9 December 2024 – EU and Mercosur conclude important free trade agreement after long negotiations and despite massive criticism from France. Diplomatic row between France and Brussels. And this Monday, another summit on the failed steel policy takes place in the German Chancellery. Another election tactic by the German Chancellor?
EU and Mercosur on the verge of an important free trade agreement
After more than a quarter of a century of negotiations, the moment has come: The President of the European Commission, Ursula von der Leyen, and Trade Commissioner Maroš Šefčovič have travelled to Montevideo – despite massive criticism from France – to sign the EU-Mercosur pact. With around 700 million people, this would create the largest free trade zone in the world.
At a time when protectionist tendencies and tariffs are on the rise, Europe is sending an important signal. While the volume of trade between Mercosur countries and the EU has fallen from 31 to 15 per cent over the past 20 years or so, China’s share has risen from 2 to 24 per cent in the same period. The conclusion of the agreement should now strengthen Europe’s presence in the region again.
Although both the Council of Ministers and the European Parliament still have to give their approval, the news has already caused a stir on the markets. The sub-index for cars and car parts in the STOXX 600 in particular rose by four per cent in three days.
Dispute between France and Brussels escalates
The dispute between the European Commission and France over the Mercosur agreement meant that Commission President Ursula von der Leyen was no longer welcome at the reopening ceremony of Notre Dame Cathedral. Her name did not appear on the official guest list. Allegedly, there was a communication problem between Brussels and Paris. However, this version is rather unlikely and is probably just an excuse. French President Emmanuel Macron had recently helped to put von der Leyen back on the throne of the Commission presidency.
In any case, at the weekend Ms von der Leyen was able to experience what it is like to be a supposedly less important member of the European community. Now she knows how small and medium-sized enterprises feel in the EU. SMEs are simply not invited or overlooked, just as Ms von der Leyen was the victim of an alleged communication error when invited to the Notre Dame inauguration. This regrettable communication error does not appear to have occurred with US President-elect Donald Trump and Ukrainian President Volodymyr Zelenskyy, with whom Mr Macron met at the weekend.
Another summit on failed steel policy at the German Chancellery
A steel summit is being held today, Monday, in the German Chancellery. After Chancellor Olaf Scholz, who is still in office, has already held two industry summits (29 October and 15 November 2024), the third summit will now follow – this time exclusively with German steel producers, trade unions and works councils.
The aim is to discuss specific measures to further relieve the burden on an industry that has already been promised or granted more than €7 billion euros in additional subsidies in 2024. This does not include the existing subsidies in the form of free EU CO2 certificates and German electricity price compensation for particularly energy-intensive industries, for example. These two measures alone are already costing taxpayers around 1.5 billion euros per year.
German chancellor with clientele policy only in election campaign mode?
At these industry summits, the Chancellor is in no way inferior to the Commission President and is clearly only serving his own electorate and core clientele. There is no other explanation for the composition of the invited industry and steel summit participants. Small and medium-sized enterprises are not mentioned by the Federal Chancellor. Instead of boosting the demand side for steel products, the Federal Government prefers to continue throwing billions of taxpayers’ money at the home-made mistakes of the domestic steel industry.
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