BERLIN — German Defense Minister Boris Pistorus will spend next week touring the Indo-Pacific with a passel of corporate chiefs in tow to make deals across the region. It’s part of an effort to mark a greater impact in an area where Berlin’s presence has been minor, but whose importance is growing as Germany looks to build up access to natural resources, technology and allies in a fracturing world. “If you look at the Indo-Pacific, Germany is essentially starting from scratch,” said Bastian Ernst, a defense lawmaker from Chancellor Friedrich Merz’s Christian Democrats. “We don’t have an established role yet, we’re only just beginning to figure out what that should be.” Pistorius leaves Friday on an eight-day tour to Japan, Singapore and Australia where he’ll be aiming to build relations with other like-minded middle powers — mirroring countries from France to Canada as they scramble to figure out new relationships in a world destabilized by Russia, China and a United States led by Donald Trump. “Germany recognizes this principle of interconnected theaters,” said Elli-Katharina Pohlkamp, visiting fellow of the Asia Programme at the European Council on Foreign Relations. Berlin, she said, “increasingly sees Europe’s focus on Russia and Asia’s focus on China and North Korea as security issues that are linked.” The military and defense emphasis of next week’s trip marks a departure from Berlin’s 2020 Indo-Pacific guidelines, which laid a much heavier focus on trade and diplomacy. Pistorius’ outreach will be especially important as Germany rapidly ramps up military spending at home. Berlin is on track to boost its defense budget to around €150 billion a year by the end of the decade and is preparing tens of billions in new procurement contracts. But not everything Germany needs can be sourced in Europe. Australia is one of the few alternatives to China in critical minerals essential to the defense industry. It’s a leading supplier of lithium and one of the only significant producers of separated rare earth materials outside China. Australia also looms over a key German defense contract. Berlin is considering whether to stick with a naval laser weapon being developed by homegrown firms Rheinmetall and MBDA, or team up with Australia’s EOS instead. That has become a more sensitive political question in Berlin. WELT, owned by POLITICO’s parent company Axel Springer, reported that lawmakers had stopped the planned contract for the German option, reflecting wider concern over whether Berlin should back a domestic system or move faster with a foreign one. That means what Pistorius sees in Australia could end up shaping a decision back in Germany. TALKING TO TOKYO Japan offers something different — not raw materials but military integration, logistics and technology.  Pohlkamp said the military side of the relationship with Japan is now “very much about interoperability and compatibility, built through joint exercises, mutual visits, closer staff work, expanded information exchange and mutual learning.” She described Japan as “a kind of yardstick for Germany,” a country that lives with “an enormous threat perception” not only militarily but also economically, because it is surrounded by pressure from China, North Korea and Russia.  The Japan-Germany Acquisition and Cross-Servicing Agreement took effect in July 2024, giving the two militaries a framework for reciprocal supplies and services and making future port calls for naval vessels, exercises and recurring cooperation easier to sustain.  Pohlkamp said what matters most to Tokyo are not headline-grabbing deployments but “plannable, recurring contributions, which are more valuable than big, one-off shows of force.” But that ambition only goes so far if Germany’s presence remains sporadic. Bundeswehr recruits march on the market square to take their ceremonial oath in Altenburg on March 19, 2026. | Bodo Schackow/picture alliance via Getty Images Berlin has sent military assets to the region for training exercises in recent years — a frigate in 2021, combat aircraft in 2022, army participation in 2023, and a larger naval mission in 2024. But as pressure grows on Germany to beef up its military to hold off Russia, along with its growing presence in Lithuania and its effort to keep supplying Ukraine with weapons, the attention given to Asia is shrinking. The government told parliament last year it sent no frigate in 2025, plans none in 2026 and has not yet decided on 2027. Germany’s current military engagement in the Indo-Pacific consists of a single P-8A Poseidon maritime patrol aircraft, sent to India in February as part of the Indo-Pacific Deployment 2026 exercises.  Germany, according to Ernst, is still “relatively blank” in the region. What it can contribute militarily remains narrow: “A bit of maritime patrol, a frigate, mine clearance.” Pohlkamp said Germany’s role in Asia is still being built “in small doses” and is largely symbolic. But what matters is whether Berlin can turn occasional visits and deployments into something steadier and more predictable. The defense ministry insists that is the point of Pistorius’s trip. Ministry spokesperson Mitko Müller said Wednesday that Europe and the Indo-Pacific are “inseparably linked,” citing the rules-based order, sea lanes, international law and the role of the two regions in global supply and value chains.  The new P-8A Poseidon reconnaissance aircraft stands in front of a technical hangar at Nordholz airbase on Nov. 20, 2025. | Christian Butt/picture alliance via Getty Images The trip is meant to focus on the regional security situation, expanding strategic dialogue, current and possible military cooperation, joint exercises including future Indo-Pacific deployments, and industrial cooperation. That explains why industry is traveling with Pistorius.  Müller said executives from Airbus, TKMS, MBDA, Quantum Systems, Diehl and Rohde & Schwarz are coming along, suggesting Berlin sees the trip as a chance to widen defense ties on the ground. But any larger German role in Asia would have to careful calibrated to avoid angering China — a key trading partner that is very wary of European powers expanding their regional presence. “That leaves Germany trying to do two things at once,” Pohlkamp said. “First, show up often enough to matter, but not so forcefully that it gets dragged into a confrontation it is neither politically nor militarily prepared to sustain.”

BRUSSELS — The European Union and Australia are expected to conclude talks on a long-awaited trade deal early next week, with Commission President Ursula von der Leyen on Wednesday announcing she would visit from March 23-25.  Von der Leyen will meet Australian Prime Minister Anthony Albanese in Canberra, according to a Commission statement. Trade Commissioner Maroš Šefčovič is also expected to join the trip, although planning might yet change due to flight disruptions in the Middle East. Albanese confirmed the visit, saying in a statement that he would meet both von der Leyen and Šefčovič on March 24. Brussels and Canberra relaunched trade negotiations after Donald Trump’s return to the White House last year. They had collapsed amid acrimony at the end of 2023 amid disagreements over quotas on beef and lamb. The breakthrough comes as the EU looks to get closer to the Pacific-centered CPTPP trade bloc through its deepening bonds with Australia. In a letter to EU leaders shared Monday, von der Leyen said the EU and Australia were in “the final stretch towards concluding” their trade agreement.  “In addition to removing trade barriers, it will also facilitate access to critical raw materials — such as lithium, cobalt, rare earth elements, and hydrogen — and strengthen Europe’s presence in one of the world’s most dynamic economic regions,” she wrote, as part of a list on the Commission’s efforts to boost competitiveness. Negotiators had grappled in the home stretch to close the gap on access for Australian beef and lamb to the European market; EU trade protections on specialty foods; critical minerals; and an Australian tax on luxury cars. Canberra and Brussels are also looking to seal a security and defense partnership, which is finalized.  The EU top diplomat Kaja Kallas, who would be signing the defense deal, known as Security and Defense Partnership, is however not expected to be part of the trip. The pace would come on the heels of similar partnerships signed with the U.K., Canada and most recently India. Speaking last week at at the annual gathering of diplomats with the External Action Service, the EU’s diplomatic body, Kallas said that the deal was coming as she announced that “later this week, I will sign the tenth [SDP] with Australia and subsequent ones with Iceland and Ghana in the coming days.”     James Panichi, Zoya Sheftalovich, Sebastian Starcevic and Nette Nöstlinger contributed reporting.

Every day across Europe, millions of citizens wear, sleep on, eat off or rely on rental textiles provided by industrial laundries. From hospital linens and reusable surgical gowns to industrial workwear, hotel bedding, restaurant textiles and hygiene products, textile services operate quietly but indispensably at the heart of Europe’s economy. In many countries, more than 90 percent of hospitals and hotels would be forced to close within days without a continuous supply of hygienically cleaned textiles, while pharmaceutical and food production facilities would halt operations within 24 hours. Behind this essential service stands a highly organi z ed European industry that combines operational excellence with a circular, service-based business model — washing and keeping textiles in use for longer, reducing waste and lowering environmental impact while safeguarding public health. By relying on reuse, repair and professional maintenance, the system significantly reduces the need for virgin raw materials sourced from outside Europe. At the same time, these locally anchored service models create skilled jobs, generate tax revenues in the communities where companies operate and drive continuous innovation in circular solutions — supporting new business opportunities and industrial development across the European Union . > In this time of on going and challenging geo-political change, it will become > crucial to fully recogni z e the strategic value of circular, service-based > business models, which strengthen competitiveness and resilience while > delivering on Europe’s sustainability objectives. > > Hartmut Engler, CEO of CWS Workwear As several important legislative files move forward in Brussels, it is time to reflect on what textile services need to continue to implement sustainable solutions. Public procurement rules are a great vector to promote and encourage circular business models while delivering on the strategic autonomy ambition of the EU. Public authorities across the EU spend over € 2.6 trillion annually on purchasing services, works and supplies, accounting for around 15 percent of the EU ’s GDP. However, too much of this investment is directed toward linear services and disposable goods, slowing down progress toward Europe’s environmental and industrial objectives. With the revision of the EU public procurement rules, it should be recogni z ed that the EU’s circular economy and environmental aims are greatly advanced by the textile rental industry. Specifically, g reen p ublic p rocurement should become mandatory across all EU m ember s tates and should also encourage alternatives to direct purchase such as leasing models or product-as-a-service business models. Public procurement should not be driven solely by value-for-money considerations, but by a holistic lifecycle approach that reflects long-term environmental and social performance. Introducing mandatory lifecycle costing as an award criterion would ensure that sustainability is measured over the full duration of a contract, not just at the point of purchase. > Longevity of product should be the first priority of the upcoming Circular > Economy Act. The most sustainable product is ultimately the one that is kept > in use the longest, putting durability and repairability at the centre of > environmental benefits. > > Elena Lai, s ecretary g eneral of the European Textile Services Association European Textile Services Association (ETSA) members already deliver sustainable business models with product-as-a-service models implementing repair, reuse and extended use. Such business models should be empowered and further supported in legislation, hand in hand with recycling. Extending a product’s useful life delivers far greater climate and resource benefits than breaking products down for recycling after short use cycles. It preserves the embedded energy, water and raw materials already invested. However, prioriti z ing longevity does not mean neglecting end-of-life solutions. At the same time, ETSA members are joining forces to invest in a joint recycling pilot project, translating circular ambition into practical industrial solutions. They are developing innovative processes to transform end-of-life textiles into recycled fib er s suitable for insulation materials, industrial wipers and other high-value applications — with the long-term vision of advancing closed-loop systems in which recycled fib er s can increasingly serve as raw materials for new textile production. Recycling requires stable markets and long-term policy certainty, and the sector is actively investing in building both. By developing concrete use cases for recycled content, these initiatives help strengthen European recycling value chains while further reducing dependency on third-country suppliers. > Europe does not need to invent circular solutions from scratch. They already > exist. The priority now is to put in place policies that support circular, > service-based business models. These models are built on durability and > extending product lifespans to get more value from the resources we already > use. > > Elena Lai, s ecretary g eneral of the European Textile Services Association Textile services are not an emerging concept but a proven, scalable European solution — reducing consumption, anchoring jobs locally, safeguarding public health and lowering emissions. By recogni z ing and supporting service-based reuse models in forthcoming legislation, the EU can accelerate its sustainability ambitions while strengthening competitiveness and strategic autonomy. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is ETSA – European Textiles Service Association * The ultimate controlling entity is ETSA – European Textiles Service Association * This political advertisement advocates for the recognition and support of circular, service-based business models within forthcoming EU legislation; by addressing the Circular Economy Act, the revision of EU Public Procurement rules, Green Public Procurement requirements and lifecycle costing criteria, it seeks to influence policymakers and the public debate on EU sustainability, industrial policy and procurement frameworks, bringing it within the scope of the TTPA. More information here.

BRUSSELS — The European Commission will adopt the Industrial Accelerator Act (IAA) on Wednesday, finally backing the landmark measure that would define a European preference in green public procurement after several delays. Haggling over the planned regulation went right down to the wire, with a meeting of cabinet chiefs that began on Monday spilling into Tuesday, the day before Ursula von der Leyen’s College of Commissioners will now sign off on an agreed text. According to one Commission official, another 44 changes were made to the draft at the meeting that ran into overtime. Paula Pinho, the Commission’s chief spokesperson, confirmed at Tuesday’s regular midday briefing that “commissioners are expected to adopt a proposal for an Industrial Accelerator Act.” The landmark measure would define a “Made in EU” preference in green public procurement — while pushing back a decision for six months on whether friendly third countries can be included in its scope. This means that, even after Wednesday’s announcement, countries like the U.K. or Switzerland will still need to lobby to get inside the tent. The IAA would also set restrictions on inward investment for dominant players in strategic green industries. These would mainly have China in mind, and cover batteries and energy storage, electric vehicles and components, solar photovoltaic, and the extraction, processing and recycling of critical raw materials, according to a draft obtained by POLITICO last week. An earlier version of the proposal, which is being overseen by Industry Commissioner Stéphane Séjourné, was panned last month by as many as nine departments of the EU executive. By the end of last week that was down to three, including the Commission’s powerful trade department, according to one person familiar with the discussion. They were granted anonymity to discuss the closed-door talks. Germany also led a rearguard action by 10 EU countries — which styled themselves as the Friends of Industry — who support less industry regulation and more open trade, with Economy Minister Katherina Reiche saying it would create “a regulatory wasteland that nobody can understand anymore.” With so many changes being made at the last minute, including dropping entire industries like tech from the purview of the legislation, critics say the bill is nowhere near ready for prime time and is at risk of being heavily revised when it goes for review by the Council of the EU, which represents the bloc’s 27 member countries, and European lawmakers. Additional reporting by Gerardo Fortuna.

BERLIN — Faced with Donald Trump’s decision to strike Iran, German Chancellor Friedrich Merz has a notably resigned message for the U.S. president: Who are we Europeans to judge? Despite the German leader’s deep concern that the conflict in the Middle East will spiral out of control, with potentially grave consequences for Europe, Merz said ahead of his Tuesday Oval Office meeting with Trump that he was in no position to criticize the U.S. president. After all, he argued, Germany’s own approach to Iran has been ineffectual — and Europe needs the U.S. to end Russia’s war in Ukraine. “Now is not the time to lecture our partners and allies,” Merz said in Berlin one day before his departure to the U.S. “The German government’s view of developments in Iran is determined by our own geopolitical vulnerability, as Russia’s war against Ukraine is in no way less than the injustice of the Iranian regime.” Merz has judiciously been making the right noises in the build-up to the Washington visit. He sounded tough against Beijing’s market-distorting trade practices after a meeting with Chinese leader Xi Jinping last week, and is admitting Europe’s failures in trying to deal with Iran. That’s exactly what Trump wants to hear. The chancellor has established a relatively good rapport with Trump, according to people close to him, and is certain to leverage this to try to cajole the president to align with Europe on two issues of vital, immediate interest to the EU —  support for Ukraine, and the administration’s tariff plans in a moment of great uncertainty following the U.S. Supreme Court’s rejection of Trump’s tariff regime. The visit may not resemble Merz’s stop at the White House last year, when foreign leaders were more often subjected to lengthy public inquisitions before a phalanx of press in the Oval Office. Last time, Merz sat deferentially as Trump did most of the talking. This time, Trump may seize the opportunity to try to get Merz to back him on Iran in front of cameras.  One of Merz’s main goals will be to convince Trump to put more pressure on Russian President Vladimir Putin to end the war in Ukraine. | Guido Bergmann/Bundesregierung via Getty Images Merz’s statements ahead of the meeting suggest he could try to curry favor with the president by potentially addressing U.S. Republican claims that Europe has been “pathetically soft” on Iran — as Trump ally U.S. Senator Lindsey Graham put it — by arguing they have a point. Merz on Sunday said his government is “drawing sober conclusions” from the failures of its policy toward Tehran. “Appeals from Europe” and packages of sanctions had failed because Europe was “not prepared to enforce fundamental interests with military force,” the chancellor said. Even as Germany stays out of the military conflict with Iran, Merz hopes his conciliatory tone will work to draw Trump closer on Ukraine and tariffs — the two issues that have most tested transatlantic ties. German officials don’t expect to convert Trump on these issues, but remain hopeful they can make incremental progress.  “Merz and Trump still get along well,” said Metin Hakverdi, a center-left lawmaker who serves as the German government’s transatlantic coordinator. “That doesn’t mean Trump will stop being Trump. But it does mean that you can clearly articulate your interests to him.” UKRAINE AND TARIFFS One of Merz’s main goals will be to convince Trump to put more pressure on Russian President Vladimir Putin to end the war in Ukraine by toughening American sanctions on Moscow, say people familiar with the chancellor’s thinking. To do so, the chancellor is likely to cast the U.S. fight against the regime in Tehran in terms of a larger struggle. Helpfully for that argument, Putin has referred to the killing of Khamenei as “a cynical violation of all norms of human morality and international law.” As Stefan Kornelius, Merz’s spokesperson, told reporters on Monday: “We have also seen in Russia’s reaction to the American actions in Iran that there is once again a clear taking of sides here that the U.S. will not share … I believe this conflict shows once again where right and wrong lie in Ukraine.” Russia’s rising battlefield casualties — which it can no longer compensate for with new recruits — may also provide an opening for Merz to convince Trump to pressure Russia, said Norbert Röttgen, a senior lawmaker in Merz’s conservative party. “There are both military and economic problems for Russia that are increasing and becoming more and more apparent,” said Röttgen. “That is a certain new factor.” At the same time, Merz — who was in China last week — will likely talk to Trump about what he sees as the need for the U.S and the EU to draw closer together to confront common challenges posed by Beijing, including Chinese subsidies to loss-making companies and dependencies on Beijing for critical raw materials. “In this context, the chancellor will probably also point out that the U.S. tariff policy of course makes de-risking even more problematic, because it puts us in a situation where we are under pressure from two sides,” Röttgen said of the EU’s position. It may help Merz’s cause that he sounded almost Trumpian last week during his visit to Beijing. After meeting Chinese President Xi Jinping, Merz bemoaned his country’s ballooning trade deficit with China in language Trump would likely endorse, calling Germany’s trade dynamic with China “unhealthy.” Whether Merz’s conciliatory tone will work to draw Trump closer on Ukraine and tariffs — the two issues that have most tested transatlantic ties — remains a big question. | Pool photo by Evan Vucci via AFP/Getty Images Merz may also have some direct leverage to exert in discussions in Washington. Trump is eager for foreign companies to move more of their production facilities to the U.S., including German automotive manufacturing facilities, a U.S. official said last week. A primary focus of their meeting will be deepening the economic cooperation between the U.S. and Germany, the official added. But given Trump’s steadfast commitment to tariffs, the most Merz may be able to realistically hope for is clarity on the administration’s plans for EU levies — especially in light of the president’s uneven response to the Supreme Court decision that derailed the EU–U.S. trade deal. German and EU leaders at least want to ensure that tariffs under the new regime will not exceed the 15 percent tariff cap agreed in the summer. “We therefore expect clarity from the U.S. government on the next steps,” Sebastian Hille, a spokesperson for Merz’s government, said last week. “We want to achieve stability and predictability in trade relations. This is essential for us and also for U.S. companies.” At the same time, Merz will want to ensure there’s no broader escalation in the president’s trade wars. “The tariff screw can be turned again as a geostrategic tool,” said Hakverdi, Berlin’s transatlantic coordinator. “That is the central problem, and that is precisely why personal exchanges at the highest level are so important.”

LONDON — U.K. Foreign Secretary Yvette Cooper will announce a critical minerals deal with Kazakhstan on Thursday as the West scrambles to diversify its supply chains away from China. Britain’s top diplomat will host foreign ministers from the five Central Asian countries — Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan — at Lancaster House in London. Cooper will unveil the critical minerals deal with Kazakh Foreign Minister Yermek Kosherbayev, alongside pacts with the other countries covering carbon capture and higher education. “Central Asia is an important region with huge potential to boost economic growth,” Cooper told POLITICO in a statement. “These agreements deliver for British businesses, strengthen economic security and are a clear demonstration of U.K. support for the independence of the Central Asian states.” The new plan of action will diversify U.K. supply chains by supporting British investment in critical minerals in Kazakhstan. The MoU was signed by Kazakhstan’s Deputy Minister for Industry Olzhas Saparbekov and Trade Minister Chris Bryant. “Global demand for critical raw materials is rising rapidly, driven by clean energy technologies, advanced manufacturing and defence industries,” Kosherbayev wrote in a recent op-ed. Kazakhstan, he noted, produces 22 of the 36 minerals identified in the U.K.’s Critical Minerals Strategy last November, including uranium, titanium, silicon and rhenium. Kazakhstan is a global critical minerals powerhouse, supplying over 40 percent of the world’s uranium and leading in titanium production. It is a top‑ten copper and zinc exporter. Early this month, U.K. Foreign Minister Seema Malhotra was in Washington for a key meeting of 50 nations to diversify critical mineral supply chains away from China. The U.K. set out a Critical Minerals Strategy last November to ensure that by 2035 no more than 60 percent of Britain’s supply of any one critical mineral comes from a single country. In further efforts to support the economic security and independence of the Central Asia republics, Cooper will also announce a new agreement on U.K. education cooperation with Tajikistan, Turkmenistan and Uzbekistan, alongside a second campus for Coventry University in Almaty, Kazakhstan, and a new AI Center at the university’s campus in Astana. She will also unveil a deal for British start-up Valor Carbon and the Government of Kyrgyzstan to develop carbon capture projects and a £100 million deal to plant 25,000 hectares of forest.

BERLIN — China was once the promised land for German industry. Now it’s a massive strategic headache for Chancellor Friedrich Merz, who departs on his inaugural visit to Beijing on Tuesday. For years, Berlin was the driving force behind closer EU relations with China — brushing aside human rights concerns to lobby for a landmark investment deal in 2020. Closer trade relations with China, German leaders argued, would have a moderating effect on the regime in Beijing, a justification encapsulated with the mantra Wandel durch Handel, or change through trade. For a long time, it was also good for business. Germany was one of the few EU countries to run surpluses with Beijing, supplying the vital components and machinery that fueled China’s economic ascent. Its industrial giants like carmaker Volkswagen and chemical company like BASF made huge investments to harness the Chinese market. But that all-in approach to China now increasingly appears to be a historic policy miscalculation on par with Germany’s misguided energy dependence on Russia before the Kremlin’s full-scale invasion of Ukraine four years ago. In public, Merz hasn’t admitted the scale of the challenge. Last week, he told fellow conservatives that he is traveling to China to forge closer cooperation. “We have a strategic interest in finding partners around the world who think like us, who act like us,” he said. But many German industry leaders are now urging the chancellor to take a far tougher line and are howling over what they call the “China shock.” Since the Covid pandemic, the trade relationship has flipped to an eye-watering deficit — €90 billion in 2025 — and China is widely blamed for much of the hemorrhaging of jobs in Germany’s all-important manufacturing sector — now running at roughly 10,000 job losses per month. Frustratingly for the reflexive transatlanticist Merz, pivoting to President Donald Trump’s U.S., which is locked in an unpredictable tariff showdown with Europe, is hardly a viable option. That means Merz has to find some way to engage with Chinese leader Xi Jinping. Jörg Wuttke, a long-time China watcher who briefed the chancellor on Feb. 17 ahead of his visit, said he was surprised by how “well prepared he was.” For close to two hours, Merz took notes from a group of six China experts, saying little beyond asking questions. His priority, Wuttke said, was conveying the problems in a way that would connect with Xi. “He realizes he is possibly the most important politician for China in Europe,” Wuttke said. But China seems to have the best cards. Germany has over time become reliant on critical raw materials imported from China, giving Beijing the power to shut down German plants almost at will even as Berlin tries to pursue a longer term policy of reducing such dependencies or “de-risking.” That goal will take years to realize, however. By then, a growing number of German industry leaders are arguing, much of the damage will have been inflicted as German companies buckle due to massive Chinese price advantages resulting from subsidies, deliberate dumping and an undervalued currency. Merz himself admits that Germany should hold no “illusions” about China and its ambition to “define a new multilateral order according to its own rules.” “Merz is going at the worst possible time in terms of the impact of the China shock on the German economy,” said Andrew Small, director of the Asia program at the European Council on Foreign Relations. “The numbers are obviously absolutely horrible, with no projection that they’ll get better.” WHO HAS THE LEVERAGE? In many ways, the trip will look like those taken by chancellors in the past, when China’s vast and fast-growing market was considered the hope of German industry. Merz is traveling with a delegation of some two-dozen business executives. Over the course of three days, with stops in Beijing and the tech hub of Hangzhou, he will dine with Xi and visit the Forbidden City as well as outposts of Mercedes Benz and Siemens Energy. But few expect any sweeping deals will be reached. German industry leaders are instead calling for more concrete and immediate progress to improve their circumstances. “Our companies are coming under increasing pressure because key competitive conditions are being systematically distorted,” Thilo Brodtmann, the managing director of VDMA, said in a statement ahead of Merz’s trip. As a consequence, he said, German machinery exports to China fell by 8.5 percent during the first 11 months of last year, while machinery imports from China rose by 12.5 percent. Brodtmann called on the chancellor to address Chinese export controls on rare earths and to end China’s practice of subsidizing loss-making “zombie companies” that offer cut-rate prices. “German companies are not competing with other companies, but with the Chinese treasury,” he said of subsidies more broadly. The most powerful tool Merz has at his disposal is China’s growing dependence on the European market, which only increased as Chinese domestic demand has fallen. For Merz, a longtime free-trade purist, a push to threaten defensive tariffs within the framework of the EU is not only anathema — it’s potentially reckless at time when Germany is also dealing with the fallout of Trump’s trade wars. Trump’s attempt to confront China also provides something of a cautionary tale. In the midst of a trade feud between the U.S and China last year, Beijing announced sweeping export controls on rare-earth magnets and the raw materials needed to make them. Weeks later, Trump and Xi reached a detente, with Beijing agreeing to delay rare earth export restrictions for one year. But Nicolas Zippelius, a lawmaker focusing on China relations for Merz’s conservatives, said Merz may be more forceful than he lets on in public. “I would say that China and Germany can hurt each other very badly,” said Zippelius. “We must not underestimate Germany’s strong voice within the EU. And the EU has shown in the past that it has power, for example through tariffs and other measures.” Such conversations would happen in private, Zippelius added. “I don’t think it helps to take risks against each other in the open,” he said. “But in closed-door talks, you can communicate that very clearly. And there you definitely have leverage.” To that end, Merz could choose to ally itself more closely with France, which has emerged as one of the loudest voices warning that China is steadily hollowing out Europe’s industrial base while the continent is distracted by Trump. The only question is whether China would take Merz’s warnings seriously. “The leverage is there,” said Small of the European Council on Foreign Relations. “But on the Chinese side, the assessment is that Europe is not willing to use it.” Indeed, China knows the EU has backed off in the past over potential trade conflicts with Beijing in sectors such as solar panels and telecommunications due to fear of Chinese retaliation. As Merz and other European leaders look for an answer, time is on China’s side, added Small. “Unless there is more serious concerted action on the European side, China will calculate that it can get away with exactly what it’s doing at the moment and all of these problems will continue,” he said. Nette Nöstlinger contributed to this report.

EUROPE’S VANISHING CARS ARE JEOPARDIZING ITS RAW MATERIALS SECURITY Used cars are a treasure trove of metals essential in energy technology, but the EU is letting them vanish without a trace. By MARIANNE GROS in Brussels Illustration by Natália Delgado/ POLITICO EU decision-makers don’t have to look far to find cheap critical raw materials: Just 5 kilometers away from the EU quarter, car dealers up and down Heyvaert Street are scooping them up and shipping them to Africa. Dealerships in this industrial precinct in southwest Brussels send European used vehicles — many too polluting to be allowed on the continent’s roads — to African countries like Senegal, Sierra Leone and Nigeria, where the market for Europe’s unwanted automobiles is thriving. That one street intimately connects the capital of the EU — where some 10 million new cars hit the roads each year — to a global supply chain of used vehicles that sustains road transport in developing markets. One day these cars will end up in junkyards far away, and with them tons of valuable metals that the EU could recycle and reuse to run its economy. But Europe’s age-old habit of exporting unwanted goods is coming back to bite it as the bloc looks to recycle its way out of its reliance on raw materials imported from China.  The EU is scrambling to secure new sources of critical metals and minerals necessary for clean energy and military technology — a task of increasing urgency as geopolitical tensions disrupt traditional supply chains. For a small continent like Europe that is poor in natural resources but rich in consumer goods, old cars are a promising source of these materials. The vehicles are full of metals such as copper, platinum and steel that are essential in a long list of critical industries such as clean energy and military technology. And they’ll become even more valuable as early generations of electric vehicles — full of battery metals like lithium, cobalt and nickel — reach the end of their lifespans. But the EU isn’t close to taking advantage of this prospect. Along with those that are legally exported, between 3 million and 4 million end-of-life cars disappear without a trace from the EU each year. That’s a third of all cars that get deregistered. Some go missing because of a gap in the paper trail. Others get exported through obscure trade routes. Many are dismantled illegally, with the more valuable parts sold online or in non-compliant dealerships — while the rest are dumped, creating a pollution risk. “We see big and currently unused potential in recycling, reuse and also substitution” of critical raw materials, said Keit Pentus-Rosimannus, a member of the European Court of Auditors who last month co-authored a report on the EU’s difficulties in securing a supply of critical raw materials.  But that recycling and reuse can only happen if the waste products, e.g. cars, make it to recycling hubs in the first place.  The market for Europe’s unwanted automobiles is thriving in cities like Lagos in Nigeria. | Olympia De Maismont/AFP via Getty Images “The illegal dismantling and export of [end-of-life vehicles] is mainly motivated by profits from the sale of spare parts and metals,” the German Environment Agency wrote in a study on the topic back in 2020. Unauthorized dismantlers are “neglecting proper depollution, to avoid additional costs,” the study explained.  In a separate paper published in 2022, the agency estimated that 20 percent of all German vehicles that “go missing” — over 72,000 cars — are exported illegally.  According to Interpol data, nearly 3.6 million vehicles and vehicle parts from Europe — not just EU countries — were registered in the Stolen Motor Vehicles database as of Dec. 31, 2025. EUROPE’S MISSED OPPORTUNITY  The EU has made materials recycling a strategic pillar of its mission to reduce reliance on imports from China in an increasingly hostile geopolitical environment. Europe’s economy runs on importing critical raw materials, such as nickel, copper and lithium, as well as rare earths and so-called platinum group metals like palladium or platinum. It needs them to build car engines, weapons and products that contribute to the bloc’s green tech transition, including batteries, chips and solar panels.   While the metals are mined all over the world, China overwhelmingly dominates the processing and refining of these critical raw materials.  To address this, the European Commission says it wants to launch new mining projects, sign deals with other countries to diversify its supply, and promote recycling projects.  With the introduction of the Critical Raw Materials Act in 2024, EU governments are required to adopt national circularity measures to boost the recovery of critical raw materials and simplify permitting processes for recycling and recovery projects. The law says that 25 percent of the EU’s annual strategic raw material consumption should come from domestic recycling by 2030. Last December, the Commission announced additional measures as part of a new plan called RESourceEU.  But many argue that progress is too slow. “Most EU targets that are in place do not incentivize the recycling of specific individual materials. High processing costs, limited availability of materials, technical and regulatory issues also make the use of the recycling sector less competitive,” the Court of Auditors’ Pentus-Rosimannus said. Others say the EU is doing little to reduce consumption in the first place. Policymakers need to be “addressing [materials] consumption aspects to accelerate this process in addition to everything else that is being done on the recycling part” said the European Environment Agency’s head of the clean and circular economy group, Daniel Montalvo. EU policies should tackle “how we can change this upstream part of the material cycle so that we use products more intensively and for longer,” he added. RECYCLERS NEED HELP  End-of-life vehicles should all end up in one of Europe’s 13,000 authorized treatment facilities like the one in Menen, Belgium, which straddles the country’s border with France and is run by recycling company Galloo.   Running a recycling center is expensive and illegal dismantlers create unfair competition because they avoid regulatory and compliance costs. | Sebastian Kahnert/picture alliance via Getty Images “We can dismantle 17 cars at once here. Usually, we treat 10 to 15 thousand cars a year, but this year we’re around 3 or 4 thousand on this site,” said Emmanuel Katrakis, the company’s director of public and regulatory affairs. Galloo set up Valorauto, a joint venture with French-Italian automaker Stellantis, in 2023. Valorauto runs a vehicle take-back and recycling service through 300 authorized treatment facilities in Western Europe. The low turnover in Europe’s car fleet — a result of stagnating sales since the Covid pandemic due to Europe’s weaker economy — means fewer cars end up in recycling centers. Once the vehicles reach what can only be described as a cemetery for cars, the vehicles get scrubbed of polluting substances and taken apart. Most of the plastic, rubber, glass and iron can be recycled. Crucially, the more precious resources in their engines, catalytic converters and electrical systems can be collected. Two thirds of vehicles that reach end-of-life status end up in this system.  But running a recycling center is expensive. Illegal dismantlers create unfair competition because they avoid regulatory and compliance costs, which drives the price down, while also diverting some of the end-of-life-vehicle flow — and therefore revenue — away from authorized centers.  “We’re tired of having bad actors in our sectors who are willing to work with a completely illegal market,” Katrakis said.  Cars also get dropped off with missing parts.”We’re going to buy their car for €150, maybe €200, but they know they can sell their catalytic converter separately for €60. They do the math,” he added.  For Valorauto’s general manager, Thomas Delgado, online marketplaces should be held responsible for enabling the car dismantling grey market, saying they don’t monitor the sellers properly. “There are several marketplaces that should do their part to help [us] fight this system” he said, by preventing individual sellers from selling a car part unless they can prove they are registered as an authorized treatment facility.   Then there are Europe’s faulty registration systems. A lot of these cars go missing because they are sold second-hand in another country but are never deregistered in their country of origin. “Today we have national computer systems that are supposed to track things, but they’re totally overwhelmed,” Delgado said.  There are also gaps between the car registries and the database of insured vehicles. Responsibility for monitoring these systems is often shared by several national ministries.  National governments have tried to address the issue by creating incentives for car owners to drop their vehicles off at authorized centers. In Denmark, for example, owners can get a “scrapping premium” when their vehicle is dropped off at an approved dealer.  A new regulation on end-of-life vehicles aims to clarify when a car is legally considered waste.  | Nicolas Tucat/AFP via Getty Images At the EU level, a new regulation on end-of-life vehicles aims to address the issue with “clearer rules on the distinction between a used vehicle and an end-of-life vehicle” and “a strict framework for transfers of ownership,” but some of the technical aspects of the law are still being discussed. The law also aims to clarify when a car is legally considered waste.  The automotive sector is glad to see the EU will “implement an EU-wide registration/deregistration system and regulate the export of ELVs outside the EU, preventing valuable raw materials from leaving the European market,” according to ACEA, the sector’s main lobby.  GETTING A SECOND LIFE  Over 800,000 used vehicles are exported from the EU each year, mainly to African countries, according to EU data. The revised end-of-life vehicle regulation states that only roadworthy cars can be exported from the EU.   Just because a car isn’t allowed on the streets of a European city doesn’t mean it should be dismantled immediately, however.   “It’s important to make the distinction because they are not necessarily at the end of life everywhere,” said Pierre Hajjar, chief executive officer of Socar Shipping Agencies, a vehicle shipping company on Brussels’ Heyvaert St. Last December local police raided the street, seizing 45 vehicles and forcing several dealerships to close for not complying with national rules on cash payments or for not having the right environmental permits.   With the revised end-of-life-vehicle regulation, the EU wants to increase traceability so “only high-quality, technically fit European vehicles will be exported.” But for African markets, Hajjar says that’s already the case.  “For Africa, everything goes by boat, everything is extremely traceable,” he said, because port authorities and maritime shipping companies have high thresholds for the kind of vehicles that can be exported. “Whereas in Eastern countries it’s road transport … there isn’t really any traceability, they cross the borders quite easily,” he added.  

BRUSSELS — Ireland on Monday sounded the alarm over a new group of Europe’s largest six economies, dubbed “E6,” amid fears that smaller countries’ interests could be bulldozed. “I am conscious, and I say this very respectfully, a lot of the countries in that E6 will have different views on some fundamental issues,” Irish Finance Minister Simon Harris said ahead of a meeting with his eurozone peers in Brussels. “I would much rather see a structure where countries come together on issues where they share a common view rather than the entry to the club being based on your size exclusively,” he said. Harris’ comments came after the finance ministers of Germany, France, Italy, Spain, the Netherlands and Poland met in Brussels, behind closed doors, earlier in the day to discuss how best to speed up Europe’s plans to take on Wall Street. That’s a problem for the likes of Dublin, which has a direct stake in the plans to deepen the bloc’s financial markets. Most money managers in Europe do the bulk of their business in Ireland and Luxembourg, which oppose efforts to create a single EU watchdog for the biggest financiers across the bloc. Monday’s E6 gathering was the second meeting of its kind, with another planned in March, amid growing frustration that the EU is moving too slowly to keep pace with the economic powerhouses of the U.S. and China. The shock surrounding U.S. President Donald Trump’s pursuit of Greenland also convinced the EU’s most powerful countries to agree on political positions ahead of G7 meetings — especially when it comes to securing critical raw materials. “What happened with Greenland served as a wake-up call,” Germany’s finance minister, Lars Klingbeil, told reporters ahead of the Eurogroup. “We’ll be transparent.” The goal is to agree on certain topics and present them to the rest of the EU, he added. The next E6 meeting will focus on boosting the euro on the global stage and making defense investments more effective. Not everyone’s opposed. Some diplomats perceive E6 as little more than a political tactic to push the most reluctant countries to go ahead on controversial issues. TWO-SPEED EUROPE While there are other formats that smaller countries can attend to influence policy, the E6 club is designed to coordinate policy positions on economic initiatives. That’s put several countries on edge. Political appetite for a two-speed Europe has been building, in which smaller groups of nations can peel off and sign up to initiatives that are mired in European discord. Several countries have expressed concern over the E6 club since its creation. Handling political debates within such an exclusive forum could also dilute the Eurogroup, which in itself is an informal body that finance ministers have used to discuss sensitive topics away from the public eye. “That’s going to kill the Eurogroup,” one EU diplomat said. “I think it’s a big mistake.” Kathryn Carlson contributed to this report.

ALDEN BIESEN, Belgium — The European Union should open up more to its trade partners in public procurement and curb Chinese investment in sectors like green tech, according to a new draft of a landmark industry act obtained by POLITICO on Thursday. Free-trade partners like the United Kingdom and Japan will breathe a sigh of relief as the draft Industrial Accelerator Act (IAA) foresees a definition of “Made in EU” that includes “trusted partners.” Brussels wants to throw up a higher barrier to investment from China by imposing a cap on foreign direct investment by countries that dominate a given global industry. The leak of the bill came as EU leaders held a retreat at a Belgian castle to wargame ways to reverse the bloc’s industrial decline in the face of China’s export dominance and America’s tech supremacy. European Commission President Ursula von der Leyen is trying to find a balance between France’s protectionist instincts and calls for more openness led by Germany, Italy and the EU’s Nordic contingent. Leaders played down differences as they gathered at the Alden Biesen estate, with Italian Prime Minister Giorgia Meloni saying her views on industrial strategy converged with those of German Chancellor Friedrich Merz, and brushing off suggestions the duo were trying to isolate French President Emmanuel Macron. “It is not something that we do against someone else, by excluding someone else,” she told reporters. Leaders reached a form of consensus on areas including the concept of a European preference, where there was openness to examining what it may mean and where it may be needed, according to a person briefed on the talks. The meeting kicked off an intense month of politicking on restoring EU competitiveness and its single market project, with the IAA due out on Feb. 25 and leaders to reconvene for a full-blown summit on March 19-20. The draft drew a swift and strong rebuke from Chinese business. “The latest version of the Industrial Accelerator Act is likely to undermine the investment confidence of leading Chinese companies,” the Chinese Chamber of Commerce to the EU said. “Beyond the political signaling, many of the proposed measures raise serious practical concerns, including the feasibility of mandatory local partnership requirements, which in many cases may simply not be commercially or technologically viable.” A big question mark over the industry push, which is being led by Industry Commissioner Stéphane Séjourné, is whether it can be sufficiently decisive to turn the economic tide. “Whatever new FDI rules will be enacted will be ineffective,” said Yanmei Xie, a senior associate fellow at the Mercator Institute for China Studies. Each EU member country has a different agenda and building a united front against Chinese dominance is a near impossibility. “Whoever is the lowest denominator becomes the de facto gatekeeper.” TRUSTED PARTNERS The latest draft of the IAA, which runs to 96 pages, broadens the definition of a European preference as it would apply to public procurement and other taxpayer-funded programs in energy-intensive industries, net-zero technologies and the automotive sector. In so doing it should allay fears among friendly trading nations of a “Fortress Europe” scenario.  The scope of Made in EU should include content originating from the EU and the European Economic Area, which spans Norway, Iceland and Liechtenstein. The draft also leaves the door open to “trusted partners” whose manufacturing “should be deemed equivalent to Union origin content.” Earlier on Thursday, Séjourné dismissed the notion that the Made in EU push would exclude trade partners. His cabinet said there was broad support, both politically and in industry for the work of the Commission, although “opinions diverge on the conditions and modalities of its implementation.” A broader Made in EU concept will be welcome in the U.K. after the country’s finance minister, Rachel Reeves, said on Wednesday that Britain needed to be part of the Made in EU club. “I actually support the idea of some sort of ‘Made in Europe’ or ‘Made in countries that share each other’s values,’” she told an event. Japan, a major auto exporter, will also welcome the shift. The country “very much meets the definition of a Trusted Partner of the EU,” Patrick Keating, Honda Europe’s head of government affairs, told POLITICO.  GETTING TOUGHER The EU executive doubled down on its efforts to curb foreign direct investments from China in its latest draft.  Should the current form hold, the IAA would limit investments by companies based in countries that control more than 40 percent of global manufacturing capacity across four sectors: batteries, electric vehicles, solar technologies, and the processing and recycling of critical raw materials. “The sectors indicated — those in which Beijing is a leader — as well as the reference to the 40 percent manufacturing capacity, highlight how the increasingly clear target of these measures are Chinese foreign direct investments,”said Luca Picotti, a lawyer at Italy’s Osservatorio Golden Power. The Commission’s proposal, which effectively mirrors Beijing’s 1980s forced joint venture policy, remains in the new draft. Chinese automakers that could be forced to give up some of their technology to their European competitors are pushing back on that strategy. BYD CEO Stella Li has called the model “outdated.” “It’s not efficient: We take decisions in a second, a joint venture takes months. It’s a model of the past,” she told Italian daily Corriere della Sera at the Davos World Economic Forum last month. Governments would also be compelled under the IAA to buy more climate-friendly materials, though the scope of the requirement remains elusive in the latest draft of the upcoming industry booster. The act also proposes introducing voluntary green steel labels.  The scale of the Commission’s intervention remains unclear in the draft, which is missing a section devoted to specific materials as well as a set of annexes, though hints are sprinkled throughout the document. “Public procurement is a powerful lever,” von der Leyen told industry representatives at an event in Antwerp on Wednesday, noting it amounts to 15 percent of EU GDP. “This is massive financial firepower controlled by European governments. But too often, we see that our public buyers have to take the subsidized foreign products instead of the high-quality European alternatives. That is homegrown value that we are leaving on the table.”  Aude van den Hove reported from Alden Biesen, Francesca Micheletti, Jordyn Dahl and Sebastian Starcevic from Brussels, and Zia Weise from Antwerp.