Good morning and welcome to Euro Express.

along with EU-China Summit Held tomorrow, for the first time since 2020, we’re exploring why Brussels is doing better than Washington on relations with Beijing, even as transatlantic allies try to dissuade China from siding with Russian President Vladimir Putin’s side. Ukrainian war.

Meanwhile, Germany and Austria yesterday first formal step Introduced gas rationing with Russia shutting off taps. But in a phone call with German Chancellor Olaf Schultz, Putin hinted at a possible compromise, saying payments from European gas customers may continue to be made in euros.

As calls grow for what diplomats call a “universal fund”, we’ll look at maintenance customs revenueone of the few “own resources” that fuels EU coffers.

As Brussels renews efforts to bring in companies and polluting industry To address their harm to the environment, we bring you an update on the topic that the European Commission will present next week.

Don’t (significantly) hurt

It has been billed as the EU’s toughest summit ever with China, as the president of the European Council and European Commission prepares to deliver a blunt message to Beijing on his relationship with Vladimir Putin, Writing Sam Fleming and Henry Foy in Brussels.

Charles Michel and Ursula von der Leyen will urge President Xi Jinping and Premier Li Keqiang to distance themselves from Russia’s bloody war in Ukraine and warn China will be threatened if it backs the conflict in Moscow suffer reputational damage.

While they do not intend to issue an explicit threat of sanctions, and officials have no punitive measures at this stage, both the U.S. and the EU have firmly reserved that option when measuring China’s “unrestricted” friendship with Russia.

Yet, despite the tough rhetoric, the EU entered the discussion with deep fear. That’s because, while the EU’s geopolitical interests are increasingly divergent from those of China and Russia, the EU-China economic partnership remains vital to both parties.

After all, China’s GDP is approximately 10 Several times bigger than Russia. It is the EU’s largest trading partner, Accounting It accounted for 16% of EU trade in 2020, compared with less than 5% in Russia.

The EU is now working on a project to get rid of Russia’s most important hydrocarbon exports as soon as possible. But trying to unwind trade ties with China that is so tightly entwined would be more painful.

A 2020 EU-China investment treaty is still a long way off, and the EU remains focused on strengthening its trade defenses with China rather than seeking deeper integration.

But both sides have enormous incentives to avoid a fundamental collapse in the economic relationship.Officials have made no secret of the fact that, while the EU’s relationship with China has become increasingly unstable, it remains very different from the United States, which is taking a more open confrontational trajectory with Beijing (and urgent The European Union followed suit).

The EU president “agreed that we need to continue working with China,” one official said. A very clear case will be made that “our economies both benefit from a trade relationship that feeds both societies . . . and the current global turmoil is not good for that.”

So the aim of the EU-China conference call scheduled for tomorrow morning Brussels time is to mitigate the damage. The EU does not expect China to play an active role in ending the war in Ukraine, but wants Beijing to keep its distance.

This seems like a very unambitious goal, but it is probably the best the EU can hope for.

Daily Chart: Germany’s Vulnerability

Over the past few years, China has exploited divisions within the bloc, with Germany often prioritizing friendly relations with Beijing. But China’s stance on the Ukrainian war has changed its calculations. (more here)

EU seeks refined customs

Calls for the EU budget have grown louder as the EU faces a growing number of shared challenges – including the need to advance a green agenda, tackle the refugee crisis, decouple from Russian fossil fuels and support mutual defence projects, Write Sam Fleming.

The reality, however, is that budgets are built on fragile foundations. For example, member states have yet to agree on new “own resources” – or bespoke revenue lines – needed to repay the €800bn of co-borrowing under the NextGenerationEU programme.

There are gaps even in the EU’s oldest source of income. Today, a report from the European Commission’s panel of customs wise men will address the particular problems in the area of ??customs revenue and propose a series of reforms to improve the situation.

The recommendations will be incorporated into the customs reform package, which the committee will present by the end of the year.

The EU imposed tariffs of nearly 25 billion euros in 2020, of which 20 billion euros went to the EU budget. However, European Express saw a draft of the Wise Men’s report and found that billions of euros remained unreceived.

It found that changes in trade and technology, including the shift to e-commerce, required modernizing the system. A panel of the wise, chaired by former Spanish foreign minister Arancha González Laya, made 10 proposals to reform the system.

These include upgrading customs data sources rather than relying solely on declarations, facilitating data sharing between authorities, creating a European customs agency, and simplifying rates for low-value goods.

“The reality is also that European customs do not currently operate ‘as one’,” the report found. “This leaves the customs union at the mercy of its weakest link.”

tough on polluters

The EU wants to tighten sanctions on companies polluting the environment by setting tougher limits on hazardous waste, requiring better reporting of emissions and imposing tougher penalties on those who violate these measures, Write Alice Hancock in London.

The proposals form part of revisions to the EU’s outdated industrial emissions directive and would expand industries affected by the rules to include more livestock farms and large battery makers, according to a draft document seen by European Express.

While the Industrial Emissions Directive covers about 20% of the EU’s air pollution quality and about 40% of greenhouse gas emissions, it is “generally effective” in reducing pollutants, the document said, but it was unclear whether it encouraged companies to try to prevent emissions new technologies, and not much has been done to decarbonise the EU.

The draft shows that the directive is also not implemented “uniformly” in all member states.

It’s been a busy week for green policy in Brussels.The European Commission has released a package proposal Yesterday was intended to promote the “circular economy”. These include better recycling of textiles and the extension of energy efficiency labels commonly found on white goods to almost all consumer products.

The extension to the Industrial Emissions Directive, due on April 5, will ensure European citizens have better access to information on pollution from heavy industry, and they will be able to take action against companies and demand compensation if their health is affected.

Mohamed Chashim, a member of the Dutch Environmental Council, said the proposals marked an important effort to stop hazardous waste at its source, rather than simply making companies pay for pollution through an emissions trading system.

But Christian Schaible, manager of industrial production policy at the European Environment Agency, said the directive “failed” to drive a “comprehensive transition” of industry to climate neutrality. He added that it was a “huge mistake” to keep an article preventing the issuance of permits to industrial polluters to impose limits on greenhouse gas emissions.

what to watch today

1. NATO Secretary-General Jens Stoltenberg presents 2021 annual report

2. Ukrainian President Volodymyr Zelensky addresses Belgian parliament

notable, citable

Obviously, the longer the war lasts, the higher the economic cost

• The outlook is bleak: Russia’s war in Ukraine is causing a “supply shock” to the euro zone economy, which will push up prices, cut growth and undermine consumer and business confidence, Say European Central Bank President Christine Lagarde.Also, looking forward labour market As inflation has risen, the situation has worsened.

• Slow bureaucracy: UK processes less than half of Ukraine visa applications refugeethe refugee minister said yesterday that less than 10 per cent of those applying under a scheme that allows Britons to volunteer as hosts.

• Buy US: Germany chose this month to replace its aging fleet of Tornados with a fleet of American-made F-35 fighter jets, much to the dismay of France.The defense industry in Europe is irritated The choice of U.S. weapons systems seems to run counter to enhancing Europe’s own capabilities.

• Gazprom, raid: Investigators conducted a Dawn Raid In the offices of Gazprom’s German arm yesterday, EU officials sought to understand the Russian company’s possible role in the recent surge in natural gas prices to record highs.