Coming to you from Polis180’s “European Economic Policy” program, inviting you to subscribe for free by dropping us a line here or an Instagram-DM here.
Hey there, curious minds and all-around Brussels enthusiasts!
This week, we unpack the historic first post-Brexit UK-EU Summit – where leaders paved a “new chapter” with sweeping deals on fisheries, a streamlined sanitary and phytosanitary framework, and a landmark security & defence partnership – before decoding who really won (and lost) in the “grab bag” of agreements; we then turn to the EU’s 17th Russia sanctions package, the Commission’s plan to tame the flood of ultra-fast-fashion parcels with new handling fees, and the latest Trump-era tariff theatrics; finally, we spotlight the €150 billion SAFE arms-loan fund approved under the “ReArm Europe” push and consider what’s next for transatlantic and pan-European defence cooperation.
Strap in for a ride through the riveting world of European economic policy with us!
Written By Lukas Seelig, Leonie Gruber, Moritz Pohl and Leonie Schade
Editorial deadline: 25 May, 23:59
Trade
BREXIT WITH BENEFITS
Written by Leonie Gruber
Written by Leonie Gruber
Last week, we were lucky to witness the first UK-EU Summit since Brexit. António Costa and Ursula von der Leyen – representing the Council and Commission – met with Keir Starmer, to kick off a “new chapter in the relationship between the United Kingdom and the European Union”. In a shifting geopolitical landscape with fewer like-minded allies for the EU, it reaffirms a new special relationship with the UK, moving past nearly a decade of mistrust under Starmer’s predecessors.
Decoding the mosaic of agreements
Going through the deal, it seems that both parties have engaged in a wide-ranging dialogue on issues that could not be more diverse. From issuing more comprehensive joint statements on geopolitical flashpoints like Ukraine and the Middle East, to announcing a broad defense and security pact (more on that below) and charting a path toward a unified sanitary and phytosanitary framework – a grab bag with something for everyone. However, as the BBC put it, this grab bag shouldn’t leave everyone satisfied after identifying the winners and losers of these agreements – let’s shine a spotlight on some of them.
Are we really over the fish?
Earlier in the negotiations, Kaja Kallas, High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission, stated that she could not believe “how important fish are”. In fact, this topic is a politically sensitive undertaking, seeing that the UK fishing industry had hoped to not see the existing EU-UK Trade and Cooperation Agreement (TCA) extended after its expiration in 2026. Instead, the industry prefers to introduce annual negotiations, rather than continue with the current agreement, which gradually returns 25% of the EU’s fishing rights in UK waters to British fleets. To the delight of coastal EU countries, the outcome in the form of a 12-year extension of the current agreement granting full reciprocal access to waters to fish until 2028 has been unveiled last week. Kallas, pleased that the chapter on fishing disputes is now behind them, stated that we are now „over the fish”.
Strengthening economic ties: Less bureaucracy, costs and border controls
In a bid to smoothen post-Brexit turbulence, the latest EU-UK agreement signals a shift toward deeper economic cooperation — and less bureaucratic drag. The agreement to introduce a common sanitary and phytosanitary (SPS) area is aimed at easing the flow of agricultural goods by scrapping burdensome paperwork, certification demands, and border checks — with a keen eye on the particularly sensitive trade route between Northern Ireland and Great Britain. Business groups have welcomed the move as a long-overdue relief. Yet, not all is calm on the horizon since some points should make hardline Brexiteers suspicious: If EU law changes, it’s the UK that adapts and, in the event of a dispute, for example about the few but important exceptions, the final say lies on EU’s side, seen that the Court of Justice is providing the arbitration panel.
Another economic nudge comes in the form of climate cooperation. The agreement furthermore promises less costs to link the UK’s and the EU’s respective emissions trading schemes. For British exporters, that could mean escaping the looming costs tied to the EU’s Carbon Border Adjustment Mechanism (CBAM) – a policy designed to level the playing field on carbon pricing for imports. Still, the ink isn’t dry. With much framed as an “agreement to agree”, the broader direction is clear, but crucial details remain foggy. For now, hope floats — but so do questions.
SANCTION TANGO, ROUND 17: STILL NOT HITTING THE RIGHT NOTES?
Written by Moritz Pohl
On 21 May, the EU’s 17th sanctions package against Russia came into effect. Approved just a day earlier, it’s the bloc’s most extensive response yet to the ongoing war in Ukraine.
Central to this round are anti-circumvention measures: 189 additional vessels linked to Russia’s shadow oil fleet have been sanctioned, bringing the total to 342. Also added are 31 companies supporting Russia’s military-industrial complex or helping bypass sanctions. Export controls on dual-use and high-tech goods have been tightened as well.
Despite its scope, the package is unlikely to shift Moscow’s calculus. Therefore, calls for tougher measures are growing louder, including from Germany’s new Chancellery chief Thorsten Frei.
Round 18? Likely just around the corner.
TINY PARCELS, MASSIVE HEADACHE
Written by Moritz Pohl
The EU has been stepping up pressure on ultra-fast fashion and bargain e-commerce platforms like Chinese Shein and Temu since last year. In fact, back in October 2024, the Commission launched formal proceedings against Temu over the sale of illegal goods – one of the first moves under the Digital Services Act.
Now, as Trade Commissioner Maroš Šefčovič confirmed on Tuesday (May 20th), the European Commission is preparing a more systemic response to the overwhelming flood of low-value parcels. In 2024 alone, an estimated 4.6 billion packages under €150 each entered the EU.
The plan? A handling fee to support the 27 national customs agencies. For direct-to-consumer shipments under €150, a €2 fee would be charged – paid by the e-commerce platform. Shipments to warehouses would be taxed at a lower rate of €0.50 per parcel.
Meanwhile, the Chinese government has voiced its concerns, urging the EU to ensure a fair, open, and non-discriminatory business environment for Chinese firms operating in the single market.
The legislative wheels are turning. We’ll keep you posted.
TRADE, TRUMP, TRUTH
Written by Moritz Pohl
While we missed the very beginning of the new Trump-era trade disruption due to a brief publishing hiatus, we’re back – and the stakes are higher than ever.
Following intense market turmoil and a downgrade of the US sovereign credit rating that questioned the dollar’s status as the world’s reserve currency, President Trump announced a 90-day suspension of the first round of punitive tariffs targeting the EU and most of the rest of the world. For background and possible EU countermeasures, check out our blog post from May 14, 2025.
Since then, countries like the UK have rushed to conclude bilateral trade deals with the US. Meanwhile, EU Trade Commissioner Maroš Šefčovič held a scheduled call with US counterparts last Friday – but just hours before the meeting, Trump once again sabotaged the tone.
Taking to social media, he advised a 50% tariff on all EU goods, effective June 1, 2025, and accused the Union of existing “only to rip off America.” Constructive tone? Not quite.
In the end, the much-anticipated trade call yielded few tangible results. EU Trade Commissioner Šefčovič took to Twitter afterward to emphasize that the EU remains “fully engaged”-though any deal, he stressed, must be “guided by mutual respect”. He also made it clear that the EU is more than ready to “defend its interests” if push comes to tariffs.
And Brussels seems to mean it. Behind the scenes, countermeasures are already lined up – ready to be deployed at short notice should Trump make good on his tariff threats.
Defence
by Lukas Seelig
EU-UK SUMMIT DELIVERS ON SECURITY & DEFENCE
Another big win from last week’s EU-UK summit? A fresh bilateral Security & Defence Partnership that is poised to plug the UK into the EU’s defence circle alongside Norway, Moldova, South Korea, Japan, Albania and North Macedonia. This deal ropes in an annual Security & Defence Dialogue – starring the EEAS Deputy Secretary-General – and a bi-annual foreign and security policy chat between the EU’s High Representative and the UK Foreign Secretary (plus ad-hoc invites to top-tier EU meetings). London also earns a seat at the table for the EU’s crisis-management drills and gets in on info-sharing for cyber, space and countering foreign info manipulation. All of this is just the opening act for UK access to the €150 billion Security Action for Europe (SAFE) arms-loans fund – step two, covering terms and the UK’s financial contribution, is expected “in only a few weeks,” though France’s procurement pushback could slow it down.
However, voices on the ground are split. Shadow Defence Secretary James Cartlidge blasted the deal as “surrendering our fishing grounds for 12 years in exchange for no guaranteed defence funding,” while Labour’s Emily Thornberry hailed it as “in our clear mutual interest” and vital for giving British firms a shot at reshaping European defence. Either way, the next few weeks will prove whether step two can cross the finish line. Exciting times!
SAFE’s €150 BILLION BOOST: EU ARMS UP FOR REARM EUROPE
Speaking of exciting times: EU capitals last week green-lit the €150 billion SAFE loan in COREPER (which coordinates and prepares the work of the different Council configurations) on 21 May. Interesting bid: because SAFE squeaked through with a qualified majority, Hungary’s veto didn’t stand a chance. The next stop then was this week’s formal adoption at the General Affairs Council.
Quick refresher: Born from the Commission’s March 2025 “ReArm Europe” push and fast-tracked by the Polish Council Presidency, SAFE lets governments borrow EU cash to snap up military kit. It’s focused on shoring up defences against Russia – but as highlighted above, it’s not a Fortress Europe. We understand that up to 35 percent of a weapons contract can go to non-EU manufacturers (think U.S. firms or Ukrainian producers), and the final text as hammered out last week smooths the path for non-member subcontractors. If you don’t have execs or HQ in the EU (or partner states like Norway and Ukraine), you can still land “common procurement” slices worth 15–35 percent of the deal.
In short, if the EU and member states continue to work on SAFE, it won’t just be about big loans – it’ll be about smart, cross-border buying, plugging gaps in Europe’s defence industry, and keeping critical suppliers – wherever they’re based – onside. Watch this space as national plans roll in and the action really gets underway.
What else was on?
Kyiv is weighing a shift of its exchange rate anchor from the U.S. dollar to the euro to mirror its deepening economic and political alignment with the EU, bolster stability amid global market volatility, and advance its EU membership ambitions amidst ongoing geopolitical strains.
An ECB study finds that 72 % of firms in the euro area are critically dependent on ecosystem services, underlining how natural‐ecosystem degradation poses a systemic threat to financial stability.
The G7 finance chiefs and central bank governors have flagged non-bank financial intermediaries as a growing stability risk and committed to enhancing the monitoring of these shadow-banking entities.
The latest MiFIR/D Delegated Act – published in the OJEU – forms a clear split between OTC interest rate swaps and credit default swaps, mandates the use of the UPI (ISO 4914) from September 2026, and lays out extra data fields necessary for transparency.
The ECON Committee has green-lit the European Parliament’s negotiating line on shifting to T+1 settlement under CSDR, including provisions for suspending cash penalties if fail rates spike, exempting documented SFTs, and calling on EMSA to explore a future move to T+0.
The ECB warned that heightened geopolitical and trade uncertainty could trigger market losses amplified by the non-bank financial intermediation sector, and urges an ESMA-led integrated supervisory framework plus stronger macroprudential measures to tackle structural liquidity and leverage risks—while also stressing the need to channel more capital within the EU single market toward innovative firms.
In a focused review, the ECB outlined how escalating trade disputes can reshape value chains, stoke market volatility, and concentrate risks – recommending policymakers coordinate risk identification and response, and advising financial institutions to conduct stress tests on trade‐related shock scenarios.
Your voice matters! We invite you to share your thoughts, insights, and what’s currently captivating your attention. Let us know what you enjoyed in this edition, what’s moving you right now, and which issues you believe deserve a spotlight. Whether it’s a book, an article, or a topic you’re passionate about, we’re all ears. Your feedback helps us tailor our content to your interests and keep our newsletter engaging. So, drop Lukas, Moritz or Janik a line and let’s keep this conversation going. Your input is invaluable!
Are you a Brussels Bubble Insider? We’re all ears and ready to spill the beans! If you’ve got some juicy gossip, insider leaks, or just something intriguing on your mind, we’d love to hear from you. Let’s share a coffee or a confidential chat and keep the conversation flowing. Your insights are the secret sauce that makes our newsletter sizzle. Drop us a line, and let’s connect!
The Polis Blog serves as a platform at the disposal of ‘Polis180’s & ‘OpenTTN‘s members. Published comments express solely the ‘authors’ opinions and shall not be confounded with the opinions of the editors or of Polis180.
Zurück