of illegal subsidies”.
The EU Commission announced the additional tariffs in June. At the time, Beijing had already responded with an anti-subsidy investigation into pork from the EU. This would primarily affect Spain, the Netherlands and Denmark. And since January, the Chinese authorities have also been investigating suspected illegal subsidies on European brandies such as cognac – which, like cheese, would also hit France the hardest.
According to data from the European Commission’s Directorate-General for Agriculture and Rural Development, the EU exported €1.7 billion worth of dairy products to China in 2023. This is less than in the previous year, when it was still around two billion euros. With a share of twelve percent, dairy products are the third most exported agricultural product from the EU to China. Pork accounts for 17 percent and grain for 19 percent.
China imported a total of 2.6 million tons of dairy products in 2023, a good twelve percent less than in the previous year. Imports of milk powder, liquid milk and cream have also fallen compared to previous years. Milk powder, such as that used for baby food, is not included in the anti-subsidy investigation that has now been announced.
China still has a need for imported milk powder due to possible food scandals. Due to increasingly secure domestic production and falling demand as a result of a decline in the birth rate, imports are falling – most recently by 38%. Meanwhile, demand for foreign yogurt and whey products is increasing. New Zealand holds the largest market share for dairy products in China, with a good 48% in 2023.
The Commission stated on Wednesday that it was taking note of the investigation. The procedure will be analyzed “very closely”. “The Commission will vigorously defend the interests of the EU dairy industry“, it said. If necessary, intervention would not be ruled out to ensure that the investigation complies with WTO rules.
The EU Chamber of Commerce in China was not moved by the move on Wednesday: Beijing’s actions “should not be seen as a surprise”. “Regrettably, the use of trade defense instruments by one government is increasingly reciprocated in kind by the other”, the EU Chamber said, adding that it hoped the investigation would be “conducted fairly and transparently”.
At an event in Spain this week, EU foreign policy chief Josep Borrell emphasized that the EU “ must not be naive” and that a trade war was “perhaps unavoidable”.
The nervousness among Europe’s gas traders has a name: Sudzha. This is the only transfer point through which Russian gas still flows to Ukraine and on to the EU. The battles over the station have caused European prices to swing back to €40 per megawatt hour in recent weeks. The EU actually wants to put an end to such risks. With REPowerEU, it has set itself the goal of becoming independent of fossil energy from Russia by 2027 at the latest. Far too late, says the Brussels think tank Bruegel.
“From a security of supply perspective, I think it is feasible for the EU to stop Russian gas imports immediately“, Bruegel analyst Ben McWilliams told Table.Briefings. The situation can no longer be compared to 2022, when the risks were dramatically high.
“The reason why EU countries are not stopping imports of Russian gas is more political than concerns about the security of supply“, says McWilliams. “The political calculation is probably that the benefits of stopping imports would not sufficiently outweigh the costs of a temporary price increase.” Although sanctions against Russian gas would still hit the Kremlin’s state revenues, they would be less severe than in the days when prices were well above €100.
The EU currently still obtains around ten to 15 percent of its gas from Russia – via the Ukraine route, the Turkstream pipeline through the Black Sea and via LNG terminals. One of the most vulnerable countries is still Austria, where the proportion of Russian gas was over 80 percent this year.
“If Gazprom stops deliveries, gas prices in Austria will rise by ten to 20 percent in the short to medium term“, estimates analyst Marcus How from VE Insight. So is it all just a question of price? Even with an increase of 20 percent, Austria would still be a long way off the highs from the summer of 2022 with prices of over €300.
However, a look at a regional analysis shows that the supply in Central and South Eastern Europe depends on quite a few “ifs” – which is probably one reason why some politicians are reluctant to make a hard cut. The consulting firm Rystad recently analyzed how Europe could at least react to the halt in Russian supplies through Ukraine. The transit contract expires at the end of 2024 and the government in Kyiv has announced that it will not be extended. Three examples:
The decision as to how quickly the EU states withdraw from Russian gas therefore essentially depends on these issues:
The future of Turkstream supplies has so far been underexposed. Bruegel expert McWilliams has a strong view: “It’s very unlikely that the flows through Turkstream will end because they supply Serbia and Hungary, who don’t want to cut off that supply.” However, if the EU sticks to Turkstream and lets Hungary have its way, this would also mean that it does not completely withdraw from Russian gas.
The government in Budapest is currently blocking important progress in Brussels. In order to better structure and monitor the many “ifs” for a phase-out of Russian gas, a high-level working group was formed at EU level in June at the instigation of the Czech Republic. Many of Prague’s supporters want the Commission to provide a clear roadmap for the phase-out.
Czech Energy Minister Jozef Síkela, who has been nominated as an EU Commissioner, once again made his claim to the energy portfolio in Brussels clear on Wednesday. His “vision of my future work within the European Commission” includes “further moving away” from Russian energy resources, he wrote on X.
The Hungarian Council Presidency had initially announced that it would put the issue on the agenda of the informal meeting of energy ministers in July. However, this did not happen. Several EU states urgently want to discuss long-term supply contracts. According to information from Table.Briefings, Poland, the Netherlands and Spain have now asked the Commission to work out a solution for these contracts. Madrid’s Commission candidate Teresa Ribera, who has the best prospects of winning the energy portfolio, has repeatedly called on the business community to scale back gas contracts with local companies since Russia’s attack.
In order not to make the initiative dependent on the Hungarian Council Presidency, the members of the working group are currently looking for a chair to drive the discussion forward. Budapest will host a regular meeting of Southern and Eastern European states on Oct. 29 in order to further interlink the countries’ gas infrastructure. The so-called CESEC Group, which also includes Moldova, Serbia and Ukraine, is planning the Vertical Gas Corridor.
The EU member states had actually already created the legal conditions for an end to the long-term contracts. Article 6 of the new Gas Market Regulation is considered a possibility for an import ban, which each member state could impose by law. Couldn’t European importers then invoke force majeure and avoid paying compensation?
This path will be extremely difficult for two reasons. The agreed Article 6 stipulates numerous conditions. In addition, any state that potentially interferes with European security of supply with this step would have to coordinate with all kinds of European partners – from Georgia to Iceland. At its meeting in June, the high-level working group therefore asked the Commission for guidelines and legal clarification, according to an EU diplomat.
However, the route via the Gas Market Regulation also has a fundamental problem. “It is questionable whether the article in question constitutes a sanction“, says an insider from the gas industry. A sanction would probably offer more legal certainty and could be interpreted as force majeure. However, a strict embargo on Russian gas would have required unanimity in the Council.
The Gas Market Regulation, on the other hand, only grants member states the right to “limit capacity bids of individual network users at entry points from the Russian Federation and Belarus” – i.e. to prohibit regular bookings of pipeline connections. According to the gas expert, this embargo through the back door would be associated with legal uncertainties for importers: “Such a step would lead to legal disputes.”
There is just over a week to go. Then the deadline set by Commission President Ursula von der Leyen for the member states to nominate their candidates will expire. Seven member states have not yet made any proposals. Italy is one of them. There is speculation that Giorgia Meloni will put forward her party colleague from the Fratelli, Raffaele Fitto, the European Affairs Minister in her government and former co-leader of the ECR group in the European Parliament.
However, it is rumored from generally very well-informed circles in Rome that Rome could also send a woman: Elisabetta Belloni. She is a trained diplomat, apparently gets on brilliantly with the Prime Minister and has been head of the Italian secret services since 2021. Von der Leyen wants to form the first commission in which there are as many women as men. From this perspective, a female candidate from Italy would be very welcome.
Incidentally, Mario Draghi gave Belloni the job as head of the secret service when he headed the technocratic government in Rome. Speaking of Draghi. His report on the future of EU competitiveness is now due to be published in September. Ursula von der Leyen has reportedly delayed its publication. The report is now to be published around the time of her State of the Union speech, which she will give in the first week of the session in Strasbourg.
The exact contents of the report are still secret. In recent months, he has given two speeches in which he offered an insight into the thrust of his report. Among other things, he wants a trade policy that provides greater protection and support for European industry in the face of state-sponsored competition from China and the USA.
Enjoy the last few quiet days in EU politics, because things will change abruptly at the beginning of September.
One day after the EU Commission imposed additional tariffs on Chinese EVs, Beijing has responded: China has launched an anti-subsidy investigation into dairy products imported from the European Union. This was announced by the Chinese Ministry of Commerce in a statement on Wednesday.
The Chinese authorities are targeting, among other things:
As a result, there is a threat of punitive tariffs on the corresponding goods from the EU, the ministry announced. The subsidies are being investigated as part of the common agricultural policy of the EU member states as well as national programs in Ireland, Austria, Belgium, Italy, Croatia, Finland, Romania and the Czech Republic, which were listed individually in the notification.
According to official information, the action is the result of a complaint from Chinese manufacturers of dairy products. Discussions on the subject were also held with EU representatives last week. The investigation is to be completed within twelve months, but could be extended by a further six months.
The move is seen as a further threatening gesture in the dispute over EU punitive tariffs on Chinese EVs. The EU Commission set the tariffs for vehicles from China on Tuesday. They amount to up to 36.3 percent and will come into force by the end of October at the latest, initially for five years.
France – which is also considered to be the driver of EU tariffs on EVs from China – would be the largest affected country by the potential punitive tariffs on certain dairy products. France is the largest exporter of dairy products to the People’s Republic within the EU this year, according to Chinese customs data. Italy and Denmark have followed in second place so far in 2024. In 2023, French dairy product exports to China amounted to €665 million, which accounts for around eight percent of France’s global dairy product sales. Excluding infant milk, export sales fall to €386 million.
The dairy market in China is also important for the German agricultural sector: last year, 294,000 tons of milk and dairy products – excluding cheese and butter – were exported to the People’s Republic. With a value of €386 million, this was the highest item within German agricultural exports to China. According to the German government, fresh consumer and processed milk accounted for almost half of this.
The German Dairy Industry Association expressed concern on Wednesday: “China continues to be an important global importer of German dairy products and ingredients, despite growing Chinese production”´, the association told Table.Briefings.
Reliable and trusting trade relations have developed between Germany and China over the years. “It should therefore be the goal for both sides that the dairy and food sector is not unduly dragged into the ongoing industrial dispute between China and the EU over electric vehicles and related technologies”, said the association, which represents around 90 milk processing companies in Germany. There were clear demands to politicians: “We expect the German government and the European Commission to work at the highest level to resolve this dispute quickly.”
Of the countries in which Beijing wants to scrutinize state subsidy programs, only Italy and Belgium voted in favor of the EU’s additional tariffs on e-cars in July. Ireland, Austria, Croatia, Finland, Romania and the Czech Republic abstained.
According to information from EU circles, negotiations with Beijing are still possible in order to avert the tariffs on EVs. So far, these talks have not produced any results. The Chairman of the Trade Committee in the EU Parliament, Bernd Lange (SPD), believes there is still “time for constructive dialog and a joint solution“. The higher tariffs “have not yet been imposed and will not apply retroactively”, he explained. There will now be further talks with the companies and negotiations with the Chinese side “on the possible elimination of illegal subsidies”.
The EU Commission announced the additional tariffs in June. At the time, Beijing had already responded with an anti-subsidy investigation into pork from the EU. This would primarily affect Spain, the Netherlands and Denmark. And since January, the Chinese authorities have also been investigating suspected illegal subsidies on European brandies such as cognac – which, like cheese, would also hit France the hardest.
According to data from the European Commission’s Directorate-General for Agriculture and Rural Development, the EU exported €1.7 billion worth of dairy products to China in 2023. This is less than in the previous year, when it was still around two billion euros. With a share of twelve percent, dairy products are the third most exported agricultural product from the EU to China. Pork accounts for 17 percent and grain for 19 percent.
China imported a total of 2.6 million tons of dairy products in 2023, a good twelve percent less than in the previous year. Imports of milk powder, liquid milk and cream have also fallen compared to previous years. Milk powder, such as that used for baby food, is not included in the anti-subsidy investigation that has now been announced.
China still has a need for imported milk powder due to possible food scandals. Due to increasingly secure domestic production and falling demand as a result of a decline in the birth rate, imports are falling – most recently by 38%. Meanwhile, demand for foreign yogurt and whey products is increasing. New Zealand holds the largest market share for dairy products in China, with a good 48% in 2023.
The Commission stated on Wednesday that it was taking note of the investigation. The procedure will be analyzed “very closely”. “The Commission will vigorously defend the interests of the EU dairy industry“, it said. If necessary, intervention would not be ruled out to ensure that the investigation complies with WTO rules.
The EU Chamber of Commerce in China was not moved by the move on Wednesday: Beijing’s actions “should not be seen as a surprise”. “Regrettably, the use of trade defense instruments by one government is increasingly reciprocated in kind by the other”, the EU Chamber said, adding that it hoped the investigation would be “conducted fairly and transparently”.
At an event in Spain this week, EU foreign policy chief Josep Borrell emphasized that the EU “ must not be naive” and that a trade war was “perhaps unavoidable”.
The nervousness among Europe’s gas traders has a name: Sudzha. This is the only transfer point through which Russian gas still flows to Ukraine and on to the EU. The battles over the station have caused European prices to swing back to €40 per megawatt hour in recent weeks. The EU actually wants to put an end to such risks. With REPowerEU, it has set itself the goal of becoming independent of fossil energy from Russia by 2027 at the latest. Far too late, says the Brussels think tank Bruegel.
“From a security of supply perspective, I think it is feasible for the EU to stop Russian gas imports immediately“, Bruegel analyst Ben McWilliams told Table.Briefings. The situation can no longer be compared to 2022, when the risks were dramatically high.
“The reason why EU countries are not stopping imports of Russian gas is more political than concerns about the security of supply“, says McWilliams. “The political calculation is probably that the benefits of stopping imports would not sufficiently outweigh the costs of a temporary price increase.” Although sanctions against Russian gas would still hit the Kremlin’s state revenues, they would be less severe than in the days when prices were well above €100.
The EU currently still obtains around ten to 15 percent of its gas from Russia – via the Ukraine route, the Turkstream pipeline through the Black Sea and via LNG terminals. One of the most vulnerable countries is still Austria, where the proportion of Russian gas was over 80 percent this year.
“If Gazprom stops deliveries, gas prices in Austria will rise by ten to 20 percent in the short to medium term“, estimates analyst Marcus How from VE Insight. So is it all just a question of price? Even with an increase of 20 percent, Austria would still be a long way off the highs from the summer of 2022 with prices of over €300.
However, a look at a regional analysis shows that the supply in Central and South Eastern Europe depends on quite a few “ifs” – which is probably one reason why some politicians are reluctant to make a hard cut. The consulting firm Rystad recently analyzed how Europe could at least react to the halt in Russian supplies through Ukraine. The transit contract expires at the end of 2024 and the government in Kyiv has announced that it will not be extended. Three examples:
The decision as to how quickly the EU states withdraw from Russian gas therefore essentially depends on these issues:
The future of Turkstream supplies has so far been underexposed. Bruegel expert McWilliams has a strong view: “It’s very unlikely that the flows through Turkstream will end because they supply Serbia and Hungary, who don’t want to cut off that supply.” However, if the EU sticks to Turkstream and lets Hungary have its way, this would also mean that it does not completely withdraw from Russian gas.
The government in Budapest is currently blocking important progress in Brussels. In order to better structure and monitor the many “ifs” for a phase-out of Russian gas, a high-level working group was formed at EU level in June at the instigation of the Czech Republic. Many of Prague’s supporters want the Commission to provide a clear roadmap for the phase-out.
Czech Energy Minister Jozef Síkela, who has been nominated as an EU Commissioner, once again made his claim to the energy portfolio in Brussels clear on Wednesday. His “vision of my future work within the European Commission” includes “further moving away” from Russian energy resources, he wrote on X.
The Hungarian Council Presidency had initially announced that it would put the issue on the agenda of the informal meeting of energy ministers in July. However, this did not happen. Several EU states urgently want to discuss long-term supply contracts. According to information from Table.Briefings, Poland, the Netherlands and Spain have now asked the Commission to work out a solution for these contracts. Madrid’s Commission candidate Teresa Ribera, who has the best prospects of winning the energy portfolio, has repeatedly called on the business community to scale back gas contracts with local companies since Russia’s attack.
In order not to make the initiative dependent on the Hungarian Council Presidency, the members of the working group are currently looking for a chair to drive the discussion forward. Budapest will host a regular meeting of Southern and Eastern European states on Oct. 29 in order to further interlink the countries’ gas infrastructure. The so-called CESEC Group, which also includes Moldova, Serbia and Ukraine, is planning the Vertical Gas Corridor.
The EU member states had actually already created the legal conditions for an end to the long-term contracts. Article 6 of the new Gas Market Regulation is considered a possibility for an import ban, which each member state could impose by law. Couldn’t European importers then invoke force majeure and avoid paying compensation?
This path will be extremely difficult for two reasons. The agreed Article 6 stipulates numerous conditions. In addition, any state that potentially interferes with European security of supply with this step would have to coordinate with all kinds of European partners – from Georgia to Iceland. At its meeting in June, the high-level working group therefore asked the Commission for guidelines and legal clarification, according to an EU diplomat.
However, the route via the Gas Market Regulation also has a fundamental problem. “It is questionable whether the article in question constitutes a sanction“, says an insider from the gas industry. A sanction would probably offer more legal certainty and could be interpreted as force majeure. However, a strict embargo on Russian gas would have required unanimity in the Council.
The Gas Market Regulation, on the other hand, only grants member states the right to “limit capacity bids of individual network users at entry points from the Russian Federation and Belarus” – i.e. to prohibit regular bookings of pipeline connections. According to the gas expert, this embargo through the back door would be associated with legal uncertainties for importers: “Such a step would lead to legal disputes.”