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.

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.

LONDON — Britain and the European Union will hold their annual leaders summit on Nov. 20 in Brussels.

U.K. Prime Minister Andy Burnham confirmed the date in a statement to the House of Commons on Monday afternoon.

Brussels and London want to use the meeting to sign off new agreements on agri-food trade, emissions trading, and a youth mobility scheme.

Burnham told the Commons he wanted to secure a deal on the agreements — begun by previous Prime Minister Keir Starmer — and then begin a “calm, clear-eyed, rational look” at even closer relations.

“If we are serious about promoting growth, controlling immigration, upholding our values and security, it is a conversation we must have,” he said.

“Sticking with the status quo is not good enough for Britain. Worse, it would be a major dereliction of duty to turn away.”

He added: “Our immediate priority is securing a successful outcome at the summit, and I believe we should then set up a serious dialogue about the different options for our relationship in the long term.”

The prime minister also said the meeting would present an opportunity to “raise our concerns about Made In Europe” — the EU’s program of protectionism which some countries want to exclude the U.K.

Burnham has previously suggested these future options could include rejoining the single market, customs union, or even the EU wholesale.

Kemi Badenoch, the leader of the opposition Conservative party, criticized the prime minister for focusing on the U.K.’s relationship with the EU.

“His exact words earlier this year were, ‘The last thing we should do right now is rerun those arguments,’” she said.

“And yet, here he is unpicking the deal this country signed with the EU a decade after the referendum. He is not going to get a better deal. The EU are tough negotiators.”

She added: “Just like some people thought all of Britain’s problems would be solved by leaving the EU, some now think all our problems will be will be solved by rejoining. Neither of these are serious positions.”

In a statement issued while Burnham was speaking in Westminster, António Costa, president of European Council, which represents EU member countries, said improving cooperation was “essential.”

He said the three agreements under negotiation could be complemented by additional deals on a defence and security partnership, as well as on migration and law enforcement.

“The European Union and the United Kingdom are like-minded partners, united by common values and shared interests,” he said in a statement,” he said.

“Our security and prosperity are closely intertwined, making a strong partnership between us essential.

“By deepening our cooperation, we can strengthen our ability to address the challenges of our time, strengthen our resilience and promote stability in Europe and beyond.”

Costa and Burnham will be joined by European Commission President Ursula von der Leyen at the Nov. 20 meeting. Negotiations have been taking place since the previous summit in May 2025, which was attended by Starmer.

This year’s summit was intended to take place in July but was postponed following the collapse of Starmer’s administration.

LONDON — Andy Burnham said Monday it would be a “dereliction of duty” for Britain not to seek closer ties with the EU.

In a House of Commons statement reopening Britain’s highly-charged Brexit debate, the prime minister said the vast majority of the public would back a closer relationship with the EU if it helps to control immigration and boost economic growth.

Announcing a long-anticipated U.K.-EU summit will take place on Nov. 20., he said: “Sticking with the status quo is not good enough for Britain. Worse, it would be a major dereliction of duty to turn away. We need to take a calm, clear-eyed, rational look at the world as it is today to consider what is best for our country.”

At Labour’s annual conference last month, Burnham said Britain’s departure from the bloc had done more harm than good.

In subsequent interviews he said it’s possible a future Labour manifesto could include a pledge to hold an “in-out” referendum on rejoining the EU.

The U.K. prime minister addressed MPs after telling the Rest is Politics podcast in an interview aired over the weekend that it is “clear” Russia interfered in the 2016 Brexit referendum.

“I asked the question coming to Downing Street: ‘Was there interference in the 2016 referendum from Russia?’ And I’ve had the clear answer that yes, there was,” Burnham said.

But his spokesperson told reporters Monday:  “We do believe the referendum result to be legitimate.”

Reform UK Leader Nigel Farage, one of the most high profile campaigners for Brexit in 2016, said Burnham’s Russian interference claim was “outrageous” and accused the prime minister of being a “liar.”

At a press conference in Kent, he acknowledged Brexit had led to more inconvenience for some businesses, like the haulage firm where he was giving the speech, but said: “When you have borders to protect your country, there is some level of inconvenience.”

Dan Bloom contributed reporting.

This story has been updated to include comments from Nigel Farage.

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.

Britain is open to Germany joining the sixth-generation jet fighter Global Combat Air Programme led by the U.K., Italy and Japan, Prime Minister Andy Burnham said on Thursday.

“I’ve indicated to the chancellor in our discussion… our openness to Germany joining GCAP,” Burnham said in Berlin during a meeting with German Chancellor Friedrich Merz.

“That is something we seek to progress in the coming period working with our other partners Italy and Japan in relation to that as well,” he added.

POLITICO reported last month that Berlin has held exploratory talks about participating in GCAP after Germany’s combat aircraft plans with France collapsed earlier this year.

“This is neither a decision nor a preliminary decision. It is a first, small step in Germany’s efforts to seek—and possibly find—partnerships in this area,” said a senior German official, who spoke on condition of being granted anonymity.

“We are at a very early stage in reassessing our options. Germany has not made a decision yet. It is exploring all possible avenues,” they said. “However, you are aware of the chancellor’s position that he favors a European solution rather than Germany acting alone.”

Earlier this year, Canada became the first observer nation in GCAP, which could be a pathway to full future membership. Other possible members include Saudi Arabia.

However, the three GCAP members have been wary of opening the club, worrying about less work for each partner nation or delays to the program.

The CEO of Italian defense firm Leonardo, which is part of the GCAP industrial coalition within the program, said in July that if another country wants to join the program, it needs to happen within the next 12 months.

The British leader also outlined a new partnership with Germany to counter hybrid threats from countries such as Russia.

“The defense ministries have been tasked with exploring ways to expand this partnership,” said the German official.

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.