BRUSSELS — The EU aims to seal a free-trade agreement with India by late January instead of the end of the year as initially envisaged, Trade Commissioner Maroš Šefčovič told POLITICO. “The plan is that, most probably in the second week of January, that [Indian Commerce Minister] Piyush Goyal would come here” for another round of negotiations, Šefčovič said in an interview on Monday. “There is a common determination that we should do our utmost to get to the [free-trade agreement] and use every possible day until the Indian national day,” he added. India celebrates its annual Republic Day on Jan. 26, and both Commission President Ursula von der Leyen and Council President António Costa have been invited as guests of honor. Von der Leyen and Indian Prime Minister Narendra Modi pledged in February to clinch the free-trade agreement (FTA) by the end of the year — something even they recognized would be a steep target. But a number of issues keep gumming up the works, Šefčovič said, including that India is linking its objections to the EU’s planned carbon border tax and its steel safeguard measures with the EU’s own demand to reduce its tariffs on cars. Šefčovič traveled again to New Delhi last week in an effort to clear major hurdles to conclude the EU’s negotiations with the world’s most populous country. “The ideal scenario would be — like we announced with Indonesia — that we completed the political negotiations on the FTA,” Šefčovič said. “That would be my ideal scenario, but we are not there yet.” The EU and Indonesia concluded their agreement in September. “It’s extremely, extremely challenging,” he said, adding: “The political ambition of our president and the prime minister to get this done this year was absolutely crucial for us to make progress.”

EU climate chief Wopke Hoekstra thinks reports of the death of Europe’s green agenda have been greatly exaggerated. “There’s always a lot of talk about backlash,” Hoekstra told POLITICO’s Sustainable Future Summit Tuesday. “That is, I think, one of the big misconceptions.” The EU’s new climate goal for 2040, agreed by ministers last month, “is actually an acceleration, rather than a downgrade, of what we are having today,” he said. The EU’s approach to its environmental and climate rules has been placed under extreme pressure from a combined pushback from far right parties, heavy industry and some leading members of Hoekstra’s own center right European People’s Party. That has led to the scrapping or weakening of some existing standards and made setting the 2040 target a brutal political fight. But Hoekstra said the realignment of some green policies was not about resiling from Europe’s environmental ambitions. “We’ll need to find a recipe — and I’ve been saying that over and over again — where we really make sure that climate, competitiveness and independence are being brought together. That in the end, is the winning formula,” he said. Hoekstra also pushed back on criticism by countries whose exports will be hit by the EU’s carbon border tax. This was a major feature of the recent COP30 climate negotiations, with large emerging economies like South Africa, India and China expressing concern about a measure they believe unfairly disadvantages their industries. Hoekstra dismissed that griping as a way to gain advantage in the course of the COP30 talks. “It is a tool that is being used, as quite often is the case in diplomacy,” he said. What he had heard “behind-closed-doors,” he said, was a completely different story. “Those who might have expressed their concerns publicly are not only acknowledging inside of a room that actually the effects are not that large, they’re actually even saying that it helps them to have a different type of conversation,” he said.

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.

LONDON — Officials in Brussels have stalled new Brexit reset talks after EU countries clashed over the issue of British payments to the bloc.  Ambassadors from the bloc’s 27 member states on Friday failed to give the green light for negotiations on linking U.K. and EU emissions trading systems (ETS), as well as talks on an agri-food deal. Talks are set to resume on Tuesday.  The U.K. and EU agreed in principle to negotiate on the two topics at a summit in May. But only once member states give their approval can talks truly begin. The delay is a setback for British negotiators, who had hoped to get an ETS deal in place before the EU implements its new carbon border tax regime in the New Year. Without a deal in place by the end of December, British firms exporting carbon-intensive goods to the EU such as steel and cement will be hit by the taxes from Jan. 1. One EU diplomat with knowledge of Friday’s talks confirmed there was disagreement over the issue of how much the U.K. should pay to participate in the EU’s single market. A second official confirmed there was “political sensitivity” on the issue, with specific concerns over when the U.K. would be expected to pay.  “[Should it be] on the occasion of the next electricity trading agreement, as the majority of member states suggest? Or after that, as some member states still claim,” they said.  The same official added that there was also “frustration that other talks are lagging behind” on the more contentious issue of youth mobility. Both officials were granted anonymity in order to speak freely about the ongoing talks.  CARBON TAX HIT Adam Berman, director of policy and advocacy at Energy UK, said it was now “not realistic” that a linkage negotiation would be completed by the end of the year. This will be “problematic” for British firms, Berman said, which will suddenly be subject to the new tax from Jan. 1, with the energy sector likely to be hit the hardest. But it could also harm the EU, which could see emissions increase as it seeks to replace relatively “cleaner” U.K. imports. Meanwhile, the U.K.’s EU Relations Minister Nick Thomas-Symonds has said he wants a Sanitary and Phytosanitary deal — which would see the U.K. align with EU agri-food standards — up and running by 2027. | Stefan Rousseau/PA Images via Getty Images Another headache for both sides is the fact the new regime will apply in Northern Ireland, which has no hard border with the EU, meaning the region could become a backdoor into the EU market for high-carbon goods. Berman said there was speculation of a time-limited exemption from CBAM while the U.K. was in linkage negotiations with the EU. “The big question is — Can both sides have an honest conversation about what the implications might be if there isn’t an exemption from the beginning of next year?” he said. Nevertheless, Berman is hopeful of an eventual agreement, pointing out that the issue of ETS was “not highly politicized” like other, more contentious aspects of the reset like youth mobility. “There is a pretty high level of alignment between these two policy mechanisms in the U.K. and the EU and high levels of environmental ambition on both sides. So really there are more technical questions to resolve than there are political questions, which bodes well for the likelihood of an eventual positive outcome.” AGRI-FOODS DEAL Meanwhile, the U.K.’s EU Relations Minister Nick Thomas-Symonds has said he wants a Sanitary and Phytosanitary deal — which would see the U.K. align with EU agri-food standards — up and running by 2027. To meet this timeline, talks with the EU would need to be wrapped up sometime in 2026 so parliament has time to enact legislation.   The U.K. is also racing to negotiate a deal to join the EU’s €150 billion rearmament scheme by “mid-November.” EU member countries have until the end of November to submit their own plans detailing how they would spend their allotted shares of the €150 billion in loans.  London fears that, if the U.K. isn’t in the room when that happens, it could end up losing out. The issue of Britain offering financial payments to the bloc is also politically sensitive for the U.K. Responding to the reports, a spokesperson for Britain’s right-wing Conservative Party said the government’s post-Brexit reset had “turned out to be an outrageous hit job on British taxpayers, with demands from the EU for billions of pounds from our country.” “Starmer doesn’t have the backbone to stand up to Brussels, with their attempt to extort cash from us as a punishment for having the foresight to leave the EU,” they added.

BRUSSELS — What began as a push to free Europe’s businesses from crippling rules has morphed into yet another tactic to appease Donald Trump.  Since taking office, the U.S. president has repeatedly threatened to hike tariffs on EU goods unless the bloc agrees to roll back some of its laws that also apply to American companies. That presents Brussels with a dilemma. If it bows to the U.S. pressure, it risks ending up with strict regulations that only apply to European businesses — potentially destroying their competitiveness. Conversely, if it scraps the rules altogether, it abandons key aims like digital sovereignty and environmental protection. Enter the simplification agenda, Brussels’ new plan to get the best of both worlds. Cutting red tape is one of the few areas of policymaking on which EU countries largely agree; in fact, they want more of it. Later this week, European leaders meeting in Brussels will instruct the European Commission to speed up its work “as a matter of utmost priority, on all files with a simplification and competitiveness dimension,” according to draft conclusions obtained by POLITICO.  Driving home that message, 19 EU leaders — including Friedrich Merz of Germany, Emmanuel Macron of France, Giorgia Meloni of Italy and Donald Tusk of Poland — have issued a presummit appeal for “a systematic review of all EU regulations to identify rules that are superfluous, excessive, or unbalanced.” In a letter, obtained by POLITICO, they also called on Brussels to dismantle outdated rules, demanded a “constant stream” of simplification measures and urged self-restraint when it comes to new legislation. Still, the simplification drive is being spun as a way to address some of Washington’s concerns with what it sees as regulatory overreach by Brussels.  “Since Trump is willing to swallow a number of jokes — he doesn’t look too closely at it anyway — if we can say to him, ‘Donald, thank you very much, it’s thanks to you that we’ve cleaned things up a bit,’ why not?” asked Pascal Lamy, a former EU trade commissioner and head of the World Trade Organization. SWEEPING ROLLBACK In a bid to bring struggling European industries back from the brink, Commission President Ursula von der Leyen has made deregulation — or “simplification” — the North Star of her second term. In less than 12 months, her Commission has come up with plans to cut much of the red tape crafted during her first mandate, touching on almost all areas of EU law, from defense and agriculture to digital rules and the environment.  At first, the logic was straightforward: Fewer rules would be good for European companies struggling to remain competitive against their U.S. and Chinese rivals.  Now, the simplification push comes as a diplomatic gesture — to smooth relations with Washington after Trump made it clear that U.S. companies shouldn’t be bound by European rules he has denounced as discriminatory.  Commission President Ursula von der Leyen has made deregulation — or “simplification” — the North Star of her second term. | Thierry Monasse/Getty Images Under the trade deal von der Leyen struck with Trump at his Scottish golf resort in July, the Commission pledged that its green rules would “not pose undue restrictions on transatlantic trade.” The list agreed by the two sides included Europe’s rules on supply chain oversight, sustainability reporting, a carbon border tax and rules aimed at preventing the import of goods produced on deforested land. All have already been the target of simplification measures launched by the Commission.   Explaining the strategy, Danish Foreign Minister Lars Lokke Rasmussen likened it in an interview with POLITICO to a Kinder Egg — an Italian-made children’s treat with chocolate on the outside and a toy on the inside. Cutting red tape is in Europe’s “own self best interest. But at the same time, it also serves others’ interest as well,” explained Rasmussen, whose country holds the presidency of the Council, the bloc’s intergovernmental branch. Others say it’s not so clear cut.  “We can’t say on the one hand that we’re willing to pay for American strategic protection in terms of tariffs, and on the other hand that we’re not going to change our regulations for that, neither on data, nor on DMA, DSA, nor everything else that Americans criticize about what they see as our hyper-regulation,” Lamy said, referring to the twin pillars of EU tech regulation, the Digital Markets Act and the Digital Services Act.  The Commission stressed that while Washington and Brussels have agreed to look at ways to cut red tape, “this will not lead to a lowering of EU standards or legislation,” said Olof Gill, deputy chief spokesperson for the Commission.  “The EU has been firm on defending our fundamental principle — our legislative framework and our regulatory autonomy are not up for negotiation,” added Gill, whose remit covers trade.  LEADERS JUMP IN The letter from the 19 EU leaders intensifies the pressure on the EU executive from the bloc’s leading economies to keep deregulating — above all from Macron and Merz. Backed by their largest businesses, the two leaders have echoed U.S calls for the EU to ditch its supply chain oversight directive. But the European debate has the added benefit of having — apparently — convinced Trump’s new ambassador to Brussels, Andrew Puzder, that the EU’s drive to slash red tape is in its own essential interest.  “Chancellor Merz and President Macron have both said it should be repealed … not because that’s in America’s best interest. They’re saying it’s the best interest of Germany and France,” Puzder told a recent event in Brussels, referring to the supply chain rules. For a veteran like Lamy, the simplification imperative arose from internal EU pressure following strategy recommendations by former Italian Prime Ministers Mario Draghi and Enrico Letta. The former leaders warned that Europe must become more competitive or face the “slow agony” of decline. “If we look at the history of these simplification packages, they were entirely generated within the EU by pressure from employers,” Lamy said.  But even with the political wind in her sails, delivering on simplification won’t be a pleasure cruise for von der Leyen.  Negotiations on the first simplification package — aimed at cutting green reporting obligations for companies — nearly destroyed the coalition of political groups that elected her to a second term, while efforts to simplify Europe’s farming policy and budget have sparked another backlash from the agriculture sector.  National calls for massive cuts to EU rules have also drawn criticism from EU decision-makers who are reluctant to see trade talks or corporate interests derail the bloc’s green agenda.  “No one should be mistaken, we will not lower these standards because there is no competitiveness in a race to the bottom,” said Teresa Ribera, the Commission’s No. 2 and top competition regulator. Nor are European lawmakers giving up on the “Brussels effect” — whereby rules set by the EU set a standard for how business is done internationally. That EU rules should apply to foreign companies is “a fundamental element of … Europe’s normative power,” said Pascal Canfin, a centrist member of the European Parliament, who has worked on several of the simplification packages.  Hans von der Burchard and Nette Nöstlinger contributed to this report from Berlin. This story has been updated. 

BRUSSELS — The European Commission is drawing up a playbook to convince the Trump administration that Europe is serious about cutting red tape for American companies — but on its own terms. The EU executive told national envoys this week that it was preparing a “checklist” spelling out how Brussels would address President Donald Trump’s demands on its business rule books, five EU diplomats and officials told POLITICO.  The move comes after Trump’s trade department sent its position to the European Commission demanding that Brussels remove what the U.S. considers to be non-tariff barriers to trade — measures that EU officials see instead as core elements of the bloc’s regulatory sovereignty. The European Commission has repeatedly stressed that the bloc will not be unwinding any existing laws or regulations to suit Trump’s agenda. But having faced criticism over the EU-U.S. trade deal, EU officials are mindful to present the work on easing the regulatory framework as being in line with the bloc’s own ongoing deregulation agenda. This now includes nine simplification packages — known in the Brussels jargon as “omnibus” measures. “We don’t do ‘at your command,’” said one of the officials, who like others interviewed for this story was granted anonymity to discuss the confidential conversations. “We’re going to sell them our omnibus as concessions.”  EU trade chief Maroš Šefčovič and his U.S. counterpart Jamieson Greer spoke last Sunday, a European Commission spokesperson said earlier this week. FLIPPING THE NARRATIVE For Brussels, the move offers a chance to flip the narrative: Instead of bowing to Trump’s pressure, the EU executive is looking to frame its own deregulation push to show it is playing ball on their trade agreement — which was set down in writing in August and only referred briefly to some non-tariff barriers and the bloc’s business oversight rules. According to the diplomats, the Commission’s internal work will focus on areas explicitly mentioned in the statement agreed after Trump and Commission President Ursula von der Leyen shook hands on a deal in Scotland — including the EU’s carbon border tax, deforestation ban, supply chain transparency rules and its green reporting obligations.  This would exclude the EU’s digital rules, such as the Digital Services Act and the Digital Markets Act, which the Trump administration sees as censoring or discriminating against American companies. Commission Deputy Chief Spokesperson Olof Gill said the EU was focused on the “faithful implementation” of the joint statement, describing it as the basis for strategic cooperation. “The EU is now exploring the best path forward to implement all commitments made, with Commissioner Šefčovič engaging closely with U.S. counterparts,” Gill told POLITICO. “Our focus is on delivery and tangible results, ensuring that all next steps build on the joint statement and reflect a fair and reciprocal EU–U.S. trade partnership.” The checklist was first reported by Bloomberg. Marianne Gros contributed reporting.

MANCHESTER — Shadow Trade Secretary Andrew Griffith has warned against “deeper entanglement” with Europe, claiming it could stop the U.K. from exploiting trade opportunities further afield. In an interview with Anne McElvoy at the POLITICO Pub at the Conservative Party conference on Monday, Griffith warned of “unintended consequences” if the U.K. aligns more closely to Europe as part of the government’s post-Brexit “reset” with the bloc. His comments came after a poll commissioned by POLITICO revealed that nearly two-thirds (63 per cent) of British voters backed government plans to negotiate a sanitary and phytosanitary (SPS) agreement with the European Union, which would see the U.K. align with EU animal and plant health standards. Just 22 percent were opposed. “Of course, we’re all in favor when it’s couched in terms of a poll as: ‘wouldn’t it be good to remove this particular friction and have these particular rules?’,” Griffith said, when asked about the poll. “But then, the flip side that is not surfaced in that opening is that it may, in future, prevent you from exploiting other opportunities.” In addition, plans to tie the U.K.’s emissions trading schemes with Europe and impose a carbon border tax in line with the EU’s “may impede that very ability to get concessions from India that might unlock big opportunities for financial and professional services,” he added. “You’ve got to be very careful about understanding what are the unintended consequences.” Asked about the possibility of a U.K. free trade agreement with Mercosur — a South American trade bloc comprised of Argentina, Bolivia, Brazil, Paraguay and Uruguay — Griffith said he was “very open to it in principle.” But he said it was at odds with the government’s position on Europe “because they’re going for a much deeper entanglement on things like SPS.” Last week at the Labour Party conference, Trade Minister Chris Bryant described a U.K.-Mercosur deal as a “no-brainer,” adding that he had had “very positive conversations” about it with Argentina and Brazil. The EU is eyeing a possible signature of its own Mercosur deal on Dec. 5. Bryant said there “must be chapters that we would be able to close which would be almost identical to the EU that we can close very quickly.”

BRUSSELS — Donald Trump’s tariffs have stung both the EU and India into mounting a big push to get their long-delayed trade deal over the line — fast.   Brussels and New Delhi only have three months left to deliver on their joint pledge to seal a deal by the end of the year — with the toughest issues related to agriculture and sustainability yet to be resolved.   Despite unprecedented political will, policymakers and experts alike recognize it won’t be an easy run to the finish line.   “The negotiations remain extremely challenging,” the EU’s lead negotiator Christophe Kiener told European lawmakers last week. “It was absolutely expected that when we start negotiating on the most difficult issues, the most sensitive areas, it would not be easy.”   As crunch time approaches, with another round of talks scheduled for next week, here are five things to know:  1. There’s renewed appetite on both sides — thanks to Trump.  Spurred by Trump’s tariff crusade, which hit Indian imports with tariffs as high as 50 percent and didn’t spare the EU either — albeit with a lower rate of 15 percent on most goods — both sides are frantically hunting for alternative trade partners.  “When we knew Trump would come into office, Delhi started sending smoke signals to capitals across Europe saying: We are serious about trade and we want to make this work to hedge against the uncertainties of tariffs and the U.S.’s commerce-first approach,” said Garima Mohan, a senior fellow at the German Marshall Fund who leads the think tank’s work on India.  Roger that, said Brussels.   Taking her whole College of Commissioners to India a few weeks into Trump’s second mandate, European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi agreed to seal a deal by the end of the year — something even they recognized would be a steep target.   “It will not be easy. But I also know that timing and determination counts, and that this partnership comes at the right moment for both of us,” von der Leyen said at the time.   The EU has been on a negotiation roll, revamping its pact with Mexico, and concluding talks with the South American bloc of Mercosur countries and with Indonesia.   2. The two have a complicated trade history.  While India is playing hard to get, it is nonetheless seeking to overcome some of its protectionist instincts, deepening ties with Japan and negotiating a deal with Australia. A deal with the EU, its second-largest trading partner, remains a key objective. But historically, their trade relationship has never been easy.   “I know from experience how difficult India can be, how difficult it is to strike the final deal on the more sensitive issues. I suspect that that’s where we are now,” said Ignacio García Bercero, the EU’s chief negotiator for India until 2013. That’s when talks went into snooze mode over thorny issues such as India’s agricultural protectionism and its generic pharmaceuticals. They were relaunched at India’s request in 2022.   Although negotiators stress things are different this time around, they can’t escape sometimes conflicting economic approaches given India’s protectionist history.   “If we look at what is left, it’s the most important stuff … those are exactly the same things that we were dealing with in 2012, 2013, when the negotiations derailed last time,” said Nicolas Köhler-Suzuki, associate researcher at the Jacques Delors Institute.  3. Ukraine isn’t making things any easier.  While Brussels is counting on India for its diversification push, it won’t find it easy to remain a credible threat to Russia while doing more business with a country that maintains historically close ties with Moscow.  An EU official, granted anonymity to discuss closed-door discussions, conceded “one of the biggest issues where [the EU and India] have differences is Ukraine.”  The world’s most populous country sent 65 troops this month to join Russia’s annual Zapad military exercise, in which the Kremlin simulated a nuclear attack on NATO countries. At a recent summit in China, Modi held hands with Russian President Vladimir Putin as they approached their host, President Xi Jinping.  At a recent summit in China, Narendra Modi held hands with Russian President Vladimir Putin as they approached their host, President Xi Jinping. | Pool photo by Suo Takekuma via AFP/Getty Images Trump, meanwhile, is calling on the EU to hit New Delhi with tariffs as high as 100 percent for enabling Russia’s war in Ukraine.   “It’s not all joyous music and singing and dancing. There is an acknowledgement that we need to do more to bridge gaps where they are,” the official said, referring to a communication on India the EU executive put out in mid-September.  Ultimately, by engaging with India, the intention is to ensure the gap left by the U.S. isn’t filled by other, politically hostile, powers.  For India, giving up its ties to Russia is a no-go, as that would constitute a major concession to China, India’s long-standing Asian rival.   “The Russia-China factor is a huge concern for India,” said Mohan.  4. There’s a bunch of tricky technical bits.   Aside from the geopolitics, divergences are also creeping up in a host of nitty-gritty areas.   For one, there are long-standing disagreements on cars and car parts, wines and spirits, and other agricultural products. Earlier this year, the two sides agreed to set aside particularly sensitive agricultural sectors, such as dairy and sugar, to facilitate the talks.   On top of that come other issues related to agriculture, such as sanitary and phytosanitary measures. The EU also takes issue with the Indian Quality Control Orders, which prescribe that certain products must conform to Indian standards before being sold there.  Sustainability provisions and the EU’s green agenda are also complicating the negotiations.   “India had been clear from the outset that it did not particularly like the way the European Union wants to link sustainability-related issues and trade, but they’ve obviously accepted that we will need to have a chapter on this,” said Kiener, the EU negotiator.   However, New Delhi still takes issue with making the Trade and Sustainable Development chapter binding and enforceable through a dispute settlement mechanism. It has also threatened to retaliate against the EU’s carbon border tax, as POLITICO reported earlier this year. “The carbon border adjustment mechanism that the EU has visualized does not meet the test of fair play,” Commerce Minister Piyush Goyal said then.   If that wasn’t enough, a historical issue has also cropped up in the talks: An India-Pakistan dispute over the two countries’ rival claims to basmati rice. New Delhi is pressuring the EU to designate the grain Indian — but if Brussels does so, it risks a rift with Pakistan.  In short, sealing the agreement will likely entail a trade-off between the political benefits of a fast deal against the economic gains of a potentially more comprehensive agreement.   5. They are a temperature check of the EU’s trade priorities.   Ultimately, the deal will be a test of just how much of its (green) trade ambitions the EU is willing to sacrifice on the altar of geopolitics.   Considering Trump’s attempts to upend or at least significantly harm the rules-based trade order, calls have been growing for the EU to be more pragmatic and aim for quicker and less comprehensive deals.   But not everyone agrees that will ultimately be beneficial in the long-term.   “We hope that the result of the trade negotiations will be a commercially meaningful agreement,” Angelika Niebler of the European People’s Party, chair of the European Parliament’s delegation for relations with India, said in Parliament’s trade committee last week.   The India deal will also reveal just how important the bloc deems its aim to advance the bloc’s environmental agenda through trade deals.   “Clearly, India has [a] different geopolitical alignment, and they have always been somewhat closer to the Russia operation,” said García Bercero, the former EU negotiator who now works for the Bruegel think tank.   “But at the end of the day, I don’t think that this would need to be an obstacle to concluding an agreement.” 

BRUSSELS — The United States will cap tariffs on European cars, pharmaceuticals and semiconductors at 15 percent, Washington and Brussels have agreed in a joint statement seen by POLITICO. The four-page text, dated Aug. 18, locks in the key points of the deal that U.S. President Donald Trump agreed with European Commission President Ursula von der Leyen when the two met at his Turnberry golf resort in Scotland on July 27. The two leaders’ account of the deal differed on the day, notably on pharma, causing concern that drug producers in Europe could end up being priced out of the U.S. market entirely. In another key clause, the joint statement confirms that the U.S. will lower tariffs on autos and auto parts in most cases to 15 percent from 27.5 percent — but only after the EU formally introduces legislation to “eliminate tariffs on all U.S. industrial goods.” The EU now has a 10 percent levy on car imports. The bloc will expand market access for U.S. agricultural goods that are not sensitive for its own market. The U.S., meanwhile, commits to exempting aircraft and parts as well as cork and generic drugs from higher tariffs, applying its most-favored nation tariff to those imports.  Washington and Brussels will join forces to tackle overproduction on steel and aluminum, and will explore the possibility of setting tariff-rate quotas. This was a key request from the European side, to avoid its steel and aluminum exports facing a 50 percent tariff. The EU and the U.S. will also team up against countries — such as China — that are imposing export restrictions on critical minerals. The European Commission will also explore providing “additional flexibilities” in the implementation of the EU’s carbon border tax to American companies, as well as ensure that the EU’s sustainability reporting obligations (CSRD) or the supply chain oversight rules (CSDDD) “do not pose undue restrictions on transatlantic trade.”  Confirming verbal assurances made in Turnberry, the EU intends to procure $750 billion of U.S. energy, including liquified natural gas, oil and nuclear energy products through 2028. It will also buy “at least” $40 billion worth of U.S. AI chips.  On top of that, “European companies are expected to invest an additional $600 billion across strategic sectors in the United States through 2028,” the document adds. Brussels and Washington have been haggling over the document since the handshake deal between von der Leyen and Trump averted the U.S. president’s threat to hit the EU with an across-the-board 30 percent tariff.

For decades, the only meaningful deals China struck with any other nation to reduce its enormous output of greenhouse gases were with the world’s other largest polluter, the United States. Now, the European Union is trying to break into that club.  Six months ago, the Donald Trump administration cut U.S. ties to the Paris climate agreement, reneging on past deals with Beijing.  That left a huge gap. The world’s two top-polluting countries had for many years set the course for the rest of the world — albeit at a pace far too slow to avoid warming the planet to catastrophic levels.  Even in the hours before its leaders were to meet Chinese President Xi Jinping on Thursday, there was no guarantee of a deal. But on Wednesday afternoon EU diplomats were told the statement would go ahead, according to one of those informed, who was granted anonymity in order to discuss the talks. If an agreement comes, there’s no certainty it will be meaningful. Regardless, experts say a joint statement between the leaders of the EU and China, being floated for Thursday’s summit, could be a much-needed boost for jittery clean energy markets and give political confidence to other nations’ governments to further cut their own emissions. “This is a moment the EU and China cannot afford to miss,” said Ireland’s former President Mary Robinson, a prominent voice in climate diplomacy. “EU-China climate cooperation can help steady markets, accelerate the clean energy transition and show that even in a moment of division, climate action remains one of the surest paths to resilience.” On Thursday, Ursula von der Leyen and António Costa, presidents of the European Commission and European Council — which writes the bloc’s legislation and represents the national leaders, respectively — will meet Xi and Premier Li Qiang in Beijing for talks including on security, economics and trade. The relationship is not ripe for dealmaking and there is little prospect for fruitful discussions on any of these topics, with trade tensions in particular driving the two sides apart.  In fact, climate is the only topic where there appears to be any hope of an outcome beyond thin-lipped smiles.  Beijing wants a “comprehensive agreement” on trade, economics and beyond from the leaders’ summit, said Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute. But failing that, “at least a climate one.”  CHANGING EQUATION During the first Trump administration, the EU struggled to step into the role of China’s climate interlocutor. Those talks were restricted by the EU’s own internal divisions and lack of diplomatic clout, as well as China’s unwillingness to step into the role of global leader and the expectation that Trump was an aberration. A decade later, Trump is back in the White House, and some things have changed.  For one, China doesn’t need convincing that climate efforts are in its national interest. China’s clean technology economy has surged, with exports of products such as solar panels, batteries and electric vehicles “becoming key growth drivers for the Chinese economy,” said Belinda Schäpe, a China policy analyst with the Finland-based nonprofit Centre for Research on Energy and Clean Air.  That has a positive effect on the climate. According to analysis by the website Carbon Brief, Chinese clean technology exports reduced global emissions by around 1 percent in 2024.   Schäpe said the EU is an “important market” for Chinese products, which are often cheaper. That gives China more incentive to deal with the EU. It also feeds into the trade tensions that are upsetting the rest of the EU-China talks, with Europeans fearful that China’s state subsidies will lead to a flood of cheap products displacing manufacturers in the EU. On top of that, earlier this year, China extended export controls on critical minerals needed for the production of many clean technologies.  That showed China was “willing to strike where it hurts when geopolitics demand it,” said Byford Tsang, a senior policy fellow with the Asia program at the pan-European think tank European Council on Foreign Relations.  “Before signing up for a closer climate partnership with Beijing, Europe should ask whether it is ready to accept the terms and conditions of relying on China Inc. for its energy transition.” BURNISHING CHINA’S IMAGE A deal would boost China’s attempts to position itself as the anti-Trump locus of global affairs, and a supporter of the United Nations and multilateralism. “In an increasingly turbulent international landscape with rising unilateralism and protectionism,” Chinese Foreign Ministry spokesperson Guo Jiakun told the press on Tuesday, the summit was “good not only to our two sides, but also to the world as a whole.”  An agreement with the EU on global warming would make the U.S. look isolated and reckless, boosting China.  Such a statement would draw a sharp contrast “against the U.S. withdrawal” from the Paris deal, said Schäpe. As well, it shows China can work with Europe “despite the situation with Russia” and Beijing’s tacit support for its war in Ukraine.  “It makes China look like the more responsible actor,” Schäpe added. The EU doesn’t want to hand China that win for nothing.  The two camps have held intense talks for months in the hope of brokering a joint leaders’ statement this week.  That includes a two-day summit earlier in July between Chinese ministers and EU commissioners in Beijing. The two sides tangled over the EU’s demand for China to make real commitments, either on cutting down pollution or curtailing its coal use, according to an EU official who was granted anonymity to discuss the substance of the talks.  “China was a very challenging mission,” said a separate Commission official, granted anonymity to discuss the sensitive diplomacy as they are not authorized to speak publicly.  The EU and China are both expected to submit new targets for reducing emissions until 2035 ahead of the COP30 climate talks in Brazil in November. The EU is especially keen for China to give a signal that its goal will be a step up from its current promise to peak emissions by 2030.  Western diplomats have pressured Beijing to promise a cut of more than 30 percent below the peak by 2035.  But the EU’s leverage has been undermined by its own slow process for entering a pledge, with the process for doing so mired in political controversy. “The problem is,” said Li, “when it comes to substance, the European side has very clear demands on Chinese climate action — but its own climate politics is backfiring big time at home.” SEEKING LOW-HANGING FRUIT Joint climate statements have previously been the sole domain of the “G2” — China and the U.S, the two largest polluters and economies.  Together, the pair accounts for around 40 percent of all greenhouse gas emissions every year, with China making up the bulk at roughly 30 percent.  Throughout the three-decade history of international climate diplomacy, economic and superpower competition between Beijing and Washington meant neither wanted to restrict or shift its economic model without a sign that the other would as well. A major breakthrough came in 2014, when Xi and Barack Obama made a deal to cut their pollution. That agreement laid the foundation for the Paris Agreement, struck a year later. In 2022, the two superpowers also agreed to cut release of methane, a powerful greenhouse gas responsible for almost one-third of global warming since the industrial revolution. The “Sunnylands Statement” — named for the California estate where it was signed — sidestepped the thorniest issues to find lower value, but still important, places for accord.  This could serve as the template for an EU-China deal, said Li. There may be room for cooperation on building out renewable energy, reining in nitrogen oxide pollution, financing climate efforts in poorer countries and on carbon pricing frameworks underway in both countries. They might even revisit the moribund U.S.-China deal on methane. Li suggested they could also look to make a deal on the “sticking points” around the COP30 climate talks. Those include agreeing to avoid messy fights between the big economies that might derail the talks, a rolling dispute over the EU’s carbon border tax, how to extend a past global pledge on moving away from fossil fuel use or funding a new anti-deforestation initiative.  But EU officials have been watering down such expectations. “If finally there is a joint statement, it will be an important step forward,” said the Commission official. “In this critical situation I’d say that the victory it’s the joint statement itself.” Zia Weise contributed to this report from Munich.