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four advances and one failure

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Despite the elections in France and the war in Ukraine, the presidency of the European Union exercised by Paris has proved to be productive. It has made it possible to advance a number of major projects in the economic field, some of which have been underway for a good ten years. The most spectacular progress is undoubtedly that concerning the energy transition. The 27 Member States have indeed agreed on the outlines of the future “carbon border adjustment mechanism”to simplify the carbon tax at borders.

The ministers of the economy of the 27 agreed, in March, for it to see the light of day in 2023. It will cover five sectors of activity: steel, aluminum, cement, electricity and fertilizers, productions that require a lot of energy. For three years, the mechanism will operate without financial consequences. Then, from 2026, importers will have to start paying. At the same time, European companies in the same sectors will also have to pay for the carbon they emit. This tax should be applied gradually, according to a timetable that runs until 2035.

The end of petrol cars in 2035

The Twenty-Seven also agreed on a series of measures to move towards economies that emit less CO2. The most spectacular measure concerns the de facto ban on the sale of new petrol, diesel or hybrid cars after 2035. The Council also confirmed the objective of reaching 40% renewable energy in the European energy mix by 2030, which will require a significant investment effort.

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Another important advance concerns trade. The European Union is muscled up to assert its interests against China and India. It has adopted a procedure, called “instrument of reciprocity in public procurement”, which will make it possible to sanction countries that do not open their market to European companies. Thus, a Chinese company will not be able, for example, to come and build a stadium or a railway line in Europe if European companies cannot do the same thing in China.

Better regulated digital platforms

The French presidency can still be proud of having adopted two important texts concerning digital technology, the regulation on digital services (DSA) and on digital markets (DMA). These two texts aim to regulate the major platforms, to allow more competition and to make them more responsible for the content they broadcast.

Finally, an important step forward concerns social Europe, with the final agreement on a “adequate minimum wage”. It establishes rules for setting a minimum wage in each country and provides for its regular review. This salary cannot be the same throughout the Union, of course. But, with this directive, it is indeed a question of creating a mechanism which should enable the countries of Eastern Europe to gradually catch up with the level of wages practiced in the West.

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Failure on the taxation of multinationals

The French presidency, on the other hand, came up against an important subject: it did not succeed in arriving at the minimum tax for multinationals. This is an essential reform to which France is very committed. The efforts of a number of countries, including France, resulted last year in an agreement within the framework of the OECD (Organization for Economic Co-operation and Development) which provides for the creation throughout the world of a minimum tax floor of 15% for large groups. This is to fight against tax evasion by multinationals.

This measure must now be translated into European law. Unanimity is required. But Hungary blocked it, for reasons that have nothing to do with the project… It will therefore be up to the Czech Presidency to resume this project. For its part, France proposes to circumvent this Hungarian veto and to advance to 26, while waiting for Budapest to agree to commit.

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