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    Starmer’s diplomatic flurry puts him at centre of attempts to shape Ukraine-Russia deal

    As Keir Starmer and his aides huddled to discuss their response to Friday’s calamitous White House meeting between Donald Trump and Volodymyr Zelenskyy, the prime minister’s team pondered whether to issue a statement on social media.Already messages of support were flooding in for the Ukrainian president from other European leaders, including Emmanuel Macron of France and the European Commission president, Ursula von der Leyen.But the prime minister decided to stay silent and instead display his backing with action rather than words. After a series of phone calls on Friday night, Starmer brought forward a planned visit by Zelenskyy to London, giving him the opportunity for a symbolic meeting at Downing Street followed by an audience with King Charles.“I picked up the phone to President Trump, and I picked up the phone to President Zelensky,” Starmer told the BBC on Sunday. “That was my response.”Starmer’s flurry of diplomatic activity has resulted in a Franco-British peace effort which puts the prime minister at the centre of European attempts to shape any deal between Moscow and Kyiv.“Starmer’s was a big gesture,” said Bronwen Maddox, the director of the Chatham House thinktank. “Having Zelenskyy here, having that meeting, mattered. There is no need to go rushing around tweeting. He’s now trying to be a bridge between the US and Zelenskyy and Europe, which is a reasonable ambition.”Some even believe this could be Starmer’s “Falklands moment”, referring to the way Margaret Thatcher took on Argentina over the Falkland Islands and in doing so rebooted her flagging premiership. By Sunday morning, Starmer was being backed by the leaders of the Conservatives and Liberal Democrats.“It’s really important that this summit the prime minister is having today goes well and we support him in that,” the Tory leader, Kemi Badenoch, said on Sunday.Starmer’s calls with Trump and Zelenskyy on Friday night focused on trying to get the minerals deal between the two countries back on track.One Downing Street official said: “We need to ensure there is a minerals agreement and there is a plan for stopping the fighting and giving Ukraine the security guarantees it needs. The minerals deal is still on the table.”View image in fullscreenOfficials rejected reports that Starmer’s call with Zelenskyy had been “emotional”, but said the Ukrainian president had clearly found his encounter with Trump “bruising”. The two men agreed that Zelenskyy would visit London 24 hours earlier than planned, allowing him time for a longer meeting in Downing Street before a trip to Sandringham on Sunday to meet King Charles.Officials said the visit to see the king was a deliberate message to Washington, where Trump is eagerly awaiting his own audience with the monarch, with US officials pushing for a state visit as soon as this year.Starmer then spent Saturday around the cabinet table in discussions with Jonathan Powell, his national security adviser, and other senior officials. They had come to the conclusion there was little they could do to restart US-Ukrainian talks, so decided to come up with an alternative plan to help shape the peace deal.The plan they hit upon was a separate set of discussions, this time involving Britain, France, Ukraine and potentially one or two others, to formulate their own prospective deal to present to the US. The talks would provide a counterbalance to those between the US and Russia which have excluded Ukraine and European countries.Starmer called Macron, who welcomed the idea. But there was one more hurdle to clear: the prime minister had to call the US president for the second time in two days to make sure he was not opposed.Officials briefed on the call would not say what Trump’s reaction to the idea was, or even whether he indicated he would not stand in the way. But the prime minister was sufficiently emboldened by the conversation that he decided to announce the talks on the BBC on Sunday morning.“The second Trump call was much more focused on not wanting to go back over what has happened, but saying, if we move forward with this other plan, would you be interested in us doing that?” said one British official. “There is no point in us doing this if the US didn’t feel there was space for that. Clearly we are doing it, so we thought it was a worthwhile exercise.”Saturday evening culminated with Starmer’s Downing Street talks with Zelenskyy. In front of the assembled press, the prime minister took the unusual step of leaving No 10 to greet Zelenskyy from his car, before walking him back down the street again after their meeting.View image in fullscreen“And as you heard from the cheers on the street outside, you have full backing across the United Kingdom,” Starmer told his Ukrainian counterpart. “We stand with you, with Ukraine, for as long as it may take.”Sunday was yet another intense day of diplomacy for the prime minister, who began by speaking to the leaders of all three Baltic states and then hosted the Italian prime minister, Giorgia Meloni, at Downing Street. Meloni, who arguably has the best relations with Trump of any European leader, has called for an immediate summit between the US, EU and other allied countries to discuss Ukraine.From there, Starmer travelled to Lancaster House for his defence summit, which was attended by representatives from across Europe, as well as officials from Turkey and Nato.British officials are aware that all this activity may result in very little. They have yet to secure their main objective – a promise from Trump to offer military backing to any British and European troops posted to secure a new border between Russia and Ukraine.But for now, Downing Street is delighted that the prime minister has managed to navigate the turbulent geopolitics of a Trump-led US, and in doing so prove that post-Brexit Britain can still play a global leadership role.“It’s a testament to the relationship the prime minister has with the presidents of both America and Ukraine that he was able to host Zelenskyy and speak to Trump not once but twice over the days,” said one official.Additional reporting by Angela Giuffrida in Rome More

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    Keir Starmer lays down Ukraine peace demand ahead of Trump talks

    Keir Starmer has raised the stakes before a crucial meeting in Washington with the US president, Donald Trump this week, by insisting that Ukraine must be “at the heart of any negotiations” on a peace deal with Russia.The prime minister made the remarks – which run directly contrary to comments by the US president last week – in a phone call on Saturdaywith Ukraine’s president, Volodymyr Zelenskyy, in which he also said that “safeguarding Ukraine’s sovereignty was essential to deter future aggression from Russia”.Downing Street made clear that the prime minister would carry the same tough messages into his meeting with Trump in the White House on Thursday.Starmer is likely to tell the US president that the UK will raise its defence spending to 2.5% of gross domestic product, in line with Labour’s election manifesto commitment.The prime minister is also expected to extend an invitation to Trump from King Charles for a second state visit to the UK.But the meeting is also expected to represent the biggest test of Starmer’s diplomatic and negotiating skills in his prime ministership by far, as he tries to retain good relations with Trump while making clear the UK and Europe’s red lines on Ukraine and Russia.View image in fullscreenSources said Starmer may speak to Emmanuel Macron on Sunday before the French president’s talks with Trump on Monday. The aim would be to agree a broad European position on the Trump-led effort to end the Russia-Ukraine conflict.Starmer also spoke yesterday to the European Commission’s president, Ursula von der Leyen, and agreed that Europe must “step up” to ensure Ukraine’s security.Starmer’s meeting with Trump is being described in Westminster as possibly career-defining for the prime minister. Former UK foreign secretary William Hague said it was the most important first bilateral between a prime minister and a president since the start of the second world war.After a week of extraordinary anti-Zelenskyy and pro-Russian rhetoric from Trump and his team, the US president issued another dismissive assault on Zelenskyy’s leadership and relevance to a peace deal on Friday, saying: “I don’t think he’s very important to be at meetings, to be honest with you. When Zelenskyy said: ‘Oh, he wasn’t invited to a meeting,’ I mean, it wasn’t a priority because he did such a bad job in negotiating so far.”View image in fullscreenAs well as dismissing the democratically elected Zelenskyy as a dictator, the White House has been pressuring Ukraine’s president to sign a $500bn minerals deal in which he would give the US half of his country’s mineral resources. The Trump administration says this is “payback” for earlier US military assistance.Zelenskyy has so far refused to sign, arguing that the agreement lacks clear US security guarantees.Reuters reported that the US was also threatening to disconnect Ukraine from Elon Musk’s Starlink satellite internet system if Zelenskyy does not accept the Trump administration’s sweeping terms.Ukrainian officials characterised the threat as “blackmail”, saying to do so would have a catastrophic impact on the ability of frontline Ukrainian combat units to contain Russia.skip past newsletter promotionafter newsletter promotionThe news agency said the US envoy to Ukraine, Keith Kellogg, raised the possibility of a shut-off during talks on Thursday with Zelenskyy in Kyiv. An under-pressure Zelenskyy has signalled his willingness to accommodate Washington’s demand, but he has stressed he cannot “sell out” his country.Ukrainian officials are scrambling to find alternatives to Starlink in the event that Trump’s threat is carried out. Ukraine’s armed forces depend on the system to provide real-time video drone footage of the battlefield and to conduct accurate strikes against Russian targets.The Russian military uses Starlink too. Ukrainian commanders are now contemplating a nightmare scenario, in which Musk’s SpaceX company switches off Ukrainian access while continuing to offer it to the Russians – with the White House in effect helping Moscow to win the war.A senior Ukrainian official said his country’s armed forces need American satellite intelligence data. If intelligence sharing were to stop, Ukraine would struggle to continue its successful campaign of long-range strikes against targets deep inside Russia, he said.Asked if the US threat to turn off Starlink was blackmail, he replied: “Yes. If it happens, it’s going to be pretty bad. Of that we can be sure.” Frontline troops used the internet system continuously and it was fitted on advanced naval drones used to sink Russian ships in the Black Sea, he noted.Speaking on Friday, Trump rowed back on some of his earlier comments, which included a false claim that Zelenskyy was deeply unpopular, with a “4%” rating. Trump told Fox News that Russia did invade Ukraine but said Zelenskyy and the then US president Joe Biden should have averted it. “They shouldn’t have let him [Putin] attack,” he declared.Trump’s aggressive remarks have consolidated support for Zelenskyy among Ukrainians, with 63% now approving of him, according to the latest opinion poll before the third anniversary on Monday of Russia’s full-scale invasion.An Opinium poll for the Observer finds more than three times as many UK voters (56%) disapprove of the Trump’s administration handling of Ukraine as approve (17%).About 55% think it likely the UK will need to participate in a large military conflict over the next five years, compared with a fifth (20%) who think it unlikely. A majority (60%) of people believe the UK should increase defence spending. More

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    The Guardian view on the EU-Mercosur trade deal: another farmer flashpoint approaches | Letters

    Anticipating the strong protectionist winds that will blow from Donald Trump’s White House, the president of the European Commission, Ursula von der Leyen, has been responding by making her own economic weather. Last week, Ms von der Leyen flew to Montevideo, 5,000 miles south of Washington DC, to controversially conclude negotiations in one of the biggest free trade agreements in history. Twenty-five years in the making, the Mercosur trade deal opens up trade between the EU and a Latin American bloc of partners comprising Argentina, Brazil, Paraguay and Uruguay.In theory, the agreement promises a more open market of 700 million people for products ranging from Argentine beef to German cars. For European manufacturers, it would eliminate tariffs on a majority of goods. As Mr Trump threatens to impose heavy tariffs on Chinese and European exports, here was evidence, asserted Ms von der Leyen, “that openness and cooperation are the true engines of progress and prosperity”.This sunny analysis does not, however, tell the whole story. From an economic perspective, the Mercosur deal makes sense for Europe, offering an alternative market in the event of US tariffs and amid the continuing Chinese slowdown. It also deepens European connections with the global south, at a time when Beijing is doing the same in systematic fashion. But the political realities are treacherous: opposing Mercosur is a common cause celebre among European farmers, who fear being undercut by Latin American producers who are not subject to the same environmental standards.At the end of a year in which farmers’ protests have made headlines across the continent, and far-right parties have exploited rural resentment to attack the EU’s green transition, this is territory to be navigated with extreme care. The deal has yet to be ratified, and EU member states are split. Germany, desperate to shore up its export industry, is strongly in favour. France, whose farmers famously carry immense political clout, is implacably opposed. Serious reservations have been expressed by the Netherlands, Poland, Austria, Italy and Ireland.Less than a month after officially beginning her second term in office, Ms von der Leyen is taking a risk by pushing ahead at pace when such divisions exist. Approval of the trade part of the overall deal may be subject to a qualified majority vote, meaning that France would not be able to exercise its veto. That would be grist to Marine Le Pen’s mill, given that, in one recent poll, almost two-thirds of French citizens said they no longer had confidence in the EU. Meanwhile, the prospect of a disunited European front – with France and Germany at loggerheads – as Mr Trump enters the White House, is not an uplifting one.In the quarter of a century since the Mercosur negotiations began, the negative impacts of globalisation on particular European regions and economic sectors have driven a backlash that has benefited the far right. Trade deals are about politics as well as economics. To avoid the fallout of this deal overshadowing the economic gains, Brussels should make it a priority that losers from it are adequately compensated. Bypassing a necessary battle for hearts and minds, as the EU confronts new geopolitical challenges without and the rise of Eurosceptic nationalism within, is not a viable option.

    Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. More

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    Trump told European leaders that US ‘will never come to help you’

    Donald Trump told the president of the European Commission in 2020 that the US would “never come help” if Europe was attacked and also said “Nato is dead”, a senior European commissioner said.Multiple news outlets said the exchange between Trump and Ursula von der Leyen at the World Economic Forum in Davos in 2020 was described in Brussels on Tuesday by Thierry Breton, a French European commissioner responsible for the internal market, with responsibilities including defence.“You need to understand that if Europe is under attack we will never come to help you and to support you,” Trump said, according to Breton, who was speaking at the European parliament.According to Breton, Trump also said: “By the way, Nato is dead, and we will leave, we will quit Nato.”According to the Jerusalem Post, Trump added: “And by the way, you owe me $400bn, because you didn’t pay, you Germans, what you had to pay for defence.”As Germany’s defence minister, von der Leyen was among European officials who pushed back at Trump on the issue of funding.But threats to quit Nato, and demands that European nations increase contributions to it, were as much a feature of Trump’s presidency as concern over his opaque, apparently submissive relationship with Vladimir Putin.Trump claims to understand the Russian president, who he says waited until Trump was out of office before invading Ukraine.In Brussels, Breton reportedly said Trump’s 2020 remarks were “a big wake-up call” and warned: “He may come back.”The first contest of this year’s Republican presidential primary, the Iowa caucuses, takes place on Monday.Trump faces 91 criminal charges, legal attempts to keep him off the ballot and assorted civil threats, yet enjoys huge polling leads over his closest rivals: Ron DeSantis, the hard-right governor of Florida, and Nikki Haley, a former South Carolina governor and ambassador to the UN.skip past newsletter promotionafter newsletter promotionPolling regarding a notional general election between Trump and Joe Biden shows a close contest, with Trump often in the lead.“Now more than ever, we know that we are on our own, of course,” Politico reported Breton as saying.“We are a member of Nato, almost all of us, of course we have allies, but we have no other options but to increase drastically [spending on arms] in order to be ready [for] whatever happens.”Trump’s campaign did not immediately comment. More

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    European leaders hail 'new dawn' for ties with US under Biden

    European leaders have voiced relief at Joe Biden’s inauguration, hailing a “new dawn” for Europe and the US, but warned that the world has changed after four years of Donald Trump’s presidency and transatlantic ties will be different in future.“This new dawn in America is the moment we’ve been awaiting for so long,” Ursula von der Leyen, the European commission president, told MEPs. “Once again, after four long years, Europe has a friend in the White House.”The head of the EU’s executive arm said Biden’s swearing-in was “a demonstration of the resilience of American democracy”, and the bloc stood “ready to reconnect with an old and trusted partner to breathe new life into our cherished alliance”.But Von der Leyen said relief should not lead to illusion, since while “Trump may soon be consigned to history, his followers remain”.Charles Michel, the president of the European council, also said the US had changed. Transatlantic relations had “greatly suffered” and the world had grown “more complex, less stable and less predictable”, said Michel, who chairs summits between the EU’s 27 heads of state and government.“We have our differences and they will not magically disappear. America seems to have changed, and how it’s perceived in Europe and the rest of the world has also changed,” he said. Europeans “must take our fate firmly into our own hands”.A study this week showed that while many Europeans welcomed Biden’s election victory, more people than not felt that after four years of Trump the US could not be trusted, and a majority believed Biden would not be able to mend a “broken” country or reverse its decline on the world stage.The EU has invited Biden to a summit and top-level Nato meeting when he is ready, with Michel called for “a new founding pact” to boost multilateral cooperation, combat Covid, tackle climate change and aid economic recovery.The German president, Frank-Walter Steinmeier, said he was “greatly relieved” at Biden’s inauguration, hailing “a good day for democracy”. He said democracy under the Trump administration had faced “tremendous challenges and endured … and proved strong”.Steinmeier said the transfer of power to Biden brought with it “the hope that the international community can work together more closely”, and he said Germany was looking forward “to knowing we once more have the US at our side as an indispensable partner”.However, he said that “despite the joy of this day”, the last four years had shown that “we must resolutely stand up to polarisation, protect and strengthen our democracies, and make policy on the basis of reason and facts.”Italy’s prime minister, Giuseppe Conte, said his country was “looking forward to the Biden presidency, with which we will start working immediately.” He said the two countries had a strong common agenda, including “effective multilateralism, climate change, green and digital transition and social inclusion.”The Spanish prime minister, Pedro Sánchez, said Biden’s victory represented “the victory of democracy over the ultra-right and its three methods – massive deception, national division, and abuse, sometimes violent, of democratic institutions.”Five years ago, Sánchez said, the world had believed Trump to be “a bad joke. But five years later we realised he jeopardised nothing less than the world’s most powerful democracy.”Britain’s prime minister, Boris Johnson, who has faced criticism for his close relationship with Trump, said he was looking forward to working closely with Biden, citing a host of policy areas in which he hoped to collaborate.“In our fight against Covid and across climate change, defence, security, and in promoting and defending democracy, our goals are the same and our nations will work hand in hand to achieve them,” Johnson said in a statement.The former Soviet leader Mikhail Gorbachev called for Russia and the US to repair their strained ties. “The current condition of relations between Russia and the US is of great concern,” he said in an interview with the state-run news agency Tass. “But this also means that something has to be done about it in order to normalise relations. We cannot fence ourselves off from each other.”Among the US’s more outspoken foes, Iran, which has repeatedly called on Washington to lift sanctions imposed over its nuclear drive, did not miss the chance to celebrate Trump’s departure.“A tyrant’s era came to an end and today is the final day of his ominous reign,” said the president, Hassan Rouhani. “We expect the Biden administration to return to law and to commitments, and try in the next four years, if they can, to remove the stains of the past four years.”Biden’s administration has said it wants the US back in the landmark Iran nuclear accord from which Trump withdrew, providing Tehran returns to strict compliance.The Nato chief, Jens Stoltenberg, said the military alliance hoped to strengthen transatlantic ties under the new president, adding that the world faced “global challenges that none of us can tackle alone”. More

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    Ursula von der Leyen: Europe has a friend in the White House with Biden – video

    The European commission president, Ursula von der Leyen, has said the EU, after four years, has a ‘friend in the White House’ on the eve of Joe Biden’s inauguration on Wednesday.
    ‘Joe Biden’s oath will be a message of healing for deeply divided nation,’ she said. ‘This new dawn in America is the moment we’ve been awaiting for so long. Europe is ready for a new start with our oldest and most trusted partner.’
    Inauguration day: a guide to what to expect as Joe Biden assumes office More

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    Failing to Protect the Independence of the European Commission

    I have always believed that the independence of members of the European Commission (EC) was a keystone of successful European integration. Commissioners are obliged by their oath of office to seek a European solution to problems, rather than just seek a balance between conflicting national interests. They have done so ever since 1958. This is why European integration has succeeded, while integration efforts on other continents have failed under the weight of national egoism.

    As the European Union grows, the independence of commissioners from national politics has become ever more important. Some believe the European Commission is too large. From an efficiency point of view, they have a point. But Ireland, among others, has insisted that despite this, each member state should have one of its nationals as a member of the commission at all times.

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    But if the one-commissioner-per-member-state rule is to be upheld as the EU enlarges, commissioners from all states — large and small — must demonstrate that they put European interest first and are not subject to the vagaries and passions of politics in their country of origin. In other words, European commissioners must be independent. All member states must be seen to respect this.

    This is why I am deeply troubled by the attitude taken by the Irish government, and then by President Ursula von der Leyen of the European Commission, to call for Phil Hogan to resign as EU trade commissioner. Both of them failed in their understanding of the European Union and of one of its vital interests — namely the visible independence of members of the European Commission from the politics of any EU state, large or small.

    I was genuinely shocked by what happened. Late in the evening of August 22, leaders of the Irish government called on Hogan to “consider his position.” That means to resign. They piled on the pressure thereafter, with a further statement on August 23 containing a political determination that he had broken the government’s quarantine rules to combat the spread of COVID-19 after returning to Ireland from Belgium. Hogan resigned on August 26. That was his decision and one he was entitled to make.

    Lessons From This Precedent

    But there are profound lessons to be learned by President von der Leyen — and by the European Commission as a whole — as to how and to whom commissioners should be held accountable, and a need to understand what this precedent means for the future political independence of commissioners from their home governments. Separately, there are also questions to be asked about the internal management of and the collegiality of the EC.

    I will set out my concerns here, drawing on the words of the EU treaty, which I helped draft as a member of the Convention on the Future of Europe.

    On August 26, von der Leyen clearly withdrew any active support from Commissioner Hogan and unquestioningly accepted the line of the Irish government. This influenced him to resign from his position. In this action, I contend that the president did not fulfill all of her responsibilities under the treaties. I know she faced genuine political difficulty. But the treaties were framed to deal with fraught political situations while preserving the independence of the EC and due process.

    Embed from Getty Images

    The European Commission is the guardian of EU treaties and should be seen to defend the rules laid down in the treaties under all circumstances, even when it is politically difficult. Article 245 of the treaty requires member states to respect the independence of commissioners. Ireland is bound by that article, after having ratified it in a referendum. One should note that Article 245 refers to respecting the independence of commissioners individually, not just to the EC as a whole.

    It is for the Irish government to say whether publicly demanding a commissioner’s resignation for an alleged breach of Irish rules is compatible with the Irish government’s treaty obligation under Article 245. But it had other options,

    If a commissioner is visiting a member state for any reason, he or she is subject to the laws of that state on the same basis as any other citizen. A visiting commissioner would not be above the law, nor would they be below it either. If they breached the law, due process in the courts ought to be applied — as with any citizen. This is what would have happened if the visiting commissioner was from any country other than Ireland and had experienced the difficulties that Hogan did, and due process would have been followed.

    The statements of the Irish government, and the unsatisfactory explanations by Hogan, created political problems for von der Leyen. She had to do something, but not necessarily what she did. Yet there were options available to her, which she inexplicably failed to use or consider.

    Rules Ignored

    Commissioners are subject to a code of conduct. Under that code, there is an ethics committee to determine if its guidelines have been breached. If the matter is urgent, there is provision for a time limit to be set for a report by the committee. Nonetheless, a reference to the ethics committee would have allowed for due process and a calm and fair hearing. More importantly, using this process would also have asserted the independence of the European Commission as an institution.

    The code says that it is to be applied “in good faith and with due consideration of the proportionality principle,” and it allows for a reprimand that does not warrant asking the commissioner to resign. Due to the course followed, we will never know if there was any breach of the code at all by Hogan.

    President von der Leyen’s failure to use these mechanisms seems to be a serious failure to defend due process and proportionality and to protect the independence of individual commissioners, as was required by the treaty. The EC and the European Parliament should inquire into why she did not do so. There are consequences now for the viability of the code of conduct if it is not to be used in a case like this.

    Criteria Not Applied

    Was what Phil Hogan did a resigning matter anyway? Article 247 allows for only two grounds for asking a commissioner to resign. These are that he or she is “no longer being able to fulfil the conditions for the performance of [their] duties” or “has been guilty of serious misconduct.” I do not think either condition was met in Hogan’s case.

    Hogan would have been fully capable of carrying out his duties while the ethics committee did its work. Instead, his position is now effectively vacant.

    Most people I have spoken to do not think the breaches committed by Hogan — while foolish — amounted to “serious misconduct” within the meaning of Article 247. Failure to recollect all the details of a private visit over two weeks, or to issue a sufficient apology quickly enough, may be political failing, but they hardly rise to the level of “serious misconduct.” Any deliberate and knowing breach of quarantine measures should have been dealt with in Irish courts without fuss.

    In any event, von der Leyen would have been far wiser to have gotten an objective view on all of this from the ethics committee before allowing Hogan to resign.

    Why Did the European Commission Not Meet?

    Another issue is the president’s failure to call an EC meeting if she was considering that a commissioner should resign. Under Article 247, it is the EC — not the president alone — that can make a commissioner resign, and even then it must be approved by the European Court of Justice. These safeguards were put in the treaty to protect the independence of the European Commission. They were ignored in this case.

    The subsequent weakening of the institutional independence of the commission is very damaging to European integration and to the interests of smaller EU states. This should be of concern to the European Parliament.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    The CO2 Border Adjustment for the EU

    The heads of state and government of the European Union propose introducing a “carbon border adjustment mechanism” from 2023, to charge imported goods according to the CO2 emitted during their production. At their recent summit, they decided to use the ensuing revenues to boost the EU’s budget. This gives a fiscal twist to an instrument actually designed for climate policy.

    Ursula von der Leyen, the president of the European Commission, had already announced in 2019 that she would like to introduce a “carbon border tax” as part of her European Green Deal. In spring 2020, the commission launched a roadmap process to prepare concrete legislative proposals by 2021. Its proposal also responds to fears that higher European CO2 costs caused by EU emissions trading (EU ETS) could cause companies to relocate activities outside the union, causing carbon leakage.

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    Outsourcing would contribute to reducing European emissions, but not to tackling the global problem. To date, the European Union has addressed the risk of relocation by allocating free emission allowances to sectors at risk of carbon leakage. A CO2 border adjustment could create an alternative with a global impact.

    There is rising support for the idea, after years of resistance from many EU member states and business associations. And the pressure is set to grow, with an increase in the EU’s climate target for 2030 — and anticipated higher CO2 costs for EU businesses — expected this fall. Furthermore, a CO2 border adjustment for foreign products will be widely interpreted as a clear message, especially to Washington and Beijing, that the EU intends to implement the 2015 Paris Agreement. When designing the instrument, it will be important to comply with World Trade Organization (WTO) rules and to get important trading partners on board. 

    WTO-Compatible Design

    The European Commission proposes three ways in which a “carbon border adjustment mechanism” could be implemented: “a carbon tax on selected products, a new carbon customs duty or the extension of the EU ETS to imports.” From a trade law perspective, any of these options could be designed in accordance with WTO rules. The crucial aspect is the principle of non-discrimination: that a CO2 border adjustment must not differentiate among like products or between WTO members. If it were necessary to depart from the principle, for example, where a trading partner or individual company is able to demonstrate that it is already taking care of emissions reductions, the rules for exceptions would need to be observed.

    An EU-wide CO2 “product tax” and its implementation by the EU member states would be the most straightforward approach from a trade law perspective. To do this, the EU would first have to levy a CO2 tax on goods manufactured in the European Union. Then, it would be unproblematic to apply this tax to imports as well — the value-added tax, for example, follows this approach. Imported “like” products would be treated the same way as domestic products, which is WTO-compliant.

    Extending the EU ETS to industrial imports would be more complex. The task for the European. Commission would be to demonstrate that under trade law, the CO2 allowance price is ultimately equivalent to a “product tax.” Failing that, the commission could argue that it was acting to protect a global resource, i.e., that avoiding carbon leakage was the central aim of the EU legislation. The “conservation of exhaustible natural resources,” which includes the Earth’s atmosphere, is a valid ground for violating WTO principles, subject to certain conditions. Such an exemption would also have to be claimed for a new CO2 customs duty.

    However, the European Council decision has exacerbated the risk that WTO dispute settlement panels will regard the new instrument as a means of generating income, rather than a means to protect the climate. This would make a difference if trading partners challenged the new tool. The climate focus, which would be taken into account in WTO rulings, is currently slipping into the background.

    Don’t Underestimate the Diplomatic Effort

    A CO2 border adjustment mechanism will need extensive explanation given the many open details, and it can only promote international climate policy cooperation if trade partners are informed at an early stage and regularly consulted. For this, the European Union should use WTO forums and the climate regime as well as other international organizations. In 2012, the European Commission was made painfully aware of the difficulties involved in going it alone, after seeking to include international aviation in the EU ETS. Major partners put political pressure on the EU, even threatening sanctions, and the union decided to backtrack and reduce the coverage of the ETS to flights within the European Economic Area.

    Trust can only arise if the EU adheres to multilateral climate and trade agreements — i.e., supports the Paris Agreement and the troubled WTO and expresses this clearly and often. This task has probably become much more difficult after the European Council decision because a fiscally-motivated border adjustment cannot be convincingly attributed to these multilateral concerns — especially as the revenues would flow to the EU rather than to funds supporting climate protection, for example, in poorer countries. If a CO2 border adjustment specifically targeted cement, steel and other energy-intensive industries, as has already been discussed, producers from emerging and industrialized countries would be especially affected.

    The union should start discussions with these countries without delay. A good opportunity will arise at the meeting of G20 finance ministers in Saudi Arabia toward the end of the year. In addition, the EU should insist to the US that this initiative is not intended as a provocation in the smoldering customs dispute. Ultimately, the climate policy success of a CO2 border adjustment will depend on how the world’s major economies react to it.

    *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions relating to foreign and security policy.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More