Dispute over committees + EV tariffs since midnight + Giegold leaves BMWK

Dear reader,

Peter Strohschneider, Mario Draghi, now Sauli Niinistö: It has become Ursula von der Leyen’s practice to present the reports she has commissioned together with the authors. This Wednesday, it is the turn of former Finnish President Niinistö to present his recommendations for strengthening the EU’s resilience. They are not only aimed at military effectiveness, but also at the resilience of societies, whether against disinformation or natural disasters.

Von der Leyen sees Niinistö’s home country as a model of resilience: Finland has learned to live with its aggressive neighbor Russia, “every part of Finnish society is able to secure vital functions in times of crisis”, said the Commission President in March, when Niinistö took up his post.

According to the Commission, its report will form the basis for work in this area over the next five years, similar to the Draghi report on competitiveness. In addition, the authority is currently working on a white paper that will quantify the military gaps in defense capability. Von der Leyen and the new NATO Secretary General Mark Rutte also announced after a meeting yesterday that they would be setting up a high-level task force to strengthen cooperation between the EU and NATO.

However, the Niinistö report is not the only one that the Commission will publish today: The College will adopt the annual progress reports on the EU candidate countries. In it, the Commission is likely to praise the progress made in Ukraine and Moldova in particular, but will hold back on making concrete recommendations on Georgia given the uncertain developments following the elections there.

Your
Till Hoppe

SEDE: Why the upgrade to a full committee has been delayed

By

Stephan Israel

Marie-Agnes Strack-Zimmermann (FDP/Renew) must continue to be patient as SEDE chairwoman. The planned upgrading of her Subcommittee on Security and Defense to a full committee is now to take place in the new year and no longer this autumn. The new target date is Jan. 1, according to the EU Parliament. The reason for the delay is that they now want to concentrate on the hearings and wait for confirmation from the next Commission.

In the background, however, it is also about influence and power. The differences regarding the structure of SEDE and three other committees have not yet been resolved. Observers see it as symptomatic of the wrangling over competencies that the ITRE industry committee and the AFET foreign policy committee are currently supposed to be responsible for discussions on the European Defense Industry Program (EDIP), which is, after all, the most important legislation in the field of defence.

Large or small cut for SEDE?

The Conference of Presidents, on the other hand, currently has no role for SEDE in this dossier. According to one MEP, the existing full committees have no great interest in handing over competences or dossiers. At the same time, Renew is said to have presented an initial draft for Annex 6, which was considered “overreaching” and too detailed, particularly by the EPP as the largest group.

Security and defense is a fashionable topic in which everyone wants to have a say, according to the EU Parliament. The question is whether SEDE is concerned with defense and security policy in the broader sense or only with the defense industry. Depending on the structure, not only AFET and ITRE but also the Internal Market Committee and the Transport Committee TRAN would have to relinquish responsibilities.

It would make sense, for example, for SEDE to take care of military mobility or new developments in dual-use goods. The responsibilities could also include joint procurements or future European capabilities – such as a joint air defense system.

Weber is said to have intervened

AFET Chairman David McAllister has yet to make a move, it is said. But also the French conservative François-Xavier Bellamy, currently designated as rapporteur for EDIP. Nevertheless, EPP group leader Manfred Weber is said to have put his foot down to ensure that SEDE does not remain an empty shell.

It remains to be seen whether the original idea of a package solution will be retained for the upgrading of SANT, the housing and democracy protection committees. Some stakeholders fear that this could lead to further delays. More committees would also mean more overlaps, which would, however, also reflect the overlapping responsibilities in the new commission. It is symptomatic that three committees are often involved in the Commissioners’ hearings from next week.

Danger of a phantom committee

There is still a danger that SEDE will be upgraded, but ultimately become a phantom committee without any real powers. Critics of the newcomer say that Marie-Agnes Strack-Zimmermann’s brash appearance has not always been helpful in the discussion about the structure of SEDE. Others, however, praise the ambition of the German liberal who is not afraid to fight for her political concerns.

The new full committee on security and defense should be the answer to the fact that there will be a defense commissioner for the first time. Its competencies should be reflected in the responsibilities of SEDE.

The designated Defense Commissioner Andrius Kubilius is said to be facing a similar dilemma as SEDE Chairwoman Marie-Agnes Strack-Zimmermann. Expectations of the new Commissioner are high, but the Lithuanian reportedly fears that he will end up with a theoretically wide-ranging field of activity without much responsibility.

Bulgaria: A winner’s choice of dubious authenticity

The polling stations had been closed for two hours in Bulgaria. That was when Boyko Borisov claimed the right to govern from the headquarters of his right-wing party Gerb (Citizens for European Development of Bulgaria): “I will govern with anyone who supports our program. All of them are potential partners tonight except my colleagues from ‘Rebirth’, whom I congratulate on the good result, but whom I cannot allow purely ideologically”, Borissov told journalists. Rebirth is an extremely right-wing, pro-Russian party in Bulgaria.

After the seventh parliamentary election in three and a half years, eight parties and party alliances have now entered the Bulgarian parliament. Voter turnout rose by around four percent to just under 39 percent.

Although Borissov’s center-right alliance Gerb-SDS has become by far the strongest force with 26.38%, it represents just one in twelve eligible voters due to the still low voter turnout. However, a renewed government of the previous three-time Prime Minister Borissov is still in the stars. The coalition prospects are too unclear.

First and second place for pro-Western forces

The conservative-liberal party alliance PP-DB (We Continue the Change, PP, and Democratic Bulgaria, DB) came in second behind Borrissow’s Gerb with 14.2 percent. Third place went to the nationalists of Rebirth (13.35 percent). They were followed by DPS-NN, the Bulgarian Socialist Party (BSP), APS, So One Nation Gives (ITN) and the parliamentary newcomer Sword.

Numerous red lines mark the relationships between the parties. After all, the Euro-Atlantic-oriented Gerb and the equally pro-Western liberal-conservative runners-up PP/DB agree on fundamental political issues. For example, Bulgaria’s right to unrestricted access to the Schengen area, rapid adoption of the euro and military support for Ukraine. A coalition between the two parties is therefore not only mathematically necessary, but also politically consistent.

New elections not ruled out

The crucial question is therefore whether they will be able to agree on a third coalition partner or find one. If not, the Bulgarians are likely to elect their eighth parliament in just under four years in March 2025.

The liberal-conservative PP/DB has made the reform of the legal system and the fight against corruption their priority. This should rule out cooperation with DPS-NN. The leader of that party, Deljan Peevski, was hit with Magnitsky sanctions by the US Internal Revenue Service in 2021 on suspicion of corruption.

In fact, the DPS-NN and the APS are among the secret winners of the recent parliamentary elections. Until July, both factions still formed one party – the Movement for Rights and Freedoms (DPS), which focuses on the ethnic and religious minorities of Turks, Pomaks and Roma. If united, this “Turkish party” would have become the second strongest political force.

Did everything go according to plan during the elections?

However, the fact that Peevski’s DPS-NN won 11.5 percent of the vote, a good four percent more than the APS led by DPS founder Ahmed Dogan, raises doubts among some observers about the legitimacy of the election. Deservedly or undeservedly, Dogan enjoys a heroic veneration among traditional DPS voters dating back to the 1980s as a resister against the forced assimilation of Bulgarian Muslims by the communist regime.

In contrast, Deljan Peevski has become the Balkan country’s most controversial political figure in his twenty-year career, which has been peppered with scandals. His appointment as head of the State Agency for National Security (DANS) triggered the largest and longest mass protests in post-communist Bulgaria in June 2013.

Strange distribution of votes in some places

Election protocols from Roma neighborhoods in several cities document strange vote distributions with zero votes for most parties and disproportionately high vote shares for GERB and DPS-NN. In the small town of Belitsa, video surveillance at a polling station captured a woman marking the numbers 8 and 18 for DPS-NN and Gerb on blank ballot papers in the presence of other members of the election commission.

It would now be the task of state investigative authorities to clarify whether these are isolated cases or a mass phenomenon. Experience from previous elections makes it doubtful that this will happen. Frank Stier

Clemens Fuest: Canceled industrial projects are ‘a stroke of luck’

Ifo Chairman Fuest: “We are not currently in a situation where entire regions are being deindustrialized.”

Has the German government’s strategy of using subsidized large-scale projects such as chip or battery factories to drive forward the transformation of local industry failed?
I can’t say whether the strategy has failed. But of course politicians should now look at the reasons for the rejections. The projects are different. Chip manufacturers are deciding against projects because they are worried about the global chip economy. I see these rejections as a stroke of luck. It gives us the opportunity to rethink our strategy. However, not all major projects are bad. I would even consider projects that could end the dangerous dependence on China for antibiotics, for example, to be necessary. As a rule, however, state money can be put to better use than subsidizing factories.

So no state funding for green steel?
There is a case for promoting Thyssen-Krupp’s pilot project. This is about the development of a new, possibly more environmentally friendly technology. However, it would be wrong to subsidize the entire local steel production.

Some experts believe it is necessary to preserve certain core industries in Germany in order to enable green growth and create the transition to a circular economy. They see the primary industry as one such core industry. Does this argument make sense?
Many people argue this way, but there is no convincing evidence for it. Some claim that downstream industries will move away if the primary industry leaves. There is no empirical evidence for this either. This does not mean that the effect cannot occur, but as a basis for government intervention, pure conjecture is a bit weak.

But aren’t certain industry clusters and research structures, which in turn are important for innovation, interdependent?
If we are really talking about research and development, then clusters are important. Cluster effects simply arise when people talk to each other, you are more likely to get new employees, cooperations arise, etc. – but that is not yet a reason for state subsidies. If companies benefit from being close to other industrial companies, they will go there of their own accord. And if a cluster disintegrates, this is usually a sign that the location is no longer competitive. Then you might have to give it up.

Can politicians learn from the deindustrialization of regions such as the North of England or the Rust Belt in the USA how to prevent such developments?
I fear that the decline of industries is the price of economic development. The deindustrialization in some regions as a result of the China shock shows that there is indeed no guarantee that such regions will recover. But it is also not a solution to permanently subsidize local companies across the board.

What does this mean for the transformation in Germany?
A certain amount of structural change is inevitable. But we are not currently in a situation where entire regions are being virtually deindustrialized. That happened in Germany in the Ruhr region and certain parts of eastern Germany. But I don’t see that happening now. However, I do think it is important for politicians to ensure an industry-friendly environment.

What exactly should the federal government do?
Infrastructure, bureaucracy, taxes and duties, training, skilled workers, energy – there are a lot of areas where politicians should do more and not run the risk of making major mistakes. That would be a big win for the industry. How companies then develop in this environment should be left to the market. Moreover, we are not only seeing a shrinking of certain industrial companies. Many want to expand, but can’t find workers. If other companies cut jobs due to structural change, this does not necessarily have to be a disadvantage. It would be different if we had five million unemployed – but we don’t. For this reason, German politicians would be well advised to create generally good conditions for investment but to allow structural change.

And you think that’s right, even though other countries such as the USA or China are massively subsidizing their industries?
The Americans are mainly subsidizing chip factories and factories in the green economy. This is a bad and expensive policy. We should definitely not copy the strategy of the Inflation Reduction Act. We are also further ahead in Europe. In the USA, politicians must first ensure that CO₂ emissions fall. That’s why we have the CO₂ price in Europe. The factories for heat pumps or solar cells that are currently being built in the USA will probably disappear again as soon as the subsidies are removed. This is because the USA has no recognizable comparative advantage here.

What can we learn from this?
In Europe, and especially in Germany, we should concentrate on political measures that are uncontroversial and where the usefulness is clear. I would also like to see industrial settlements in the field of research and development. But please don’t subsidize mass production such as batteries or solar panels, which we know will migrate to emerging countries in the medium term anyway.

Reorganization of the Greens: Giegold leaves BMWK

State Secretary Sven Giegold wants to leave the Federal Ministry of Economics as part of the reorganization of the Green Party leadership. According to information from Table.Briefings, he is to become deputy party leader of the Greens.

Because the BMWK position is not compatible with a party function and Giegold apparently firmly expects to be elected, he announced on Tuesday evening that he would be stepping down from this position on Nov. 15. The Federal Delegates’ Conference, at which the new Green Party leadership will be elected, will take place from Nov. 15 to 17.

Giegold has been responsible for European and economic policy as State Secretary at the BMWK since 2021. The former MEP has good contacts with churches and social movements. Originally, he was also discussed as political director, but there was resistance to this from the Realo wing. Robert Habeck, who thanked his outgoing State Secretary on Tuesday “for three years of trusting cooperation”, is also said to have viewed this plan critically.

In addition to Giegold, Manuela Rottmann is to join the Green Party board as treasurer. As Table.Briefings reported on Monday, the current party deputy Pegah Edalatian will become political director. Find out who else has been nominated for the Green leadership and what risks are involved in Berlin.Table (only available in German).

EVs: Tariffs are in effect – Commission focuses on negotiated solution

The EU Commission wants to negotiate alternatives with Beijing even after the additional tariffs on Chinese EVs come into force. The Chinese government and the Commission are interested in “finding a solution quickly,” an EU official said on Tuesday. The Commission had previously finalized the tariffs. They will apply for five years.

The authority thus set the final amount of the additional levy: According to the regulation, an additional levy of 17.0 percent is due for electric cars from the manufacturer BYD. Electric vehicles produced by Geely will be subject to an 18.8 percent levy, while the maximum rate is 35.3 percent, for example, for SAIC. US manufacturer Tesla has to pay 7.8 percent.

Tariffs in effect since midnight

German manufacturers, particularly VW’s Cupra, BMW’s Mini and Mercedes’ Smart, are also affected. They have to pay 20.7 percent on vehicles imported from China. Special treatment for European manufacturers is not legally possible, said the EU official.

The Commission Implementing Regulation was published in the Official Journal on Tuesday evening, and the tariffs were entered into force at midnight. At the beginning of the month, a sufficient majority of EU member states voted in favor of the punitive tariffs. Germany had voted against it. Berlin had concerns about the risk of a new trade conflict and possible retaliatory measures against German companies, especially the German automotive industry. Yesterday, VDA President Hildegard Müller called on all sides to “resolutely” seek a WTO-compliant solution in order to abolish the additional tariffs.

It remains unclear when the EU delegation will travel to Beijing for the next round of negotiations. There is no deadline for the talks. The Commission is negotiating with the Chinese side and individual manufacturers, in particular on minimum prices for cars imported from China. The EU side demands specific and verifiable commitments from the manufacturers for each model. The Chinese side rejects this – probably also for fear of setting a precedent for other industries.

Tariff dispute: Awaiting China’s response

It is still uncertain how China will react to the final introduction of the tariffs. Even before the tariffs were passed, the government in Beijing accused the EU of protectionism and had considered additional duties on imported pork and dairy products as possible retaliatory measures. An investigation into brandy imports has already resulted in China taking anti-dumping measures against the EU.

In this context, the Chinese Ministry of Commerce threatened to raise tariffs on imports of large-engined gasoline cars from the EU. Numerous premium vehicles from the Mercedes-Benz, Audi and BMW brands could fall under the new regulation. Although the companies operate plants in China, high-engined saloons or SUVs are mostly imported to the People’s Republic, not manufactured. However, observers doubt that the Chinese leadership will allow the trade conflict with the Europeans to escalate shortly before the US presidential election. If Donald Trump wins there, stable economic relations with Europe will be all the more important.

France has also already announced its intention to contest the import duties on spirits. Paris considers them to be political and unjustified. One diplomat described them as an “unacceptable manipulation of trade rules.” French Trade Minister Sophie Primas will travel to Shanghai next week and will also meet China’s Trade Minister Wang Wentao. The European Commission also announced it would challenge the provisional anti-dumping measures on brandy imports from the EU at the World Trade Organization. fpe/tho

Informal summit in Hungary: New draft for Budapest Declaration

At their meeting on Tuesday, the Permanent Representatives continued to work on the Budapest Declaration, which is scheduled to be adopted at the informal summit on Nov. 8 in Budapest. The declaration focuses on the New Deal for Competitiveness, aiming to enhance economic growth and strengthen the competitive position of member states in the global marketplace. The draft currently comprises ten pages, outlining strategic initiatives and collaborative policies designed to address shared economic challenges.

This document represents a significant step toward fostering innovation, sustainable development, and regulatory efficiency across the region. By emphasizing these key areas, the Budapest Declaration seeks to create a more dynamic and resilient economic environment that can adapt to the rapidly changing global landscape.

For those interested in the detailed proposals and strategies, the full paper is available to Table.Briefings; you can read it here.

Innovation Council: €1.4 billion for the 2025 work program

The Commission presented the work program of the European Innovation Council (EIC) on Tuesday. The program will be able to spend €1.4 billion in the coming year to support European deep-tech research and high-potential start-ups. For its 2025 work program, the EIC has almost 200 million euros more at its disposal than in 2024.

According to the Commission, the new work program brings further improvements in addition to the increase in funding. These include better access to equity capital as part of the Scale-up Program (STEP). Further improvements have also been made based on the recommendations of the EIC Advisory Board. The targeted support, particularly under the STEP scaling-up call, will help to close critical funding gaps and build a stronger, more resilient innovation ecosystem in Europe, said Iliana Ivanova, acting Commissioner for Innovation and Research.

EIC acts as an investor

Following a pilot phase (2018 to 2020), the Commission established the European Innovation Council as a permanent part of Horizon Europe in 2021. A special feature of the EIC is the promotion of individual companies, primarily start-ups and SMEs, which are supported both in the form of grants and investments. Investments are currently made through direct equity investments or quasi-equity and are managed by the EIC Fund. This fund also aims to attract private co-investment to further promote the growth of innovative companies in strategic sectors.

The most important points in the new EIC work program:

New EIC STEP Scale-up program: With a budget of €300 million in 2025 (and an expected increase to €900 million in the period 2025-2027), larger investments of €10 to €30 million per company are possible to promote private co-investments, with a total target of €50 to €150 million.
Updated EIC challenges: €120 million for new technologies such as autonomous robots, climate-resilient plants, conversion of waste into raw materials and medical diagnostics. As well as €250 million for early-stage companies in areas such as generative artificial intelligence, new space technologies, agricultural technology and future mobility solutions.
Expanded access to business acceleration services for emerging companies from countries with lower research and innovation performance.

Application procedures to become simpler

The three main funding lines of the EIC work program are:

EIC Pathfinder: €262 million for multidisciplinary research teams for early-stage research.
EIC Transition: €98 million for turning research results into innovations.
EIC Accelerator: €634 million for start-ups and SMEs to develop and scale innovations.

Criticism of the previous EIC programs was mainly due to the complex application procedures and administrative requirements. Many start-ups felt hindered by the high requirements. With the adjustments to the program and additional funding opportunities, the EU wants to simplify processes and respond more flexibly. vis

E-fuels: Industry calls for regulatory reform

In a position paper published by the e-Fuel Alliance, the industry association calls for urgent action on the regulatory framework at the European level. If the legal framework is not changed, the ramp-up of hydrogen and derivatives will be much slower, explained Ralf Diemer, Managing Director of the eFuel Alliance. Even low quotas for e-fuels would then be difficult to meet.

According to the paper, the industry is particularly hampered by unclear quota regulations and restrictive requirements of the Renewable Energy Directive (RED III) as well as overly complex requirements of the delegated acts on the production of RFNBOs (Renewable Fuels of Non-Biological Origin). According to the eFuel Alliance, these regulations make it difficult for potential investors to enter the market and prevent the development of a strong value chain for renewable fuels in Europe. The association is not yet satisfied with the statements made by the designated Energy Commissioner Dan Jørgensen in this regard and has announced that MEPs will question Jørgensen further at his hearing next week.

Industry calls for e-fuels on the road

In addition to regulatory uncertainties, the exclusion of road transport as a target market for e-fuels is also a hurdle. It restricts the demand for e-fuels and slows down growth, especially as comparatively more stable purchase agreements are possible for road vehicles. The eFuel Alliance is therefore calling for e-fuels to be recognized as a CO2-reducing technology in road transport.

In order to ensure sustainable and long-term investment security, the industry association proposes adopting more ambitious quotas for the use of renewable fuels, rewarding purchase volumes with financial incentives for overfulfilment and using support programs such as the EU Innovation Fund. The EU should also consider adapting the Energy Tax Directive so that renewable fuels are no longer taxed in the same way as fossil fuels. luk

Education: What Commissioner-designate Mînzatu wants to achieve

The designated EU Commissioner Roxana Mînzatu wants to strengthen vocational (further) education and training and draw up an action plan for basic skills. The action plan is intended to counteract the “worrying decline in performance” in the areas of reading and writing, mathematics and science, as well as insufficient digital skills. This is according to the written answers from Romanian MEPs to questions from the European Parliament. These have now been published ahead of Mînzatu’s hearing before the Parliament scheduled for Nov. 12.

If Mînzatu is confirmed as Executive Vice-President for People, Skills and Pensions in November, she is planning a “Union of Skills” to alleviate the shortage of jobs and skilled workers and strengthen education across Europe. She also announced “investing in people”: “The next Commission will be an investment Commission.”

The action plan for basic skills is also intended to improve the working and learning conditions for teachers and students. Well-being and social-emotional skills play a crucial role for Mînzatu.
A strategic plan for STEM education is intended to help combat the shortage of teachers for the subjects of mathematics, computer science, natural sciences and technology and attract more girls and women to this field.
More people should get into training, the quality of training should improve and qualifications and certificates should be recognized more easily across national borders. To this end, Mînzatu wants to work towards an “ambitious legal framework”.

Digital and green education

Mînzatu is also focusing on digital learning – from early childhood to lifelong learning. The Digital Education Action Plan 2021-2027 is a good basis, but the reforms need to be accelerated further. Digital tools are needed in the classroom and “advanced digital skills” in areas such as AI, programming, and cybersecurity.

Sustainable education is to continue to be supported with the “GreenComp” framework and teacher academies are to teach environmental topics even more intensively in the future. The Commissioner also wants to strengthen the Erasmus+ program and improve access to exchange programs for disadvantaged groups in order to promote equal opportunities and European identity. Vera Kraft

Hearing of the Commissioner

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