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EU heads discuss bold or fold strategy towards #TrumpTariffs

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European leaders will seek to agree a common stance on Wednesday (16 May) towards threatened US import tariffs on steel and aluminium, balancing the views of those most fearful of a trade war and those determined not to be bullied into concessions, write Gabriela Baczynska and Philip Blenkinsop.

US President Donald Trump has imposed import duties of 25% on steel and 10% on aluminium on grounds of national security, but granted EU producers a temporary exemption until 1 June pending the outcome of talks.

French President Emmanuel Macron and other EU leaders, who meet for a summit in Bulgaria from Wednesday, have said the bloc will not negotiate with a gun held to its head.

Donald Tusk, who chairs the summits, said on Wednesday EU unity was key.

“Here again, unity is our greatest strength and my objective is simple - we stick to our guns,” Tusk told a news conference before the dinner discussion. “This means a permanent exemption from US tariffs on aluminium and steel if we are to discuss possible trade liberalisation with the US.”

“The EU and US are friends and partners. Therefore US tariffs cannot be justified on the basis of national security. It is absurd to even think that the EU could be a threat to the United States.”

In bitter comments, Tusk said Trump has rid Europe of “all illusions” with the trade dispute and by pulling out of an international agreement on Iran’s nuclear programme.

He said on Twitter: “Looking at latest decisions of @realDonaldTrump someone could even think: with friends like that who needs enemies. But frankly, EU should be grateful. Thanks to him we got rid of all illusions. We realise that if you need a helping hand, you will find one at the end of your arm.”

EU diplomats say the need to find a unified stance goes beyond just tariffs. The United States has withdrawn from the Iran nuclear deal, posing a threat to European companies doing business there, and has blocked appointments to the World Trade Organization, undermining its ability to settle trade disputes.

However, in the run-up to the 1 June deadline, Germany, mindful that its cars could be hit if the trade conflict deepens, has urged its EU partners to show more flexibility.

German Economy Minister Peter Altmaier, a former head of Chancellor Angela Merkel’s cabinet, has acknowledged that finding a common stance with France and formulating an offer to the United States were “equally difficult”.

The European Commission, which oversees trade policy for the 28 EU members, has insisted that the European Union be granted a permanent exemption without conditions.

It has also said it would respond to tariffs with its own duties on US products, including motor bikes and whisky. It is expected to notify the WTO of its potential plans this week.

A steel industry source said there were signs in written correspondence it had seen that the mood had changed and that the Commission was more inclined to find a compromise.

The idea would be to dust off bits of the planned Transatlantic Trade and Investment Partnership (TTIP), on which negotiations were frozen after Trump came into office.

Such an agreement would be far simpler, limited largely to tariff reduction, and would not be known as “TTIP”, a red rag to anti-globalization protesters.

The EU view is that the first step would be an assessment of what both parties wish to negotiate, and then it would need EU members to approve a mandate. Negotiations proper could be years away.

Altmaier said the Europeans should discuss this regardless of any exemption.

One EU diplomat said Germany, and Altmaier in particular, risked undermining the Commission and that division would delight Washington.

“He’s rubbing a lot of people the wrong way,” the diplomat said. “What we think is important is that the ranks are closed... We’re not going to pay with a free trade treaty with something that is illegal in the first place.”

A further issue is that the United States has agreed permanent exemptions with countries such as Brazil and South Korea, but only by imposing import quotas instead of tariffs.

US Commerce Secretary Wilbur Ross, who talked with EU Trade Commissioner Cecilia Malmstrom again on Tuesday, has been on the phone to EU capitals telling them to accept export restraints, according to EU diplomats.

However, a number of trade specialists in Brussels say that quotas on industrial goods are not allowed under WTO rules and that, in any case, the EU demand is that no measures be imposed.

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EU can be €2 trillion better off by 2030 if cross-border data transfers are secured

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DigitalEurope, the leading trade association representing digitally transforming industries in Europe and which has long list of corporate members including Facebook are calling for an overhaul of the General Data Protection Regulation (GDPR). A new study commissioned by the lobby shows that policy decisions on international data transfers now will have significant effects on growth and jobs across the whole European economy by 2030, impacting Europe’s Digital Decade goals.

Overall, Europe could be €2 trillion better off by the end of the Digital Decade if we reverse current trends and harness the power of international data transfers. This is roughly the size of the entire Italian economy any given year. The majority of the pain in our negative scenario would be self-inflicted (around 60%). The effects of the EU’s own policy on data transfers, under the GDPR and as part of the data strategy, outweigh those of restrictive measures taken by our major trade partners. All sectors and sizes of the economy are impacted across all Member States. Data-reliant sectors make up around half of EU GDP. In terms of exports, manufacturing is likely to be hit the hardest by restrictions on data flows. This is a sector where SMEs make up a quarter of all exports. "Europe stands at a crossroads. It can either set the right framework for the Digital Decade now and facilitate the international data flows that are vital to its economic success, or it can slowly follow its current trend and move towards data protectionism. Our study shows that we could be missing out on around €2 trillion worth of growth by 2030, the same size as the Italian economy. The growth of the digital economy and the success of European companies is dependent on the ability to transfer data. This is especially so when we note that already in 2024, 85 per cent of the world’s GDP growth is expected to come from outside the EU. We urge policymakers to use the GDPR data transfer mechanisms as it was intended, namely to facilitate – not to hinder – international data flows, and to work towards a rule-based agreement on data flows at the WTO." Cecilia Bonefeld-Dahl
Director General of DIGITALEUROPE
Read the full report here Policy recommendations
The EU should: Uphold the viability of GDPR transfer mechanisms, for example: standard contractual clauses, adequacy decisions Safeguard international data transfers in the data strategy Prioritise securing a deal on data flows as part of the WTO eCommerce negotiations
Key findings
In our negative scenario, which reflects our current path, Europe could miss out on: €1.3 trillion extra growth by 2030, the equivalent to the size of the Spanish economy; € 116 billion exports annually, the equivalent to Sweden’s exports outside the EU, or those of the ten smallest countries of the EU combined; and 3 million jobs. In our optimistic scenario, the EU stands to gain: €720 billion extra growth by 2030 or 0.6 per cent GDP per year; €60 billion exports per year, over half coming from manufacturing; and 700,000 jobs, many of which are highly skilled. The difference between these two scenarios is €2 trillion in terms of GDP for the EU economy by the end of the Digital Decade. The sector that stands to lose the most is manufacturing, suffering a loss of €60 billion in exports. Proportionately, media, culture, finance, ICT and most business services, such as consulting, stand to lose the most – about 10 per cent of their exports. However, these same sectors are those that stand to gain the most should we manage to change our current direction. A majority (around 60 per cent) of the EU’s export losses in the negative scenario come from an increase in its own restrictions rather than from third countries’ actions. Data localisation requirements could also hurt sectors that do not participate heavily in international trade, such as healthcare. Up to a quarter of inputs into the provision of healthcare consist of data-reliant products and services. In the major sectors affected, SMEs account for around a third (manufacturing) and two-thirds (services such as finance or culture) of turnover. Exports by data-reliant manufacturing SMEs in the EU are worth around €280 billion. In the negative scenario, exports from EU SMEs would fall by €14 billion, while in the growth scenario they would increase by €8 Data transfers will be worth at least €3 trillion to the EU economy by 2030. This is a conservative estimate because the model’s focus is international trade. Restrictions on internal data flows, e.g. internationally within the same company, mean this figure is likely much higher.
More information on the study
The study looks at two realistic scenarios, closely aligned with current policy debates. The first, ‘negative’ scenario (referred to throughout the study as the ‘challenge scenario’) takes into account current restrictive interpretations of the Schrems II ruling from the Court of Justice of the EU, whereby data transfer mechanisms under the GDPR are made largely unusable. It also takes into account an EU data strategy that places restrictions on the transfers of non-personal data abroad. Further afield, it considers a situation where major trade partners tighten restrictions on the flow of data, including through data localisation. The study identifies sectors in the EU that rely heavily on data, and calculates the impact of restrictions to cross-border transfers on the EU economy up to 2030. These digitising sectors, across a variety of industries and business sizes, including a large proportion of SMEs, make up half of EU GDP.
Read the full report here

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Ombudsman makes suggestions to improve accountability of Frontex's work

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The Ombudsman has made a series of suggestions to Frontex to improve the accountability of its operations and to ensure that people know there is a complaints mechanism they can use if their fundamental rights have been breached.

The suggestions follow a six-month own initiative inquiry assessing how Frontex has implemented new rules - in force since November 2019 - on its complaints mechanism and the Fundamental Rights Officer.

The inquiry showed that the complaints mechanism dealt with a very low number of complaints (22 admissible complaints by January 2021) since it was established in 2016 and none of them concerned the actions of Frontex staff members.

The Ombudsman considered that the low number of complaints could be due to factors such as lack of awareness, fear of negative repercussions or lack of engagement by deployed Frontex officers who could play a more active role in transmitting complaints.

The inquiry also documents the delays in implementing changes introduce in 2019, including the appointment of 40 fundamental rights monitors, as well as poor cooperation between the Fundamental Rights Officer and national authorities. 

The Ombudsman noted that when it comes to reports about serious incidences (these have a separate more complex procedure) the role of the Fundamental Rights Officer is less prominent than when it is dealing with complaints lodged with the complaints mechanism.

The Ombudsman found that the Executive Director should act on recommendations by the Fundamental Rights Officer, and noted that decisions by the Executive Director on complaints forwarded by the Fundamental Rights Officer may be challenged before the European Ombudsman.

To introduce more accountability and transparency, the Ombudsman proposed that Frontex make it clear to its officers that they should accept and transmit any complaints they receive, and that Frontex’s information materials say that complainants will not be penalised for submitting a complaint.

The Ombudsman also asked Frontex to consider accepting anonymous complaints, and to revise its rules to set out clear and unambiguous steps for dealing with complaints about violations concerning the rules on the use of force.

Frontex has also been asked to improve the information it makes available to the public including publishing all of the Fundamental Rights Officer’s annual reports, which in future should include a section on the concrete actions taken by Frontex and member states in reaction to recommendations by the Fundamental Rights Officer.

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NextGenerationEU: European Commission endorses Greece's €30.5 billion recovery and resilience plan

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The European Commission has today (17 June) adopted a positive assessment of Greece's recovery and resilience plan. This is an important step towards disbursing €17.8 billion in grants and €12.7bn in loans under the Recovery and Resilience Facility (RRF) over the period 2021-2026. This financing will support the implementation of the crucial investment and reform measures outlined in Greece's recovery and resilience plan. It will play a key role in enabling Greece emerge stronger from the COVID-19 pandemic. The RRF – at the heart of NextGenerationEU – will provide up to €672.5bn (in current prices) to support investments and reforms across the EU.

An Economy that Works for People Executive Vice President Valdis Dombrovskis said: “Greece's recovery plan will help it emerge stronger from the pandemic and equip the economy for a greener and more digital future. The measures include support for energy efficient renovations and clean urban transport, as well as a focus on improving the population's digital skills, both in terms of education and in terms of reskilling and upskilling the workforce. We welcome Greece's ambition to invigorate private investment and reform labour market policies, digitalise the public administration and businesses, all of which will be key for the modernisation of the Greek economy. Taken together, the plan provides a unique opportunity for Greece to equip its economy and people for the future and put the country on a more sustainable growth path. We stand ready to support the Greek authorities to fully implement these reforms and investments.”

The Greek plan forms part of an unprecedented co-ordinated EU response to the COVID-19 crisis, to address common European challenges by embracing the green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market. The Commission assessed Greece's plan based on the criteria set out in the RRF Regulation. The Commission's analysis considered, whether the investments and reforms set out in Greece's plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience.

Securing Greece's green and digital transitions

The Commission's assessment of the plan finds that it devotes 38% of Greece's total allocation to measures that support climate objectives. This includes investments in upgrading the electricity network, strengthening the support scheme for producers of renewable energy sources. Furthermore, the plan supports investments in energy efficient renovations and the development of local urban plans with a focus on strengthening climate resilience of urban areas. Other measures include support for a national reforestation programme and a comprehensive strategy to strengthen the civil protection and disaster management systems that covers, amongst others, investment in flood mitigation. The Commission's assessment of the plan finds that it devotes 23% of Greece's total allocation to the digital transition.

This is in excess of the minimum of 20% required by the RRF Regulation. Measures to support Greece's digital transition include investments in digital infrastructure such 5G and fibre networks, measures to support the digital transition of the public administration and investments and reforms to support the digitalisation of businesses with a particular focus on small and medium sized enterprises. The plan also includes measures to improve digital skills at all levels, as part of the education system and through dedicated trainings for all age groups. Reinforcing Greece's economic and social resilience The Commission considers that Greece's plan effectively addresses all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Greece by the Council in the European Semester in 2019 and in 2020. It includes measures that contribute to economic growth and increase employment through improving productivity.

Commission President President Ursula von der Leyen said: “I am delighted to present the European Commission's positive assessment of Greece's €30.5 billion recovery and resilience plan. The plan is ambitious and will help build a better future for the Greek people. It can reshape Greece for decades ahead. We need to make the best out of it, for the next generations. We will stand with you every step of the way.”

The plan provides for the implementation of a comprehensive national public health programme that will support primary, secondary and tertiary prevention and strengthen primary care, making the economy more open, improving public administration and making the judicial system more efficient. Alongside the substantial increase in public investment, the Plan makes full use of the Recovery and Resilience Facility loans to provide funding to companies and increase the level of private investment. The Plan builds on and complements key ongoing structural reforms to improve the broader functioning of the economy and which are currently monitored under the enhanced surveillance framework. The plan represents a comprehensive and adequately balanced response to Greece's economic and social situation, thereby contributing appropriately to all six pillars of the RRF Regulation.

Supporting flagship investment and reform projects

The Greek plan proposes projects in all seven European flagship areas. These are specific investment projects which address issues that are common to all member states in areas that create jobs and growth and are needed for the twin transition. For instance, Greece has proposed €2.3bn to reform the education, training and life-long learning system combined with investments in upskilling and reskilling programmes that cover the entire labour force. These measures aim to equip people with high quality and labour market relevant skills, including skills related to the green and digital transitions. The assessment also finds that none of the measures included in the plan significantly harm the environment, in line with the requirements laid out in the RRF Regulation.

The controls systems put in place by Greece are considered adequate to protect the financial interests of the Union. The plan provides sufficient details on how national authorities will prevent, detect and correct instances of conflict of interest, corruption and fraud relating to the use of funds.

Economy Commissioner Paolo Gentiloni said: “Forty years since Greece joined the Community we are opening a new chapter in the country's long European story. Greece stands to benefit from more than €30bn in support through NextGenerationEU, financing that will underpin major investments and far-reaching reforms over the next five years. This is an ambitious plan that stands to benefit every part of Greece and every segment of Greek society. Greece has come a long way since the last crisis and so has the European Union: NextGenerationEU is a partnership that will we will take forward together.”

Next steps

The Commission has today adopted a proposal for a Council Implementing Decision to provide €17.8bn in grants and €12.7bn in loans to Greece under the RRF. The Council will now have, as a rule, four weeks to adopt the Commission's proposal. The Council's approval of the plan would allow for the disbursement of €4bn to Greece in prefinancing. This represents 13% of the total allocated amount for Greece. The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms.

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