BRUSSELS — The European Union is under pressure to keep Ukrainian troops fully online after Elon Musk’s Starlink was restricted amid volatile U.S. support for Kyiv.

“It was a very dangerous and unpleasant surprise,” Ukrainian President Volodymyr Zelenskyy told reporters after EU leaders met in Brussels, referring to Starlink speed limitations experienced by military troops in recent days. “We were using Starlink to intercept jet-powered Shaheds [combat drones] that are attacking our civilian infrastructure and killing our families … When the speed limits were lowered, we became incapable of shooting [them] down.”

Ukraine has long relied critically on Musk’s satellite constellation for wartime efforts. Reuters reported Friday that the order to slow Ukraine’s military-grade Starshield service came from the White House, days after Washington pressed Kyiv to halt strikes on Russian refineries, amid soaring energy prices and ahead of November’s midterm elections.

“It is unacceptable for Ukraine’s defense — and therefore Europe’s security — to depend on the goodwill of a single American billionaire or on Donald Trump’s decisions,” French centrist Member of the European Parliament Christophe Grudler told POLITICO.

Ahead of Thursday’s high-level meeting, European lawmakers had been calling on the EU executive to fast-track Kyiv’s access to satellite capabilities already pooled under the bloc’s Govsatcom program — which gives participating governments secure communications capabilities.

Negotiations between the EU executive and Ukraine over this access have been ongoing since March, with no breakthrough. Norway and Iceland secured such an agreement earlier this year.

“What I don’t understand is why the European Commission and the Member States have not done everything possible to quickly reach an agreement that would allow Ukraine to benefit from it,” added Christophe Grudler, who wrote to EU leaders.

He also called on them to speed up work on IRIS² — the EU’s in-house, planned satellite network and full-fledged match to Starlink, which is only expected to come online in 2030.

Commission spokesperson Thomas Regnier confirmed in a statement that it is “currently in talks with Ukraine to fully associate” the country with the EU’s Govsatcom program. “The war in Ukraine shows that our security also depends on space. And the EU has been doing quite a lot. We are ready to support Ukraine where we can support Ukraine,” he added.

Calls to crack down on dependence on foreign providers and boost alternatives to Starlink also come at a time when legislators are negotiating a series of laws that could tame Musk’s ambitions in Europe.

“Ukraine’s dependence on Starlink highlights the vulnerability of European defence systems that rely on U.S. technology, Another reminder that Europe must reduce its dangerous technological dependencies — ASAP,” center-right Finnish lawmaker Aura Salla said on social media.

Policymakers across Europe have been joining forces to curb Starlink’s dominance in low-Earth orbit, where satellites fly close to Earth to deliver faster connections.

“As legislators, we must ensure that European operators are well positioned in the market and limit the dominance of foreign players,” German center-left lawmaker Matthias Ecke said. In Brussels, lawmakers, including Ecke, are backing European telcos gunning for prized satellite frequencies, currently licensed to U.S. operators until next year and eyed by Starlink.

Meanwhile, Zelenskyy said Ukraine was working bilaterally with EU countries to secure more capabilities, citing France. He also expressed hopes that Starlink restrictions could be lifted. “My partners told me there were signals from the White House that they would return these capabilities.”

SpaceX — Starlink’s parent company — didn’t respond to POLITICO’s request for comment.

BRUSSELS — France and Germany said Friday they had struck a deal to favor European-made cars under a landmark EU industry bill in exchange for weakening a 2035 vehicle emissions target, ending months of wrangling between the bloc’s two biggest economies.

Under the agreement, Germany would accept stricter “Made in Europe” — or local content — requirements for the automotive industry in the proposed Industrial Accelerator Act, a longstanding French demand, while France would back Berlin’s push to relax the EU’s plan to phase out new combustion-engine cars.

The EU’s current target is for companies to reduce emissions from new vehicles by 100% from 2021 levels by 2035, with the possibility to “earn” 10% of emissions leeway through initiatives like offsets and investments.

France and Germany now want to soften the 2035 target to 90% but without having  to offer investments in alternative fuels to compensate the remaining 10%, as proposed by the European Commission.

“This balanced approach will enable the European Union to pursue its climate objectives while strengthening the technological sovereignty, industrial base and international competitiveness of its automotive industry,” the two countries said in a joint statement.

The agreement, first reported by POLITICO in July, was due to have been announced Thursday, during a meeting of EU leaders in Brussels. But it was held up at the last minute by disagreements within Germany’s governing coalition.

“We hope that this Franco-German dynamic can swiftly lead to an agreement with our partners, for our jobs and our industry,” French President Emmanuel Macron said in a post on social media.

An Elysée official on Friday made clear that, under the Franco-German deal, the scope of Made in Europe for automotive can be extended to the U.K. and Switzerland under certain conditions. — addressing a key concern of Prime Minister Andy Burnham’s government ahead of a Nov. 20 U.K.-EU summit in Brussels.

The agreement was reached after the German Social Democratic Party, the junior partner in Chancellor Friedrich Merz’s coalition government, dropped its opposition.

“This is a modern realignment of German industrial policy that places significantly greater emphasis on preserving jobs and production sites,” said German Environment Minister Carsten Schneider, who is from the SPD.

“The clear expectation for German companies is that they will use these new opportunities to make investments and guarantee jobs here in Germany,” he added.

CORRECTION: This article was updated on Oct. 16 after an earlier version misrepresented the figures in the Franco-German proposal on the softening of 2035 targets.

BRUSSELS — France and Germany on Thursday failed to agree a common position on the scope of the bloc’s future “Made in Europe” rules, as well as on greater flexibility for CO2 emissions cuts and the 2035 combustion engine ban. 

The draft quid-pro-quo deal, which was first reported by POLITICO in July, marks a major convergence between the two countries and had been expected to be signed imminently. On Thursday evening, however, the agreement stalled amid opposition from Germany’s Social Democratic Party, the center-left junior partner in the ruling coalition, over concerns it dropped key environmental targets.

“A final agreement has yet to be reached,” a German government spokesperson said.

Earlier this week, French President Emmanuel Macron had suggested the ball was in the German court. “There are political constraints on the other side of the Rhine, and I completely respect coalition discussions,” Macron said Monday on the sidelines of the Paris car show.

Under the terms of the proposed deal, Germany would accept stricter Made in Europe criteria for the automotive sector in the Industrial Accelerator Act, which France has pushed for, in exchange for weakening the combustion engine ban, one of Berlin’s long-term demands.

“In light of the significant technological, economic and geopolitical changes since the existing regulatory framework was established, the Automotive Package should strike a better balance between climate objectives, industrial competitiveness, technological development and the strengthening of European value creation,” the two countries wrote in a draft agreement obtained by POLITICO.

“Based on the Franco-German Ministerial Councils in 2025 and 2026, Germany and France therefore propose a balanced negotiating package combining ambitious CO₂ reduction targets with additional flexibility and targeted incentives for European value creation,” the agreement adds.

Currently, the EU’s target is for companies to reduce combustion engine emissions by 100% from 2021 levels by 2035, with the possibility to ‘earn’ 10% of emissions leeway through initiatives like offsets and investments.

Under the proposed deal, France and Germany want to soften the 2035 target to 90%, and to offer a further 10% leeway in exchange for investments in alternative fuels (for a combined 80%).

Crucially for steel manufacturers and Germany’s leftist SPD, the French-German agreement would axe the green steel investment requirement, removing a key incentive.

“This destroys the lead market for the steel industry,” an industry lobbyist told POLITICO on condition of anonymity to discuss the sensitive topic. In failing to put pressure on automakers to source green steel, the draft deal makes it a “nice-to-have” extra, they explained.

In a concession to Berlin, the draft agreement stresses that the so-called utility factor — which calculates plug-in hybrid emissions based on how often a vehicle’s electric motor is used vs. its combustion engine — should be calculated on lab-based results rather than real-world data, as required by the Commission. The change will help automakers sell more plug-in hybrids while still reaching the broader emissions targets.

In exchange for these emissions concessions, Germany endorsed France’s demand that the scope of the Made in Europe rules under the bloc’s Industrial Accelerator Act be restricted when it comes to the automotive sector.

The text only covers the EU’s 27 member countries and will be extended to the U.K. under certain conditions.

EU industry chief Stéphane Séjourné told POLITICO on Tuesday that he supported the deal as a way of breaking the impasse, and said the U.K. currently qualifies for Made in Europe. 

The agreement could resolve a stalemate over both the CO2 regulation and the IAA, in which France and Germany have been on opposite sides. “The elements of this combined package should be adopted as soon as possible and at the same time,” the two countries wrote.

The British government welcomed the potential inclusion of the U.K. in the Made in Europe rules for cars. 

“This is a Franco-German proposal and there is still a European process to run, but if confirmed, we welcome the objective to have the U.K. included in the Industrial Accelerator Act, and this would be good news for the British automotive industry and the jobs and investment it supports across the U.K.,” a No. 10 official said in a statement.

If approved, the comprehensive Franco-German deal will still have to be approved by other EU countries and by the European Parliament, which are currently discussing the Industrial Accelerator Act and the automotive package, including emissions targets for automakers.

Carlo Martuscelli, Francesca Micheletti and Graham Lanktree contributed to this report.

BRUSSELS — It was meant to be a debate on how to curb Europe’s soaring energy prices.

But the first session of talks at an EU leaders’ summit in Brussels Thursday quickly descended into a three-hour fight over whether the EU should put a carbon price on driving cars and heating buildings.

The delay got so bad, the roast veal and fig tartlet lunch awaiting European leaders was driven well into the afternoon.

Countries including Italy, Poland, Czechia and Hungary called for ETS2 — an already-legislated law that will put a carbon price on heating and transport from 2028 — to be delayed for two more years. Estonia suggested it could be scrapped altogether.

The push was rejected by a majority of the bloc, with several EU diplomats telling POLITICO it was, as one put it, an “unacceptable” offer. Another said the ETS2 launch date would never be changed. But the debate reflects a growing sense from right-leaning governments that the EU’s ambitious green agenda runs against their push to bring down energy costs. 

While the main topic of today’s discussion was ETS2, its predecessor, the Emissions Trading System — which puts a price on carbon emissions from factories and power plants — was arguably the real target.

Put together, these two emissions trading schemes will be the EU’s most powerful policy tool for bringing down planet-warming emissions.

A proposed reform of the original ETS is currently being debated in the European Parliament and in the Council of the EU. Italy and Poland have been leading a gang of 10 member-countries which have been railing against the ETS since American and Israeli bombs started falling on Iran in March. 

What they want is for the European Commission’s July review of the ETS to be further weakened, even though the proposal already softens carbon restrictions over the next decade to give industry more time to invest in cleaner production methods.

But by framing the ETS as a scourge on household bills, both Warsaw and Rome have found ready audiences at home and abroad. On Monday, hours before a meeting of EU environment ministers convened in Luxembourg, Poland led a meeting of member countries with concerns on the ETS. Their gang, which originally counted 10 countries in March, had now grown to 16.

While Italy and Poland did manage to get Czechia, Slovakia, Hungary and Greece to back their ask for a “reassessment of the ETS2” and to “further postpone its entry into force until at least 2030,” inside the room of European leaders the position mostly fell flat.

Five EU diplomats granted anonymity to discuss the ongoing negotiations said Nordic countries and the Netherlands were firmly against changes to ETS2 — a position backed by France and Germany.

But Paris and Berlin’s long-term reliability as ETS defenders is in doubt. French President Emmanuel Macron and German Chancellor Friedrich Merz both face threats from the far-right, where the ETS has become a dirty word.

Germany’s far-right Alternative für Deutschland, which is no fan of the ETS, is politically ascendant, having won the largest share of votes in two regional elections in September. In France, with elections only months away in 2027, Marine Le Pen’s far-right National Rally is leading in the polls. 

How Le Pen would deal with the ETS isn’t certain, but Jordan Bardella, the French far-right lawmaker and rising star of National Rally, offered a clue  in recent comments.

“ETS: three letters, an acronym that reeks of detached bureaucracy, with one question that keeps coming up: who’s going to pay?” he said to European Parliament in May.

BRUSSELS — NATO allies will hold a crisis meeting to discuss how to respond to a series of drone strikes on cargo shipping in the Black Sea, Romania’s President Nicușor Dan said.

Two chemical tankers were hit by air drones in the past 24 hours in or near Romania’s territorial waters, but it is “too early” to say for sure whether Russia was behind the attacks, Dan added.

Dan was speaking on the sidelines of the European Council summit in Brussels, where he spoke to Bulgarian Prime Minister Rumen Radev and NATO Secretary-General Mark Rutte about the latest incidents.

“The secretary general expressed the solidarity of the alliance and there will be a NAC [North Atlantic Council] meeting at which the whole situation with the Black Sea will be discussed,” Dan told POLITICO. “Of course the conclusion is that all the hybrid attacks are trying to decrease our support for Ukraine. We will continue to support,” he said.

Dan said invoking NATO’s collective defense clause, Article 5, was “not now” being discussed as an option for responding to the attacks. Nor has Romania asked for Article 4 — the emergency clause that sets consultations in motion over military matters when a member’s security has been threatened — to be triggered, he said.

Rescuers are searching for seven missing crew members after two chemical tankers were hit by aerial drones in or near Romanian territorial waters. Over the past 10 days, drones have hit at least five more cargo ships close to Romania and Bulgaria — both NATO members — killing at least 23 sailors.

Investigation teams from Romania’s army and intelligence services are trying to establish what led to the most recent drones strikes on the ships, Dan said.

Romania asked NATO for equipment including specialized radars and requested the delivery to be accelerated after a Russian drone crashed into an apartment building near the border with Ukraine in May.

Dan suggested Romania was likely to seek further assistance with equipment from allies this time. “On the operational level, we are in the same situation where we have been … on the Danube border with Ukraine,” Dan said. “What we did at that moment, we came here to NATO and some of our allies — United States, France, Spain, Italy, Slovakia, Portugal — gave us some equipment. And now we are in the same situation, but on the other border, with the Black Sea.”

After the meeting with Dan and Radev, NATO’s Rutte said the alliance had already increased “counter-drone capabilities” along its eastern flank. “NATO will continue to work closely with our allies in the Black Sea, adjusting our deterrence and defence posture as needed,” he posted on X.

This story has been updated. Victor Jack contributed to the report.

BRUSSELS — European leaders came for the budget. They’re staying for everything else.

A two-day European Council starting Thursday was supposed to be all about the money. Instead, leaders of the 27 EU member countries are heading into one of their most crowded summits in years, with a succession of geopolitical crises threatening to hijack the EU’s carefully laid plans.

European Council President António Costa originally wanted the gathering to accelerate negotiations on the bloc’s next seven-year budget, hoping to seal a deal before elections in France, Italy and Poland in 2027 make an already difficult agreement even harder.

But the world had other plans. Soaring energy prices, tensions with China, Russia’s war in Ukraine (and U.S. President Donald Trump’s ambiguity over it), migration and turmoil in the Middle East have all elbowed their way onto the agenda.

The result is a two-day marathon covering virtually every major challenge facing the EU, from keeping European factories competitive to ensuring the world’s most important shipping lanes stay open.

For anyone trying to follow the action without spending 48 hours glued to Brussels, here’s your guide to what matters.

With the usual warning: EU leaders are notorious for letting discussions drag on or reshuffling the agenda — that’s what our liveblog is for.

Thursday at dawn: The pre-match warm-up

Before the summit even starts, Europe’s political families will gather at the crack of dawn.

The European People’s Party meets from 7:30 a.m. at the Sofitel Brussels Europe — the place to be if you can get in, given how many center-right leaders will be at the summit table.

The Socialists gather from 8:30 a.m. at PES headquarters, with Costa, Spain’s Pedro Sánchez and Denmark’s Mette Frederiksen expected.

Renew kicks off at 8 a.m. at the Palais d’Egmont, with French President Emmanuel Macron and top EU diplomat Kaja Kallas among those expected.

Even without leaders in the summit room, the far-right Patriots got a head start Wednesday, with Marine Le Pen delivering a scathing attack on the state of the EU.

Thursday morning: The energy blame game and China

Leaders kick off with discussions on Europe’s struggle for economic competitiveness, starting with energy — potentially the most politically explosive debate.

Governments want immediate relief from soaring energy prices as a result of the war in Iran, and will push the Commission to introduce new measures on top of the wide-ranging but somewhat toothless package it announced back in March.

Expect finger-pointing between capitals and Brussels over who should act, and for climate policies like the upcoming Emissions Trading System on heating and transport to come under fire.

Next comes China. European Commission President Ursula von der Leyen will brief leaders on efforts to tackle the EU’s enormous trade imbalance with Beijing, following trade chief Maroš Šefčovič’s negotiations with Chinese officials.

Leaders are expected to renew their demand for Brussels to “urgently” tool up with further trade defenses to prevent further deindustrialization of the bloc and to shield further industrial sectors from Chinese competition.

There’s also time for the familiar fight over EU red tape, with calls for Brussels to stop legislating.

Thursday afternoon: Costa’s budget gamble

This was supposed to be the main event. Leaders will discuss Ireland’s negotiating proposal for the EU’s 2028–2034 budget slashed by €159 billion from the Commission’s original proposal.

The positions are well known: The self-styled “modernists” — essentially the old frugals in disguise — want to contain costs, while countries benefiting from EU spending are determined to defend their allocations, under the less glamorous banner of “friends of cohesion.” Positions on new EU-wide taxes are similarly entrenched.

But the real story is timing.

Governments have watered down a commitment to secure an agreement by December, according to draft conclusions seen by POLITICO. Costa wants a deal before a series of high-stakes elections in 2027 complicate negotiations; capitals fear a deadline could weaken their bargaining power.

Most importantly, Costa is moving into the driving seat as budget talks enter their most politically sensitive stage. Watch for clues about a possible extraordinary summit in late November — and whether December remains a credible deadline or leaders quietly start preparing for negotiations to spill into 2027.

Thursday dinner: Making room for new members

Over dinner, leaders will tackle enlargement and the EU reforms needed to accommodate new members — after all, October’s summit has historically been devoted to the bloc’s hopefuls.

Montenegro is edging closer to completing accession negotiations, while progress elsewhere raises questions about whether the bloc is institutionally and financially ready to grow.

The Commission has outlined proposals to prepare the EU for enlargement, and leaders will discuss how internal reforms should accompany the accession process. Watch for a positive signal to Montenegro and commitments on reforming the bloc itself.

Friday morning: Ukraine’s wish list

The second day begins with Ukraine and an expected appearance by President Volodymyr Zelenskyy. Declarations of European solidarity are all but guaranteed. The more interesting question is what leaders are actually prepared to do.

Kyiv needs air defense systems, interceptors and financing as Russian attacks intensify. Leaders could discuss tougher action against Moscow’s shadow fleet and visa restrictions for Russians. And while EU financing for Ukraine has already been agreed for 2026, the country’s needs beyond that remain an increasingly pressing issue.

Could this mean reopening the debate on using frozen Russian assets to plug future funding gaps? That remains a question mark — although no immediate breakthrough is expected.

Friday pre-lunch: Defense and three dangerous waterways

Before breaking for lunch, leaders will turn to Russian hybrid attacks, maritime security and the Middle East.

In the Black Sea, recent attacks on civilian shipping threaten Ukraine’s crucial grain export route. Turkey has floated new protected shipping corridors, while countries including Romania and Bulgaria are pushing to give the issue more attention.

Will leaders back concrete measures or stop at condemnation? That’s the question.

Discussions then turn to the Middle East and two other critical shipping routes: the Strait of Hormuz and the Red Sea. The fallout from the Iran–U.S. war, increased Iranian attacks around Hormuz and renewed Houthi threats in the Red Sea have disrupted global trade and energy flows.

The EU’s Aspides naval mission is short of vessels, and Kallas wants governments to contribute more. Watch whether leaders put ships behind their promises.

The broader Middle East discussion will also touch on Iran, Yemen, the West Bank and Lebanon.

Friday lunch: The migration showdown

Spain’s Pedro Sánchez, Italy’s Giorgia Meloni and Denmark’s Mette Frederiksen are worth watching as leaders discuss migration over lunch, following the crisis in Spain’s North African exclave of Ceuta.

Irregular arrivals have been declining, but disagreements remain over border crises, solidarity and tougher migration controls.

And with an election looming in Spain on Nov. 29, this could be Sánchez’s last tango — and a final chance to defend his government’s handling of the crisis while venting his frustration over the lack of European solidarity.

Watch whether the debate produces agreement or another political clash, as happened last time.

Bonus: Two pressers are better than one

With such a packed agenda, leaders won’t wait until the end of the summit for the usual joint press conference by von der Leyen and Costa. An additional one is planned for Thursday, after the budget debate.

On Thursday, watch Costa’s language on the budget deadline and whether von der Leyen offers any concrete measures on energy prices.

On Friday, look for promises of additional support for Ukraine, whether commitments on maritime security come with actual ships and resources — and commentary on how the migration showdown over lunch went.

Martina Sapio contributed to reporting.

The Ukraine war’s spillover into the Black Sea is creating a growing European security and commercial risk: Drones are hitting ships and killing sailors, grain routes are under strain, and insurers and investors are weighing the cost of operating through Ukraine’s ports.

Five commercial vessels have been hit in Bulgarian and Romanian waters over the past week alone, leaving at least four people dead, several sailors missing and others injured. In response, Black Sea countries Bulgaria, Romania and Turkey have raised the issue at NATO, asking for more focus toward the region and joint support, according to two alliance diplomats.

“The attack within Bulgaria’s exclusive economic zone is absolutely unacceptable. It constitutes a serious breach of maritime and international law and will further jeopardise safe navigation in the Black Sea,” Bulgarian Prime Minister Rumen Radev said on X after the attacks last week.

Russia has been attacking Ukrainian ports and cities in the area since the start of its full-scale invasion. But the recent strikes have brought the spillover into NATO territory. If they continue, EU leaders will face pressure to protect Black Sea shipping and keep Ukrainian trade moving.

Those questions will be top of mind at Thursday’s European Council summit. According to draft conclusions obtained by POLITICO, leaders are expected to discuss the “immediate restoration of safe passage for grain cargo ships.”

A wider problem

Russia is not the only country using naval drones in the Black Sea. Ukraine has also used them against Russian-linked shipping. In June, a Ukrainian sea drone exploded in Romania’s Constanța port after Kyiv said it had veered off course because of Russian electronic interference.

“The Black Sea situation is quite dangerous because attacks are coming from both [sides],” said an EU shipping representative, who was granted anonymity to speak freely. “You have to worry about both.”

Attribution can also be difficult. Bulgarian Prime Minister Rumen Radev said Wednesday that investigators still have not proven that Russia is behind the strikes — although some have attributed his reticence to his broadly softer approach toward the Kremlin.

Drone operations by both Russia and Ukraine are likely to continue as long as each has the money and production capacity to sustain them, said Cristian Vlas, assistant research manager for Eastern Europe at the think tank ACLED.

Oleksii Goncharenko, a Ukrainian lawmaker and founder of the Black Sea Security Forum, told POLITICO that a “serious diplomatic initiative” was needed, bringing together Ukraine, Russia and a third-party guarantor, such as Turkey, “to restore freedom of navigation in the Black Sea.”

Grain routes under pressure

The security risk is disrupting routes that carry Ukraine’s harvest to market, with consequences for EU transport links. Black Sea ports are Ukraine’s main export gateway, handling around 95 percent of the country’s grain exports, as well as significant volumes of iron ore. Shipping traffic has fallen as the security risk has grown.

Some cargo is being rerouted to the River Danube, but capacity there has been stretched in recent months as drought pushes water levels to record lows. Operators are trying to add rail capacity, but that risks moving the bottleneck westward to Romania.

Moving more Ukrainian grain overland also risks reviving tensions with farmers in neighboring EU countries, Vlas said. Romanian farmers have worried that Ukrainian produce meant only to transit could stay on the domestic market, he added, while transport operators are already juggling competing demands for capacity.

Ukraine’s Agriculture Minister Taras Vysotskyi has warned that millions of tons of unsold grain is piling up, and that farmers who can’t sell won’t be able to afford to resow all their land.

Bulgaria is working with Romania and Turkey on a joint initiative to protect freedom of navigation in the Black Sea, which Radev plans to bring to EU leaders on Thursday.

Following the Black Sea countries’ request at NATO, military officials are likely to look into possible options such as shifting counter-drone systems to the region, the two alliance diplomats said. Radev said Sofia will convene his counterparts in Ankara and Bucharest to examine further proposals, while a senior Bulgarian official called for new joint anti-drone systems with Romania, partly financed by the EU.

Investment at risk

The attacks also threaten what had started to look like a renewed bet on Ukraine’s ports. MSC, the world’s largest container line, was among the biggest and newest investors, reportedly acquiring a majority stake in a container terminal at a port near Odesa in May.

Ukraine has also been offering investors a long-term concession at the Chornomorsk terminal near Odesa. This terminal is one of Ukraine’s largest planned port public-private partnerships and part of what is expected to be a multibillion-euro reconstruction effort involving European companies.

But people who work in Ukraine’s ports say the case for rebuilding is collapsing.

“No one is ready to invest and rebuild, since you know that tomorrow there will be another missile, another pack of drones,” Oleg Grygoriuk, chairman of Ukraine’s Marine Transport Workers’ Trade Union, said.

BRUSSELS — The EU and China are in a good place to talk after last week’s trade deal on hybrid cars, but challenges remain, panelists at POLITICO’s European Resilience Summit on Wednesday agreed.

“From the Chinese business perspective this is very welcome,” said Linlin Liang of the China Chamber of Commerce to the EU, calling the understanding reached in Beijing “quite balanced from our perspective.”

An agreement to halve China’s exports hybrid vehicles to Europe was the main deliverable brought home by Trade Commissioner Maroš Šefčovič.

The two sides said in a joint statement that they would keep talking about issues such as market access for medical devices and the Foreign Subsidies Regulation, an EU measure that scrutinizes foreign subsidies that distort competition in public procurement and corporate acquisitions.

Šefčovič will hold further talks with Chinese Commerce Minister Wang Wentao in January, and they will meet again in March, as he pushes to rein in a €1 billion-a-day bilateral trade deficit.

Liang said Beijing stands ready to act if further talks go off track.

“I would like to remind all what MOFCOM mentioned: that they reserve the right to retaliate in case that things … don’t go around as agreed,” she told the panel on Europe in global trade, referring to the Chinese Ministry of Commerce.

Kathleen Van Brempt, a Belgian MEP for the Socialists & Democrats, said the most important outcome of last week’s Beijing talks was that there was “some sort of trade deal or result.”

Yet Beijing’s aggressive subsidy policies remain a hurdle, the senior trade lawmaker said, referring to a widely cited OECD study which found that Beijing’s subsidies to industry are up to eight times higher than in other countries: “It’s not normal,” she said.

Liang said that China’s export success should not be attributed solely to subsidies, and was the result of “decades of investment in innovation.”

She also said there was “a super appetite” among Chinese businesses to invest in Europe, but that they needed to assess the profitability of the EU market just like European companies.

The discussion also revealed differences between policymakers and businesses over the EU’s proposed Industrial Accelerator Act, a flagship measure aimed at steering public procurement spending toward European companies in sectors ranging from renewable energy to steel and the automotive industry.

Van Brempt, the S&D group’s lead lawmaker on the file in the trade committee, said the parliament’s three co-leads are aligned on the bill. While the center-right European People’s Party was “very divided” over the measure, she said lawmakers should be able to come to a common position.

The bill’s “Made in Europe” provision is a cause for concern for industry, meanwhile, as it risks isolating the EU from global supply chains.

“I would be careful always saying, okay, localize, put fences up,” said Holger Weintritt of German pharmaceutical company Bayer. “Let’s make sure that we still remain globally connected and look for reliable partnerships instead of isolating ourselves .”

When Maroš Šefčovič set out his strategy for engaging with China to European Union ambassadors in July, he had a warning for governments urging tougher action on trade against Beijing.

“Sometimes, it’s even popular to start a trade war, but it’s very difficult to finish it,” the EU trade chief recalled later in an interview with POLITICO.

Three months on, Šefčovič has secured a first breakthrough, reaching a deal in Beijing last week to sharply reduce imports of Chinese hybrid cars. The symbolic win marks a small step toward stabilizing a trading relationship that Brussels believes has reached a dangerous tipping point.

The agreement, which will initially cap imports at 350,000 vehicles a year, marks a significant concession from Beijing, whose carmakers have been flooding the European market with increasingly competitive vehicles. 

For Šefčovič, who negotiated last year’s tariff truce with Donald Trump, the agreement suggests his strategy of engagement backed by the threat of tougher trade measures may be starting to pay off.

Šefčovič agreed to launch the trade dialogue at a meeting with Chinese Commerce Minister Wang Wentao in Brussels in late June.

By focusing initially on cars — an area where the EU has leverage as one of the few major markets still open to Chinese manufacturers — the Slovak commissioner hoped to secure a confidence-building win before tackling thornier questions, from critical raw materials to China’s vast industrial overcapacity.

At the same time, he worked to coalesce European governments behind a parallel effort to strengthen the bloc’s trade defenses, reinforcing his negotiating position with the threat of tougher action to bring down the EU’s €1 billion-a-day trade deficit with China.

The hybrid deal, however, is only the opening move in a much bigger contest.

EU leaders meet in Brussels on Thursday to take stock, weighing the benefits of continued engagement against demands for more aggressive action to protect European industry from a surge in Chinese imports.

The meeting will test whether a commissioner who has made a career of finding compromises with difficult partners can maintain Europe’s support for a strategy whose success is far from assured.

“You have to deal with the same partner across the table,” Šefčovič said of the risks of starting a trade war, in the interview with POLITICO in August. “So if you can avoid this, it would be much better.”

Market power

Šefčovič’s opening move was to focus on an area where Europe still has leverage: access to its market of 450 million people.

China’s fiercely competitive manufacturers have become global powerhouses, but they are struggling with weak demand at home. A prolonged property slump has weighed on consumer spending, while cutthroat competition has triggered price wars. Domestic sales of passenger vehicles fell 28% in September from a year earlier.

That makes overseas markets increasingly important. With the U.S. shutting out Chinese imports, Europe remains one of the most lucrative markets still open to Chinese manufacturers.

Šefčovič gambled that Beijing would prefer to accept limits on exports rather than risk losing access to the European market altogether.

He set his sights on the automotive sector, where Chinese manufacturers have been making rapid inroads. Chinese carmakers accounted for just 2% of both the European hybrid and plug-in hybrid markets in 2024; by the first half of 2026, their respective shares had risen to 14% and 25%, industry figures show.

The Commission was preparing to restrict hybrid imports even without an agreement. But a negotiated settlement also offered Šefčovič something valuable politically: evidence that engagement with Beijing could deliver tangible results.

The negotiations were intense, according to a person familiar with the talks on the Chinese side.

“It was very, very tough,” the person said, speaking on condition of anonymity to discuss the closed-door negotiations. “Both sides hadn’t seen such intensity in a long time. No summer break, no holidays. They worked around the clock even one, two days prior to Šefčovič’s trip to Beijing.”

While pursuing dialogue, Brussels also wanted to convince Beijing that it was prepared to take tougher action if the negotiations failed.

Šefčovič had earlier flagged plans for a new “diversification instrument” that would require businesses in critical sectors to source essential inputs from at least three suppliers — a move to reduce China’s ability to exploit Europe’s dependence on its critical raw materials.

Then, just three days before Šefčovič’s trip to Beijing, France and Germany raised the stakes.

President Emmanuel Macron and German Chancellor Friedrich Merz called for a powerful new trade weapon that would allow Brussels to restrict — or even shut off — access to the European market within days for countries deemed to have severely distorted the bloc’s single market.

The proposal did not explicitly name China, but Beijing was its obvious target. 

Keeping it together

EU leaders are expected to welcome the agreement but also press the Commission to act quickly to strengthen the bloc’s trade defenses, according to several diplomats. The understanding reached in Beijing has bought time, but hasn’t settled how far Brussels should go if Chinese exports keep rising or negotiations stall.

“We’re losing thousands of jobs in industry; olive oil and ice cream won’t solve the core issue,” said one EU diplomat after Šefčovič briefed ambassadors on Sunday, referring to reported deliverables from the talks.

A senior German official welcomed the Beijing deal as a first step in the right direction. “It’s a positive sign — which, of course, doesn’t fully solve the problem of the trade deficit with China,” the official said.

But Berlin’s support for a tougher line might prove short-lived.

Alicia García-Herrero, a senior fellow at the Bruegel think tank, argued that Beijing’s concessions had been calculated to assuage Berlin, given the importance of the automotive industry to the German economy.

“I’m just hoping Merz doesn’t turn away from the letter he sent to the Commission,” she said. With the German chancellor politically weakened at home, García-Herrero fears he may be reluctant to risk a prolonged confrontation: “I worry Merz will take this quick win and run.”

That leaves Šefčovič facing a balancing act: keeping EU governments on board with continued engagement with China while maintaining a credible threat of tougher action if the talks break down. 

“I expect [leaders] to give the Commission a nod to move ahead with other trade defense measures. China may see this as a betrayal. If that is the case, we could return to conflict very quickly,” said Noah Barkin, a senior adviser at the Rhodium Group’s China practice.

The battle ahead

For Šefčovič, the challenge now is to turn a limited breakthrough on cars into a broader rebalancing of trade with China — while buying Europe time to strengthen its defenses should the negotiations fail.

“There is an argument for doing to China what China had done to Europe for years — bogging Beijing down in dialogue and process while Europe gets its tools in place. But the EU needs to make full use of the time that these talks provide,” said Rhodium’s Barkin. 

The trade chief is expected to hold a video call with Wang in January, before the two meet again next March. Those talks will test whether Beijing is prepared to make further concessions in sectors where European industry is increasingly on the defensive, including chemicals.

Another priority is critical raw materials, where China has agreed to continue issuing export licenses for rare earths. Beijing’s grip on their supply gives it considerable leverage over European manufacturers, underscoring the limits of Šefčovič’s negotiating position.

The Commission is also preparing two proposals for December: the diversification instrument, aimed at reducing dependence on Chinese supplies, and a mechanism to shield European industries and regions from retaliation.

The scale of the challenge is daunting. Chinese hybrid imports were worth €6.7 billion in the first half of 2026, against an EU-China trade deficit of €360 billion last year. The agreement offers some relief to European automakers but does little to address the underlying imbalance.

Brussels hopes the hybrid safeguard can serve as a blueprint for protecting other industries facing a surge in Chinese imports.

“We hear our industry. That includes the chemical industry, the wind industry, the furniture industry. We know where there’s a surge, and we know what hits the hardest in terms of our deindustrialization,” a senior Commission official said on Monday.

Šefčovič acknowledged the limits of dialogue in his August interview, warning that negotiations would become harder to sustain without tangible progress.

“What would be very important is to come back to say there is acknowledgment of the issue and there are already some pilot schemes which we want to test and to see if they are working,” he said.

“But if simply there will be no action, then of course it will be much more difficult for us just to talk about these issues.”

Jordyn Dahl in Brussels and Hans von der Burchard in Berlin contributed reporting. 

PARIS — French center-right presidential candidate Edouard Philippe accused his far-right rival Marine Le Pen of trying to force a Frexit in disguise with her euroskeptic campaign promises.

“There is something in Marine Le Pen’s proposals that has the potential to blow Europe up, or let’s say to crack it open,” Philippe said at POLITICO’s Paris Competitiveness Summit on Tuesday.

The former prime minister — who is currently the best-placed centrist candidate to challenge the front-running Le Pen, according to recent polls — said Le Pen’s plan to unilaterally demand a drastic cut to France’s contribution to the EU budget was akin to “saying you want out of Europe” without openly advocating for leaving the bloc. Le Pen had previously called for a referendum in France on leaving the EU but dropped the proposal after her crushing defeat to Emmanuel Macron in the 2017 presidential election. Her party, the National Rally, now says it wants to change the EU from within.

Philippe, a fiscal conservative who has been pitching himself as the voice of reason in a campaign dominated by populist rivals, also slammed budget plans Le Pen unveiled last week as “grotesque,” accusing her of pitching “fantasy” savings.

Le Pen’s fiscal plans have faced serious scrutiny since being presented, with many observers saying they either lack key details or overestimate savings on major proposals like immigration. Progressive think tank Terra Nova wrote in a note out Tuesday that Le Pen’s budget presentation was “riddled with errors and contradictions” as well as “botched estimates.”

“She isn’t even able to estimate the cost of the pension reform she is proposing,” Philippe said.

Le Pen said in August that her plan to bring France’s legal retirement age back down to 62 for most workers would cost €9 billion a year, and last week she said she would lay out at a later stage how she intends to fund her flagship pledge. However, the Institut Montaigne, a fiscally conservative think tank, estimated the proposal would cost €34.7 billion a year.

Philippe is hoping to convince voters that his fiscally conservative agenda is the right path in a country burdened by a ballooning public debt and a budget deficit still above 5% of gross domestic product, in breach of EU rules.

Philippe said France needed to get its finances back on track to regain credibility on the European stage after a “loss of influence” over the past few years.

Though he currently leads a crowded field of centrist candidates, Philippe’s campaign has struggled in recent weeks to gain momentum — and far-left candidate Jean-Luc Mélenchon is now challenging the former PM for second place in the polls. France’s presidential election goes to a runoff if no candidate receives more than 50% of the vote, and Le Pen’s strong poll numbers all but guarantee her a spot in the second round.

Tough on China

The former prime minister pitched a pragmatic European agenda with less regulatory burden, more focus on investment and a tougher approach to China.

Philippe had some harsh criticism for an already embattled flagship measure of the EU’s green deal, saying the 2035 combustion engine ban has been “disastrous.”

There was “a great naiveté toward China,” which ultimately benefited from Europe’s push on electric vehicles, Philippe said.

“We need to much better protect our market,” he added. “If one wants access to the European market, one has to manufacture in Europe. If a carmaker doesn’t manufacture here, then we have to slap high tariffs.”

The EU is in the process of drawing up new “Made in Europe” rules that would favor European producers over those outside the bloc, in response to trade practices by competitors like China and the United States.

Shortly before Philippe took the stage, European Commissioner for Industry Stéphane Séjourné said at the POLITICO event that a Franco-German deal trading stronger protections on the definition of Made in Europe in exchange for a loosening of combustion engine rules should be finalized “in the next few hours or in the next few days.”

On artificial intelligence, Philippe aligned himself with Macron, advocating for European sovereignty in the field and the need to regulate what he described as “an instrument of power.”

“What I see is an AI world making money for the U.S. with European savings and European data, and that bugs me,” he said.

PARIS — A deal between France and Germany to strengthen protections in the Industrial Accelerator Act in exchange for a loosening of combustion engine rules should be finalized “in the next few hours or in the next few days,” the bloc’s industry chief Stéphane Séjourné said Tuesday.

Speaking at POLITICO’s Competitiveness Summit in Paris, Séjourné said he hoped the agreement would help “break the deadlock, particularly in the European Parliament” on the IAA.

Séjourné’s comments come a day after French President Emmanuel Macron said a grand bargain with Germany was “imminent.”

The French commissioner said he was open to more “flexibility” on the combustion engine ban and emission rules — so long as decarbonization targets are not fully abandoned — if that helps to unlock talks on the IAA.

“This agreement, in fact, is a European agreement, and that is why it is so important. It should make it possible to green-light the IAA,” Séjourné added.

POLITICO revealed the Franco–German bargain in July. Séjourné is hoping the agreement will ease tensions in the European Parliament, where a minority of lawmakers from the center-right European People’s Party — mostly from the German delegation — have sought to reject or substantially weaken the proposal.

The IAA dispute lies between supporters of an opt-in system — where trading partners would need to qualify before receiving preferential treatment on the European market — and backers of an opt-out system in which the EU would move to exclude partners that fail reciprocity or other conditions. Many of those who back the opt-out option are German EPP lawmakers.

Séjourné called the debate irrelevant, stressing that what matters most is reciprocity with countries the EU works with.

“European public funds should be used primarily for public procurement,” he said. “Our goal is to keep production running smoothly, so we can’t expand the scope of Made in Europe indefinitely if our goal is to manufacture in Europe.”

On the EU’s broader trade policy, Séjourné stressed the need for Europe to continue to build credible “trade defense instruments” while arguing that China “rightly believes that they won their power struggle with the Trump administration a year ago on trade.”

Séjourné was also asked for his thoughts on a member country unilaterally cutting its contribution to the EU, as proposed by the far-right front runner for next year’s presidential election in France, Marine Le Pen — a move he said would be akin to leaving the bloc.

“I don’t know of any gym member who goes to the gym and doesn’t pay their membership fee to gain access,” he said.

WARSAW — NATO must modernize its military infrastructure to move forces and equipment from Western to Eastern Europe “where we would expect any future conflict,” U.S. Ambassador to NATO Matthew Whitaker said Monday.

Speaking on a panel at the Warsaw Security Forum, Whitaker’s comments came as Washington reviews its military presence on the continent — with the ambassador saying that Europe ranks fourth among Washington’s strategic priorities, behind homeland security, the Western Hemisphere and the Pacific.

He pointed to outdated military bases, fuel supply chains and agreements governing the stationing of American troops in Europe as areas requiring attention under the ongoing U.S. force posture and basing review.

He emphasized the importance of military mobility and “moving things from the west to the east,” citing discussions with EU Defense Commissioner Andrius Kubilius. European officials warn that Russia could be ready to attack a NATO country by the end of the decade.

Whitaker did not announce any decisions to relocate or withdraw American forces. He nevertheless made clear that Washington is reassessing its global commitments to avoid spreading its military resources too thin.

“Superpowers and great global powers have mostly had challenges when they get overextended,” Whitaker said, adding that U.S. President Donald Trump wants allies to become “capable and not dependent.”

“The United States isn’t stepping back. We’re just asking you to step forward,” he said.

Whitaker also criticized countries that are falling short of their defense-spending commitments.

He said he had recently delivered a “very strong message” to political leaders in Czechia. The country’s defense spending for this year is approximately 1.8% of GDP, falling short of NATO’s current 2% benchmark.

European governments must continue strengthening their armed forces, he argued, warning that the continent still lacks many of the capabilities it needs to defend itself.

Kubilius, meanwhile, stressed the need to reduce Europe’s military dependence on Washington, highlighting EU efforts to develop its own drone defenses, satellite communications and surveillance capabilities.

Polish presidential adviser Marcin Przydacz, also on the panel, urged Western European allies to accelerate defense spending while emphasizing that NATO, rather than the EU, must remain responsible for Europe’s collective defense.

BRUSSELS — EU countries must “do their job” to prevent travelers from being stuck in airport queues over Christmas, Migration Commissioner Magnus Brunner told POLITICO, as he singled out Brussels Airport for the way it has handled the new Entry/Exit System.

In an interview, Brunner defended the bloc’s digital border system and blamed its problems on national authorities and airports.

“Member states had enough time to prepare themselves for this system. They agreed on the system,” Brunner said. “It’s a security issue. It has to work … it’s up to the member states to do their job.”

EU countries began rolling out the Entry/Exit System, which records the fingerprints and facial images of non-EU visitors to the Schengen area, a year ago. It has been fully operational at all external Schengen border crossings since April.

But it has led to long waits at many airports — particularly over the summer, when some countries switched it off during peak periods. Delays persist at some airports, including at Brussels Zaventem, where travelers were forced to wait in lines for up to five hours last month.

“Some member states are a bit behind,” Brunner acknowledged. “We have some challenges, like Zaventem for instance, in Belgium, but also in other member states. And they have to do their job. They agreed on the new system, and now it’s up to the member states to do their job.” 

Brunner also said the Commission had offered support from border agency Frontex and funding to help countries implement the system, adding that he was “very confident” the problems would be ironed out before the next holiday rush.

Belgian Interior Minister Bernard Quintin pushed back at Brunner’s criticism, with a spokesperson saying his responsibility was to ensure there were enough police officers to staff the infrastructure provided by Brussels Airport Company.

The police have “been fully staffing the 12 positions at arrivals,” the spokesperson said, but the airport can process only 500 to 600 non-Schengen passengers an hour, compared with nearly 3,500 who may arrive between 6 a.m. and 10 a.m. on busy days. The airport’s infrastructure “cannot cope” with that demand, the spokesperson said, and the company must “make significant changes.”

Brussels Airport did not directly address the criticism from Brunner or Quintin, instead saying in a statement that “all parties involved” were working to fix the delays, including testing new e-gates and pre-registration kiosks, and training more police. “The need for additional infrastructure is also being assessed,” the statement said.

The Entry/Exit System has logged almost 230 million entries and exits across roughly 1,500 border points, Brunner said. Authorities have refused entry to about 80,000 people, including 2,000 considered security threats because of links to activity such as terrorism or organized crime.

“So you see, it actually works. And it pays off,” the Austrian commissioner said.

“This is the most modern border management system in the world,” he added. “We have the comparison to the U.S., to Canada, to others, and they’re all jealous.”

Ceuta stress test

As the EU’s migration commissioner, Brunner also faced another major test over the summer, when tens of thousands of people crossed from Morocco into Spain’s North African exclave of Ceuta.

The crisis remains an ongoing challenge for Spain and the EU.

Madrid initially said almost all those who crossed from Morocco had returned within days. But thousands remained in Ceuta. More than 3,000 people were living at Trampolín beach when authorities cleared an encampment last week; more than 1,200 then chose to return voluntarily to Morocco rather than go through the asylum-screening process, according to local authorities.

Images of thousands of people swimming toward Ceuta and overwhelming the area quickly became political ammunition, with far-right politicians campaigning for tougher migration policies — turning the crisis into a potent election issue and putting pressure on Prime Minister Pedro Sánchez.

Brunner described Ceuta as a warning that the EU needs to be better prepared for sudden arrivals. He recently proposed a plan for cooperation with partner countries, stronger external borders, early-warning systems, and action against smuggling networks. Migration will be a key topic of conversation at this week’s EU leaders’ summit in Brussels.

Among the Commission’s plans to tackle migration is a proposal to strengthen Frontex that would see it have a reinforced standing corps of officers able to be deployed more quickly, a bigger role in returning people to non-EU countries, closer cooperation with partner countries and more capacity to monitor the EU’s borders. The Commission has also proposed giving the agency a role in monitoring social media to help spot emerging migration movements.

Brunner said the reforms would not mean countries would be forced to host Frontex operations if they did not want them. The plan envisages EU support during border emergencies, but member countries remain responsible for their own external borders.

Greece and other countries want the EU to be able to suspend asylum applications during a large influx and Brunner said he is “definitely going ahead” with an emergency response framework, as requested by Commission President Ursula von der Leyen. EU leaders will discuss “concrete steps” at this week’s leaders’ summit.

The goal is to make the EU “more flexible” and “more agile” if events like Ceuta occur, where “mass movements are actually engineered and weaponized” against the bloc, he said.

Brussels also wants to help partner countries protect their borders to reduce irregular arrivals into Europe. To that end, Brunner on Monday begins a trip to Bangladesh and Pakistan, seeking to strengthen cooperation on migration with the two countries, he said.

“We want to help them to protect their borders,” Brunner stated, adding that the EU could support Bangladesh “via Frontex, for instance.”

This story has been updated with statements from Interior Minister Bernard Quintin’s office and Brussels Airport.

Welcome back to TechCrunch Mobility, your hub for the future of transportation and now, more than ever, the role AI is playing in it.

BRUSSELS — Ryanair has accused rivals Lufthansa and Air France-KLM of trying to ground the low-cost carrier by alleging that its ownership structure violates EU rules.

The two legacy airlines, which face growing competition from budget carriers, belong to the European Network Airlines Association, a lobby group that has filed a legal challenge over Ryanair’s share ownership.

“Now they’re in the Irish High Court seeking to have our license suspended and Ryanair grounded,” Ryanair CEO Michael O’Leary said Thursday in Brussels.

The association confirmed to POLITICO that it has spent months urging EU and Irish aviation authorities to investigate whether Ryanair complies with the bloc’s ownership and control rules.

Under those rules, airlines must be majority-owned and effectively controlled by EU nationals or entities to hold an EU operating license. ENAA argues that Ryanair no longer meets those requirements, pointing to the airline’s March announcement that only 30% of its shares are held by EU nationals. O’Leary, an Irish citizen, holds 4% of the stock.

When the Irish Aviation Authority seemed “reluctant to engage on the matter,” ENAA took the matter to court. If Ryanair loses the case, it could be forced to change its ownership structure. The carrier’s operating license would only be suspended if it does not comply with the verdict.

Ryanair has rejected the allegations, arguing that its non-EU shareholders do not have voting rights, which means the airline is under EU control.

In an emailed statement, Ryanair accused its rivals of attempting “to restrict competition and choice for EU air travel” by challenging its operating license.

Grounding risk seen as remote

Augusto Viansson Ponte, a London-based director at Alton Aviation Consultancy, doubted that the legal case would be easily dismissed, but also said it was unlikely that Ryanair would lose its operating license.

“ENAA’s request is sufficiently well-founded to justify examination, but it is way too early to say that Ryanair is violating the rules,” he said.

Regardless of the legal outcome, Viansson Ponte said that a “likely first step would be corrective measures, not immediate grounding.”

Even if the court rules against the budget airline, Ryanair would have several options to address any compliance problems, the analyst said. 

“Ryanair could restrict non-EU [share] purchases, facilitate transfers of shares to EU investors, implement targeted share buybacks or restructure its licensed subsidiaries for example,” he said, adding that the process “should be manageable” for the airline.

Enemies in court, friends in Brussels

Despite their spat, Ryanair, Lufthansa and Air France-KLM all belong to the Brussels-based Airlines for Europe (A4E) lobby, and all are pushing for a reform of the Air Services Regulation, which sets the rules for operating in the EU, including ownership and control.

The lobby’s members jointly support providing “more flexibility … and tackle the risks linked to this change,” they said in feedback to the Commission.

“The potential way forward is to allow institutional investors from selected third countries to hold a limited percentage of shares … which would count towards the EU share of ownership,” the joint position adds. 

If EU lawmakers adopt the proposal, “that would allow a greater access to liquidity in those markets for airlines,” said easyJet CEO Kenton Jarvis, whose company is set to be acquired by U.S. investment firm Apollo.

However, the legal battle between the Irish budget airline and legacy carriers may fracture A4E. O’Leary threatened on Thursday at an A4E press conference to leave the lobby group unless the legal case is dropped by the end of the year. 

A4E later acknowledged that its members “may have differing views on certain issues, [but] we share a common interest in advancing our collective work for the benefit of European passengers, particularly in an increasingly complex and costly regulatory environment.”

Neither Lufthansa nor Air France-KLM commented on O’Leary’s threat to leave A4E.

The European Union and China reached an agreement on Friday that will curb China’s booming hybrid car exports, delivering a breakthrough in negotiations aimed at rebalancing their trade relationship.

The announcement came as Trade Commissioner Maroš Šefčovič wrapped up two days of talks in Beijing, the culmination of a push launched in June to narrow the bloc’s €1 billion-a-day trade deficit with China. 

The deal marks a win for the EU executive, which has been under pressure to secure concessions from Beijing. Going into the talks, France and Germany strengthened Šefčovič’s hand by calling for the EU to take tough action on trade if China failed to curb a growing export glut.

Speaking in Beijing, the commissioner said the two sides had reached an agreement that would help to shield European automakers from low-price Chinese competition. He declined to enter into specifics before EU leaders officially mandate the EU executive to move forward. 

“We have reached a shared understanding to moderate China’s export of hybrids and plug-in hybrids to the European Union. This opens the prospect of cutting China’s exports by more than a half,” Šefčovič told reporters. 

The estimate was based on projections of how Chinese exports would grow over the next four years without the agreement. In practical terms, it would mean that “several millions of car exports from China to the European Union” would be prevented, he explained.

China’s Commerce Ministry highlighted the understanding on hybrids in a parallel 16-point statement, but offered no details on how exports would be restrained. It said the two sides “will continue to strengthen communication and cooperation under the trade monitoring mechanism and further leverage dialogue mechanisms to enhance mutual understanding.” 

Šefčovič declined to elaborate when asked whether the deal would allow the EU to impose safeguards — a mixture of import quotas and tariffs — a step that Brussels has been considering. He said the arrangement would comply with the rules of the World Trade Organization.

First step

Šefčovič said that Beijing had also agreed to lower duties on European goods worth €4 billion, ranging from olive oil to footwear, a move that would save exporters €225 million. 

“It is a crucial first step,” he said. “But only a first step in the process of rebalancing.” 

The Slovak commissioner said he would report back to European Commission President Ursula von der Leyen, along with EU leaders, when they meet for a summit in Brussels next Thursday.

He had focused on cars as a key deliverable going into meetings in Beijing with Commerce Minister Wang Wentao and Vice Prime Minister He Lifeng.

Chinese auto exports to Europe have been booming, accounting in August for one in eight cars sold in the bloc — mainly driven by sales of hybrids. Europe’s own automotive industry is feeling the pressure, with Volkswagen and Mercedes-Benz recently announcing job cuts and plant closures.

Aside from the deal on hybrids, Beijing said in its statement that it was “willing to continue” fast-tracking licenses to export rare earth elements to the EU. Automakers had been forced to shut down assembly lines after China temporarily restricted exports in response to U.S. tariffs last year. China dominates the production and processing of rare earths.

“We have reached a shared understanding to further facilitate China’s export licensing for rare earths and permanent magnets,” Šefčovič said. 

Road ahead

Brussels sees the agreement on hybrid electric vehicles as a blueprint that could be replicated to shield further EU sectors currently under strain, such as chemicals or machinery. The two sides plan to meet again in March 2027, and will hold a video call in January. 

The agreement on one of the EU’s top negotiating targets significantly reduces the risk of an escalation in trade tensions that could have led to a tit-for-tat round of retaliation. It remains to be seen whether the EU will act swiftly on the Franco-German call to empower Brussels to shut out exports from countries that destabilize its single market.

“Public opinion and the leaders clearly expect very fast action from our side. I am glad to say that the Chinese partners appreciated this very strong political argument, and therefore, we can proceed through the negotiated solution,” said Šefčovič.

Other areas of agreement include exploring easier market access for European medical devices, as well as promises by Beijing to scale back sweeping disease-control measures that have restricted European meat and livestock exports. 

While the deal will cool the most immediate tensions, a wider resolution to the economic imbalances that fueled the conflict remains distant. The EU’s trade deficit with China totaled nearly €360 billion in 2025, and is already up 12 percent so far this year.  

China’s automotive exports to the EU, which totaled €15.1 billion last year, are only a fraction of that.

This article has been updated.

LONDON — Germany wants the U.K. to raise tariffs on Chinese electric vehicles in exchange for protection from Made in Europe rules, according to a person familiar with Berlin’s position.

Friedrich Merz’s government believes the move would show reciprocity on trade and counter accusations from other EU member states that Britain is trying to “cherry pick” the benefits of EU membership, said the person, who was granted anonymity to discuss closed-door talks.

It comes as Prime Minister Andy Burnham met with the German chancellor on his first official visit to the country this week.

Burnham and Merz were due to talk about possibilities for Britain’s future relationship with the EU — after the British prime minister put rejoining the bloc back on the table of U.K. politics for the first time in a decade.

Berlin’s position on EV tariffs is significant as Germany has broadly backed a tolerant policy towards the U.K. on trade matters since Brexit — in contrast to more hard-line positions taken by countries like France.

The EU is in the process of drawing up new Made in Europe rules that would favor European producers over those outside the bloc — in response to trade practices by competitors like China and the United States.

The U.K. is worried that the measures will hit British business — especially automakers — and wants assurances from Brussels that it will get an opt out. If Berlin gets its way, those assurances could be dependent on emulating EU trade policy with regard to Chinese EVs.

Predatory strategy

Germany’s vaunted car industry, arguably the jewel in the country’s economic crown, has faced stiff competition from Chinese imports in recent years.

EU countries have accused China of dumping low-cost, state-subsidized electric vehicles into the European market and in December 2024 imposed countervailing duties as high as 35.3. percent on some manufacturers.

Industry Commissioner Stephane Séjourné accused China of pursuing a deliberate “predatory strategy” with state subsidies to the tune of €10,000 per vehicle.

The U.K.’s Trade Secretary Jonathan Reynolds told POLITICO last month that the government was keeping tariffs “under review, to be frank, more closely than lots of other issues” and that “different parts of our own sector want different things from” the government’s policy.

Hamish Falconer, the U.K.’s minister for European relations, told POLITICO’s Brussels Playbook Podcast this week that he was “surprised” at reports tariffs might be a condition of Made in Europe opt-outs, adding: “That’s not the kind of conversation that I’m having with my European counterparts.”

Going ahead with higher tariffs risks alienating Beijing, which has expressed serious concerns about the policy. It would also raise the price of electric vehicles on the market, potentially making it harder for the government to meet its decarbonization targets.

BRUSSELS — European Trade Commissioner Maroš Šefčovič opened two days of talks in Beijing on Thursday aimed at rebalancing a gaping trade deficit, with failure to reach a deal likely to test Brussels’ resolve to impose tougher trade restrictions.

The meeting marks the final round of an effort launched in June to reset the lopsided trading relationship, and will hinge on whether China’s Commerce Minister Wang Wentao is prepared to make substantial concessions.

If no agreement can be reached to narrow the EU’s €1 billion-a-day goods trade deficit, Brussels and Beijing could find themselves on a collision course. EU leaders will review the outcome of the talks at a summit in Brussels next Thursday, where they will consider next steps.

Arriving in China, Šefčovič said his goal was to balance what he called an unsustainable trade deficit. Heading into a meeting with Wang, he said it was crucial that the talks deliver “tangible outcomes.”

The discussions have zeroed in on cars, with Chinese exports increasingly eating into the market share of European automakers. In August, one in eight cars bought in the bloc was Chinese, thanks largely to a boom in sales of plug-in hybrid electric vehicles.

European negotiators have been pushing China to commit to some form of export restraint — in particular for hybrids. Unlike Chinese-made battery-electric vehicles, which were hit with extra countervailing duties in 2024, plug-in hybrids are not subject to such measures.

Without meaningful commitments from Beijing, the Commission has warned it will resort to unilateral trade restrictions. For cars, it is considering safeguard measures that would mix import quotas and tariffs to protect European automakers.

Chemicals are next. Industry Commissioner Stéphane Séjourné said Thursday that the Commission plans to introduce targeted safeguards on plastics and composite materials, subject to a request from EU governments that Brussels do so.

Wind in his sails 

Šefčovič flew to Beijing with the backing of the leaders of Europe’s two biggest economies — France and Germany — to take a tougher approach to trade.

In a joint appeal on Monday, President Emmanuel Macron and Chancellor Friedrich Merz said the Commission should be given a freer hand to shut off access to the EU for goods from countries that distort the bloc’s single market.

While the two leaders did not mention China in their letter to Commission President Ursula von der Leyen, there was no mistaking the target of their proposed trade “kill switch,” which could be blocked only by a qualified majority of EU countries.

The EU already has a powerful trade weapon in its Anti-Coercion Instrument, designed to counter economic bullying by foreign powers. 

But Brussels has yet to muster broad support from member countries to deploy it, most recently in January when U.S. President Donald Trump threatened to seize Greenland, a Danish territory.

The EU’s difficulty in responding swiftly to trade threats has heightened concerns about a surge in Chinese exports that European officials say benefit from unfair government subsidies. With Trump hiking U.S. tariffs, ever more Chinese exports are heading to Europe — increasing pressure on industries that are already being forced to retrench.

Europe’s heavy dependence on China for processed rare earths and other critical raw materials also leaves it vulnerable to retaliation should relations deteriorate.

“If we aren’t willing to fix the way our model works, then we’ll be destroyed,” said one EU diplomat, summing up the concerns flooding Brussels.

“What’s the point of having [more tools] if the Chinese can shut down our strategic production in a matter of days?”

Low expectations

Although Šefčovič entered the talks strengthened by the Franco-German letter, a second diplomat said they didn’t foresee a deal with Beijing this week.

“He knows that a lot of member states are behind the Franco-German push,” the diplomat said, adding that this “has been seen in China.” 

But Beijing has little room to compromise, given its reliance on exports to sustain growth amid weak domestic demand and a prolonged property slump.

“The Chinese side is starting to recognize that there is a problem. But I don’t think they are ready to enter into a substantial deal,” said Gunnar Wiegand, a former head of the EU diplomatic service’s Asia-Pacific department.

Wiegand, now a visiting fellow at the German Marshall Fund, said Šefčovič had earned a reputation as a dealmaker in talks on Britain’s exit from the EU and in last year’s trade deal with Trump. This time, however, “both sides are bound by their own circumstances,” he said.

Europe is desperate to halt the erosion of its industrial base, while China remains heavily dependent on exports to sustain economic growth. 

“The Chinese are going to object to being singled out. Even if a deal with the EU would be the most rational solution, other important markets for Chinese exports, such as ASEAN countries, will start asking the same. It will undercut their global market,” he said. 

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