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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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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“The Brexit drama is not over yet”

Berlin The will is there – that’s very positive news, says the head of the Institute for the World Economy, Gabriel Felbermayr, in an interview with the Handelsblatt. But many problems remained unsolved. “The worst for the German economy was prevented with this contract,” said Felbermayr.

Nevertheless, there will be difficulties in the supply chains: “Freedom from customs does not mean that there are no customs formalities. Duty-free may only be traded that meets the so-called rules of origin. Only a customs union would have eliminated this problem. “

Four years of Brexit drama seems to have come to an end with the current compromise. There is a free trade agreement. What do you think of the solution?
I am very relieved. There will be no tariffs and quantitative restrictions. That is clearly better than a situation in which WTO rules would have been used. But how good the solution really is depends on the details. The analysis has to begin here. And you have to see whether the drama is really over.

What exactly do you fear? Where could there still be problems?
Northern Ireland remains de facto in the EU customs union. That will spark domestic debate in the UK; Disputes with Brussels about the interpretation and implementation of the text are inevitable.
Even within the EU, the matter is not over yet, because the cost of the deal means very different things for different countries. All EU countries must agree; and if mixed competences are involved, the national parliaments must also agree. It is not yet clear whether this is the case. In any case, further negotiations with London are very likely.

That doesn’t sound so euphoric. So the current compromise is not the breakthrough it is being celebrated as – and therefore may not be a good basis for future bilateral relations.
A lot of china was smashed. Mutual distrust is high. Threats to use the navy against EU fishing boats if necessary, and then the French truck blockade in response to the coronavirus mutation in England: things like this have an effect. That is certainly a burden for future cooperation.

What does the current agreement mean for the German economy?
For the German economy, the worst was prevented with this contract. The burden on some German key products such as mutual tariffs of ten percent on cars would have been high. Nevertheless, there will be problems in the supply chains: Exemption from customs does not mean that there are no customs formalities. Duty-free may only be traded if what meets the so-called rules of origin. In addition to new bureaucratic burdens, some German companies will have to redesign their supply chains in order to comply with the rules of origin.
That will add to the cost. Only a customs union would have eliminated this problem. Ex-Prime Minister Theresa May was open to it. The EU should have made concessions in good time. After Boris Johnson took over the dossier, the customs union was off the table. Unfortunately.

Some complain that the British continue to benefit from the large domestic market with almost no restrictions, without assuming any obligations. Is that fair? What do you mean?
There is no objective measure of what is just. But it seems to me that you could hardly have been sold as fair if you withheld rights from the British that were granted to the Canadians or the Japanese or even the Ukraine.

And there are also restrictions. I have already mentioned the rules of origin. In terms of trade in services so important to the UK, the agreement offers relatively little. All studies show that even through a free trade agreement, the kingdom has to bear economic losses compared to full membership. But of course, because the United Kingdom would have lost more than the EU through a hard Brexit, the gains from avoiding a non-contractual situation are also higher. But that is always the case when a large bloc like the EU concludes a trade agreement with a smaller economy. In economic terms, it is clear that both sides will benefit from the hard Brexit.

Johnson always predicted a major post-Brexit boom, including attractive bilateral trade deals around the world. Could he even be right in the end?
It will not bring about a boom through free trade agreements alone. Even agreements with the USA and the Commonwealth countries do not replace full membership in the EU. “Global Britain” mitigates the economic damage, but does not undo it. Studies show that the kingdom has already lost two to three percentage points of economic growth compared to a comparison group in the years since the referendum, which must first be caught up again. But it is of course conceivable that London will use the newly gained degrees of freedom in regulatory policy to outgrow the former EU partner countries. However, the opposite is also conceivable.

Since the Brexit referendum, Berlin in particular has urged the EU partners to take a pragmatic or even conciliatory path, while the French remained firm in order to set a chilling example. Which was the better strategy?
The pragmatic way is clearly the better one. Europe cannot be held together by deterrence. Nor would it be good for the Union’s internal processes. As a last resort, every member must be able to credibly threaten to leave. This is an important insurance against possible exploitation by other countries. The more decisions are made with a qualified majority, the more important this is.

Do you think the recent blockade over the mutated coronavirus has opened the eyes of the British to what a messy exit means?
The television pictures had certainly shown the British their vulnerability. But it was more of a symbolic process, because even a hard Brexit would not have meant a trade blockade.

And the fact that an agreement ultimately failed due to the threat of an economically rather marginal sector such as fishing, isn’t that symptomatic of these excruciatingly long negotiations?
Yes, unfortunately the argument about the fish fits perfectly into the picture. But that’s not entirely surprising. The fact that politicians on both sides of the English Channel were ready to let the agreement fail because of the fish shows once more the enormous symbolic sectors that are economically almost irrelevant, but politically powerful. The negotiations between the EU and the USA on the TTIP agreement ultimately failed because of the chlorine chicken.

When you take stock of this Brexit tragedy that has lasted for years. Isn’t a European Union without the British a serious loss of political, cultural and, above all, market-based tradition?
Yes sure. The loss of Great Britain makes the EU more centralized and more planned economy overall. Other countries will now have to uphold the market economy tradition. In the negotiations on the EU budget, a group around the Netherlands has already formed. But it has also shown that without the British, things are possible that were previously unthinkable, such as joint debt.

What does the loss of the second largest economy mean for the geopolitical role of the EU? Will it be able to face the superpowers China and the USA on an equal footing in the trade and technological struggle?
The European single market will shrink by 16 percent with the exit of the British. In negotiations with China and the USA, the EU can ultimately only score points with access to this internal market. The bargaining power is therefore shrinking, and with it the global scope for action. It will therefore be extremely important that the EU, with all the countries on its periphery, including the United Kingdom, Switzerland, Turkey and Ukraine, develop partnership agreements that integrate the countries as closely as possible into the internal market. It will not be easy, but it is strategically essential. The agreement with London is certainly not the ultimate answer here.

Do you see any chances for a resumption of TTIP after the change of power in Washington?
Ms. Malmström, the former EU trade commissioner once said that after Trump took office, TTIP is in the freezer. I think it froze there. Revival in the old form as a very comprehensive, very ambitious agreement is impossible. Of course, that does not mean that negotiations with the USA cannot be successfully conducted in individual areas. Industrial tariffs are an anachronism and harm both sides. Brussels and Washington should work together on technical standards, especially for new technologies.
The same applies to competition law and the taxation of global companies. And the issue of climate protection, which was missing from the TTIP negotiations, must also be tackled transatlantically in order not to cause new disputes through the CO2 border adjustment regime. It will be exciting, however, when London and Washington conclude a deep agreement. That would put Brussels under pressure.

Some are even calling for the EU to join the new Asian free trade area RCEP. Does it make sense?
No. The EU already has agreements with many member states of the RCEP zone, for example with Korea, Japan and Vietnam. These are broader and deeper than the RCEP agreement. Negotiations for similar agreements are already underway with New Zealand, Australia and a few other countries. And even with China, an investment protection agreement seems to be within reach.

More: IfW boss Felbermayr: Companies need completely different state aid.

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EU should join transpacific free trade area CPTPP

Containerterminal in China

By joining the CPTPP, the EU would expand its economic and political influence in the Asia-Pacific region, argue the IW researchers.

(Photo: dpa)

Beijing, Brussels, Tokyo The conclusion of the Asian free trade agreement RCEP made many in Europe sit up and take notice. After all, the agreement encompasses 2.2 billion people, 30 percent of global economic output and the most economically dynamic region in the world.

The EU also wants to increase its influence in the region. In Brussels and Strasbourg, accession to the transpacific free trade area CPTPP is therefore repeatedly discussed as an alternative to RCEP. Researchers at the employer-related Institute of the German Economy (IW) are now calling for such a step. “A possibly attractive way could be a joint accession with the USA and the UK to an enlarged CPTPP,” says a study by the IW, which the Handelsblatt has received in advance.

By joining the CPTPP, the EU would expand its economic and political influence in the Asia-Pacific region, argue the IW researchers. CPTPP appears to them to be more attractive than RCEP because CPTPP is significantly more demanding when it comes to important standards.

The authors of the study Jürgen Matthes and Galina Kolev write that CPTPP will also have to be expanded in the course of accession in negotiations with the previous members, for example with regard to the naming and, above all, with regard to climate protection and competition rules.

The transpacific free trade zone CPTPP was originally promoted by the US as a counterweight to China’s growing economic influence in the region – but came about two years ago after the withdrawal of the Americans without US involvement. The CPTPP agreement has shrunk to eleven states since the US withdrew.

China is basically open to agreements

With a view to China, the IW study sees the transpacific agreement as an opportunity to induce the world’s second largest economy to adhere to international standards.

The agreement is basically open to the People’s Republic, it says, “but only if the Chinese government adapts to market-based standards and declares that it is ready to pursue sustainability goals”. Such an expanded CPTPP may increase the pressure on China to agree to such standards in the WTO and to abandon its blockade of new rules, the authors said.

Together with the USA, the EU-27 and the United Kingdom, the new CPTPP, as a plurilateral agreement with a share of around 60 percent of global GDP, would bundle an “immense economic power”, argue the IW authors. Accession would send a strong signal of liberalization.

At the request of the Handelsblatt, Tokyo was open to the EU joining the agreement. Japan will chair the CPTPP next year. The agreement is open to all economies that are ready to meet the high standards, it said in a statement by the Japanese Foreign Ministry.

In Brussels, however, people have so far been skeptical. The transpacific free trade area CPTPP is not an issue for Brussels for fundamental reasons. “While we welcome all initiatives that promote rules-based trade, there are important differences between multilateral trade agreements such as CPTPP or RCEP and the EU’s approach, which aims at comprehensive and ambitious trade and investment agreements,” said a commission spokeswoman when asked by the Handelsblatt.

“EU trade policy is determined by its own interests”

Brussels is also unimpressed by the possibility of the UK joining the CPTPP. Great Britain has set itself the goal of applying for admission to the transpacific free trade area CPTPP in the coming year.

“Once the transition period is over, the UK will be able to conclude trade deals with third countries and it will be up to the UK to decide whether to apply to join the CPTPP,” said a Commission spokeswoman. “The EU’s trade policy is determined by the EU’s own interests-“

MEP Reinhard Bütikofer takes a pragmatic approach. “In terms of trade policy, we are dealing with a variable geometry,” said the chairman of the European Parliament’s China delegation to the Handelsblatt.

RCEP

The agreement made many in Europe sit up and take notice.

(Photo: AP)

RCEP and CPTPP are not alternatives, but rather overlapping elements. “From an EU perspective, there are more options than a simple choice between RCEP and CPTPP,” said Bütikofer. The Green politician advocates pursuing the old idea and concluding a regional free trade agreement with the Asean community.

CPTPP and RCEP are agreements that are not up to date in terms of sustainability and occupational safety standards. “The EU cannot simply join in – without fighting to improve standards,” said the trade expert.

Too different interests?

Bernd Lange (SPD), Chairman of the Trade Committee in the European Parliament, referred to the existing trade agreements or those currently being negotiated with Asian countries. These are comprehensive and geared towards the offensive and defensive interests of the EU.

“I think the EU network is going under a little because it is not grouped under one big roof. That makes CPTPP better, ”said Lange. The influential EU politician is against joining the CPTPP. “Giving up our agreements in order to join a new network of bilateral agreements is not a sensible approach in my eyes,” Lange told Handelsblatt.

Even the European People’s Party (EPP), the largest political group in the European Parliament, does not see the CPTPP as an alternative for the EU: “I do not consider accession to be desirable: the interests are too diverse to be able to and want to join this negotiated agreement “, Said Daniel Caspary, head of the CDU / CSU group in the European Parliament, the Handelsblatt. He advocates intensifying negotiations with the countries on their own agreements.

More: In Brussels and Beijing, confidence is growing that they will still be able to agree on a historic agreement.

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How Lambertz became bigger than Bahlsen

Aachen While the Germans are currently stocking up on gingerbread and dominoes, the season is already over for the world’s largest Christmas baker Lambertz in Aachen. The last truck with Christmas cookies left the factory before Nicholas. At peak times, 152 trucks with 10,000 pallets a day leave the eight plants, two of them in Poland.

Instead of speculoos, there are now Florentines and chocolate biscuits coming from the baking streets. It only takes 20 minutes from mixing the dough to bagging. “We do 60 percent of our business with all-year-round baked goods,” emphasizes Hermann Bühlbecker, sole owner of the Henry Lambertz family business founded in 1688. Lambertz is also the German market leader for organic baked goods.

In 40 years Bühlbecker has built the heavily indebted print manufacturer into a leading pastry producer with 4,000 employees. With 637 million euros in sales, Lambertz is also significantly larger than Bahlsen, for example. The Hanoverians generated around 540 million euros in 2019.

Bühlbecker, the dazzling brand face of Lambertz, who likes to be photographed with Hollywood stars, royals and political celebrities, turned 70 this year. But the restless entrepreneur is not thinking of withdrawing from the chairmanship of the advisory board for the time being. “My daughter Shiraz has just finished her studies in international management in Paris,” he says.

The 24-year-old comes from a second marriage to a French woman. “For so many years I have struggled to build a family business. It is therefore a matter close to my heart that Lambertz remains in family hands. ”

The family is supposed to run the company from the advisory board. Bühlbecker’s wife Zahra is already working there as his deputy. The computer scientist and mathematician has worked in various areas in the company for many years, such as managing the supply chain. One thing will change, however: “After me, there will be no brand ambassador who is constantly on the road for Lambertz,” emphasizes Bühlbecker. “The brand is now well-known.”

It was different when Bühlbecker, who had just completed his doctorate in business administration, started in the family business in 1976. At that time Lambertz only supplied specialist retailers, made losses and had high debts. From January to August, the production lines in the factory that his father had planned as an architect.

Away from debt and niche products

“At that time Lambertz only sold Aachener Printen, which were also regionally and seasonally limited. There were three unfortunate circumstances, ”remembers Bühlbecker. The family was already in sales talks. Because the three partners, Bühlbecker’s aunt, uncle and mother, were personally liable.

The then 26-year-old wanted to try at least one year, who would have preferred a university or diplomatic career. “I was the only possible successor, and you don’t just throw away three centuries of family tradition,” he says.

First he switched from printed boxes to small packaging. He designed a uniform red logo. “Purple is the color of kings. Lambertz used to be purveyor to the court in Prussia, Belgium and the Netherlands, ”says Bühlbecker, who soon began promoting the Printen personally in retail. It slowly went uphill.

In order to position Lambertz more broadly, he wanted to take over the competitor Kinkartz from Würselen, which also sold gingerbread at the discount. But then Bühlbecker experienced his “entrepreneur trauma”, as he calls it: The Kinkartz family sold to Südzucker of all places.

The group already held the majority in the gingerbread manufacturer Haeberlein Metzger from Nuremberg through Schöller. “How am I supposed to compete with Europe’s largest sugar company?” Worried Bühlbecker.

Hermann Bühlbecker with Heidi Klum

The Lambertz boss advertises his pastries at galas with models and celebrities.

(Photo: Lambertz)

In the south, however, gingerbread entrepreneur Weiss from Neu-Ulm fought against Südzucker and at some point gave up. “If you offer me the same amount as the corporations, I’d rather sell to you,” the owner told him. Bühlbecker did not hesitate long. “I had to struggle for ten years to get off high debt again.”

Südzucker later wanted to buy Lambertz. “They offered me that I could become Germany’s gingerbread king as managing director.” Bühlbecker refused. “I’m used to fighting alone.” He trained his fighting spirit in tennis from an early age. He played in the top German league and also internationally. “In tennis I learned that you can win with better tactics, even though you are actually worse.”

Years later, Südzucker parted with the gingerbread division. Lambertz finally bought Kinkartz and Haeberlein butchers. Later the stollen baker Dr. Quendt from Dresden added. “We maintain the old brands,” emphasizes Bühlbecker, who at the same time has to manage the balancing act of attracting young customers – for example with the fruit and nut chocolate cap “Henry’s”.

In order to keep the 332 year old brand young, Bühlbecker has been inviting people to the shimmering “Lambertz Monday Night” at the ISM confectionery fair in Cologne for over 20 years. There, top models and Hollywood stars present dresses made of chocolate and celebrate with celebrities from business and politics. Bühlbecker knows them all.

His affinity with celebrities began with Prince Charles. In 1993, the then Foreign Minister Hans-Dietrich Genscher asked for a special gift for the British heir to the throne instead of a box of gingerbread. Bühlbecker personally presented him with Windsor Castle made from Printen and marzipan. The prince was delighted. “I realized how impressive it is to show your face as an entrepreneur.”

Royals, stars and presidents

From then on, Bühlbecker cultivated his appearances in the shine of stars and starlets. “With Red Bull, Lambertz is the inventor of content marketing,” says Bühlbecker. A glow comes to his eyes when he shows the photo wall full of royals, stars and presidents. He is particularly proud to have raised billions for social projects for twelve years with the “Clinton Global Initiative” with greats like Bill Gates and Angelina Jolie.

For Katjes boss Bastian Fassin, Bühlbecker is “an extraordinary entrepreneur who has made the Lambertz brand and company an indispensable factor in the last few decades – not only in the Christmas business”. He invented a unique marketing approach by combining himself and the Lambertz brand. “A great achievement!” Says Fassin.

The entrepreneur is annoyed that some people think that Bühlbecker wants to pursue his private pleasure with his annual ISM party. “This is not relaxation, but rather hard work after exhausting days at the fair. For our company this is an important stage for brand communication. ”

And the international network comes a bit close to his career aspiration as a diplomat. Bühlbecker is also the honorary consul of the Ivory Coast. “That might sound strange to some, but that’s the largest cocoa-growing area in the world. For us, cocoa is also the most important raw material. These close connections are elementary for us. ”

Today, Lambertz does almost 45 percent of its business with its own retail brands. “We were never too fine for that,” he emphasizes. In the 1990s, Lambertz built up the production of year-round pastries. “We had free capacities. Today we are one of the big names in Germany and Europe with biscuit mixes. ”Conference biscuits were also the key to Lambertz’s international business, which accounts for a quarter of sales.

Bill Clinton with Hermann Bühlbecker

The Lambertz boss worked for the Clinton Global Initiative for twelve years, where celebrities raise money for social projects.

(Photo: Lambertz)

The USA is the most important export market. The US punitive tariffs of 25 percent on German biscuits hit Lambertz all the harder. The tariffs were raised a year ago because of the EU subsidies being banned for the aircraft industry.

Bühlbecker is annoyed: “Why does the EU – as is customary in the USA and China in such conflicts – not set up a compensation fund for its domestic economy. We feel left alone by politics. ”He is all the more hoping for counter-tariffs, which the WTO has now allowed. “Even if almonds from the USA become more expensive.”

The corona crisis has not left Lambertz unscathed. The Germans consoled themselves with sweets in lockdown. According to market researcher IRI, sales of sweet pastries in food retailing from January to August rose by 9.1 percent compared to the previous year to 1.1 billion euros. But for Lambertz, the tourist business at airports, train stations and Christmas markets failed.

The newly discovered teleshopping brings a little compensation, also in the USA. “In a quarter of an hour, 4,000 high-quality gift boxes were sold for 50 euros,” says Bühlbecker when he told his Lambertz stories at QVC. “That was the greatest sales experience of my life.”

More: Haribo boss Hans Guido Riegel defends controversial plant closure in Saxony

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What a no-deal would mean for the economy

Dover

Brexit is most visible on the motorways in front of the ferry ports on the English Channel.

(Photo: Reuters)

London Companies on both sides of the English Channel are currently preparing for the UK to leave the European single market in two and a half weeks without a free trade agreement.

The British business association CBI called on the governments on Sunday to cushion the impending crash Brexit with transitional regulations. Both sides should now be “deeply practical”, said association chief Tony Danker. “Sensible transitional regulations” are needed for all possible areas, from product labeling to data exchange.

British Prime Minister Boris Johnson and EU Commission President Ursula von der Leyen set Sunday as the deadline for the free trade talks. In a phone call on Sunday, however, they extended the negotiations again.

“Despite the fact that deadlines have been missed again and again, we think that it is responsible to go the extra mile,” said the two in a joint statement.

There is still a lack of agreement on the main issues surrounding fisheries and fair competition. Both sides had warned in the past few days that the talks were likely to fail. At the same time, both had always emphasized that they wanted to reach a trade deal. Chancellor Angela Merkel also emphasized on Sunday how important it is to find a solution.

Because if a disorderly Brexit happens on December 31, this would have significant consequences in many industries:

graphic

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What a no-deal would mean for the economy

Dover

Brexit is most visible on the motorways in front of the ferry ports on the English Channel.

(Photo: Reuters)

London Companies on both sides of the English Channel are currently preparing for the UK to leave the European single market in two and a half weeks without a free trade agreement.

The British business association CBI called on the governments on Sunday to cushion the impending crash Brexit with transitional regulations. Both sides should now be “deeply practical”, said association chief Tony Danker. “Sensible transitional regulations” are needed for all possible areas, from product labeling to data exchange.

British Prime Minister Boris Johnson and EU Commission President Ursula von der Leyen set Sunday as the deadline for the free trade talks. In a phone call on Sunday, however, they extended the negotiations again.

“Despite the fact that deadlines have been missed again and again, we think that it is responsible to go the extra mile,” said the two in a joint statement.

There is still a lack of agreement on the main issues surrounding fisheries and fair competition. Both sides had warned in the past few days that the talks were likely to fail. At the same time, both had always emphasized that they wanted to reach a trade deal. Chancellor Angela Merkel also emphasized on Sunday how important it is to find a solution.

Because if a disorderly Brexit happens on December 31, this would have significant consequences in many industries:

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That’s what Johnson and von der Leyen’s dinner is all about

London There have already been many memorable appearances by British Prime Ministers in Brussels: since Prime Minister Margaret Thatcher, they have mainly used the stage to set themselves apart from continental Europeans.

Will Britain’s incumbent Prime Minister Boris Johnson continue this tradition when he makes his first visit to the EU capital this Wednesday evening since Brexit? Or will he seek a compromise?

The British Prime Minister meets with EU Commission President Ursula von der Leyen for dinner. The duo want to decide whether there can be a free trade agreement between the EU and Great Britain or not.

Is the dinner the last chance for a deal?
A final breakthrough is not expected at dinner. But Johnson and von der Leyen would at least have to agree that a compromise is possible on the remaining issues of fisheries and fair competition. Then the talks between the negotiators Michel Barnier and David Frost could continue under new auspices. Johnson and von der Leyen have already phoned twice since Saturday and both times extended negotiations.

What else is there?
In fisheries, there are different ideas about the length of the transition period and the future level of EU catch quotas in UK waters. This point is considered solvable. An agreement on the level playing field is more difficult. The EU wants to ensure that the UK will continue to adhere to minimum standards in labor and environmental law and subsidies. In addition, she insists on a sanction mechanism in order to be able to punish violations of the agreement. From Johnson’s point of view, both of these restrict British sovereignty too much.

What does Johnson want to achieve with the visit?
The British Prime Minister wants to show that the negotiations are now a top priority. He hopes the EU will soften its red lines. He would prefer to negotiate directly with Chancellor Angela Merkel and French President Emmanuel Macron, but the EU states insist that the Commission speak on their behalf. The attempts by London to play the EU states off against each other have so far failed.

What have the EU states asked von der Leyen?
The German Council Presidency has instructed von der Leyen that it would be best to find a deal with Johnson after all, but not at any price. Concessions are therefore not to be expected. “There is still the chance of an agreement,” said Chancellor Angela Merkel in the Bundestag on Wednesday, but added: “I don’t think we’ll know tomorrow whether that will work or not.” Above all, you need satisfactory answers “The question of fair competition in divergent legal systems”. All EU countries are behind von der Leyen. In contrast to many other issues, such as the EU budget, they seldom agree when dealing with the UK. This was last made clear on Tuesday at the meeting of the European Ministers with Commission Vice-President Maros Sefcovic.

What are the differences between the EU countries?
There are major differences within the EU in the dispute over fishing rights. For France, but also for Belgium, the Netherlands and Denmark, fishing rights in British waters sometimes play a major role. French President Emmanuel Macron threatened indirectly with a veto if fishermen’s access to British waters was not secured in the long term. In view of the minor economic importance of fishing in Germany, this point of contention is not so important from the perspective of the German Council Presidency. Berlin, on the other hand, has the greatest interest in an agreement for the automotive industry, for example.

Why is Merkel, as President of the Council, not mediating the deal?
The mandate for the negotiations with the United Kingdom has the EU Commission headed by Ursula von der Leyen, a very close confidante of Merkel. This also ensures continuity. The EU Council Presidencies change every six months. At the beginning of the year, the Council Presidency will change from Germany to Portugal. At the EU summit on Thursday and Friday, Chancellor Merkel already has her hands full to break the budget blockade by Poland and Hungary. Merkel does not want the EU summit to be overshadowed by the final Brexit talks. She focuses on solving the delicate financial question with Budapest and Warsaw. Because a compromise or a plan B is of the utmost importance for the full functioning of the EU.

graphic

Does Johnson show willingness to compromise?
There was a positive signal on Tuesday: The British government announced that it would remove the Northern Ireland passages from its internal market law, which violate the EU exit treaty. Ultimately, this only means that London wants to stick to the exit contract after all – actually a matter of course. The fact that Johnson withdrew his provocation before dinner relaxed the mood. However, Johnson has not yet moved on the key issues. On Wednesday, he reaffirmed in the House of Commons that no British Prime Minister could accept the EU’s demands for fair competition.

How great is domestic political pressure on Johnson?
He should have no problem getting a compromise through Parliament. The Brexit hardliners would rebel in his conservative faction, but Johnson has a large majority of 80 seats. In addition, the Labor opposition would probably vote for a deal to avoid a no-deal. Johnson could therefore afford concessions in Brussels.

How much longer can the negotiations last?
The Europeans had actually wanted to conclude the free trade talks before the EU summit on Thursday. But this deadline now also seems to be obsolete. The European Parliament needs a few weeks for ratification because the text of the treaty has to be legally checked and translated into all 23 official languages. In order for all MEPs to receive all documents on time and to be able to vote at a special virtual meeting on December 28th, a binding agreement would be required this week. The only hard deadline is December 31st. Then the Brexit transition period ends. Theoretically, it would be possible to have a trade treaty initially come into force provisionally and to ratify it by the parliaments afterwards.

What if the free trade talks fail?
Then Great Britain will leave the European single market on December 31st without a trade agreement. From January 1st, the tariffs of the World Trade Organization (WTO) came into force. Then, for example, ten percent tariffs would be due on cars and 40 percent on certain foods. The UK economy would grow two percentage points less in the new year. On the European side, the losses would be more evenly distributed, but German companies would also have to be prepared for falling sales in one of their largest markets.

Would the negotiations continue after a no-deal?
Sooner or later, both sides would have to talk to each other again. Some EU governments believe that a no-deal would be a healing shock for the UK and that Johnson would be more likely to respond to EU demands afterwards. However, that could turn out to be a miscalculation, because the appetite for further discussions would be low in London. There is a risk that the relationship as a whole will be shattered. The Europeans also depend on good cooperation, for example in foreign and security policy or on climate issues. The issues in the free trade talks remained the same after a no-deal.

If there is no deal, what does that mean for data exchange between the EU and the UK? What do companies expect?
The United Kingdom is one of the most important locations for data processing, for example in the areas of logistics, customer relationships and mobility. Almost every large company, but also medium-sized companies and start-ups in the EU exchange data with locations in the UK. If there is no deal, there is a risk of disaster for the data exchange. The President of the IT association Bitkom, Achim Berg, fears chaos that would affect large parts of the EU economy. The background to this is that without a Brexit agreement, Great Britain would be classified as a third country under data protection law. This would interrupt the free flow of data between Germany or the EU and the British Isles. In such cases, the General Data Protection Regulation GDPR provides for strict data transfer requirements – a level of data protection is required that is essentially equivalent to European standards. Safe third countries in this regard are the USA or Japan, to which the EU Commission has confirmed an adequate level of data protection by means of an “adequacy decision”. However, there is no such agreement between the EU and Great Britain to date. German companies would run the risk of violating the GDPR – with the known high risk of fines.

Is there such a thing as a temporary solution for exchanging data between the EU and UK?
Not really. In the opinion of the Baden-Württemberg data protection officer, Stefan Brink, further exchanging the data via corresponding standard contractual clauses or with the express consent of the data subjects is not a solution. “In particular, the association of the secret services in Great Britain and the USA makes it absolutely necessary to transfer the case law of the European Court of Justice,” says Brink. That means: “The surveillance and exchange activities of the secret services of the United Kingdom also violate the EU Charter of Fundamental Rights as inappropriate, excessive state surveillance of citizens.”

More: Boris Johnson travels to Brussels for a crisis meeting.

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Great Britain and the EU make the last attempt

EU chief negotiator Michel Barnier

The Frenchman will consult with British negotiator David Frost on Monday.

(Photo: AP)

London Will the UK and the EU still come together in the free trade talks? On an important point of controversy, the fishery, one had come closer, EU circles scattered on Sunday evening. This was immediately denied in London.

EU chief negotiator Michel Barnier was pessimistic on Monday morning. According to diplomats, he said at a meeting with the 27 EU ambassadors that a deal has not yet been recognized. Now the ball is on the British side.

First make hope, then dampen expectations and pass the buck to the other side – all of this has long been part of the rituals in the talks with London. The number of anonymous briefings on both sides shows how high the pressure is on the negotiating teams in Brussels. Under massive time pressure, both sides are trying to agree on a trade pact after all.

The free trade agreement should be in place by the EU summit on Thursday. Today, Monday evening, EU Commission President Ursula von der Leyen and British Prime Minister Boris Johnson want to call again to see whether negotiations should continue.

After all, on one point both sides seem to agree: “We are at a difficult point,” said the British Agriculture Minister George Eustice on Sunday the broadcaster Sky News.

The talks are “on a knife edge”, said the Irish Prime Minister Michael Martin the Irish broadcaster RTE. He put the chances of a Brexit deal at 50 to 50. An anonymous British minister made a similar statement to the Sunday Times.

The British chief negotiator David Frost arrived in Brussels on Sunday to make a “very last attempt”. On Friday evening, Frost and his counterpart Michel Barnier had exhausted the negotiations because they could not go any further.

They had spent the whole week with their teams in the “cave”, a windowless basement room in the Department of Commerce in London. Negotiations continued until late at night, but the major issues remained unstable.

British Prime Minister Boris Johnson then telephoned EU Commission President Ursula von der Leyen from his country estate Checkers on Saturday to give new impetus.

In the hour-long phone call, Johnson reiterated that the EU must recognize London’s freedom to do things differently in the future. Von der Leyen, on the other hand, emphasized that the price for access to the internal market is compliance with certain rules.

The main points of contention are the same as in March when the talks began:

  • Fishing: After there was talk of rapprochement in EU circles on Sunday evening, a spokesman in London said nothing had changed significantly. The EU wants to secure long-term access for its fishermen to British waters. The British government had only offered a transition period of three years, after which it plans to negotiate the quotas annually. There are also differences in the size of the catch quotas.
  • Fair competition: The EU wants to ensure that the British government adheres to similarly strict rules as the EU in labor and environmental law as well as in subsidies. The commitment to the “level playing field” should be made binding. Johnson, on the other hand, does not want to have his hands tied and insists on British sovereignty.
  • Governance: The EU wants to stipulate that the partners can impose punitive tariffs on the other if they violate the free trade agreement – in all areas. The British government is blocking itself because it believes that this would cement its dependence on the EU.

If these three questions are not clarified, no agreement is possible, said Johnson and von der Leyen in a joint statement after their phone call.

If the talks fail, Great Britain will leave the European single market on December 31st without a follow-up agreement. From January 1st, the tariffs of the World Trade Organization will apply to trade across the English Channel.

British ministers are threatening no-deal

In London there was a complaint that Barnier suddenly made new demands last week. This was a “setback”, said Agriculture Minister Eustice. The EU rejected this representation. All demands are known for a long time.

British ministers again threatened a no-deal. The cabinet is one hundred percent behind Johnson and would also support a no-deal, the “Sunday Times” quoted a minister as saying. It is an open secret that heavyweights like Finance Minister Rishi Sunak and Cabinet Office Minister Michael Gove want to avoid such a scenario.

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In the fisheries dispute, France had increased the pressure on Barnier in recent days not to give in. European Minister Clément Beaune had described the British claims as “unjustified”. But negotiators seem to be making headway on the fisheries issue.

The bigger problem is the UK’s refusal to comply with EU demands for fair competition. Because from the British point of view, this is about the basic idea of ​​Brexit. Johnson had stressed several times that the kingdom would have to free itself from the EU’s “tractor beam” in the future.

To make matters worse, the controversial internal market law will return to the House of Commons on Monday. The House of Lords had canceled the offensive Northern Ireland passages because they violate the EU exit treaty and represent a breach of international law. But Johnson is expected to let the House of Commons write them back in. In doing so, he risks another confrontation with the EU, which has therefore already initiated infringement proceedings.

That will not improve the mood in the negotiations. The Single Market Act is one of the reasons why the EU insists on a strict control mechanism with sanctions.

More: Johnson’s Brexit poker is now negligent.

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Arianespace boss Israël holds on to Vega rocket – Ariane 6 is coming

Paris Stéphane Israël heads Arianespace, which was founded as a marketer of the European Ariane rocket. Arianespace is part of the Ariane Group, which in turn is a joint venture between the European aviation group Airbus and the French engine manufacturer Safran.

In addition to flights with the Ariane 5 rocket, Arianespace now also offers take-offs with the Vega model built by the Italian company Avio and the Russian Soyuz. The company is increasingly struggling with competition from Elon Musk’s SpaceX, which is supported by the US government, and new private providers.

In this phase there is also an accident: On Tuesday morning, a Vega with two satellites on board came off course a few minutes after take-off and had to be abandoned. It is the second Vega accident since it went into service in 2012 – albeit within a year and a half.

Meanwhile, the premiere of the European joint venture’s bearer of hope has been delayed: the Ariane 6. The new rocket model should be the answer to the challenges of the competition, a good deal cheaper and more flexible than the Ariane 5 that is still in use.

But the financing has not yet been fully secured, and the initial launch planned for 2021 has to be postponed to 2022. Stéphane Israël talks about the causes of the most recent accident, the consequences for the European space program and what Arianespace SpaceX has to counter.

Mr Israël, Tuesday morning a Vega rocket with two satellites went off course, there is probably an initial explanation for the technical defect. What are the consequences for your further program?
According to initial research, an industrial problem related to the fourth stage integration (AVUM) is the most likely cause of the loss of control of the launcher. If this cause is confirmed by the commission of inquiry, and if this commission quickly proposes corrective solutions to strengthen quality and control processes, we can envisage a return to the Vega flight under all the necessary reliability conditions, which is compatible with our targets for this launcher for 2021 is. That is the scenario we are betting on today. The schedule for other launches, in particular the three Soyuz launches planned before the end of the year from Kourou and Wostochny, remains unaffected.

What is Arianespace’s current position in the institutional and private missile launch markets?
Today the market is characterized as the United States and China are hyperinvesting, they have entered civilian and military competition: who can do the most launches? There are also fewer launches for large geostationary telecommunications satellites, in favor of large constellations of small satellites. SpaceX is focused on its own constellation, Amazon intends to put more than 3000 satellites into orbit.

EU Commissioner Thierry Breton is actively working towards a European constellation that is strongly supported by industry. And Arianespace launched twice for OneWeb earlier this year and has received 16 more launches as part of the takeover of the project. The year 2020 is the year of the constellations.

Aside from the failure on Tuesday, how many successful launches has Arianespace had this year?
We have made six starts since the beginning of the year. There have been three commercial launches with the Ariane 5, two for OneWeb with Soyuz and one with the Vega rocket (with the support of ESA and the European Commission). We are very excited to continue working with OneWeb under the leadership of the UK government and Indian company Bharti. Our competitors tried very actively to oust us, but they failed.

Stéphane Israel

The head of Arianespace is confident that the Ariane 6 will convince in the competition.

(Photo: ddp / abaca press)

They use the Russian Soyuz missile. Isn’t that like Peugeot selling Lada cars?
No, this is taking place within the framework of a European-Russian partnership that was agreed after the fall of the Berlin Wall and with which we are very satisfied. We signed a contract with our Russian partners for the delivery of 21 Soyuz in 2015. At that time the Ariane 5 was not suitable for certain tasks. Going forward, Ariane 6 and Vega-C will be able to serve all of Europe’s institutional needs, but Soyuz has a useful role to play. In fact, Soyuz was chosen by OneWeb to deploy the first generation of its satellites.

Perhaps also because the first launch of Ariane 6 has now been postponed to 2022. Is the project still secured? The French government claims that German criticism is getting tougher. And the German government even chose SpaceX to launch a government satellite into space.
The Ariane 6 is safe, the project is absolutely out of the question. As for choosing SpaceX, for me this is a decision made in the past that corresponded to a situation at one point when the Ariane 5 was not entirely suitable. Hopefully this situation will not be repeated in the future with the Ariane 6 and the Vega-C. Today we see clear, clear support from Germany for Ariane 6. The Bundestag has spoken out in favor of Community preference, which we welcome.

Ariane 6 is supposed to be the European answer to falling prices and new competitors. What are the reasons for the delay on this launcher?
It is mainly a consequence of the corona pandemic. The Guyana space center had to close for two months and the necessary health protection measures have since reduced productivity. After all, 13 states are involved, and the various health requirements have a significant impact in French Guiana and in the European supply chain, both for the engineers and for those involved in the manufacture of the first flight patterns.

The most important thing is that all rocket engines have been successfully tested. In connection with Covid, many activities take longer than expected, but there is no technical block. At the end of the year, the upper level is to be transported from Bremen to the test center in Lampoldshausen for ignition tests. This is a very important milestone for Germany and for Ariane 6.

But if we understand the Esa correctly, additional costs of EUR 230 million must be financed.
The Esa Council at the end of December will discuss in more depth the additional costs of completing the development related to Covid-19. In addition, this delay results in costs during the transition between Ariane 5 and Ariane 6: there is a one-year shortfall in marketing and fixed costs must be covered. We are also in talks with Esa on this subject.

Will the Ariane 6 still be competitively priced? SpaceX seems to be ahead.
Assuming a rate of nine launches per year, Ariane 6 will be at least 40 percent cheaper than Ariane 5. US missiles benefit from the massive commitment of their government. The US Air Force is paying $ 316 million to launch a Falcon Heavy in 2022, which is roughly three times the export price of that heavy-lift launch vehicle. So the American taxpayer is subsidizing the Falcon, which is very good for our competitor. In Europe there is no support from public procurement on a comparable scale.

SpaceX is dumping exports?
I don’t use this term because our activities are not covered by the World Trade Organization (WTO) and Ariane also benefits from public money. But Europe must ask itself about a better mix of public and private contracts for its own missiles. We need a stronger institutional market. Otherwise, our European access to space will lack resilience.

In Germany, the suspicion repeatedly arises that France is using the Ariane to modernize its nuclear missiles.
French nuclear deterrence is not part of Arianespace’s remit.

We have the skills and the talents, but Europe is having a hard time with new competitors. Is our organization too cumbersome? Is it the principle of geo-return, i.e. the return flow of national funds?
Geo-Return is an excellent way to raise funds. In return, the states receive appropriate jobs and technologies. But we also have to bear in mind that our technological development and industrial production are now exposed to unprecedented competitive pressure. But the evolution of the geo-return is not a question that Arianespace can solve; it is up to governments to decide what measures they are willing to take to improve competitiveness.

Perhaps Europe needs more internal private competition?
The US government commissioned an independent company to conduct a study to see if they should have three or more different launch vehicles to meet their needs. The answer was clear: two (SpaceX and ULA) were chosen because the market wouldn’t be big enough for three. The European institutional market is much narrower, however: the United States has more than 20 government starts a year, while there are only five or six here. And we have Ariane and Vega. I think we need to pool our forces instead of splintering them.

Perhaps a private operator less under the pressure of 13 governments would be cheaper.
If another competitor were to join us, we would be torn apart and there would only be one winner: our competitors across the Atlantic. However, we can think about how we can meet the growing demand for microsatellite launches.

If governments want a dedicated microsatellite launcher, there is only one way to make it economically viable: Contracts with the military are necessary because the military is the only one who pays more for “quick and responsive access to space”, the microsatellite launchers. Otherwise there is the “Ride Share” solution already with the Vega and tomorrow with the Ariane 6, several customers share a start. We have just demonstrated this with the Vega SSMS mission to station 53 satellites.

You mentioned the constellations and Thierry Breton’s proposal. Isn’t the market already saturated?
No way. Think of the growing need to transfer large amounts of data. I’m not only talking about fast internet access and 5G, but also about the data that is transmitted for the connected and possibly autonomous car. I am also thinking of a sovereign cloud.

No, the demand is growing, there is a lot of space in the market for several projects, and the Ariane 6 is perfectly suited to support the launch of very large constellations. We are available for large private projects as well as for those that could be decided by Europe.

Mr Israël, thank you for the interview.

More: How Europe is wasting its future in space.

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