Brussels Edition: Back from the Brink

(Bloomberg) -- Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

European Union finance ministers can breathe a sigh of relief as they meet today to discuss the taxation of digital services. Emmanuel Macron and Donald Trump’s truce in their dispute over digital taxes means neither side will impose punitive tariffs this year. The detente brings Europe and the U.S. back from the brink of a full-blown trade war and allows talks at the OECD level to continue unimpeded. Still, whether it truly paves the way for the global tech-tax push the EU has envisaged remains to be seen. 

What’s Happening

Spanish Banks | The EU’s tax crackdown may get some support from a ruling on Spanish M&A tax breaks today, as the European Court of Justice will decide whether the handouts should be paid back. Any guidance from the bloc’s courts could also play into separate appeals by Apple and Amazon against EU tax orders.

Greener Jets | Private jets flying into Davos this week will be able to fill their tanks with fuel designed to lower carbon emissions. With the global elite under attack for its carbon footprint, the forum is trying to push its green credentials.

Libya Mission | The EU may deploy a military mission to help enforce an arms embargo and a potential cease-fire in Libya, as the bloc scrambles to contain the conflict. EU Commission President Ursula von der Leyen echoed that when she said in an interview the EU must be prepared to back up its diplomacy with force.

Post-Brexit Disputes | The EU wants any agreement with the U.K. on post-Brexit relations to include possible fines for violations of the pact. According to a document seen by Bloomberg, the Commission proposes future disputes should be resolved through an arbitration panel with the authority to impose a “lump sum” or “penalty payment” on an infringing party.

Swedish Spat | Sweden is girding for a diplomatic crisis with China over freedom of the press as three parties in the country’s parliament have called for China’s ambassador Gui Congyou to be thrown out. Here's why.

In Case You Missed It

China Accord | EU Trade Chief Phil Hogan said China must improve an offer to scale back barriers to foreign money if the two sides are to reach a long-sought-after investment agreement this year. While demanding more concessions, Hogan kept alive an end-of-2020 target for achieving an accord, the outcome of which may serve as an indication of the EU’s broader approach to China. 

AI Future | Google Chief Sundar Pichai urged the U.S. and EU to coordinate regulatory approaches on artificial intelligence, calling their alignment “critical.” He spoke just weeks before the EU unveils plans for legislation, which could include legally binding requirements for AI developers in high-risk sectors such as healthcare and transport.

No Names | The EU won’t explicitly ban Huawei or other 5G equipment vendors when it releases guidelines to help member states mitigate security risks, the bloc’s Digital Chief Thierry Breton said. U.S. officials have criss-crossed Europe over the past year, urging the bloc and its members to exclude Huawei from their networks. 

Troubled Pipeline | Nord Stream 2 expects regulators to decide by May whether its contested natural gas pipeline linking Germany to Russia will be able to operate as planned. Already suffering U.S. sanctions, the project led by Gazprom is pinning its hopes on Germany’s authorities to help it clear hurdles erected by EU competition authorities.

Chart of the Day

The International Monetary Fund predicted the world economy will strengthen in 2020, albeit at a slightly slower pace than previously anticipated amid threats related to trade and tensions in the Middle East. The report, however, contains a sense of modest hope, noting that risks are “less skewed” toward negative outcomes. 

Today’s Agenda

All times CET.

• 9 a.m. EU finance ministers meet in Brussels to discuss tech taxes, financing of Green Deal 
• 9 a.m. ECJ rules in a challenge concerning Santander and the EU’s state aid crackdown on multimillion-euro tax breaks
• 10 a.m. EU Parliament’s economic affairs committee holds hearing with Croatian Finance Minister Zdravko Maric
• 11 a.m. Eurostat to release quarterly data on government deficit and debt for 3Q 2019
• 11:30 a.m. EU Parliament’s economic affairs committee holds hearing with Central Bank of Ireland's Gerry Cross, candidate for Executive Director of the EBA
• 2 p.m. EU antitrust and tech chief Margrethe Vestager speaks at closed event at Bruegel on AI
• 3 p.m. EU Parliament’s economic affairs committee holds hearings with three candidates for the Single Resolution Board
• 4:30 p.m. NATO Secretary General Jens Stoltenberg will address the EU Parliament Committee on Foreign Affairs and Sub-Committee on Security and Defence
• EU’s Margrethe Vestager and Breton speak at a two-day conference on EU defense and industrial strategies around space 
• The EU-Vietnam trade and investment agreements up for a vote in the International Trade Committee of the EU Parliament
• The EU Parliament's Environment and Public Health Committee will vote on whether to veto a proposal from the Commission to promote the recycling of PVC waste containing lead
• EU foreign policy chief Josep Borrell meets Prince Faisal bin Farhan, Foreign Minister of the Kingdom of Saudi Arabia
• Boris Johnson’s EU divorce deal to conclude its accelerated passage through Parliament with House of Lords vote
• Facebook’s Nick Clegg gives a speech in Rome 

--With assistance from Aoife White, William Horobin and Nikos Chrysoloras.

To contact the editor responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net, Andrew Blackman

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