Polisblog
15. September 2023

nEUrds – Your Guide To What’s Moving The Bubble

 

by Lukas Seelig, Janik Gast and Moritz Pohl,

coming to you from Polis180’s “European Economic Policy” programme, inviting you to subscribe for free by dropping us a line here

 

 

 

Hey there, curious minds and all-around Brussels enthusiasts!

 

Welcome to our debut “nEUrds” newsletter [pronounced same as nerds] – a fresh adventure through the vibrant tapestry of European economics, finance, and everything in between. We’re thrilled to have you join us on this exciting ride, whether you’re a seasoned explorer of the Brussels Bubble or just someone with an insatiable appetite for all kinds of nerdy knowledge.

 

So, what’s our game plan? Simple yet daring: we’re here to bridge the gap between the dynamic realm of European economics, finance, and all the captivating dots that connect them. From the bustling markets to the hidden gems of European trade politics that dot our economies, we’re here to make the intriguing developments not only understandable but genuinely captivating. Whether you’re a connoisseur of current affairs or just someone looking for that „aha“ moment in your day, consider this (bi-)weekly newsletter your front-row ticket to the theatre of Brussels.

 

What’s simmering in our inaugural edition? Well, what better way to kick off this adventure than with THE event for Brussels Nerds – The State of the Union Address by Commission President von der Leyen. In this edition, we’re gearing up to dissect the economic policy notions woven into this pivotal speech. But hold your horses – we’re not confined to any one realm. In this and any future editions, we’re setting our sights on the most eye-catching, mind-tickling topics out there, spanning from the economy’s ebb and flow to the policies that influence the way that economic goods – be it electricity or crates – reach our grids and ports. And here’s the twist: each edition is a triple-threat affair, crafted not just by one, not two, but three unique perspectives – coming from both our inner circle of inquisitive minds and / or from the big, diverse world beyond. So fasten your seatbelts, because this newsletter is your VIP pass to unraveling the threads of the supranational project that has taken our minds and hearts by storm, one page at a time. Get ready to be informed, entertained, and possibly inspired. Let’s embark on this adventure together and get straight into this first edition!

 

Charging Ahead – The EU’s New Anti-Subsidy Push 

written by Lukas Seelig

In a resounding appearance on Brussels‘ political stage, Commission President von der Leyen yesterday delivered her annual State of the Union Address, a much-anticipated event that sets the tone for the European Union’s future endeavors. As the President touted a remarkable 90 percent fulfillment of the political guidelines presented in 2019, it’s worth noting that the European Parliament’s own in-depth analysis paints a slightly different picture, revealing that approximately 69 percent of the Commission’s proposed initiatives have actually come to fruition. This subtle but significant discrepancy serves as a backdrop to a speech that held more than a few surprises.

 

GEO-ECONOMICS AT IT – AGAIN

Following the recent address, a topic has taken centre stage, buzzing through both the political economic corridors of Europe as well as your author’s favorite newsroom in the world (looking at you, POLITICO): the anti-subsidy investigation targeting Chinese electric cars. European Commission President Ursula von der Leyen unveiled this investigation, a strategic move intended to arm the EU with additional leverage in future trade discussions.

 

This development unfolds against the backdrop of China’s burgeoning electric vehicle (EV) market, where sales account for a staggering 59% of the global total. In contrast, the entirety of Europe, as a single market, managed to sell 2.7 million EVs in 2022. Projections suggest that China could potentially secure a substantial 9% to 18% stake in this market by 2025, a share significant enough to disrupt domestic sales and challenge established legacy brands – an emphasis echoed by Commissioner Breton.

 

Against this background, this investigation arrives at a pivotal juncture when Europe’s automotive sector is urging for a „balanced approach“ in response to the growing influence of Chinese e-cars. Brands like BYD, a high-volume car manufacturer larger than Tesla, are aggressively pursuing European market strategies and increasingly competing on cost with traditional incumbents. 

 

(NOT) EVERYONE HAPPY?

The decision by the Commission to launch the anti-subsidy investigation has stirred a flurry of reactions across the European political and industrial landscape. Notably, the biggest beneficiary of this move appears to be France, which had been actively lobbying the Commission for months to take action. This endeavour had found support within the French Cabinet, and Commissioner Breton had previously underscored the associated risks in a speech made in early September. However, it’s essential not to make sweeping generalisations, as even within France, concerns have arisen among automotive giants like Renault and Stellantis who fear that a full-scale onslaught by Chinese carmakers may erode their market share in key European home markets.

 

While the European People’s Party (EPP), represented by Manfred Weber, aligns with the investigation, stressing that they „don’t want to see Chinese electric vehicles benefiting from our climate policies,” they advocate activating trade defense instruments to prevent a repeat of a „solar panel attack” (alluding to the fact that – both in the past and the present – Europe’s efforts to manufacture more green technologies were at risk of being undercut by cheaper rivals).

 

THE ELE-VW-ANT IN THE ROOM

The looming spectre of a trade dispute with China casts an undeniable shadow over Germany and its automotive industry. Recent statistics tell an unvarnished story: imports of China-made EVs surged, more than tripling from January to March 2023 compared to the same period in the previous year. This surge in imports hasn’t gone unnoticed by German automakers. Volkswagen, BMW, and Mercedes-Benz, titans of the automotive world, all witnessed a decline in their market shares within the Chinese market.

 

To drive the point home, Germany’s automotive behemoth, Volkswagen, has long considered China its „second home market,“ a testament to the sheer magnitude of its presence. Approximately 40% of Volkswagen’s global car sales in the preceding year hailed from the Chinese market, with BMW and Mercedes-Benz boasting similarly substantial stakes. As tensions simmer and trade discussions evolve, these automotive giants face a delicate balancing act between safeguarding their interests in the vital Chinese market and navigating the complexities of international trade relations. The implications of their decisions ripple not only across boardrooms but across continents, making this a topic of immense significance in the global economic landscape.

 

WHAT’S NEXT?

With the initiation of an anti-dumping investigation looming, the European Commission now finds itself at a pivotal crossroads. The task at hand is to scrutinise whether Chinese automobiles are indeed being sold within the European market at prices below those observed in the country of production / normal prices. This investigation carries a multifaceted agenda, having to (i) examine whether dumping, the practice of selling goods at an unfairly low price, is indeed transpiring from China; (ii) evaluate whether the EU’s automotive industry has suffered material injury as a consequence of this alleged dumping; (iii) establish a causal link between the observed injury and the purported dumping activities; and/or (iv) assess whether imposing measures, typically in the form of an anti-dumping duty, on Chinese imports would align with the economic interests of the European Union.

 

As this high-stakes inquiry unfolds, the European Commission holds the reins to determine the fate of this critical trade matter, a decision that could not only shape the future of the automotive industry within the European Union. Especially after the Chinese commerce ministry said in a statement that the probe „will have a negative impact on China-EU economic and trade relations”, it is clear that tensions are running high, and the outcome of this investigation holds the potential to also test the resilience of China-EU economic ties in an increasingly complex world.

 

Business Should Be Booming – President von der Leyen’s Vision for the Future of Europe’s Economy

written by Moritz Pohl

 

There is always an initiative that can be implemented! It was remarkable how many new ideas President von der Leyen presented in her speech, and it’s impossible to cover them all concisely in a short newsletter like this one. However, one thing is clear from our perspective: von der Leyen is hungry for (five years) more!

 

As such, the Commission President identified three major economic challenges for Europe’s industries in the year(s) ahead: labor and skills shortages, inflation, and making business easier for our companies. Although we would love to delve into all three topics in detail, we will focus here on the third. So sorry!

 

MAKE BUSINESS EASIER ALREADY! “Small companies do not have the capacity to cope with complex administration, or they are held back by lengthy processes.” Due to this slowing of innovation and competitiveness, one of several proposed initiatives will be the appointment of an EU SME envoy reporting directly to von der Leyen to hear about their everyday challenges. More information will follow, and it remains open whether perhaps this is another one of THOSE positions. Furthermore, to enable fast and effective funding for key technologies, von der Leyen has reiterated the importance of the STEP Platform. This abbreviation does not ring a bell? We got you covered: here has been a webpage since June!

 

But the highlight awaits at the end. Since the industry must lead on the clean transition, von der Leyen has come up with something special and commissioned Mario Draghi, who is well-known as former Chief of the ECB, as well as former Prime Minister of Italy and renowned Political Technocrat, to prepare a report on the future of European competitiveness. She concluded this thematic complex with the words: „Because Europe will do ‚whatever it takes‘ to keep its competitive edge.“ Remarkable how she recycled this “historic statement” from the financial crisis and what message it´s sending.

 

A whole paragraph about businesses in Europe? Now we must take a look beyond the borders of the European Union, with the keyword in this case being „Infrastructure.“

 

Infrastructure? Does this ring a bell regarding the G20 summit from last week? It should! As announced on Sunday (September 10, 2023), an unprecedented alliance consisting of the USA, the EU, India, Saudi Arabia, and the United Arab Emirates came together to unveil the India-Middle East-Europe Economic Corridor. To counterbalance China more effectively and cultivate secure transportation routes, it’s imperative to either win over new alliance partners or fortify existing ties. The announced project aims to compete with the Belt and Road Initiative and emphasizes infrastructure expansion, particularly in the Middle East and South Asia, with a focus on ports. A Memorandum of Understanding has already received signatures from all involved parties. Many news outlets have thoughtfully summarized all the relevant information on this matter.

 

But hold your horses! The term „infrastructure investments“ should be ringing a bell for ardent EU enthusiasts. After all, within the framework of the Global Gateway Initiative – unveiled by von der Leyen in December 2021 -, the goal is to plug investment gaps in European partner countries across the realms of Digitalisation, Climate and Energy, Transport, Education, and Research. Between 2021 and 2027, the Team Europe Initiative—comprising both EU institutions and EU Member States—aims to mobilize more than €300 billion in investments. So, where do we stand now? The last significant updates surfaced in July this year when von der Leyen introduced the Global Gateway Investment Agenda (GGIA), featuring a roster of 130 projects and a commitment of €45 billion to various partner countries in Latin America and the Caribbean In an earlier announcement, a €150 billion investment package for African partner countries (accounting for 50% of the funds) had already been pledged. This essentially means that about two-thirds of the budget are already earmarked. According to previous press releases by the European Commission, some projects are well underway, and a few may even be completed. Therefore, it is now imperative to convert these commitments into actions, execute the planned projects, and identify new opportunities. Even though there are still four years until the end of 2027, it is essential to accelerate progress in this regard.

 

Hey ChatGPT, can you incorporate more AI topics in my SOTEU? 

„Certainly, Ursula, I can do that for you“ 

written by Janik Gast

 


With AI being one of the dominating topics in – well – virtually every area since the release of ChatGPT, Ursula von der Leyen also took the opportunity to address this topic in her State of the Union Address. In fact, von der Leyen mentioned the word “AI” a staggering 18 times, as reported by Politico.

 

Her emphasis on AI is well-founded: Back in 2019, during her inauguration speech, the Commission president pledged to initiate legislation focusing on the „ethical and human implications“ of artificial intelligence within her first 100 days in office. This commitment led to the Commission launching its initial public consultation in February 2020. Subsequently, it unveiled its flagship proposal – the “AI Act” in April 2021, with the Parliament adopting its position in June 2023. Currently, the Act is in the midst of trialogue negotiations, offering promising prospects of adoption under Spanish Council Presidency. This trajectory positions the EU as a frontrunner in AI guideline development, potentially outpacing countries like the US and UK, both of which are also in the process of formulating their own AI guidelines. 

 

OK, WE GOT THAT – BUT WHAT’S REALLY NEW?

With the just mentioned biggest roast still being in the oven (side note: your author is from Bavaria) and EU elections just around the corner, the anticipation of major legislative proposals on AI was relatively low. However, a few interesting initiatives have managed to surface.

 

First, supercomputers will be open for use by AI start-ups. With three out of the world’s top five supercomputers within the EU’s grasp, von der Leyen announced an initiative to grant AI start-ups access to those high-performance computers for training their models. While nerds (staying true to the very name of this newsletter) may not typically rush to be the first to ‚open up‘, for AI start-ups this announcement should clearly be a source of excitement (editor’s note: we already apologize for a perceived overuse of nerd puns in this and upcoming editions). Von der Leyen didn’t stop there; she unveiled a modest innovation push and called for an open and collaborative dialogue with AI developers and companies. The big surprise? She revealed her intention to collaborate with AI companies, inviting them to embrace the principles outlined in the AI Act even before they officially take effect.

 

Second, von der Leyen underlined her advocacy for collaborative efforts and proposed to jointly tackle the intricacies of AI‘s influence on our societies. In a move reflective of her global perspective, von der Leyen has put forth the notion of establishing an international expert consortium on AI. This assembly would compromise scientists and companies from various corners of the globe, united in their mission to collectively scrutinize the repercussions and merits of AI on humanity. Drawing a parallel with the United Nations‘ Intergovernmental Panel on Climate Change, or, for the abbreviationB enthusiasts among us, the IPCC, von der Leyen’s vision seeks to emulate this model of worldwide cooperation in the context of artificial intelligence. Just last week, in Hiroshima, the G7 digital & tech ministers reached a consensus on establishing a voluntary yet unified international code of conduct for AI, which is likely to be presented to the G7 leaders in November.

 

Lastly, von der Leyen touched on the crucial aspect of setting up regulatory guardrails for AI. She emphasized that the top priority remains steering AI development down a path that is „human-centric, transparent, and responsible.“ However, she didn’t forget to highlight the AI Act’s pro-innovation stance. As such, Von der Leyen stressed the urgency of swiftly adopting these regulations and transitioning from policy to practice. She expressed gratitude to the European Parliament and the Council for their collaborative efforts and, with a touch of self-praise, noted that the EU’s AI Act is already setting a global standard as „a blueprint for the whole world.“

 

Brussels Meme Du Jour

This Week: A Courtesy of the State of the Union Address


Zurück

Schreibe einen Kommentar

Durch die weitere Nutzung der Seite stimmst du der Verwendung von Cookies zu. Weitere Informationen

Die Cookie-Einstellungen auf dieser Website sind auf "Cookies zulassen" eingestellt, um das beste Surferlebnis zu ermöglichen. Wenn du diese Website ohne Änderung der Cookie-Einstellungen verwendest oder auf "Akzeptieren" klickst, erklärst du sich damit einverstanden.

Schließen