MNI INTERVIEW: Business Europe Sees Future EU-UK Clashes

EU industry backs "pragmatic solutions" to UK-EU trade tensions over Northern Ireland, including reduced border checks, but sees future trade conflicts over Level Playing Field issues between the two sides as highly likely, Business Europe's Deputy Director General Luisa Santos told MNI.

The UK needs to show it is committed to observing rules and to exchanging information to show that it is doing so, Santos, chair of the EU-UK Taskforce at the lobby group, said in an interview as European Commission Vice President Maros Sefcovic prepares for a visit to Northern Ireland next week. (See MNI: N. Ireland Deal Nears, Equivalence Hopes Fade-EU Sources)

"The main objective has to be checks that are as limited as possible, but the compromise has to be that products entering the market respect the rules," she said.

But further out plenty of potential disputes are liable to arise, she said, pointing to stringent Level Playing Field conditions in the EU-UK Trade and Cooperation agreement.

While the agreement was unclear about how infringement procedures might be triggered under the deal, tensions could arise as UK rules increasingly diverge from the EU's, particularly in competition and state aid, she said.

The EU's landmark 'Fit for 55' climate package and its proposal for a Carbon Border Adjustment Mechanism, which would tax imports from countries without adequate emissions standards, could also spark disputes, she said.

BIDEN CHANGES STYLE NOT SUBSTANCE

Turning to relations with the U.S., Santos said that the EU and the U.S. are nearing consensus on climate policy and taxation policy. But, while the Biden administration's presentation is an improvement on that under Donald Trump, the substance has changed less. As with Trump, President Biden is focused on domestic policy, Santos noted, pointing to U.S. fiscal stimulus.

"They have a lot of Buy American provisions, which will be detrimental for other operators, including EU and UK companies," she said.

In other areas, the U.S. stance is unclear, with officials in Brussels lacking a sense that the U.S. has a plan ahead of the World Trade Organisation ministerial meeting starting at the end of November. They are also unsure of how the U.S. wants to cooperate with the EU with regards to China.

"What does the US want and what does it want from its allies and what can we work together on? In spite of the rhetoric, concrete action is still limited," Santos said, noting that dialogue has to be maintained with China on issues like WTO reform and climate policy.

The effective mothballing of the EU-China investment agreement, following the imposition of Chinese sanctions on EU politicians, has left an "unbalanced" situation in terms of market access. Upcoming EU trade legislation on foreign subsidies will provide important trade policy instruments but it needs to strike the right balance, she says.

"We need these tools to be effective. We really want them to target the really market-distortive procedures, but what we should avoid is that these tools become very administrative and bureaucratic, and so pose more problems for our companies and public entities."