EU trade policy round-up: latest on India and South American talks

Tue 14 Mar 2023
Posted by: Phillip Adnett
Trade News

EU flag on flagpole

With UK-EU relations appearing to have calmed following the agreement of the Windsor Framework, the Brussels has now turned its attention to other pressing trade matters.

European leaders are looking to strengthen relationships with key trading partners, while supporting Ukraine in fighting off the Russian invasion through both sanctions and weapons.

The IOE&IT Daily Update here covers the bloc’s most recent trade policy developments.

VDL’s North American tour

European Commission president Ursula von der Leyen has embarked on a charm offensive with visits to Canada and the US, as the bloc looks to secure trade and bolster supply chains.

Europe and Canada talked up a possible “green alliance” as the EU seeks reliable sources of raw materials and looks to move on from reliance on Russia and China, according to Deutsche Welle.

Von der Leyen met US president Joe Biden last week (6 March) to challenge US green technology subsidies which the EU sees as protectionist, according to Reuters.

European electric carmakers had been given access to US tax advantages but the EU wanted more assurances that they will benefit on provisions around batteries and battery components.

EU-India deal ‘on’

German chancellor Olaf Scholz has said that the EU and India are committed to sealing a free trade deal, following a meeting with India’s prime minister Narendra Modi, reports CNCBC.

The EU and India revived negotiations to forge a free trade agreement last year and hope to complete talks by the end of 2023.

However, as reported previously by the IOE&IT Daily Update, there are concerns from diplomats that Indian plans to host the G20 summit in New Delhi in September, followed by a general election in 2024, could cause delays in the country’s trade negotiations.

Environmental standards slow EU-Mercosur talks

Following meetings in Buenos Aires, negotiators of the EU-Mercosur trade deal agreed on a work schedule for the first half of 2023.

Mercosur is a common market consisting of Argentina, Brazil, Paraguay, Uruguay and Venezuela, with Bolivia currently in the process of joining. Venezuela’s membership has been suspended since 2017, however.

Prior to talks, French president Emmanuel Macron warned there would be no deal without clauses that would force both European and South American producers to follow the same environmental and health standards, reports Euractiv.

French agricultural producers fear competition from South American products which are subject to less rigorous climate standards.

More EU sanctions?

Biden and Scholz agreed to focus on “global solidarity” with Ukraine by maintaining pressure on Russia for its invasion during talks in Washington DC (4 March).

An EU official said any arms provided by China to Russia would trigger sanctions, reports Euractiv.

Politico reports that von der Leyen is supporting Biden’s hawkish approach to China, causing splits with other senior EU leaders. Washington has been consulting with allies about imposing possible sanctions on China if it provides military support to Russia.

Moscow is reported to be sidestepping current EU and G7 sanctions to secure semiconductors and other technologies that are vital to its war effort, reports the Business & Human Rights Resource Centre

EU arms trade

The EU is looking to enlist countries outside the bloc to collectively buy ammunition for Ukraine’s defensive effort against Russia.

Arms imports into European have reportedly doubled as a result of the war, as Ukraine became the third-largest arms destination globally.

Norway and Canada are named as possible interested countries in an initiative that will also boost Europe’s capacity to produce equipment, reports Politico.

According to Reuters, the proposal could see €1bn to buy urgently needed 155mm artillery shells, and money to help EU arms companies boost capacity and efficiency.

An official said a procurement plan could be agreed as soon as the end of this week with first contracts agreed around the end of April.