Brussels Edition: The Long, Slow Demise of The WTO

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

It’s the moment for that Europe has been dreading: At midnight the World Trade Organization’s appeals panel will cease to function, removing a central pillar for settling international disputes just when it’s most needed. The U.S. is behind the demise of a body whose rulings affect billions of dollars in commerce, giving Donald Trump more room for unilateral action against trade partners. Still, all may not be lost: The European Union is advocating a stopgap arbitration system, and EU Trade Commissioner Phil Hogan has pledged a WTO overhaul that would appease the U.S. 

What’s Happening

Budget Discord | European affairs ministers will discuss the EU’s long-term budget today amid persisting disagreements over its size and how it should be spent. So far countries aren’t budging ahead of talks between leaders at a summit this week, meaning it’s unlikely that there’ll be any agreement this year. 

Deal Review | EU Competition Chief Margrethe Vestager will review how the bloc’s antitrust regulators weigh industries, following criticism that they’ve been too rigid in fining Google and blocking deals. Companies have complained that the EU doesn’t look at how they face competition from imports or powerful companies that operate outside of the region.

Health Check | There are just two days of campaigning left in the U.K. general election and Boris Johnson will be hoping to move on from the furor over a picture of a child being treated on an emergency room floor. While the Tories are still well ahead in the polls, the risk is that voters now listen to Labour’s core message that the Conservatives don’t care about the National Health Service.

French Strikes | Emmanuel Macron is bracing for round two of a clash with labor unions over his plan to upend France’s pension system. Today, unions will stage a repeat of last week’s mass protests, one day before Macron’s government announces the final version of what it says will be a systemic change to pensions. The protests last Thursday brought more than 800,000 people into the streets, the most since Macron’s term began in May 2017.

5G Threat | Europe has been caught between China and the U.S. over the question of whether to include Huawei in the roll-out of 5G mobile networks. While many countries don’t want to anger Beijing, the U.S. has said repeatedly it may reassess intelligence sharing with countries using Huawei in their 5G networks. U.S. efforts appear to be gaining traction.

In Case You Missed It

Peace Talks | Russian President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskiy breathed new life into efforts to end the violence in eastern Ukraine, agreeing to a fresh exchange of prisoners and the withdrawal of some troops. Flanked by Macron and German Chancellor Angela Merkel, the two men agreed to meet again within four months though both sides highlighted the serious obstacles to a permanent settlement.

Battery Power | The EU plan to kick-start battery production and compete with Asian suppliers got a boost from 3.2 billion euros in state aid for a project spanning seven nations. The move by Brussels underscores growing European awareness that key industries risk falling behind if they don’t fill manufacturing gaps in energy storage technology. 

Indonesia Tensions | The EU imposed five-year tariffs on biodiesel from Indonesia to counter alleged subsidies to producers in the country, a move that could prompt the Indonesian government to retaliate. The duties mark the latest twist in a long-running EU trade dispute with Indonesia and add to existing tensions between the two over steel and renewable-energy trade. 

Orban Threats | Hungary’s government took a major step toward increasing its influence over theaters and cultural institutions, drawing fire from actors and opposition activists who say Premier Viktor Orban is pushing for communist-style censorship. The move comes after Orban, who’s fighting an EU probe over erosion of the rule of law, suffered a setback in municipal elections. 

Chart of the Day

The era of central bank shock and awe is over. After more than 10 years of crisis fighting and more than 750 interest-rate cuts since 2008, policy makers are facing a new decade with rates around historic lows or negative and few good options to fight the next downturn. 

Today’s Agenda

All times CET.

• 10 a.m. EU European affairs ministers meet in Brussels to discuss rule of law, EU’s long-term budget
• 11:45 a.m. Event with Ireland's data protection regulator Helen Dixon, U.S. Federal Trade Commissioner Rohit Chopra 
• 1 p.m. EU Council President Charles Michel meets French President Emmanuel Macron
• 3 p.m. Ryanair CEO Michael O’Leary speaks in Brussels
• World Trade Organization’s appellate body ceases to function properly at midnight
• EU Commission Chief Ursula von der Leyen speaks at event to fight anti-Semitism
• EU Commission Vice President Valdis Dombrovskis gives speech at COP 25 climate conference in Madrid
• EU Commission Vice President Didier Reynders attends the EU-U.S. Ministerial meeting in Washington
• Czechs resume biggest wave of protests since fall of communism, staging rally against Premier Andrej Babis 
• Next round of talks on forming Spanish government

--With assistance from Nikos Chrysoloras and Bryce Baschuk.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net, Chad Thomas

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