EU proposes six-month tariff freeze with United States – Der Spiegel

BERLIN (Reuters) – The European Union has suggested that it and the United States suspend tariffs imposed on billions of dollars of imports for six months, EU trade chief Valdis Dombrovskis was quoted as telling Germany’s Der Spiegel on Saturday.

That would go beyond a four-month suspension agreed last month, and send a signal that Brussels is seeking compromise in a 16-year-old dispute over aircraft subsidies.

“We have proposed suspending all mutual tariffs for six months in order to reach a negotiated solution,” Dombrovskis told the news magazine.

“This would create a necessary breathing space for industries and workers on both sides of the Atlantic,” he added.

In March, the two sides agreed on a four-month suspension covering all U.S. tariffs on $7.5 billion of EU imports and all EU duties on $4 billion of U.S. products, which resulted from long-running World Trade Organization cases over subsidies for planemakers Airbus and Boeing.

Dombrovskis also said the EU would closely monitor U.S. President Joe Biden’s “Buy American” laws which provide for U.S. public contracts to be awarded exclusively to American firms.

“Our goal is to push for procurement markets that are as open as possible all over the world,” he told Der Spiegel.

Reporting by Madeline Chambers; Editing by William Maclean and Helen Popper

Europe should invest in chip design, not a mega-fab: Think tank

BERLIN (Reuters) – Europe’s ambition to make the most powerful computer chips risks wasting billions of euros, a German think tank said in a report on Thursday, urging policy makers to focus instead on rebuilding the region’s chip design industry.

The EU executive’s new goal of doubling its global semiconductor share by 2030 is doomed to fail because the bloc lacks a meaningful market that any super-advanced chip foundry could sell into, author Jan-Peter Kleinhans said.

“For an EU foundry there is simply no business case at the moment in Europe, mainly for the lack of customers,” said Kleinhans, an analyst at the Stiftung Neue Verantwortung (SNV) think tank in Berlin.

The European Commission last month launched a 10-year plan, the Digital Compass, setting its sights on a 20% global semiconductor market share and building a fabrication plant, or fab, that can make superfast 2 nanometer chips.

The push has gained urgency due to supply-chain dislocations caused by a sharp recovery in demand for products ranging from smartphones to electric vehicles following a slump at the onset of the coronavirus pandemic a year ago.

The problem with the EU’s strategy is that, unlike the United States and Asia, Europe lacks a meaningful chip design industry that could justify the cost of a mega-fab, Kleinhans told Reuters in an interview.

“In terms of volume it’s simply not enough to fill a fab,” he said. “That would mean an EU foundry would need to attract foreign customers – this is extremely unlikely.”

Industry leaders TSMC and Samsung already plan investments in the United States to serve chip design leaders like Qualcomm or Nvidia that rely on contract manufacturers to produce their chips.

Plans by Intel to launch its own foundry service, or contract manufacturing operation, starting in the United States, would add to capacity and raise questions about the economics of expanding production in Europe, said Kleinhans.

Europe should instead focus on reviving its vestigial chip design industry, he said. Of its last two publicly listed “fabless” chipmakers one, Dialog, has just agreed to be bought for $6 billion by Japan’s Renesas.

Apple’s announcement that it will invest 1 billion euros ($1.2 billion) in a new chip design facility in Munich, Germany, shows where the EU should be focusing its efforts.

“Apple has single-handedly done more for European-based chip design than the Commission in the past 10 years,” said Kleinhans.

($1 = 0.8430 euros)

Reporting by Douglas Busvine; editing by David Evans

Facebook purchase of Kustomer may face EU antitrust scrutiny

BRUSSELS (Reuters) – Facebook’s acquisition of customer service startup Kustomer may be subjected to European Union antitrust scrutiny after Austria asked EU enforcers to take over the task, the European Commission said on Tuesday.

The move comes as the EU competition regulator girds up to vet more tech, pharma and biotech startup deals, sending a warning to tech giants criticised by some for so-called killer acquisitions where they buy nascent rivals with the goal of shutting them down.

The world’s largest social network announced the deal in November, which could help it to scale up its instant messaging app WhatsApp, which has seen usage jumped during the COVID-19 pandemic.

Facebook sought approval for the deal from the Austrian competition agency on March 31.

“We can confirm that we have received a request for referral from Austria,” a Commission spokeswoman said.

Other national watchdogs have 15 working days to inform the EU competition enforcer whether they too want it to review the deal.

“Following the expiry of the deadline for other Member States to join the referral, the Commission will have 10 working days to decide whether to accept or reject the referral,” the spokeswoman said.

Facebook said the deal would bring more innovation to businesses and consumers in a dynamic and competitive space.

“We look forward to demonstrating to regulators that Facebook and Kustomer would offer more choices and better services through this pro-competitive deal,” a Facebook spokesman said.

Google to contribute $29 million to new EU fund to fight fake news

BRUSSELS (Reuters) -Alphabet unit Google will contribute 25 million euros ($29.3 million) to the newly set up European Media and Information Fund to combat fake news, the company said on Wednesday, amid criticism tech giants are not doing enough to debunk online disinformation.

The COVID-19 pandemic and the U.S. election last year spurred a massive spike in misinformation, with some blaming social media for not being more proactive in tackling the issue while regulators have indicated they may take action via heavy-handed restrictions.

The European Media and Information Fund, launched by the Calouste Gulbenkian Foundation and the European University Institute last week, aims to enlist researchers, fact-checkers, not-for-profits and other public interest-oriented bodies to help in the fight against fake news.

“While navigating the uncertainty and challenges of the last year, it has proven more important than ever for people to access accurate information, and sort facts from fiction,” Matt Brittin, head of Google’s EMEA Business & Operations, said in a blog post.

The fund has a duration of five years. The European Digital Media Observatory, which is a European Commission project set up last year and whose members include fact checkers and academic researchers, will evaluate and select the projects.

($1 = 0.8531 euros)

Bosses share their experience: Three months Post-Brexit

The UK’s new trading relationship with the European Union (EU) might only be a few months old.

But some businesses are struggling to adjust to the new trading landscape outside of the customs union and single market.

Firms across four different sectors share their stories of rising costs, extra paperwork and packages that never arrive.

line

The fashion firm

Ben and Alice, co-founders of Country of Origin knitwear
image captionBen and Alice co-founded Country of Origin in 2013

Ben Taylor and Alice Liptrot have come a long way since they founded their knitwear brand Country of Origin straight out of university.

The couple now employ four other people and sell clothes wholesale to independent shops and to customers online.

About a third of sales, Ben says, came from customers in the EU. 

“But since the end of January, it’s tailed off completely.”

Ben says the firm has been caught up in an “onslaught of admin” and about 80% of orders to the EU after Brexit have seen customers having to pay extra charges.

line

What are the new rules?

New rules have come into force for those in the UK either importing from, or exporting to, Europe.

Exactly what licenses are needed or what duties must be paid depends on what is being exported, its value, where the product originates from and to which country it is being sent, according to government guidance.

From 1 January, the UK government introduced a rule that VAT must be collected at the point of sale rather than the point of import.

This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).

line

One customer in the Netherlands was asked to pay an additional €100 (£88) on their order, Ben says, for “government fees”, with no further explanation from customs agents.

Ben adds that the firm is not an “inexperienced” exporter, having shipped goods to Japan and the US. He says the lack of clarity on why certain charges are being raised is “frustrating”.

The next step? “To get some kind of operation going in Europe – moving stock to dispatch from there because this just isn’t sustainable,” he says.

“I just hope this doesn’t put off any other young person who wants to start a small business today.”

The flower grower

Diane Collison
image captionCollison’s Cut Flowers supplies supermarkets such as Sainsbury’s, M&S and Asda

Diane Collison has been responsible for helping her firm, Collison Cut Flowers, adapt to post-Brexit changes.

The Norfolk cut flower producer imports 35 million bulbs a year – mostly tulips from Holland, scented stock and lilies.

The government recently pushed backintroducing new checks on most imported plants until 2022. But some of the bulbs imported by Collison’s Cut Flowers count as “high-risk”, so they have already had to make some changes.

Diane has registered the business as a “place of destination”, where plants could be checked by local health teams, and for an EORI number so the firm can bring EU goods into the UK.

Day-to-day, she must email a freight forwarding business details of expected deliveries before they hit UK ports. That’s on top of registering invoices and plant health certificates with UK authorities.

“Each load is probably costing us about £200 extra now – and at about 150 per year that’s not an insignificant amount of money,” Diane says.

The firm may soon need to increase costs for customers.

“But I’m just pleased we’ve managed to get our imports in and what we’ve done is working,” Diane says, adding the firm has only seen deliveries delayed by a few hours so far.

The sausage exporter

Steve Howell of Foodlynx
image captionSteve Howell’s Foodlynx suffered a three-day delay to the one shipment it has made since Brexit

Steve Howell’s Foodlynx sells British sausages, bacon and bread to hotels and restaurants across the EU. 

Typically it sends one or two trucks out a week and up to six in the peak summer season. But the Dorset-based firm suffered a three-day delay to the one shipment it has made since Brexit.

Its truck was held up at the port of Le Havre in France as customs officials questioned whether certificates for some animal products had been filled in correctly.

It was moved to another cold storage unit nearby while the issue was sorted out. Steve was charged €3,914 for storage and admin costs.

Although recent statistics show that UK exports to the EU dropped significantly in January, Steve believes other factors are at play.

“Demand dropped off due to Covid last year anyway, plus we, like many others advised our customers to stock up before Christmas to avoid these types of delays.

“Now, the customers are running low on stock and we’re still trying to battle through paperwork, new labelling regulations and compliance.”

“The whole point [of Brexit] was to take back control of our country,” Steve says.

“We have succeeded in doing exactly the opposite because British exporters are completely and utterly blown out the water.”

The car parts dealer

Martyn Wilson
image captionMartyn Wilson sells classic car parts across Europe, but is considering focusing more on US customers

Martyn Wilson set up his classic car parts firm 12 years ago and about 60% of orders are shipped to the EU.

VAT is now applied at the point of sale for parts under £135 – on top of duty charged on car parts at 24%.

Citroen Classic Car Parts typically sends out 130 items per month – but difficulties arose quickly.

“For couriers, I have to supply customers’ contact details – and often have to write to them in French and German to get those, which is a bit of a drama we never had to deal with before.”

Deliveries into Italy, for example, have never arrived and others have been returned due to customers not paying the new charges.

“It has impacted us certainly from the mental point of view. It’s a lot of additional stress and you’re continually on deadlines, trying to get good reviews from customers and make sure things get delivered.”

Martyn points out that he is able to deliver car parts to the US in less than 24 hours – and no tariffs are applicable on those under $700.

“I will muddle on through in the best possible way I can and maybe it’ll push me to think outside the box a bit. 

“Perhaps in the long-run it might be good for us, but we’re going through the pain barrier.”

By Lora Jones
Business reporter, BBC News

EU fines Moody’s for failing to disclose conflicts of interests

The European Union’s markets watchdog said on Tuesday it has fined credit ratings firm Moody’s 3.7 million euros ($4.35 million) for breaching rules including the failure to disclose conflicts of interests.

All the breaches resulted from negligence on the part of the company, the European Securities and Markets Authority (ESMA) said, adding that the fine was for five Moody’s entities based in France, Germany, Italy, Spain and Britain.

ESMA said Moody’s had inadequate internal policies and procedures to manage shareholder conflicts of interest. The breaches took place between 2013 and 2017, it said.

“ESMA found that MIS (Moody’s Investors Service) had no intent to infringe the EU regulation and there was no impact on the quality of any ratings,” a Moody’s spokesperson said in an e-mailed statement to Reuters.

Moody’s, one of the three largest credit ratings agencies alongside S&P Global and Fitch, added that the regulator had recognised the steps it has taken to prevent similar infringements in the future.

ESMA said the breaches were of a rule that prevents agencies from issuing ratings on companies in which they own 10% or more of its shares, or where they have a board position.

The regulator fined Fitch 5.1 million euros a couple of years ago for similar breaches.

“ESMA believes it is crucial, to ensure independent good quality ratings and to protect investors, that (ratings agencies) carefully identify and subsequently eliminate or manage and disclose conflicts of interest to avoid interference by shareholders with the rating process,” the watchdog said. ($1 = 0.8503 euros)

Paris, EU near deal on Air France bailout conditions: Report

The French government and the European Union’s executive are close to an agreement on the terms of a bailout for Air France, which like other carriers has been hammered by the coronavirus pandemic, Le Monde reported.

The expected deal would see Air France give up fewer airport flight slots at its Paris base than initially sought by the European Commission, notably at Orly airport, the newspaper said in a report published late on Friday.

Contacted by Reuters, a spokeswoman for the Commission said it was in contact with the French authorities. “We cannot prejudge the timing or outcome of these contacts,” she added.

Air France and France’s economy ministry declined to comment.

The Air France-KLM group recorded a 7.1 billion euro ($8.38 billion) net loss for last year.

It received 10.4 billion euros in loans and guarantees from France and the Netherlands and has been negotiating a state-backed recapitalisation, with EU regulators seeking airport slot concessions at Paris-Orly and Amsterdam-Schiphol.

Under a plan submitted to Brussels, France would swap a 4 billion euro shareholder loan granted to Air France-KLM last year for hybrid debt or perpetuities, sources have said.

Air France and its unions had baulked at the EU’s demands for slot concessions at Orly.

Slot concessions for KLM had yet to be agreed by the Commission and the Dutch government, Le Monde and fellow French daily Les Echos said.

($1 = 0.8477 euros)

Source: Reuters – Paris

EU antitrust watchdogs to have more say over tech, pharma, biotech start-up deals

BRUSSELS (Reuters) – EU antitrust regulators are set to have more say over small merger deals involving start-ups in the technology, biotechnology and pharmaceutical industries, the EU enforcer said on Friday, in a warning to big companies eyeing such deals.

The move comes amid regulatory concerns on both sides of the Atlantic that a buying spree of start-ups by big companies, which do not trigger competition scrutiny because of the low value of the deal, may be so-called killer acquisitions.

This refers to a company buying a potential rival still in a nascent stage with the aim of shutting it down.

Critics have often cited the hundreds of small companies acquired by Alphabet’s Google and Facebook in recent years while supporters say such deals provide the money and resources to help start-ups to grow.

The European Commission said it wants national competition watchdogs to refer more small deals to the EU enforcer.

“A more frequent use of the existing tool of referrals under Article 22 of the Merger Regulation can help us capture concentrations which may have a significant impact on competition in the internal market,” European Competition Commissioner Margrethe Vestager said in a statement.

The Commission cited recent deals in the digital, pharmaceutical, biotechnology and certain industrial sectors which had escaped regulatory scrutiny.

Pandemic leaves digital laggard Italy scrambling to catch up

MILAN (Reuters) – Small Italian car filter supplier Ecofiltri took out a state-backed loan last year, just like thousands of other businesses fighting to keep afloat during the pandemic.

But instead of burning through the cash to pay overdue rent and bills, Ecofiltri is investing the money on a technological revamp of its business. Already facing a longer-term switch to electric transport, the company was spurred to act after the virus crisis cut the number of drivers on the road.

“We’ve expanded our facilities, bought high-tech equipment and even created an R&D department where we are working on three projects we hope we can patent to provide more intelligent products and services,” Ecofiltri co-founder Simone Scafetta told Reuters over a video call.

Italy ranked fourth to last in the EU for digital competitiveness in 2019, according to the Digital Economy and Society Index (DESI). By forcing a huge technological acceleration on the country, the pandemic is offering Italy a one-off chance to boost its feeble productivity and economic growth.

For a graphic on DESI index 2020:

Reuters Graphic

Faster economic expansion is essential for Rome to sustain the world’s third-largest public debt which the pandemic has inflated to 1.6 times gross domestic product (GDP).

Research by Milan’s Politecnico University shows Italy could add 1.9 percentage points a year on average to its GDP growth if its small- and medium-sized enterprises (SMEs) bridged a 40% gap versus Spanish peers measured by indicators ranging from e-commerce capabilities or electronic invoicing to use of big data.

“But the trick only works if businesses switch from a (crisis-driven) reactive approach to technology to a strategic one, and the environment where they operate evolves with them,” said Giorgia Sali who heads Politecnico’s research hub on SMEs and digital innovation.

For a graphic on DESI Index Connectivity:

Reuters Graphic

Italy estimates its businesses in recent years fell behind the rest of Europe in terms of digital investment by an amount roughly equal to 2 percentage points of GDP.

The pandemic has brought a welcome shift, with 86% of Italian respondents in a survey of mid- to large-sized firms commissioned by Dell Technologies saying they sped up digital transformation plans in 2020, above a 75% European average.

“The pandemic has forced Italian companies to confront the country’s huge digital gap,” said Francesca Moriani, CEO of IT services provider VAR Group, adding Europe as a whole lags the United States and China.

The euro zone’s digital economy is only two-thirds the size of that in the United States.Slideshow ( 2 images )

Encouragingly, 92% of SMEs polled by VAR Group expect to invest in digital capacity in the next two years, despite the blow to sales from the pandemic.

RECOVERY FUNDS

Italy’s digital deficit has a number of roots.

In a country where broadband access is below the EU average, large companies which can sustain programmes of technological investment make up only a tiny proportion of businesses.

Many firms are family-owned and run, meaning they tend to lack managers with the right skills to lead a digital transformation.

A European Central Bank study also highlighted funding constraints when businesses rely mostly on bank financing like in Italy, saying traditional lenders often struggle to evaluate the risk involved in projects based on complex technologies.

Add to that an ageing population, and a very low share of ICT graduates – around 5,000 a year compared with around 18,000 in smaller Spain, according to Eurostat figures here – and Italy has fallen behind in the digital race.

To support the adoption of cutting-edge technologies by its companies and ultra high-speed connectivity, Rome has earmarked 46 billion euros in yet-to-be disbursed EU recovery funds for digital investments.

It also offers tax breaks to firms seeking to boost digital spending and appointed former Vodafone CEO Vittorio Colao as its technology czar to oversee efforts in coming years.

Like in Greece, the modernisation push also targets public services which Ecofiltri’s Scafetta said set a bad example.

“We’ve given our staff palmtops and screens to share information non-stop and interact with customers … people don’t add value by walking next door to carry paper documents, like you see state employees do,” he said.

Located in the central Abruzzo region, Ecofiltri has found success by developing a process which gives a second life to diesel particulate filters.

To fund its projects, which include sensors to more easily detect issues with its filters and a digital warehouse management system to feed information to its website and liaise with e-sellers such as Amazon, Ecofiltri last September borrowed 100,000 euros from Credimi, a fintech lending firm.

Credimi says digital innovation is an important driver of credit demand it faces from SMEs.

“With a few exceptions, the pandemic has caught small- and mid-sized Italian businesses unprepared, sending them scrambling to catch up with digital progress,” Fabio Troiani, CEO Italy and Global digital services at Milan-based BIP Consulting, said.

“For some it’s become a matter of life and death.”

FALLING FURTHER BEHIND

Many smaller Italian businesses are rising to the challenge.

The share of SMEs using e-commerce in 2020 rose 50% to a third of the total, as first-time e-shoppers surged by 2 million during a nationwide lockdown last spring, according to data by Politecnico and e-commerce lobby Netcomm.

For a graphic on SMEs selling online:

Reuters Graphic

Politecnico data also point to a 42% jump in cloud services for SMEs as remote workers increased by 11.5 times to 6.6 million.

So far, Italian government programmes aimed at fostering digital investments have been mostly taken up by larger companies.

The challenge is to bring onboard companies like Ecofiltri, which is one of more than 4 million Italian businesses with fewer than 10 staff, or 95% of the total.

Small firms find it hard to attract people with the necessary skills in a country where ICT graduates make up only 1% of the total, the lowest in the EU, contributing to Italy scoring last in the DESI human capital index.

“It wasn’t easy but we’ve brought in an engineer and the next person we hire must also be an engineer or they wouldn’t fit our development plans,” Scafetta said.

Diego Ciulli, senior public policy manager at Google, warned that a failure to fill Italy’s digital gap when consumers globally have turned to online channels would be more than a missed opportunity.

“The real risk is falling further behind,” he said.

“If Italian wine producers wait for trade exhibitions to resume to find new foreign customers, while French ones get really good at selling their wine online you don’t just lose a chance to grow, you lose market share.”

EU agency says AstraZeneca vaccine is ‘safe and effective’

A review by the EU’s medicines regulator has concluded the Oxford-AstraZeneca Covid-19 vaccine is “safe and effective”.

A woman is vaccinated against Covid-19 with the AstraZeneca vaccine in Genoa, Italy, 10 March 2021.
image captionGermany, France and Italy were among the countries to pause their rollouts of the vaccine as a precaution

The European Medicines Agency (EMA) investigated after 13 EU states suspended use of the vaccine over fears of a link to blood clots.

It found the jab was “not associated” with a higher risk of clots.

Italy announced it would resume using the jab on Friday while Sweden said it needed a “few days” to decide

It is up to individual EU states to decide whether and when to re-start vaccinations using the AstraZeneca vaccine.

The agency’s investigation focused on a small number of cases of unusual blood disorders. In particular, it was looking at cases of cerebral venous thrombosis – blood clots in the head. 

Decisions to suspend use of the vaccine sparked concerns over the pace of the region’s vaccination drive, which had already been affected by supply shortages.

Much of Europe is struggling to contain a surge in coronavirus cases.

The World Health Organization (WHO) on Thursday called on countries to continue using the vaccine, and is due to release the results of its own review into the vaccine’s safety on Friday. 

What did the EMA say exactly?

Emer Cooke, the agency’s executive director, told a news conference: “This is a safe and effective vaccine.”

“Its benefits in protecting people from Covid-19 with the associated risks of death and hospitalisation outweigh the possible risks.” 

Emer Cooke
image captionMrs Cooke was speaking at an online news conference in Amsterdam

The EMA’s expert committee on medicine safety, Mrs Cooke said, found that “the vaccine is not associated with an increase in the overall risk of… blood clots”. 

But the EMA, she added, could not rule out definitively a link between the vaccine and a “small number of cases of rare and unusual but very serious clotting disorders”.

Therefore the committee has, she said, recommended raising awareness of these possible risks, making sure they are included in the product information. Additional investigations are being launched, Mrs Cooke added. 

“If it was me, I would be vaccinated tomorrow,” Mrs Cooke added. “But I would want to know that if anything happened to me after vaccination what I should do about it and that’s what we’re saying today.”

Why did European countries act?

Thirteen EU countries suspended use of the vaccine, after reports of a small number of cases of blood clots among vaccine recipients in the region.

Leading EU states said they had opted to pause their use of the drug as a “precautionary measure”.

“There were a few very unusual and troubling cases which justify this pause and the analysis,” French immunologist Alain Fischer, who heads a government advisory board, told France Inter radio. “It’s not lost time.”

In Germany, the health ministry also pointed to a small number of rare blood clots in vaccinated people when justifying its decision. It postponed a summit on extending the vaccine rollout ahead of the EMA’s announcement. 

Other countries, such as Austria, halted the use of certain batches of the drug, while Belgium, Poland and the Czech Republic were among those to say they would continue to administer the AstraZeneca vaccine.

Decisions to halt rollouts of the AstraZeneca vaccine were criticised by some politicians and scientists.

A spokeswoman for Germany’s opposition Free Democrats said the decision had set back the country’s entire vaccination rollout. German Greens health expert Janosch Dahmen, meanwhile, argued that authorities could have continued using the drug.

Dr Anthony Cox, who researches drug safety at the UK’s University of Birmingham, told the BBC it was a “cascade of bad decision-making that’s spread across Europe”.

What has AstraZeneca said?

The company says there is no evidence of an increased risk of clotting due to the vaccine.

It said it had received 37 reports of blood clots out of more than 17 million people vaccinated in the EU and UK as of 8 March.

These figures were “much lower than would be expected to occur naturally in a general population of this size and is similar across other licensed Covid-19 vaccines”, it said.

Professor Andrew Pollard, director of the Oxford vaccine group which developed the Oxford-AstraZeneca jab, told the BBC on Monday that there was “very reassuring evidence that there is no increase in a blood clot phenomenon here in the UK, where most of the doses in Europe [have] been given so far”.

British Health Secretary Matt Hancock this weekurged people to “listen to the regulators” and to “get the jab”. 

Chart showing the number of countries using each vaccine. Updated 15 March.