BRUSSELS — France and Germany said Friday they had struck a deal to favor European-made cars under a landmark EU industry bill in exchange for weakening a 2035 vehicle emissions target, ending months of wrangling between the bloc’s two biggest economies. Under the agreement, Germany would accept stricter “Made in Europe” — or local content — requirements for the automotive industry in the proposed Industrial Accelerator Act, a longstanding French demand, while France would back Berlin’s push to relax the EU’s plan to phase out new combustion-engine cars. The EU’s current target is for companies to reduce emissions from new vehicles by 100% from 2021 levels by 2035, with the possibility to “earn” 10% of emissions leeway through initiatives like offsets and investments. France and Germany now want to soften the 2035 target to 90% but without having  to offer investments in alternative fuels to compensate the remaining 10%, as proposed by the European Commission. “This balanced approach will enable the European Union to pursue its climate objectives while strengthening the technological sovereignty, industrial base and international competitiveness of its automotive industry,” the two countries said in a joint statement. The agreement, first reported by POLITICO in July, was due to have been announced Thursday, during a meeting of EU leaders in Brussels. But it was held up at the last minute by disagreements within Germany’s governing coalition. “We hope that this Franco-German dynamic can swiftly lead to an agreement with our partners, for our jobs and our industry,” French President Emmanuel Macron said in a post on social media. An Elysée official on Friday made clear that, under the Franco-German deal, the scope of Made in Europe for automotive can be extended to the U.K. and Switzerland under certain conditions. — addressing a key concern of Prime Minister Andy Burnham’s government ahead of a Nov. 20 U.K.-EU summit in Brussels. The agreement was reached after the German Social Democratic Party, the junior partner in Chancellor Friedrich Merz’s coalition government, dropped its opposition. “This is a modern realignment of German industrial policy that places significantly greater emphasis on preserving jobs and production sites,” said German Environment Minister Carsten Schneider, who is from the SPD. “The clear expectation for German companies is that they will use these new opportunities to make investments and guarantee jobs here in Germany,” he added. CORRECTION: This article was updated on Oct. 16 after an earlier version misrepresented the figures in the Franco-German proposal on the softening of 2035 targets.

LONDON — Britain has signed a new critical minerals partnership with the Trump administration, as it seeks to diversify supply chains away from China. Foreign Minister Seema Malhotra signed the partnership in Washington with U.S. Under Secretary of State Jacob Helberg on Wednesday night. “As demand for critical minerals around the world continues to rise, this Memorandum of Understanding with the United States underscores our commitment to working as close allies to build resilient, diversified global supply chains,” Malhotra said in a statement. Under the terms of the deal, the two countries have agreed to use economic policy tools and coordinated investment to secure supplies of critical minerals and crack down on subsidized imports that risk undercutting domestic production. They will jointly identify priority projects, mobilize financing for developments, and share intelligence on investments that could threaten domestic capabilities in either country. The partnership signals a tougher stance on market distortion, with both sides pledging to protect their industries from “non-market policies and unfair trade practices” — including by working with allies on a global approach to pricing challenges. The agreement also states both sides will use existing legislative and diplomatic tools to review, deter and potentially block critical minerals and rare earths asset sales on national security grounds. U.S. and U.K. ministers are expected to convene within the next six months to take the partnership forward. The Trump administration, which has announced similar agreements with Mexico, the European Union and Japan, ultimately wants to establish a critical minerals trading bloc, first floated on Wednesday by Vice President JD Vance to 54 countries. Speaking to reporters in London on Thursday, U.K. Trade Secretary Peter Kyle said the trading bloc with Washington “makes perfect sense.” “On critical minerals, the alliances make perfect sense, as long as they take into account the specific peculiarities of domestic markets,” Kyle said.  “In all of the alliances, all of us have different needs, and all of us are producing different minerals, so we have to make sure that it’s completely cooperative, but we should be approaching it with a ‘how do you make it work?’ — rather than how to avoid it,” he added.

BRUSSELS — The European Parliament’s top trade lawmakers failed on Wednesday to reach a common position on the EU-U.S. trade deal, in a move that risks fueling Washington’s impatience against the EU’s slow pace in finally implementing its side of a bargain struck last summer. Negotiations will continue until next week, two people who attended a meeting of the lawmakers told POLITICO. One said that committee vote was penciled in for Feb. 24 and a final plenary vote for March. Both were granted anonymity to discuss the closed-door talks. The meeting failed to clear remaining hurdles regarding the Parliament’s position on the removal of tariffs on U.S. industrial goods and lobsters — a precondition for Washington to reduce its own tariffs on European cars.  Lawmakers from the international trade committee disagreed on the length of a sunset clause which would limit the proposals’ application to 18 to 36 months, as well as whether the EU should withdraw any tariff concessions until a solution is found between Brussels and Washington on the 50 percent tariff the Trump administration has put on steel derivatives. With the EU still processing the shock of Trump’s threats against the territorial sovereignty of Greenland and the Kingdom of Denmark, the liberal Renew group and the Socialists & Democrats are pushing to Trump-proof the deal by inserting suspension clauses into enabling legislation in case the U.S. president turns hostile again.  The center-right European People’s Party has pushed to sign off the deal following calls from EU leaders to unfreeze the implementation of the deal.  Failure to reach an agreement on Wednesday throws into disarray the timeline for parliamentary approval, and further delays the start of negotiations with EU capitals and the European Commission.

BRUSSELS — EU ambassadors are close to a deal on a €90 billion loan to finance Ukraine’s defense against Russia thanks to a draft text that spells out the participation of third countries in arms deals, three diplomats said Wednesday. The ambassadors are scheduled to meet on Wednesday afternoon to finalize talks after a week of difficult negotiations. The final hurdle was deciding how non-EU countries would be able to take part in defense contracts financed by the loan. The draft deal, seen by POLITICO, would allow Ukraine to buy key weapons from such countries — including the U.S. and the U.K. — either when no equivalent product is available in the EU or when there is an urgent need. The list of weapons Kyiv will be able to buy outside the bloc includes air and missile defense systems, fighter aircraft ammunition and deep-strike capabilities. If the U.K. wants to take part in procurement deals beyond that, it will have to contribute financially to help cover interest payments on the loan. The text also mentions that the British contribution — to be agreed in upcoming negotiations with the European Commission — should be proportional with the potential gains of its defense firms taking part in the scheme.  France led the effort to ensure that EU countries — which are paying the interest on the loan — gain the most from defense contracts. In an effort to get Paris and its allies on board, the draft circulated late Tuesday includes new language which says that “any agreement with a third country must be based on a balance of rights and obligations,” and also that “a third country should not have the same rights nor enjoy the same benefits,” as participating member states. The draft also strengthens the control of EU countries over whether the conditions to buy weapons for Ukraine outside the bloc have been met, saying Kyiv will have to “provide the information reasonably available to it demonstrating that the conditions for the application of this derogation are met.” That will then be checked  “without undue delay” by the European Commission after consultation with a new Ukraine Defence Industrial Capacities Expert Group. The new body will include representatives from EU members countries, according to diplomats. The European Commission will raise €90 billion in debt to fund Ukraine’s war effort before Kyiv runs out of cash in April. After facing intense pressure from national capitals, the Commission agreed to deploy unused funds in its current seven-year budget to cover the borrowing costs. If that is not enough, member countries will have to pay the difference. Budget Commissioner Piotr Serafin will meet the European Parliament and the Cypriot presidency of the Council of the EU on Thursday in an attempt to solve disagreements on the repayment of the borrowing costs, said one official.

BRUSSELS — European Commission President Ursula von der Leyen is planning to travel to Australia this month to clinch a security and trade deal, according to a person familiar with the talks. Her trip will follow a meeting next week between European Trade Commissioner Maroš Šefčovič and his Australian counterpart Don Farrell in Brussels, a second person said. Both people were granted anonymity because the schedules are still tentative. The EU and Canberra are moving to revive trade negotiations that collapsed at the end of 2023 amid disagreements over quotas of beef and lamb. The quotas are still being negotiated between Canberra and Brussels, the first person familiar with the talks said. Von der Leyen will take the 20-hour-plus flight to Australia directly after she attends the Munich Security Conference, which takes place in the German city on Feb. 13-15, according to Australian digital newspaper The Nightly, which broke the news of the Commission chief’s four-day trip. EU countries last December allowed the Commission to negotiate a defense deal with Australia. Sealing such a deal would come on the heels of security and defense partnerships signed with the U.K., Canada and most recently India. An agreement with Australia would represent a win for the EU, as it would open access to the country’s vast reserves of strategic minerals. Australia is the world’s largest producer of lithium and also holds the world’s second-largest copper reserves. Coming after the EU’s fraught Mercosur deal with South American countries — criticized by farmers, France and skeptical lawmakers — the pact with Canberra is expected to also trigger pushback due to its significant agricultural component.

BRUSSELS — The EU and U.K. must overcome historic gripes and “reset” their relationship to be able to work together in an increasingly uncertain world, the bloc’s top parliamentarian said. European Parliament President Roberta Metsola used an address to the Spanish senate on Tuesday to call for closer ties with the U.K. as London steps up efforts to secure smoother access to European markets and funding projects, after the country voted to leave the bloc in 2016. “Ten years on from Brexit … and in a world that has changed so profoundly, Europe and the U.K. need a new way of working together on trade, customs, research, mobility and on security and defense,” Metsola said. “Today it is time to exorcize the ghosts of the past.” Metsola called for a “reset” in the partnership between Britain and the EU as part of a policy of “realistic pragmatism anchored in values that will see all of us move forward together.” Her speech comes after British Prime Minister Keir Starmer said he intended to try and ensure his country’s defense industries can benefit from the EU’s flagship SAFE scheme — a €150 billion funding program designed to boost procurement of military hardware. That push has been far from smooth, with a meeting of EU governments on Monday night failing to sign off U.K. access to SAFE, despite France — which has consistently opposed non-EU countries taking part — supporting the British inclusion. Starmer has also signaled in recent days that he is seeking closer integration with the EU’s single market. Brussels has so far been reluctant to reopen the terms of the U.K.’s relations with the bloc just six years after it exited. While those decisions lie with the remaining 27 EU member countries, rather than the Parliament, Metsola’s intervention marks a shift in tone that could bolster the British case for closer relations. In the context of increasingly tense relations with the U.S., capitals are depending on cooperation with British intelligence and military capabilities and in key industries. Europe must take “the next steps towards a stronger European defense, boosting our capabilities and cooperation, and working closely with our NATO allies so that Europe can better protect its people,” Metsola said.

LONDON — Keir Starmer signaled that the U.K. is ready to try again to forge closer defense ties with the European Union, after talks on British access to the SAFE loan program collapsed last year.  Speaking on a visit to China, the prime minister said he was hoping to make “some progress” on spending, capability and co-operation between European countries and Britain, whether through Security Action for Europe (SAFE) or other initiatives. “I have made the argument that that should require us to look at schemes like SAFE and others to see whether there is a way in which we can work more closely together,” he told reporters traveling with him to Beijing.  Negotiations for Britain to take part in the EU’s loan initiative for defense procurement failed in November after a dispute about how much the U.K. would have to pay. The failure to reach a deal has been a source of frustration to Labour figures in the U.K. and European allies who want to show the U.K. can achieve closer alignment with the bloc after Brexit. The U.K. can, for now,  access SAFE as a third country, but is not entitled to fuller participation as was originally envisaged. EU ambassador to Britain Pedro Serrano and British officials have both previously raised expectations that the U.K. could reach an agreement to be included in another round of SAFE, but there is not currently one under consideration.  A European Commission spokesperson said: “We will not speculate on a possible second SAFE fund at this stage.” Another avenue for closer cooperation could center on the EU’s €90 billion loan for Ukraine, which the Netherlands and many other countries would like to see the U.K. join. London could also be asked to pay a fee to join the loan. France, with the support of other countries, last week suggested that third-party countries that take part should contribute. They made the argument that since EU member countries pay interest on the loan it would be unfair if non-EU countries don’t pay anything, according to three EU diplomats.  However, British officials said this idea was not under active discussion. A U.K government spokesperson said: “We do not comment on internal EU processes,” pointing out that the country has so far committed a total of £21.8 billion in support for Ukraine through military and fiscal assistance. European Commissioners Maros Šefčovič and Valdis Dombrovskis are visiting London Monday for a series of meetings with British ministers, ahead of a planned second EU-U.K. summit later this year. Their talks this week are expected to focus on trade. As he left China, Starmer told reporters that he wanted to “get closer” to the EU then he has currently set out, not only on defense and security but also energy, emissions and trade. Referring to a second annual U.K.-EU summit planned later this spring, Starmer added: “We will not only follow up on the 10 strands that we set out at last year’s summit, we’ll also want to go closer with an iterative process.” Jacopo Barigazzi and Jon Stone contributed to this report.

BEIJING — Keir Starmer wants to take the U.K. deeper into the European Union single market — if Brussels will let him. Speaking to reporters during a visit to China, the British prime minister said he wanted to “go further” in aligning with the European market where it is “in our national interest.” In May last year Starmer effectively agreed to take the U.K. back into Brussels’ orbit in two sectors: agriculture and electricity. Those agreements, which are currently being finalized, will see the U.K. follow relevant EU regulations — in exchange for more seamless market access. Seemingly buoyed by a positive reception and a smaller than anticipated Brexiteer backlash, Starmer is now doubling down. “I think the relationship with the EU and every summit should be iterative. We should be seeking to go further,” the prime minister told reporters. “And I think there are other areas in the single market where we should look to see whether we can’t make more progress. That will depend on our discussions and what we think is in our national interest. “But what I’m indicating here is — I do think we can go further.” The comments are a significant rhetorical shift for the Labour leader, whose 2024 election manifesto promised that “there will be no return to the single market” — as well as the customs union or free movement. While the Labour government has softened on the single market in office, it has arguably hardened on the customs union. Starmer told reporters that “the place to look is the single market, rather than the customs union,” arguing that joining the latter would require unpicking trade deals struck under Britain’s newly independent trade policy. GOING SWISS? While EU officials say they are always open to concrete U.K. proposals, rejoining the single market sector-by-sector might not be entirely straightforward. Brussels agreed to British access for agriculture and electricity in part because of pressure from European industry, which will arguably benefit from the new arrangements as much as the British side. But the dynamic is different in other sectors, where some European firms have been able to thrive at the expense of their locked-out British competitors. There will also be debates in Brussels about where the bloc should draw the line in granting single market access to a country that does not accept the free movement of people — a requirement other states like Norway and Switzerland must respect. Officials are also wary that the EU-U.K. relationship may come to resemble the worst aspects of the Swiss one, a complicated mess of agreements which is subject to endless renegotiation and widely disliked in Brussels. CHEMICAL ATTRACTION The prime minister would not elaborate on which sectors the U.K. should seek agreements with the EU on, stating only that “we’re negotiating with the EU as we go into the next summit.” British officials say that for now they are focused on negotiating the agreements promised at last May’s meeting. One senior business representative in Brussels, granted anonymity because their role does not authorize them to speak publicly, said alignment in sectors including chemicals, cosmetics, and medical devices could be advantageous to businesses on both sides of the English Channel. As well as the agreements on electricity and agriculture, the U.K. and EU last May agreed a security agreement to cooperate more closely on defense, and to link their emissions trading systems to exempt each other from their respective carbon border taxes. They also agreed to establish a youth mobility scheme, which will see young people get visas to live abroad for a limited period. Starmer reiterated the U.K.’s position that “there has got to be a cap” on the number of people who can take advantage of the scheme and “there has got to be a duration agreed.” “And it will be a visa-led scheme. All of our schemes are similar to that. We are negotiating,” he added. Dan Bloom reported from Beijing. Jon Stone reported from Brussels.

SHANGHAI — As Keir Starmer arrived for the first visit by a British prime minister to China for eight years, he stood next to a TV game show-style wheel of fortune. The arrow pointed at “rise high,” next to “get rich immediately” and “everything will go smoothly.” Not one option on the wheel was negative. Sadly for the U.K. prime minister, reality does not match the wheel — but he gave it a good go. After an almost decade-long British chill toward China, Starmer reveled in three hours of talks and lunch with Chinese President Xi Jinping on Thursday, where he called for a “more sophisticated” relationship and won effusive praise in return. Britain boasted it had secured visa-free travel for British citizens to China for up to 30 days and a cut in Chinese tariffs on Scotch whisky. Xi even said the warming would help “world peace.” His wins so far (many details of which remain vague) are only a tiny sliver of the range of opportunities he claimed Chinese engagement could bring — and do not even touch on the controversies, given Beijing’s record on aggressive trade practices, human rights, espionage, cyber sabotage and transnational repression. But the vibes on the ground are clear — Starmer is loving it, and wants to go much further. POLITICO picks out five takeaways from following the entourage. 1) THERE’S NO TURNING BACK NOW Britain is now rolling inevitably toward greater engagement in a way that will be hard to reverse. Labour’s warming to China has been in train since the party was in opposition, inspired by the U.S. Democrats and Australian Labor, and the lead-up to this meeting took more than a year. No. 10 has bought into China’s reliance on protocol and iterative engagement. Xi is said to have been significantly warmer toward Starmer this week (their second meeting) than the first time they met at the G20 in Rome. Officials say it takes a long time to warm him up. There is no doubt China’s readout of the meeting was deliberately friendlier to Labour than the Conservatives. One person on the last leader-level visit to China, by Conservative PM Theresa May in 2018, recalled that the meetings were “intellectually grueling” because Xi used consecutive translation, speaking for long periods before May could reply. This time officials say he used simultaneous translation. It will not end here — because Starmer can’t afford for it to. Many of the dozen or so deals announced this week are only commitments to investigate options for future cooperation, so Britain will need to now push them into reality, with an array of dialogues planned in the future along with a visit by Foreign Secretary Yvette Cooper. As Business Secretary Peter Kyle told a Thursday night reception at the British Embassy: “This trip is just the start.” 2) BRITAIN’S STILL ON THE EASY WINS Deals on whisky tariffs and visa-free travel were top of the No. 10 list but — as standalone wins without national security implications — they were the lowest-hanging fruit. The two sides agreed to explore whether to enter negotiations towards a bilateral services agreement, which would make it easier for lawyers and accountants to use their professional qualifications across the two countries. In return, investment decisions in China were announced by firms including AstraZeneca and Octopus Energy. But many of the other deals are only the start of a dialogue. One U.K. official called them “jam tomorrow deals.” And Luke de Pulford, of the Inter-Parliamentary Alliance on China campaign group, argued that despite Britain having a slight trade surplus in services “it’s tiny compared to the whole.” He added: “This trip to China seems to be based upon the notion that China is part of the solution to our economic woes. It’s not rooted in any evidence. China hasn’t done foreign direct investment in any serious way since 2017. It’s dropped off a cliff.” Then there are areas — particularly wind farms — where officials are more edgy and which weren’t discussed by Starmer and Xi. One industry figure dismissed concerns that China could install “kill switches” in key infrastructure — shutting down a wind turbine would be the equivalent of a windless day — but concerns are real. A second U.K. official said Britain had effectively categorized areas of the economy into three buckets — “slam dunks” to engage with China, “slam dunks” to block China, and everything in between. “We’ve been really clear [with China] about which sectors are accessible,” they said, which had helped smooth the path. Then there are the litany of non-trade areas where China will be reluctant to engage: being challenged on Xi’s relationship with Russian President Vladimir Putin, the treatment of the Uyghur people and democracy campaigner Jimmy Lai. Britain is still awaiting approval of a major revamp of its embassy in Beijing, which will be expensive with U.K. contractors, materials and tech, all security-cleared, being brought in. 3) STARMER AND HIS TEAM WERE GENUINELY LOVING IT After such a build-up and so much controversy, Starmer has … been having a great time. The prime minister has struggled to peel the smile off his face and told business delegates they were “making history.” Privately, several people around him enthused about the novelty of it all (many have never visited China and Starmer has not done so since before he went into politics). One said they were looking forward to seeing how Xi operates: “He’s very enigmatic.” Briefing journalists in a small ante-room in the Forbidden City, Starmer enthused about Xi’s love of football and Shakespeare. And talking to business leaders, he repeated the president’s line about blind men finding an elephant: “One touches the leg and thinks it’s a pillow, another feels the belly and thinks it’s a wall. Too often this reflects how China is seen.” So into the spirit was Starmer that he even ticked off Kyle for not bowing deeply enough. At the signing ceremony for a string of business deals, Kyle had seen his counterpart bend halfway to the floor — and responded with a polite nod of the head. The vibes were energetic. Britain’s new ambassador to Beijing, Peter Wilson, flitted around ceaselessly and sat along from Starmer in seat 1E. The PM’s No. 10 business adviser, Varun Chandra, jumped from CEO to CEO at the British embassy. The whole delegation was on burner phones and laptops (even leaving Apple Watches at home) but the security fears soon faded to the background for U.K. officials. CEOs on the trip queued up to tell journalists that Starmer was making the right choice. “We risk a technological gulf if we don’t engage,” said one. There is one problem. Carry on like this, and Starmer will struggle to maintain his line that he is not re-entering a “golden era” — like the one controversially pushed by the Tories under David Cameron in the early 2010s — after all. 4) BUSINESS WAS EVERYTHING The trip was a tale of two groups of CEOs. The creatives and arts bosses gave the stardust and human connection that such a controversial visit needed — but business investment was the meat. In his opening speech Starmer name-checked three people: Business Secretary Peter Kyle, City Minister Lucy Rigby and No. 10 business adviser Varun Chandra. It even came through in the seating plan on the chartered British Airways plane, with financial services CEOs in the pricey seats while creatives were in economy — although this was because they were all paying their own way. Everyone knew the bargain. One arts CEO confessed that, while their industry made money too, they knew they were not the uppermost priority. Starmer’s aides insist they are delighted with what they managed to bag from Xi on Thursday, and believe it is at the top end of the expectations they had on the way out. But that will mean the focus back home on the final “big number” of investment that No. 10 produces — and the questions about whether it is worth all the political energy — are even more acute. 5) STARMER’S STILL WALKING A TIGHTROPE British CEOs were taken to see a collection of priceless Ming vases. It was a good metaphor. Starmer and the No. 10 operation were more reticent even than usual on Thursday, refusing to give on-the-record comment about several basic details of what he raised in his meeting with Xi. Journalists were told that he raised the case of democracy campaigner Jimmy Lai, but not whether he called directly for his release. The readout of the meeting from Communist China was more extensive (and poetic) than that from No. 10. Likewise, journalists were given no advance heads-up of deals on tariffs and visas, even in the few hours between the bilateral and the announcements, while the details and protocol were nailed down. There was good reason for the reticence. Not only was Starmer cautious not to offend his hosts; he also did not want to enrage U.S. President Donald Trump, who threatened Canada with new tariffs after PM Mark Carney’s visit to Beijing this month. Even with No. 10 briefing the U.S. on the trip’s objectives beforehand, and Starmer giving a pre-flight interview saying he wouldn’t choose between Xi and Trump, the president called Britain’s engagement “very dangerous” on Friday. And then there’s the EU. The longer Trump’s provocations go on, the more some of Starmer’s more Europhile allies will want him to side not with the U.S. or China, but Brussels. “There’s this huge blind spot in the middle of Europe,” complained one European diplomat. “The U.K. had the advantage of being the Trump whisperer, but that’s gone now.” Starmer leaves China hoping he can whisper to Trump, Xi and Ursula von der Leyen all at the same time.

SHANGHAI — China has lifted sanctions it imposed almost five years ago on a group of serving British parliamentarians who criticized Beijing’s record on human rights. Nine British citizens, including five MPs and two members of the House of Lords, were sanctioned after speaking out, including about what campaigners allege is a genocide against the Uyghur Muslim minority in Xinjiang. Prime Minister Keir Starmer told broadcasters on Friday that he had secured the move from Chinese President Xi Jinping in three hours of talks in Beijing on Thursday. He told the BBC: “I did raise it. And the response of the Chinese as a result of our discussions is that the restrictions no longer apply. And the President Xi said to me, that means that all parliamentarians are free to travel to China. “That rather vindicates my approach because that’s only because we’re here, that we have had the engagement.” However, Downing Street later clarified that the move referred to “restrictions on parliamentarians.” Several other groups including academics have also previously been sanctioned by China. Officials stressed that Britain did not offer anything as a quid pro quo for the move, and that Britain is not lifting any sanctions on Chinese officials in turn. Ahead of the announcement, however, the group of parliamentarians issued a punchy joint statement saying they would “rather remain under sanction indefinitely than have our status used as a bargaining chip to justify lifting British sanctions on those officials responsible for the genocide in Xinjiang.” “We would reject any deal that prioritises our personal convenience over the pursuit of justice for the Uyghur people,” the group, which includes Loughton, former Conservative Leader Iain Duncan Smith, and Deputy House of Commons Speaker Nusrat Ghani said.