China is increasingly decoupling from the global economy

Beijing, Berlin, Düsseldorf Mostly once a year, China’s head of state and party leader Xi Jinping gives a speech to high-ranking ministry and provincial leaders at the Central University of the Communist Party, which sets the course for the year. But this time it had a special meaning. Because the five-year plan is currently being finalized, which should set the course for the economy in the People’s Republic from March to 2025.

Foreign company representatives may not have liked what Xi said behind closed doors earlier this week. “The most essential feature of building a new development pattern is to achieve a high level of self-sufficiency and self-improvement,” says Xi. ”

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British companies criticize export barriers to Europe

London “There is no Irish maritime border,” said British Northern Ireland Minister Brandon Lewis on New Year’s Day when Brexit was over. This claim is now being refuted every day.

UK exporters are complaining about the additional formalities involved in trading with Northern Ireland, with many having suspended deliveries for the time being. Trucks are turned back at the ports because they do not have the correct papers with them.

The Irish Sea and the English Channel are the new hot spots in British foreign trade. Retailers, freight forwarders and fishermen all complain about the Brexit bureaucracy. Even large corporations seem surprised by the new rules. The duty-free agreement agreed with the EU does not apply to goods that are imported and then immediately exported again.

“Duty-free doesn’t feel like duty-free when you read the fine print,” said Steve Rowe, CEO of the UK department store chain Marks and Spencer (M&S). The conversion of the supply chains due to the rules of origin will “significantly burden” business in Ireland, the Czech Republic and France.

The M & S candy brand “Percy Pig”, for example, is made by Katjes in Germany. So far the fruit gums have only been imported to Great Britain and then sent on to Ireland. This operation will result in customs duties in the future. Marks and Spencer therefore has the choice of either paying the tariffs or rebuilding its supply chain so that Ireland is supplied directly from Germany. For the time being, the company no longer delivers the fruit gums to the EU.

Recently a case for customs

The fruit gum brand “Percy Pig” is sold by the British department store chain Marks and Spencer and manufactured by Katjes in Germany.

(Photo: Reuters)

The exit treaty and the free trade agreement, which have governed the relationship between the UK and the EU since the New Year, introduce a number of new trade barriers. They apply to the EU neighbors Ireland and France, but also to the British part of Northern Ireland, which continues to be part of the EU internal market.

“Deliveries to Northern Ireland are now no different from deliveries to France,” said Seamus Leheny of Logistics UK logistics association this week at a hearing in the UK House of Commons. Most British companies are not aware of this. “They don’t know what to do.”

Leheny said British trucks arrived in Belfast, Northern Ireland, with just “groceries” on their loading lists this week. “These trucks had to be checked.” That took up to eight hours. Normally they should have been sent back, but the authorities turned a blind eye and dealt with the formalities on the spot.

Ireland relaxes rules

“The EU and the UK need to get together and simplify the processes,” said Aodhan Connolly, Director of the Northern Irish Retail Federation. Some British companies would no longer serve the Northern Irish market because they did not understand the rules or did not want to deal with them. The supermarket chain Tesco has already warned of possible shortages in some foods. However, there is still no shortage, said Connolly.

At least deliveries to Ireland should be easier. Irish Customs announced on Thursday evening that all shippers will be allowed to provide a temporary customs code that will allow them access to the ferries. However, this is only a provisional measure, stressed the authority. The companies would have to find a long-term solution themselves.

“It is clear that many companies are not as prepared as they thought, or have significantly underestimated what it means to be ready for Brexit,” a spokesman for the Irish Customs Service told the Irish Times.

No traffic jams in Dover, but problems in camps

The feared truck traffic jams in front of the main ports of Holyhead and Dover have not yet materialized. However, this is only because the traffic volume is significantly lower than usual. Most companies wait and store their deliveries until they meet the new requirements. “While there are no queues at the ports, they are created in our depots,” Andrew Kinsella of Welsh freight forwarding company Gwynedd Shipping told BBC radio.

When traffic picks up again in the coming weeks, traffic jams are expected. Many of the trucks that are currently arriving at the ports do not have all the papers with them. “We register a large number of vehicles that are turned away in Calais, Dunkerque and Dover because of incorrect documents,” writes the ferry company DFDS on its website. She reminds companies that import and export declarations are required for French customs.

The parcel delivery service DPD UK has suspended its deliveries to the EU until the middle of next week in order to adjust its processes. A fifth of all parcels had been returned in the past few days due to incorrect papers.

Fishing harbor in Macduff, Scotland

“Perfect storm” for the industry.

(Photo: X06674)

Companies that rely on smooth exports react indignantly to the chaos. “Everything we sent out this week is lost,” said Jamie McMillan, head of Scottish seafood exporter Loch Fyne Seafarms, in an online video.

He lost thousands of pounds because his lobsters and crabs got stuck on the way to France. “We can no longer export to the EU until the problems are resolved.” That will probably drive his company into bankruptcy. “Thank you, Brexit!”

Donna Fordyce of the Seafood Scotland Fisheries Association spoke of the “perfect storm” for the industry. The end of the Brexit transition period caused “complete confusion”. Among other things, IT problems led to deliveries ending up in the wrong ports in France.

“These companies don’t transport toilet paper,” said Fordyce. “They export the highest quality perishable seafood. The time window to bring them to market in top condition is limited. “

More: British airline shareholders lose their rights through Brexit.

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Canada rejects acquisition of Arctic gold mine

Gold

With the acquisition of TMAC Resources, Shandong Mining would have got a gold mine and a port in Hope Bay on the Northwest Passage, the shipping route through Canada’s Arctic Islands.

(Photo: Reuters)

Ottawa The Canadian government has rejected the takeover of a raw materials company in Canada’s Arctic by the Chinese company Shandong Gold Mining. Apparently, security concerns led Ottawa to make this decision.

With the acquisition of TMAC Resources, Shandong would have got a gold mine and port in Hope Bay on the Northwest Passage, the shipping route through Canada’s Arctic Islands. China’s interest in TMAC also underscores the Arctic’s growing global strategic importance.

Canadian junior company TMAC announced Prime Minister Justin Trudeau’s government decision ahead of the Christmas holidays. TMAC is “disappointed” with the government’s decision. The transaction will not take place now, said company boss Jason Neal.

The Ministry of Innovation, Science and Economic Development, which under the “Investment Canada Act” examines applications for takeover of Canadian companies by foreign countries, did not itself publish a press release and did not want to comment because of the confidentiality required by law. Shandong Mining Co. Ltd. wanted to acquire 100 percent of TMAC Resources Inc. for 1.75 Canadian dollars per share.

That would have a market value between 200 million and 230 million Canadian dollars, the equivalent of up to around 150 million euros. The TMAC shareholders approved the takeover on June 26th with an overwhelming majority of 97 percent.

Relationship between Canada and China strained

The Chinese embassy said in a statement that Canada should “offer fair, open and non-discriminatory market conditions for companies from all over the world including China”. TMAC mines the precious metal in Hope Bay not far from the community of Cambridge Bay in its Doris gold mine.

The value of the transaction is rather low compared to other acquisitions in the raw materials sector. But the deal was politically explosive for several reasons. Canada’s relations with China have been strained since the chief financial officer of the Chinese telecommunications group Huawei, Meng Wanzhou, was arrested at Vancouver airport in December 2018 on a US extradition request.

Extradition proceedings against Meng are pending in a Canadian court. Immediately after Meng Wanzhou’s arrest, Canadians Michael Kovrig and Michael Spavor were arrested in China on charges of espionage. Canada regards this as retaliation, while China rejects any link between the two proceedings.

In addition, Shandong, which the Canadian media describe as controlled by the Chinese state, would have received a base with the takeover of TMAC in the middle of the Northwest Passage. It is expected that with advancing climate change the Northwest Passage will become navigable and thus gain in importance for international shipping.

In the narrow shipping route through the Arctic archipelago of Canada, a base could be of great strategic importance for China. It could therefore also have international significance. For Canadians, whose claims to sovereignty over the waterways in the far north are repeatedly questioned – also by the European Union and the USA – sovereignty over the Northwest Passage is a very sensitive question.

Protest

Protesters demand the release of Michael Spavor and Michael Kovrig, in Vancouver.

(Photo: Reuters)

The USA is critical of China’s Arctic policy

Therefore, even without official confirmation by the government in Ottawa, it is plausible that security and sovereignty considerations have influenced the balance between economic and national interests. This balancing must be made in accordance with the “Investment Canada Act”.

The daily newspaper Globe and Mail also reports on “pressure from the US government”. The US embassy in Ottawa initially did not comment on Canada’s decision. The US has been warning for some time that China could use civil research in the Arctic, investments in raw materials and expanding shipping as vehicles to gain a strategic foothold in the Arctic and ultimately strengthen its military presence.

US Secretary of State Mike Pompeo pointed this out in a very confrontational speech on the sidelines of the Arctic Council’s deliberations in the spring of 2019 in Rovaniemi, Finland. Pompeo sees “a new age of strategic engagement in the Arctic, with new threats to the Arctic and to all of our interests in this region”

In 2013 the Arctic Council granted China observer status. In 2018, China formulated its Arctic policy and, despite the distance between China and the Arctic, referred to itself as the “near Arctic State”. The self-designation underlines China’s interest in the region.

China wants to use the shipping routes and is interested in the raw materials of the Arctic, which include not only oil and gas, but also precious metals and technology raw materials. China sees shipping through the Arctic as the “polar silk road”.

Northwest Passage

For Canadians, sovereignty over the Northwest Passage is a very sensitive issue.

(Photo: dpa)

China’s new role in the Arctic

It is intended to help diversify trade routes and create a possible alternative to the southern maritime Silk Road through the Strait of Malacca, the Indian Ocean, Suez Canal and the Mediterranean. In its “Arctic Strategy” from June 2019, the US Department of Defense speaks of an “era of strategic competition” in the Arctic.

While China was mentioned rather marginally in earlier Pentagon documents on the Arctic, the relationship between economic initiatives and the possible resulting military presence is now described. In March 2020, Russia also underlined the importance of the Arctic for the socio-economic development of the country with a decree signed by President Putin “On the basis of the state policy of the Russian Federation in the Arctic for the period up to 2035”.

The Russian government makes it clear that the Arctic is of central geo-economic and geo-political importance for the country. Russia relies on the energy resources, metals and minerals that lie in the Arctic floor and in the sea near the coast. Investments should be made in the economic infrastructure, which is becoming even more expensive due to the thawing permafrost soil. The expansion of the military infrastructure is also a high priority.

The Canadian political scientist Rob Huebert from the University of Calgary therefore speaks of a new “strategic triangle” that is formed by the USA, Russia and China and for which he has found a handy abbreviation: NASTE, which stands for “New Arctic Strategic Triangle Environment” stands. Tensions in the Arctic are not caused by conflicts over Arctic issues, but by the rivalries of the great powers.

He sees the strained relationship between the US and Russia with the simultaneous rise of China, which challenges the US and possibly also Russia on the world stage, as a reason for new strategic and military activities in the Arctic.

It is obvious to him that for the US and Russia, the Arctic is the best starting point to strike at each other. This is one of the reasons the Arctic became “a region of overwhelming strategic importance when the US and Russia began to challenge each other’s interests in the international system”.

China is complicating the situation in the Arctic

It is not about the conflict “over the Arctic, but the use of military power from the Arctic, which gave this region its geopolitical significance”. According to Huebert, the fact that China is now calling itself the “near-Arctic state” in this strategic field and is competing with the USA and, in the longer term, with Russia as well, makes the situation even more complicated.

The historical bipolar system is now shaped by the appearance of three powers, and this makes the region “more important and more dangerous”. For TMAC, after the broken China deal, it is about securing the continued existence of the Doris mine.

It went into production in 2017, but is struggling with technical and structural problems. TMAC needs cash inflow to continue operations and repay loans. “The Hope Bay Gold Belt has considerable value,” said TMAC President Neal.

In an interview with the Nunatsiaq News published in Iqaluit, the capital of the Arctic Territory of Nunavut, he assured that the mine would not be “mothballed”. He had hoped that with the takeover by Shandong he would be able to put the mine on a secure financial basis.

He did not want to speculate about the reasons for Canada’s government rejecting the transaction, but admitted that this shows “that relations between Canada and China are currently not at all good”. The region’s Inuit organization is also counting on the Doris mine to attract the interest of domestic investors and financial institutions in view of the gold price, so that the mine can continue operations and jobs are secured for the people of Nunavut.

More: EU and China agree on investment agreements

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Boris Johnson is planning a fresh start for the United Kingdom

Boris Johnson

Boris Johnson tries to make the benefits of Brexit palatable to his compatriots.

(Foto: action press)

London Great Britain has left the EU for good, the country has been out of the internal market and the customs union since midnight. Now the question arises: what does Boris Johnson want to do with the new freedom?

“The moment is finally here, now we have to seize it,” said the Prime Minister this week after Parliament passed the free trade agreement with the EU. “The fate of this great country is in our hands”.

Johnson is betting that things can only go up after the Corona year. Brexit should take a back seat. Instead, he wants to set new accents in foreign and domestic politics.

  • Foreign policy: This year, Great Britain holds the presidency of the G7 group of leading industrialized nations. Johnson wants to invite India, South Korea and Australia to the G7 summit this summer. The idea is to form an alliance of democracies against authoritarian states like China and Russia. Johnson wants to prove that Britain remains a relevant player on the world stage.
  • Trade policy: Under the motto “Global Britain”, Johnson wants to show that the country outside the EU can conclude trade deals more quickly. In the past few months, the government has already signed follow-up agreements for most of the agreements that the country had as an EU member. New ones are to be added in the future, including New Zealand and Australia. Larger contracts, however, are not in sight. The long-awaited trade deal with the US will go on because it is not a priority for US President-elect Joe Biden. Johnson visits India in January, but here too, at best, initial declarations of intent are to be expected.
  • Climate: In November the kingdom will host the world climate conference in Glasgow. There Johnson wants to oblige the participants to make their economies climate neutral faster. Great Britain itself is setting a good example: the country wants to reduce its emissions by 68 percent by 2030. It aims to be climate neutral in 2050. Johnson recently presented his plans for a “green revolution”. Among other things, he wants to ban cars with internal combustion engines from 2030.
  • Infrastructure: Domestically, Johnson wants to invest primarily in roads, rails, fiber optics, schools and hospitals. The aim is to level the differences between the rich south and the structurally weak regions in the north. However, this alignment will be made more difficult by Brexit, because it entails additional costs for many companies and could cost jobs in structurally weak regions.
  • Deregulation: The British government insists that they do not want to become a “Singapore on the Thames”. The country cannot afford major tax cuts anyway due to the high corona deficit. But things will be done a little differently in the future, says Finance Minister Rishi Sunak. Details are not yet known. The government is also subject to strict limits because the EU can react to violations of fair competition with punitive tariffs.
  • Free ports: Whenever Johnson has to name the advantages of Brexit, the first thing that comes to mind is the free ports. By the end of the year ten free ports are to be built in the kingdom, which should attract companies with zero tariffs and lower labor costs. Critics point out that as an EU member, Great Britain had seven free ports until 2012, but has abolished them again. The macroeconomic benefits are controversial because they relocate activity within the country and cost tax revenue.
  • Agriculture: The government wants to gradually phase out the automatic per hectare subsidies that were common in the EU by 2028. In the end, farmers should only receive government grants if they create more biodiversity on their land. The reform means radical rehab for many farmers: in 2024 they will only receive half of the previous grants per hectare. The National Farmers Union (NFU) warns that many farmers will not survive the quick transition. But tax money will be used in a more targeted manner in the future: Above all, rich landowners can no longer collect millions for doing nothing.

Corona continues to hover above everything

In the long term, Britain will “prosper powerfully,” says Johnson. But his leeway is initially limited because the government is busy with the two current crises, Corona and Brexit, for the foreseeable future. The second corona wave is once again pushing the health system to its limits. Most recently, more than 50,000 new cases and more than 900 deaths were recorded each day. The new trade barriers with the EU are also forecast to mean that the economy will grow more slowly this year.

Still, Johnson is optimistic about the new year. He is hopeful that the Astra-Zeneca vaccine is now a second vaccine approved in Great Britain. This not only has the advantage that it is produced in your own country. It’s also less sensitive than the Biontech and Pfizer vaccine, so it’s easier to distribute. At Easter, the worst of the pandemic will be behind you, the head of government predicts.

By then, the new processes after Brexit should also have run their course. Truck jams are expected at the borders in the coming weeks because everyone involved has to get used to the new border controls. In the first few days, however, there could be less traffic than expected, because many freight forwarders wait and avoid the border. A number of companies have also extended their Christmas break and increased their stocks.

How smoothly the transition takes place for Great Britain depends largely on the EU. In many areas there are transitional regulations so that the cord will be cut off gradually. Johnson’s predecessor Theresa May summed it up in Parliament on Wednesday: The EU will not disappear from everyday British life.

More: Skepticism after the Brexit deal: These three important questions remain open

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USA announces further punitive tariffs on products from Germany

Lufthansa Airbus A320

The Franco-German aircraft manufacturer Airbus and its US competitor Boeing are said to have received subsidies from their governments.

(Photo: dpa)

Washington In the dispute over subsidies for the aviation industry between the USA and the EU, Washington has announced additional punitive tariffs on products from Germany and France. Aircraft components from both countries, certain wines as well as certain cognacs and other alcoholic beverages are affected, the US trade representative said on Wednesday (local time).

In response, the aircraft manufacturer Airbus called on the European Union to act. Airbus trusts that Europe will respond appropriately to the US initiative and defend its interests, the group announced on Thursday. This also concerns the interests of all companies and industries from Europe that are affected by the unjustified and counterproductive tariffs of the USA.

The EU Commission said it regretted the announcement from Washington. With the unilateral action, the United States disrupted the ongoing negotiations to settle the subsidy conflict, a spokesman said. The EU will contact the new US administration as soon as possible to continue negotiations and find a permanent solution to the dispute.

In November, the European Union announced additional taxes on certain US products. This was preceded by a decision by the arbitrators of the World Trade Organization, according to which the EU is allowed to impose punitive tariffs on US imports amounting to almost four billion dollars (3.4 billion euros) per year because of illegal subsidies for the aircraft manufacturer Boeing.

The US government has now accused Brussels of taking unfair decisions when imposing the tariffs, which is why its own measures have to be adjusted. For example, the EU based its decision on punitive tariffs on the trade volume of the 27 EU states excluding Great Britain, which has resulted in higher retaliatory measures against the USA. “The EU must take action to redress this injustice,” said the Trade Representative.

The EU hopes that Donald Trump’s successor in the White House, Democrat Joe Biden, will agree to talks about a settlement of the subsidy dispute that has been going on for years.

More: EU welcomes Joe Biden with new punitive tariffs.

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Investment deal with China is on the home stretch

China and the EU

The EU and China intend to announce their agreement this year.

(Photo: Reuters)

Brussels, Berlin After almost seven years of negotiations, the EU and China have agreed on the text of an investment agreement, according to Handelsblatt information. “A political agreement is possible before the end of the year,” said a confidante of Commission President Ursula von der Leyen the Handelsblatt. The agreement is expected to be announced by the EU leaders this Wednesday. Commission vice Valdis Dombrovskis had achieved the breakthrough in talks with Beijing.

The Comprehensive Agreement on Investment (CAI) is intended to create improved market access for European companies in China – and thus new business opportunities in the world’s second largest economy.

The automotive and telecommunications industries, among others, benefit from this, as do banks and insurance companies as well as investors from the health sector. “The result of the negotiations is the most ambitious result that China has ever agreed with a third country,” said the commission.

“Better competitive conditions in the state-run China are of great benefit to German, European and Chinese companies,” said Managing Director Joachim Lang from the Federation of German Industries (BDI) to the Handelsblatt. However, the ability to enforce the new rights is crucial. It will probably take several months for the agreement to enter into force. Among other things, the European Parliament still has to agree.

EU Commission Vice Valdis Dombrovskis had cleared the last obstacles out of the way with China’s Vice Prime Minister Liu He. A spokesman for the Chinese Foreign Ministry spoke of “great progress”. On Monday, the EU ambassadors gave the green light for the agreement. “The work on the technical level has been completed,” said MEP Bernd Lange (SPD), chairman of the trade committee.

According to information from the Commission, the decisive factor in the agreement between the EU and China was that Beijing made commitments in the area of ​​climate protection, including the implementation of the Paris Agreement.

There has also been progress on the subject of forced labor. China has agreed to undertake “continued and sustained efforts” to promote the ratification of the fundamental International Labor Organization (ILO) convention on forced labor.

graphic

However, there was already criticism of such compromises on Tuesday: “That Europe is satisfied with such a formulation, when the Chinese leadership has just demonstrated in Hong Kong that international agreements are worth nothing to them, is a strategic own goal,” said for example Thorsten Benner from the think tank Global Public Policy in Berlin. Beijing’s concessions in the area of ​​labor rights will also be central to the required approval of the EU Parliament.

The agreement opens up new market access for EU companies, for example for electric and hybrid cars, cloud and financial services, and for investments in private hospitals in cities with more than ten million inhabitants. The agreement aims to ensure that there is no discrimination against EU companies by Chinese state-owned companies. In addition, China will be prohibited from linking the approval of investments and other benefits to the transfer of technology.

The President of the EU Chamber of Commerce in Beijing, Jörg Wuttke, spoke of a “robust agreement” that one could live with: “There is never a perfect agreement.”

That is why it was good that the German Council Presidency put so much pressure on to get a deal. And MEP Lange also praised: “The progress that has been made will improve investment opportunities, level the playing field and, above all, create more legal certainty.”

“As the first actor, EU brings China to concessions”

Michael Hüther, Director of the Institut der Deutschen Wirtschaft (IW), on the other hand, warns: “Berlin and Brussels must not be fobbed off with commitments that do not change the actual business practices.” If this change succeeds, the investment agreement would send an important signal against them many protectionist tendencies in world politics.

In addition to the central agreement with Great Britain on a follow-up agreement after the final exit from the EU, the investment agreement could mean a second breakthrough at the end of the year. “The EU is the first actor in the world that has brought China to concessions on questions of social standards,” said BDI General Manager Lang. This is a decisive step towards a “Union that is also closed on investment issues and is a strong player in shaping global rules”.

Nevertheless, it is clear on the European side: The agreement is only one building block in relations with China. CAI does not offer comprehensive investment protection outside of the existing bilateral agreements. European companies can also continue to be excluded from public tenders – this point is also not covered by the investment agreement.

graphic

Many business representatives, economists and politicians are calling for it to be further developed in close coordination with the new US administration under Joe Biden.

Beijing’s concessions on market access and on the subject of distortion of competition are of great economic importance, especially from a German perspective. Germany alone exported goods worth almost 100 billion euros to the People’s Republic this year up to and including November.

China ranks third among the largest German export destinations, just behind the USA and France. China is the EU’s most important trading partner after the USA. While trade with the US has declined significantly over the past 19 years, China’s share tripled in the same period to almost 16 percent of total EU trade.

Among other things, the conclusion of the “Regional, Comprehensive Economic Partnership” (RCEP) between 14 Asia-Pacific states, including China, gave momentum to the negotiations between the EU and Beijing. “With the conclusion of the RCEP, the USA and the EU are under pressure,” said Veronika Grimm.

Both sides have been negotiating since January 2014. Even after the political agreement, it will likely take a long time for the agreement to come into force. The translation and legal examination of the text alone should take six months to a year. The agreement then has to be discussed and adopted by the European Parliament.

EU parliamentarians criticize the haste in talks for the final deal

Above all, the sustainability chapter and employee rights are likely to be central. “The ratification of ILO core labor standards, especially against forced labor, must be binding and linked to specific steps,” calls for MEP Lange.

In Brussels, MEPs criticize the rush in reaching an agreement on the investment agreement. “For geostrategic reasons, I think it is unwise, now, shortly before Joe Biden becomes president, to implement the investment pact with China quickly,” said MEP Reinhard Bütikofer (Greens), chairman of the EU Parliament’s China delegation. “I thought we wanted to work on leaving the time of going it alone behind us.”

China will remain a system rival even after an investment agreement, said Bütikofer. He announced a detailed examination of the contract text. Non-binding promises on workers’ rights were not enough for approval: “I use our free trade agreement with Vietnam as a benchmark.” There, a step-by-step plan was agreed for the ratification of the ILO standards.

The relationship between the EU and China is anything but relaxed. Shortly before Christmas, the European Parliament brought sanctions against China because of the human rights violations there. Beijing’s attack on Hong Kong’s autonomy in particular had aroused outrage and criticism not only in the European Parliament but also in numerous member states.

More: The agreement could drive a wedge between Europe and the US.

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The investment agreement is “a gift for Xi”

Thorsten Benner

The external expert heads the Global Public Policy Institute in Berlin.

(Photo: Press photo)

Since Mr. Benner, is the emerging deal a success for the German EU Council Presidency – or a strategic coup for China’s President Xi Jinping?
The agreement is a gift on a silver platter for Xi. The Chinese government could not have wished for better timing. Your goal is to drive a wedge between Europe and the United States. It is a fatal signal for transatlantic cooperation to seal an investment deal right now when a new government comes into office in Washington.
Is the Chancellor jeopardizing the restart of the transatlantic partnership?
I would not go so far. The new US administration will continue to see opportunities for cooperation with Europe. In any case, we should not judge the agreement by what it means for relations with the USA, but by what it brings to Europe.

And what is the first assessment here?
Many details are still unclear, but what has leaked out so far sounds like a joke: China wants to make “sustainable efforts” to comply with international standards against forced labor. The fact that Europe is satisfied with such a formulation, when the Chinese leadership has just demonstrated in Hong Kong that they are worth nothing to international agreements, is a strategic own goal.

Proponents of the deal say Europe wrested concessions from Beijing on the playing field …
So far this is difficult to assess. But the promises that have become known do not suggest that a breakthrough has been achieved here that would justify a hasty conclusion of the agreement. And we cannot ignore the geopolitical context. Beijing has recently behaved extremely aggressively: with disinformation against Europe, with the harassment of Taiwan and Australia – at the end of such a year, to reward Xi Jinping with an agreement cannot be in the European interest.

Does the deal signal that the EU is striving for equidistance to Beijing and Washington?
No. Even if the agreement is ratified – which is anything but certain in view of the resistance from the EU Parliament – that would not mean that Europe will abandon a more critical approach towards China and the identification of Beijing as a system rival. The deal is a setback for the critical turn in China policy, but the long-term trend is unbroken.

More: The EU-China investment deal is on the home stretch.

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Work on Nord Stream 2 in German waters apparently ended

Pipes for Nord Stream 2 in the port of Mukran on Ruegen

The line is around 90 percent ready, a little more than 100 kilometers are still missing.

(Photo: Reuters)

Moscow Russia is apparently making progress with the construction of the controversial Baltic Sea gas pipeline Nord Stream 2 despite the threats of US sanctions. The pipeline company announced on Monday that the section of the project in German waters had been completed. Previously, data from the supplier Refinitiv had shown that the Russian ship “Fortuna”, which was laying the pipes, had left the construction site in the Baltic Sea – a section of 2.6 kilometers.

The ship is now on its way to the port in Wismar and is scheduled to continue construction in Danish waters in mid-January. At the beginning of the month, “Fortuna” resumed work on the pipeline that is supposed to pump Russian gas to Western Europe. A year ago they had largely come to a standstill under pressure from the USA. The line is around 90 percent ready, a little more than 100 kilometers are still missing.

Most recently, Washington said that the US government was preparing further sanctions and urging European allies and private companies to stop work on the construction of the pipeline. The management is a thorn in the side of the USA. The administration of outgoing President Donald Trump, as well as congressmen from both parties, complain that Europeans are becoming dependent on Russian natural gas.

President-elect Joe Biden has also criticized the project in the past. At the same time, the US wants to sell its own natural gas to Europe.

Nord Stream 2 is the second Baltic Sea pipeline between Russia and Germany and is intended to bring Russian natural gas to Western Europe. The Russian state-owned company Gazprom is behind the project and is expected to cover half of the planned total costs. The other half is financed by the European energy companies Wintershall Dea, OMV, Uniper, Royal Dutch Shell and Engie

More: Nord Stream 2, Ukraine, Navalny: There are no crises in Putin’s world.

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Karoline Edtstadler announces to carefully examine Brexit deal

Karoline Edtstadler

Austria’s European Minister Karoline Edtstadler has high expectations of the Portuguese Presidency.

(Photo: AFP)

Brussels The Austrian government announces a careful examination of the Brexit trade pact: “It has to be a fair two-way deal, whereby no one may be disadvantaged. We need a good balance here, ”said European Minister Karoline Edtstadler (ÖVP) to the Handelsblatt in Brussels.

She praised the successes of the German Council Presidency, which expires at the end of the year. “The German Chancellor has shown once again how crisis-tested she is and that she stands like a rock with calm and prudence,” remarked Chancellor Sebastian Kurz’s confidante with admiration.

Edtstadler expects Portugal’s presidency, which begins on January 1, 2021, to push ahead with EU expansion in the Western Balkans. “Bilateral problems must not hold up an enlargement process,” said the European Minister. She is alluding to a veto by Bulgaria against the opening of accession talks with North Macedonia. The German Council Presidency had tried in vain to overcome the EU member’s blockade.

“The EU enlargement in the Western Balkans is also a question of security and stability, especially for Austria because of its geographical proximity to the region,” said the 39-year-old lawyer. She is confident that the integration of the Western Balkans will be achieved in the next ten years. Brussels has been negotiating with Serbia and Montenegro about admission to the EU for years. In spring, the 27 member states also decided to hold accession talks with Albania and North Macedonia.

With a view to Joe Biden’s upcoming US presidency, the Austrian European Minister would like to see a relationship “on an equal footing”. Regarding the investment agreement with China, she is confident that an agreement will be reached in the foreseeable future. “We can no longer watch China buy up companies on a large scale in the EU and vice versa, our companies look down the drain,” said the conservative minister.

Read the whole interview here:

Minister Edtstadler, at Christmas we experienced a nice mess for the EU with the Brexit deal. What does the trade agreement mean for Europe?
I welcome the successful conclusion of many years of negotiations. The agreement is a solid foundation for a future partnership. My thanks go in particular to the EU negotiating team headed by President Ursula von der Leyen and Michel Barnier. It is precisely on this complex issue that the EU has shown that it can stick together and that it is able to act even in challenging times.

What are the risks of the EU-UK trade pact from an Austrian perspective?
We will now examine everything carefully. It is important that a solution regarding the level playing field is found. It has to be a fair, two-way deal, with no one penalized. We need a good balance here.

The German Council Presidency ends on New Year’s Eve. How do you see the balance sheet?
A great success was already achieved in July with the creation of the financial package. The anchoring of the rule of law also represents a significant step forward, for which Austria has also made a strong commitment. The German Chancellor has shown again how crisis-tested she is and that she stands as a rock with calm and prudence. That is definitely also female leadership and I admire her for that. At the last European Council in December in particular, important agreements such as those on the climate target were reached. In addition, the joint procurement and distribution of a vaccine against Covid-19 in the EU is a very important success.

But not everything has succeeded under the German Council Presidency. There was no agreement on the migration pact. Is it still possible in the EU to come to a common line in dealing with refugees?
The complex issue of migration has been on the table for many years without an agreement. I remember the Austrian Presidency very well, where we tried everything and still not made progress in some areas. The EU Commission’s new proposal is now available. Much is going in the right direction.

Can you give examples?
We welcome better protection of the EU’s external borders and more intensive cooperation with third countries in order to stop illegal migration and make it easier for people to return to them. Of course, we also have to create prospects in the region at the same time. The proposal is therefore a good starting point. It is clear that the so-called return sponsorship must not lead to a mandatory distribution through the back door.

There was also no breakthrough in enlargement in the Western Balkans, especially with North Macedonia, after Bulgaria vetoed it. Are you very disappointed?
The EU enlargement in the Western Balkans is very important to Austria. It is therefore a great success that we decided in March to open accession talks with North Macedonia and Albania. Now it is hooked on Bulgaria’s veto. I share the disappointment of my German counterpart Michael Roth about Sofia’s current position.

What does the Portuguese Presidency have to do to break the deadlock?
The issue needs to be resolved bilaterally between North Macedonia and Bulgaria. No EU Council Presidency can achieve that. But our expectations at EU level are clear: bilateral problems must not hold up an enlargement process. The EU expansion in the Western Balkans is also a question of security and stability, especially for Austria because of its geographical proximity to the region.

Do you have the impression that interest in the Southeastern European region is decreasing among the Member States? France has recently stepped on the brakes.
Of course, we have to keep making clear to the member states how important enlargement in the Western Balkans is for the whole of the EU. The process must not be stopped. I am confident that we will achieve integration in the next ten years.

One of the priorities of the Portuguese Presidency will be geopolitics, in particular the development of relations with Asia and Africa. How does Austria rate this goal?
The pandemic has shown us how globally we are networked. The EU can only be successful as a global actor if we continue to stick together and speak with one voice. It is strategically important that we develop our relationships in Asia – not just with China, but also with India. Africa is an important partner and not only plays a key role for the EU on migration and economic issues. We need a sustainable Africa strategy in the EU. I therefore welcome this aim of the new presidency.

You mentioned China. The German Presidency has tried to conclude the EU’s investment agreement with China. How quickly should the EU hurry to get such an agreement wrapped up in the near future?
China is an important partner, but of course also a systemic rival at the same time. The pandemic has thwarted the German Council Presidency and the Commission in the negotiations. But I am optimistic that there will be results in the foreseeable future so that our companies in China will have more security for their investments. We can no longer watch China buy up companies in the EU on a large scale and vice versa, our companies look down the drain there. The agreement is so far the biggest attempt to achieve fairer competitive conditions in a growth market.

Transatlantic relations have hit rock bottom under President Trump. How big is the chance to build on earlier times?
Austria traditionally maintains good transatlantic relations. Under the newly elected President Biden, there is an opportunity for the EU to build a new relationship on an equal footing with the USA. We must seize this opportunity so that we can exploit the full potential of the transatlantic relationship. Europe must be able to speak with one voice.

Thank you for the interview.

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UK government sees opportunities for the financial industry

Skyline of the City of London

Companies in the finance metropolis have transferred around £ 1.2 trillion to European cities such as Dublin and Paris.

(Photo: AFP)

London Following the trade agreement with the EU, the British government sees good opportunities for the traditionally strong financial service providers on the island. “Now that we have left the European Union, we can do things a little differently,” Finance Minister Rishi Sunak said on the radio on Sunday.

From January 1st, UK-based financial service providers such as banks, funds and insurance companies will lose automatic access to the EU internal market. The trade agreement agreed on Thursday stipulates that future relations in this area must be negotiated in specific equivalence agreements.

Under such a system, UK-based financial firms would not be allowed access to EU markets unless their domestic rules were deemed “equivalent” by Brussels or as robust as EU rules.

Both sides are now aiming to conclude an agreement in principle on regulatory cooperation in this area by March 2021. “This agreement also offers security because there is a stable regulatory framework for cooperation,” said Sunak. “I think that gives people the security that we will stay in close dialogue with our European partners.”

In preparation for Brexit, British financial institutions have already shipped several thousand employees and many trillions of pounds in assets to the EU.

More than 7,500 jobs and 1.2 trillion pounds belonging to EU customers have now been transferred to cities such as Dublin, Luxembourg, Frankfurt or Paris, said the management consultancy EY, referring to a survey it created. Numerous banks, insurers and fund providers have opened new locations on the European mainland in order to be able to work after the British exit from the EU.

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