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 — British Prime Minister Andy Burnham confirmed Friday he will legislate to ease restrictive non-compete clause rules for workers — but stopped short of committing to a ban.

​Burnham said in a speech in Manchester that he wants to “make sure that non-compete clauses will no longer be a barrier to hiring for our most promising start-ups and scaling firms” — but did has yet to set out the extent of the crackdown.

​The scope of the new rules will come later, ahead of legislation. POLITICO first reported the planned crackdown Thursday.

​The government’s action would be the “Bosman ruling for the innovation sector,” Burnham said at a government-backed innovation summit in Manchester. That’s a reference to a 1995 European Court of Justice decision that changed how star players are transferred between football clubs.

​Potential changes to non-compete clauses in workers’ contracts began in 2025 under Burnham’s predecessor Keir Starmer. The proposals ranged from a total ban on non-compete clauses to a partial ban, such as allowing non-compete clauses only for workers earning more than a set salary threshold, or limiting their length.

​The vow from Burnham comes after intense lobbying lobbying for and against the restrictions in workers’ contracts. U.K. tech start-ups claim the curbs are undermining economic growth, while City firms and trade bodies, including TheCityUK and the Managed Funds Association, are against any changes.

BRUSSELS — It was meant to be Europe’s escape from the web of Chinese critical mineral supremacy.

But two years after it took effect, the EU’s Critical Raw Materials Act is not on schedule. Just one in four critical mineral projects granted special status under the law is on track to be ready on time, according to new analysis shared with POLITICO.

On Friday, EU industry chief Stéphane Séjourné will unveil a new list of critical mineral projects that will receive privileged access to funding, accelerated permitting and help from Brussels to find buyers.

The idea is to make Europe a major producer of materials essential to clean energy, tech, and defense manufacturing. It’s currently a heavy importer.

But progress on the first round of 47 projects, announced early last year, offers little hope for the bloc’s ambitions.

“At least one in three mining and processing strategic projects is either late, stalled, at risk, or no longer exists, and only about a quarter are clearly on track,” said Diego Marin, policy officer for raw materials at the European Environmental Bureau, citing publicly available sources. The findings will be published in a report later this month.

Financial, regulatory, and political hurdles are blocking European mining projects, the industry says, despite the Critical Raw Materials Act’s aim to speed up the time it takes to get the shovels in the ground.

The EEB’s findings were echoed in an industry call in August, where 23 projects named in the first round claimed some were facing “immediate jeopardy,” in a letter sent to the Commission and obtained by POLITICO.

Those same companies also believe that announcing more strategic projects will create more problems. However, a Commission official dismissed that claim, saying that some of those projects had received direct funding from the Commission, and claiming the companies believe new projects would “dilute their status.”

The EU unveiled 47 projects in March 2025, covering 14 of the bloc’s 17 designated strategic raw materials—from lithium, nickel, cobalt and graphite for electric vehicle batteries and rare earths for magnets used in wind turbines, to tungsten for military equipment and gallium for semiconductors. It also includes 13 projects from outside the bloc.

These were designed to deliver the EU’s raw materials targets: by 2030, the bloc aims to mine at least 10 percent, process 40 percent and recycle 25 percent of its own needs, while sourcing no more than 65 percent of any one material at any processing stage from a single non-EU country.

Breaking Europe’s dependence on China for key metals is at the heart of the policy, a goal European Commission President Ursula von der Leyen highlighted in her State of the Union speech last month. “We are more than 80% dependent on China for many critical raw materials [and] 90% for some rare earths,” she lamented. 

A Commission official said that if all goes to plan, the EU will meet its 2030 goals for lithium, cobalt and rare earths, but results for other materials are mixed, with shortfalls in nickel processing and recycling and across the manganese supply chain. They did not give hard figures, though.

Industry skeptical

“Unless something happens that is absolutely not foreseen today, we will be far, far away from reaching the targets, even if they are quite low,” said Jan Moström, former CEO of Swedish mining giant LKAB and outgoing president of Euromines. He said better access to financing and faster permitting was key.

The EU is under additional time pressure as a pause on China’s export controls on rare earth minerals is due to expire in January.

Global think tank ODI found in June that “out of 60 projects, 14 are unlikely to contribute by 2030 because their estimated start of production falls between 2029 and 2031,” and that “three out of four are either behind their expected schedule or impossible to verify using up-to-date public evidence” — backing up the EEB’s numbers. 

A European Court of Auditors report this year also revealed that “many projects will struggle to secure supply for the EU by 2030” and that there was “no proper tracking of results.” 

The European Commission questioned the current validity of the ECA’s findings, saying it “audited a period of policy that does not cover everything we’ve done since this mandate. So the Court of Auditors had very relevant points that we took into account in our policy, but should absolutely not be seen as a fair assessment of the work we’ve done with the von der Leyen Commission number two,” said a Commission official. 

Desperate times

Since adopting the Critical Raw Materials Act in 2024, Brussels has rolled out a flurry of initiatives to get projects moving. They include a proposed critical raw materials center, for which Parliament is seeking €2 billion; the “RESourceEU” plan that’s mobilized more than €2 billion; a mechanism to identify suppliers; and plans to revise water rules and speed up environmental impact assessments. 

But industry leaders say the EU is moving too slowly. 

“I’m still to be convinced that it makes any difference,” Michael Staffas, CEO of Swedish miner Boliden, told POLITICO when asked about the benefits of being designated as a strategic project. Boliden’s subsidiary Somincor was granted strategic status for a copper and zinc mine in Portugal. 

The “strategic project” label promised faster permitting and help securing public and private finance, with permitting deadlines of 27 months for mines and 15 months for processing and recycling projects.

“In Sweden you have different authorities that can basically object to a permit process and that in itself creates way longer time than 27 months, just the legislation,” said LKAB CEO Johan Menckel, whose company currently has three strategic projects.

One is the Per Geijer deposit, home to Europe’s largest rare-earth deposits, which the local indigenous Sámi community opposes, arguing it would harm their reindeer-herding tradition. 

The local administration recently recommended that the State Mining Authority grant the concession on the condition that the Swedish company “minimize the impact on the reindeer industry,” but that will be subject to appeal from the Sámi.

Karin K Niia, a Sámi reindeer herder, said in comments that the EU will be complicit in cultural genocide if the project goes ahead. 

Europe’s lithium hope

Europe’s biggest bet to escape China’s foothold in battery metal supply chains is the Barroso lithium mine in Portugal, run by UK-based mining company Savannah Resources. The company says the mine could supply enough lithium for around half a million electric-vehicle batteries a year.

“I don’t think the strategic project stamp and the [Critical Raw Materials Act] have been absolutely essential, but it wasn’t also supposed to be. It was supposed to, in my understanding, be important to set a framework under which Europe can do the right thing faster, better, and for the better benefit of the next generation of Europe,” Savannah’s CEO Emanuel Proença said, calling it just another piece of a very big puzzle. 

Europe’s lithium-refining ambitions are also faltering: France’s Viridian Lithium went bankrupt after failing to secure funding, while Portugal’s José de Mello Group was unable to finance its planned €492 million refinery — despite both projects winning strategic status in the EU’s first round.

Viridian Lithium spokesperson Luc Pez said the strategic project label was a ‘curse.’ 

Rio Tinto’s Jadar project in Serbia, one of the non-EU projects to gain strategic-project status, was meant to provide double Barroso’s lithium capacity and cater to up to 25 percent of Europe’s demand. That, however, was suspended because of permitting issues and became a widely protested project amid allegations of corruption and environmental concerns. 

That reflected the simple fact that people don’t like mines in their backyard — an obstacle for mining projects worldwide, but especially in Europe, which is densely populated and has strong civil society.

“These projects had strategic status, EU money and fast-track permits, and it still wasn’t enough,” said EEB’s Marin. “If the supply push can’t deliver even under those conditions, the EU has to take demand reduction and sufficiency seriously. We can’t permit our way out of a market problem.”

Frida Preuß contributed to this report.

LONDON — The U.K. government is planning to commit to a full or partial ban on non-compete clauses in workers’ employment contracts, six people with knowledge of the discussions told POLITICO.

All six of the people, who were granted anonymity to discuss government policy, said they believed an announcement is due imminently and could be made as soon as Friday. Three of those people said they believed the announcement was likely to be fronted personally by Prime Minister Andy Burnham, who is expected to give a speech Friday.

The government of Burnham’s predecessor, Keir Starmer, set out options in November 2025 to limit the use of non-compete clauses, which aim to restrict a person’s ability to work for or set up a competing business after they leave their job.

The founders of more than 20 U.K. tech start-ups wrote to the government last month saying the restrictions, along with long notice periods and enforced gardening leave, were and “undermin[ing] the innovation that drives economic growth”.

The options set out 11 months ago ranged from a total ban on non-compete clauses to a partial ban, such as allowing non-compete clauses only for workers earning more than a set salary threshold, or limiting their length.

However, two of the six people quoted above said that the government would stop short of backing a specific option at this stage.

Ministers are expected to set out a broad intention of ensuring that non-compete clauses are no longer a hiring problem for start-ups and innovative firms, but finer details will be worked out further down the line in consultation with industry.

No. 10 declined to comment.

The announcement comes after Chancellor John Healey said he wanted to tackle the costs for businesses in his budget on Oct. 28. One of the six people quoted above said: “They want to sell it as pro growth and freeing up the labour market.”

AI Minister Kanishka Narayan said last week that the government was “working extremely rapidly” on potential changes to the system.

Non-compete clauses are common in the financial services industry. The lobby group TheCityUK opposed a ban earlier this year, arguing that non-compete clauses “promote competition and innovation in high-value industries” as they are often the “only way to pre-emptively protect confidential information and intellectual property.”

The government argued last year that even though non-compete clauses are “unenforceable” as a starting point under current law, ministers were “concerned about the behavioural effect of including a non-compete clause in an employment contract. Even if broadly drafted and unlikely to be enforceable, workers may perceive the clause as binding and comply with it for fear of legal repercussions.”