BRUSSELS — Denmark is holding the line and pressing ahead with plans to schedule a crucial vote of EU ambassadors on the EU-Mercosur trade deal next week, in a tug-of-war splitting countries across the bloc. “In the planning of the Danish presidency, the intention is to have the vote on the Mercosur agreement next week to enable the Commission President to sign the agreement in Brazil on Dec. 20,” an official with the Danish presidency of the Council of the EU told POLITICO. This is the first official confirmation from Copenhagen that it will go ahead with scheduling the vote over the deal with the Latin American countries in the coming days, despite warnings from France, Poland and Italy that the texts as they stand would not garner their support.  This risks leaving the Danish presidency of the Council short of the supermajority needed to get the deal over the line. Under EU rules, this would require the support of a “qualified” majority of EU member countries — meaning 15 of the bloc’s 27 members representing 65 percent of its population. The outcome of the vote will determine whether European Commission President Ursula von der Leyen can fly, as is now planned, to Brazil on Dec. 20 for a signing ceremony with her Mercosur counterparts. France however has been playing for time in an effort to delay its approval of the accord, which has been more than 25 years in the making — a strategy several diplomats warn could ultimately kill the trade deal.  They cite fears that further stalling could embolden opposition in the European Parliament or complicate the next steps when Paraguay, which is more skeptical of the agreement, takes over the presidency of the Mercosur bloc. “If we can’t agree on Mercosur, we don’t need to talk about European sovereignty anymore. We will make ourselves geopolitically irrelevant,” said a senior EU diplomat. European leaders, including French President Emmanuel Macron, are expected to descend on Brussels on Thursday for a high-stakes EU summit. While not formally on the agenda, the trade deal with Brazil, Argentina, Paraguay and Uruguay is expected to loom large. A farmers demonstration is also expected in Brussels on the same day.  Countries backing the deal, including Germany and Sweden, argue that France has already been accommodated, pointing to proposed additional safeguards designed to protect European farmers in the event of a surge in Latin American beef or poultry imports. The instrument, which still requires validation by EU institutions, was a proposal from the Commission to placate Poland and France, whose influential farming constituencies worry they would be undercut by Latin American beef or poultry.  The texts submitted for the upcoming vote were published last week and include a temporary strengthened safeguard, committing to closely monitor market disruptions — one of the key conditions for Paris to back the deal.

BRUSSELS — Europe’s most energy-intensive industries are worried the European Union’s carbon border tax will go too soft on heavily polluting goods imported from China, Brazil and the United States — undermining the whole purpose of the measure. From the start of next year, Brussels will charge a fee on goods like cement, iron, steel, aluminum and fertilizer imported from countries with weaker emissions standards than the EU’s. The point of the law, known as the Carbon Border Adjustment Mechanism, is to make sure dirtier imports don’t have an unfair advantage over EU-made products, which are charged around €80 for every ton of carbon dioxide they emit. One of the main conundrums for the EU is how to calculate the carbon footprint of imports when the producers don’t give precise emissions data. According to draft EU laws obtained by POLITICO, the European Commission is considering using default formulas that EU companies say are far too generous. Two documents in particular have raised eyebrows. One contains draft benchmarks to assess the carbon footprint of imported CBAM goods, while the second — an Excel sheet seen by POLITICO — shows default CO2 emissions values for the production of these products in foreign countries. These documents are still subject to change. National experts from EU countries discussed the controversial texts last Wednesday during a closed-door meeting, and asked the Commission to rework them before they can be adopted. That’s expected to happen over the next few weeks, according to two people with knowledge of the talks. Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. For example, some steel products from China, Brazil and the United States have much lower assumed emissions than equivalent products made in the EU, according to the tables. Ola Hansén, public affairs director of the green steel manufacturer Stegra, said he had been “surprised” by the draft default values that have been circulating, because they suggest that CO2 emissions for some steel production routes in the EU were higher than in China, which seemed “odd.” “Our recommendation would be [to] adjust the values, but go ahead with the [CBAM] framework and then improve it over time,” he said. Antoine Hoxha, director general of industry association Fertilizers Europe, also said he found the proposed default values “quite low” for certain elements, like urea, used to manufacture fertilizers. “The result is not exactly what we would have thought,” he said, adding there is “room for improvement.” But he also noted that the Commission is trying “to do a good job but they are extremely overwhelmed … It’s a lot of work in a very short period of time.” Multiple industry representatives told POLITICO that the proposed estimated carbon footprint values are too low for a number of countries, which risks undermining the efficiency of the CBAM. | Photo by VCG via Getty Images While a weak CBAM would be bad for many emissions-intensive, trade-exposed industries in the EU, it’s likely to please sectors relying on cheap imports of CBAM goods — such as European farmers that import fertilizer — as well as EU trade partners that have complained the measure is a barrier to global free trade. The European Commission declined to comment. DEFAULT VERSUS REAL EMISSIONS Getting this data right is crucial to ensure the mechanism works and encourages companies to lower their emissions to pay a lower CBAM fee. “Inconsistencies in the figures of default values and benchmarks would dilute the incentive for cleaner production processes and allow high-emission imports to enter the EU market with insufficient carbon costs,” said one CBAM industry representative, granted anonymity to discuss the sensitive talks. “This could result in a CBAM that is not only significantly less effective but most likely counterproductive.” The default values for CO2 emissions are like a stick. When the legislation was designed, they were expected to be set quite high to “punish importers that are not providing real emission data,” and encourage companies to report their actual emissions to pay a lower CBAM fee, said Leon de Graaf, acting president of the Business for CBAM Coalition. But if these default values are too low then importers no longer have any incentive to provide their real emissions data. They risk making the CBAM less effective because it allows imported goods to appear cleaner than they really are, he said. The Commission is under pressure to adopt these EU acts quickly as they’re needed to set the last technical details for the implementation of the CBAM, which applies from Jan. 1. However, de Graaf warned against rushing that process. On the one hand, importers “needed clarity yesterday” because they are currently agreeing import deals for next year and at the moment “cannot calculate what their CBAM cost will be,” he said. But European importers are worried too, because once adopted the default emission values will apply for the next two years, the draft documents suggest. The CBAM regulation states that the default values “shall be revised periodically.” “It means that if they are wrong now … they will hurt certain EU producers for at least two years,” de Graaf said.

BRUSSELS — The international world order is beyond repair and Europe should adapt to the law of the jungle — or else come up with new rules. That’s the bleak message the European Commission is set to give on Tuesday in a text detailing major challenges ahead. “We are witnessing the erosion of the international rules-based order,” several drafts of its annual Strategic Foresight Report, seen by POLITICO, say. Since taking office, U.S. President Donald Trump has consistently shown contempt for institutions like the United Nations by withdrawing funding or pulling out of key U.N. bodies like the UNHCR, its refugee agency, and UNESCO, which works in education and science. Trump’s global tariff threats have further undermined the authority of the World Trade Organization. The European Union’s executive will acknowledge that these institutions likely won’t recover from the breakdown of the global order. In fact, Europe should prepare for it not to come back. “A return to the previous status quo seems increasingly unlikely,” the draft warns. The EU could be particularly affected by this development. Key features of the bloc, such as its internal market, trade flows, international partnerships, and technical standards, all depend on a functioning multilateral system. “The instability and partial disfunction of the international order and the partial fracturing of global economies have a destabilising effect on the EU’s ability to act in the interest of its economy and the well-being of its people,” it adds. The final text of the report presented on Tuesday could still differ significantly from the drafts. EMBRACING CHANGE The Commission report aims to steer broader EU policies ranging from trade to technology, climate and other areas. It will call for Europe to be ready for the advent of artificial intelligence that matches human thinking; for regulation of technologies to dim the power of the sun; and to consider mining outer space and the deep sea for critical minerals. Instead of clinging to the old rules-based order, Europe should lead an international effort to reform it, the document will say. “The EU should actively and with a coherent approach shape the discussion about a new rule-based global order and a reform of multilateralism,” the draft reads, singling out the U.N. and the WTO, the Geneva-based trade club, as key institutions of focus. The bloc also shouldn’t shy away from forming “new alliances based on common interests,” it advises.

A U.S. federal appeals court on Friday struck down President Donald Trump’s use of emergency powers granted by Congress to impose tariffs, opening the door for the administration to potentially have to repay billions worth of duties. The 7-4 ruling raises doubt about deals Trump has struck with the European Union, Japan, South Korea and other major trading partners to reduce the “reciprocal” tariff rates on their imports, from the levels the administration originally set in April. “We conclude Congress … did not give the president wide-ranging authority to impose tariffs” of the kind Trump imposed in his sweeping executive orders, the majority wrote. The ruling also invalidates the tariffs that Trump has imposed on China, Canada and Mexico to pressure those countries to do more to stop shipments of fentanyl and precursor chemicals from entering the United States. The decision, however, will not take effect until Oct. 14, giving the Trump administration time to appeal the decision to the Supreme Court. The White House did not immediately respond to a request for comment, but Trump shared a post on social media Friday evening calling the ruling “highly partisan,” and warning that if the tariffs were ruled illegal “it would be a total disaster for the Country” and “make us financially weak.” “Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation, and Make America Rich, Strong, and Powerful Again!” Trump wrote, signaling that the White House will appeal, as expected. The ruling from the U.S. Court of Appeals for the Federal Circuit upholds a May decision by the U.S. Court of International Trade, which concluded that Trump exceeded his authority under the 1977 law he invoked to impose both the fentanyl trafficking tariffs and his worldwide tariffs, the International Emergency Economic Powers Act. “We are not addressing whether the President’s actions should have been taken as a matter of policy,” the majority wrote in its ruling, which was in response to a combined set of cases brought by several small importers and multiple Democratic-run states. “Nor are we deciding whether IEEPA authorizes any tariffs at all. Rather, the only issue we resolve on appeal is whether the Trafficking Tariffs and Reciprocal Tariffs imposed by the Challenged Executive Orders are authorized by IEEPA. We conclude they are not.” Trade and customs experts told POLITICO that repayments would be a logistical nightmare, and would likely trigger a wave of legal challenges from other businesses and industry groups seeking reimbursement. The appeals court’s majority said their conclusion that Trump’s tariffs were illegal was bolstered by a series of Supreme Court decisions articulating the “major questions doctrine,” a legal theory rejecting claims that Congress implicitly granted the executive sweeping powers. “The tariffs at issue in this case implicate the concerns animating the major questions doctrine as they are both ‘unheralded’ and ‘transformative,’” wrote the majority, which consisted of one Republican appointee and six Democratic appointees. Dissenting from the ruling Friday were Obama appointees Richard Taranto and Raymond Chen and George W. Bush appointees Kimberly Moore and Sharon Prost. Trump has not appointed any judges to the Federal Circuit Court of Appeals. “IEEPA embodies an eyes-open congressional grant of broad emergency authority in this foreign-affairs realm, which unsurprisingly extends beyond authorities available under non-emergency laws, and Congress confirmed the understood breadth by tying IEEPA’s authority to particularly demanding procedural requirements for keeping Congress informed,” Taranto wrote for the dissenters. The White House did not immediately respond to a request for comment. Trump began aggressively using the international emergency law to impose tariffs shortly after taking office, first hitting China, Canada and Mexico with the fentanyl trafficking tariffs. He then tapped the authority to impose a baseline tariff of 10 percent on almost all countries and additional tariffs ranging up to 50 percent on dozens of individual trading partners, including the 27 nations of the European Union. No president has previously used the 1977 act to impose tariffs, although they have often used it over the past five decades to impose economic sanctions on other countries. Trump said the high number of deaths due to fentanyl constituted a national emergency that justified using tariffs to pressure China, Canada and Mexico into stopping the drug and its precursor chemicals from entering the U.S. He also said the “large and persistent” U.S. trade deficit was a national emergency that justified imposing a broader set of “reciprocal” tariffs on most countries, which he then used to pressure some trading partners into negotiating trade deals. Treasury Department data shows the Trump administration took in about $107 billion in customs duties between February and July of this year. A fair portion of that are the tariffs Trump has collected using IEEPA, but it also includes other U.S. duties that aren’t affected by the appeals court ruling, including some Trump has imposed using other authorities. Another case challenging the tariffs has also been making its way through the courts. A federal district judge in Washington, D.C., in a case brought by two Illinois toy companies, ruled on May 29 that Trump did not have any authority under the International Economic Emergency Powers Act to impose tariffs. That went further than the Court of International Trade ruling, which said that the 1977 law did give Trump some tariff authority but it was not “unlimited.” The Justice Department appealed the ruling in the toy companies case to the D.C. Circuit Court of Appeals, which has scheduled oral arguments for late September.

President Donald Trump on Tuesday announced a trade agreement with Japan, claiming he’d notched a deal with one of the country’s top trading partners. In a post on Truth Social, Trump said the U.S. will charge a 15 percent tariff on Japanese exports to the U.S. in exchange for a $550 billion investment in the U.S. Japan, he said, will open its market to U.S.-made “Cars and Trucks, Rice and certain other Agricultural Products, and other things.” “This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan,” Trump wrote on Truth Social. “Thank you for your attention to this matter!” Japan was the United States’ fifth-largest trading partner in 2024, making it by far the biggest trade deal the Trump administration has reached so far — not counting the temporary tariff truce they reached with China this past spring. A spokesperson for the Japanese Embassy did not immediately confirm the terms of the agreement outlined by Trump. U.S. imports from Japan totaled $148 billion last year, including about $58 billion worth of autos, auto parts and other automotive products. Japanese goods currently face a 10 percent U.S. tariff, but it was set to rise to 25 percent on Aug. 1. Trump did not say whether the Japanese would receive relief on Trump’s separate 25 percent tariff on cars and car parts, an issue that has been a major sticking point in trade talks. The Japanese auto industry, lead by companies like Toyota, Subaru and Honda, is taking a significant financial blow on its exports to the U.S. as a result of the tariffs, which went into effect at the beginning of April. The Japanese government did not immediately issue a statement regarding the deal, but Japanese trade minister Ryosei Akazawa is in the U.S. and met with Commerce Secretary Howard Lutnick in recent days. The Trump administration has pledged that it will make a handful of deals before the Aug. 1 deadline it has set to impose tariffs between 10 and 50 percent on more than 50 U.S. trading partners.

BRUSSELS — Europe is getting fed up with Donald Trump’s trade threats — and is exploring a bold move to look east instead of west to find partners who want to play by the rules. Trump’s unilateral and arbitrary tariffs — which could ratchet up to 50 percent from July 9 if EU and U.S. negotiators fail to cut a trade deal — have tested EU chief executive Ursula von der Leyen’s patience and resolve. Her response? To team up with the CPTPP, a Pacific-centric trade group that includes like-minded nations such as Japan, Australia, Canada and Mexico. Between them, the 39 countries of the EU and (deep breath) Comprehensive and Progressive Agreement for Trans-Pacific Partnership account for 30 percent of world trade. Forming a coalition of the willing could, boosters argue, mark a first step toward reconfiguring the international trade order and escaping the institutional paralysis besetting the World Trade Organization. In a pitch to EU leaders, von der Leyen turned previous comments on possible cooperation with the CPTPP into more of a reality. The new grouping would redesign the rules of global trade, she said, reforming or perhaps even replacing the global trade rules body. Such a plan would “show to the world that free trade with a large number of countries is possible on a rules-based foundation,” von der Leyen said after an EU summit on Thursday night. “This is a project where I think we should really engage on, because CPTPP and the European Union is mighty.” MAKING THE PLEDGE But how could forming such a coalition of the willing work? One idea would be to make an up-front pledge to uphold the established rules of multilateral trade, veteran trade negotiators Tim Groser, Steve Verheul and John Clarke said in exclusive commentary shared with POLITICO. Groser, a former New Zealand trade minister; Verheul, previously Canada’s chief trade negotiator; and Clarke, until recently a senior EU trade negotiator, said the 39 EU and CPTPP countries should, in a first step, commit to a “Standstill Agreement” to keep their markets open to each other. “What it would do is send a massive signal to Washington that a very substantial part of the global economy, including nearly all the traditionally closest partners of the United States, remains committed to the rules-based system,” they said.  The U.S. had the chance to join the CPTPP, previously known as the Trans-Pacific Partnership, during the Barack Obama administration. But Trump withdrew in 2017, after taking office for the first time, before the pact could be finalized. When asked on Thursday if the U.S. would join the new initiative between the EU and CPTPP, von der Leyen replied, “As far as I understand, the Americans left at a certain point.” It would be up to the two blocs to decide if they want to let them in, she added.  Europe is getting fed up with Donald Trump’s trade threats — and is exploring a bold move to look east instead of west to find partners who want to play by the rules. | Shawn Thew/EPA Ignacio García Bercero, a former chief EU trade negotiator, believes that the potential partnership shouldn’t close the door to the Americans just yet, nor should it be seen as a move to antagonize Trump.   However, “if the U.S. is not ready to join because they don’t believe that the solution to these problems is rules, others are going to have to move ahead without the U.S.” YOU’VE GOT A FRIEND The United Kingdom has also spearheaded efforts as a newer CPTPP member to welcome the EU’s drive to strengthen ties between the two potential partners.  “I’ve been talking to the leaders in Japan, in Singapore, in Australia, New Zealand, Canada, about how we, the U.K., can trade in an easier, better way with them — whether we as a group of countries can trade with other countries in an easier and better way,” Prime Minister Keir Starmer said as he launched the U.K.’s first Trade Strategy since Brexit on Thursday.  Those countries are all members of the Asia-Pacific bloc, which the U.K. joined in December. Starmer’s government has been open to the idea of the bloc and EU teaming up. “I do think that it’s [a] difficult environment, but there are significant opportunities if we’re agile about it, if we understand the world we’re living in, and get ahead of the curve,” the prime minister told businesses during his Trade Strategy launch in Westminster.  If the EU and CPTPP can establish a new community of values and interests, that could serve as the basis to address trade challenges that have accumulated since the WTO was founded 30 years ago — but that it has been unable to resolve because the Geneva-based trade club works by consensus and its largest member, the U.S., won’t play ball. “This must start outside Geneva with a group of countries that can move more decisively,” argued Groser, Verheul and Clarke. “In the medium term, we contend that this grouping could be a focal point for developing new rules and commitments to a trading system that can deliver continued growth and prosperity to their people.” Von der Leyen is already courting the leaders of CPTPP countries, issuing a joint statement with Kiwi Prime Minister Christopher Luxon after their meeting this week in which both supported the launch of a dialogue between the EU and CPTPP “as soon as possible.” That echoed an appeal by CPTPP ministers meeting in Jeju, Korea, in mid-May. A meeting at ministerial level is planned in July, according to an EU official. “To be clear, the EU is not joining [the CPTPP] as such, but we are building bridges between the two blocs,” the official, speaking on condition of anonymity as is customary in Brussels, said before the EU summit.