Welcome to Better Europe’s weekly update on EU Affairs.
THE EPP’S AUTOMOTIVE PLAN: HARDLINE APPROACH OR STRATEGIC NEGOTIATION?
The European People’s Party (EPP) has unveiled a strategy aimed at safeguarding the EU’s automotive sector amid the environmental pressures of the Green Deal. Under leadership of German MEP Jens Gieseke, the EPP promotes a technology-neutral framework for emission reductions, including alternatives such as biofuels alongside electric vehicles, and calls for a revision of the 2035 ban on internal combustion engines to allow for a more gradual transition. The EPP also opposes the penalties to be imposed on carmakers in 2025 for failing to meet electric vehicle production quotas, arguing that the fines harm an industry that is already struggling with weak consumer demand and insufficient charging infrastructure. Instead, they are pushing for regulatory relief to give the sector more time and flexibility. But this strategy raises questions: Is the EPP’s bold stance a genuine policy shift or is it a tactical move to secure a compromise down the line, similar to the approach taken with the EU Deforestation Regulation? The EPP’s hard-line demands may be designed to create room for negotiation, with the ultimate aim of achieving a more balanced outcome. At a press conference this week, Gieseke stated that he did not expect support from the Greens, but rather from S&D, Renew, parts of the Left and ECR. Critics have argued that the EPP is undermining the environmental goals of the Green Deal for the sake of political gain, potentially compromising long-term sustainability for short-term political manoeuvring.
PROGRESS REPORTS SHOWCASE IMPACT OF HUNGARIAN PRESIDENCY
Despite the challenging timing in between the Parliament elections and the start of the new Commission, and the limited enthusiasm of Member States about having Hungary at the helm of the EU for six months, the Hungarian Presidency did manage to push key discussions forward in certain policy areas. In finance, the Hungarians kick-started very important trilogues on the changes to the Benchmark Regulation that “alleviate certain reporting requirements and rationalise authorisation and registration requirements for smaller benchmark administrators”. They also organised a second trilogue on the sharing and reuse of data by public authorities supervising the financial sector. The challenge is now on the incoming Polish Presidency to go beyond this achievement and potentially even close difficult files as announced in their ambitious programme, such as the Retail Investment Strategy where Parliament will soon be ready to come to the negotiating table.
EU SHOWS PRAGMATISM WITH MERCOSUR DEAL AND EXTENDED SCHENGEN TRAVEL
Two seemingly unrelated events in recent days reveal the EU’s pragmatic approach to asserting its role on the world stage. After 20 years of negotiations and five more for ratification, the EU has finally signed its trade deal with the now five Mercosur countries, meaning EU citizens will soon be able to enjoy cheaper Brazilian beef. Meanwhile, despite some remaining ‘safeguards’, citizens of Bulgaria and Romania will finally be able to travel freely within the Schengen after Christmas. The timing of these two milestones is no coincidence – the EU is resolving two long-standing issues that have been dragging on for years. On the trade front, the Mercosur agreement helps the EU strengthen its global influence by securing access to South American markets that are now within reach of over 260 million people. For Germany, this trade deal is especially crucial. With its manufacturing sector grappling with decline, Berlin views the Mercosur agreement as an opportunity to tap into new markets in the face of a shifting global economy. Yet, this is not merely about expanding trade – it’s about positioning Germany’s industries in a new global order. However, the deal has sparked significant criticism, particularly from environmental groups and certain EU Member States, who warn that it risks exacerbating deforestation and undermining local economies in the Mercosur region. Meanwhile, the Schengen decision – a long-standing point of contention – will soon be a thing of the past. With Austria’s veto finally lifted, Bulgaria and Romania will formally join the Schengen area on 1 January 2025. This is a long-awaited step towards greater European integration, ensuring that the EU’s promise of free movement is realised for all its members. Taken together, these events show that the EU is making progress on issues that have held it back for too long. Both show that the EU is balancing internal and external challenges, overcoming old obstacles and moving towards a more connected future. Ultimately, the EU must walk a fine line between pragmatism and principle if it is to truly establish itself as a global leader: can it have its beef and eat it too?