March 25, 2019

Europe Offers U.S. a Deal, Hoping for Global Rules on Airline Emissions

BRUSSELS — Seeking to end years of acrimony, the European Union has made concessions to the United States to try to gain support for global rules on airline emissions.

Under the arrangement, the European Union would pare back its regulations, applying them only to its own airspace. The original plan, which the United States and other countries rejected, would have imposed charges for emissions over an airline’s entire route if the flight began or ended in Europe.

In exchange, Europe is pushing for a global deal on aviation emissions.

The European concessions — proposed quietly over the summer and made public this week — aim to end a trans-Atlantic dispute over a European law to curb emissions on major international routes. In doing so, the European Union is looking to present a united front with the Americans and press the rest of the world to adopt similar or more extensive controls.

“This is a multilateral negotiation where you give and take,” Isaac Valero-Ladrón, a spokesman for the European Commission, said in a statement. “We should not miss the bigger picture: a global deal means more emissions covered in the long term.”

The European law, which came into force on Jan. 1, 2012, covers emissions from most flights that touch down in, or take off from, European airports, obliging foreign airlines to buy some carbon permits from traders and governments. Airlines face fines of 100 euros, or $131, for each excess ton of carbon dioxide emissions that they fail to offset with permits. Repeated breaches can even lead to a ban from European airports.

So far, the rules have been applied only to flights within Europe, and European carriers and most non-European airlines have complied. The program is supposed to be expanded next year to include international flights in and out of Europe.

Despite the proposed concessions, a global deal is still a long shot. The United States and other countries have supported the arrangement, according to European Union diplomats. But emerging nations like China and India are resisting similar levels of regulation, which could make it difficult to develop global standards.

From the start, the aviation emissions law approved by European Union nations in 2008 has generated intense opposition among foreign governments, which say the rules violate their sovereignty and unfairly raise the costs of airlines from developing countries.

Carriers like China Eastern Airlines and Air India have refused to participate in the system, and they face the prospect of fines for not providing emissions data. Airbus, the European aircraft manufacturer, warned that Chinese carriers had halted some aircraft orders to signal their dissatisfaction with the European law.

Last year, President Obama signed the European Union Emissions Trading Scheme Prohibition Act. The law could exempt carriers like American Airlines and Delta Air Lines from making payments.

Amid the outcry, Connie Hedegaard, the European Union climate commissioner, announced late last year that she would “stop the clock” on the system for 12 months, relieving airlines of making the first payments, which would have been due in April 2013. Those payments were expected to be modest. But the airlines balked because they could face big bills in coming years as the number of permits they needed to buy potentially rose.

Now, the European Union is putting forth a compromise.

Under the compromise, countries could regulate, for now, “the portion of those flights within the airspace of that state or group of states,” according to a copy of a working paper. But the paper also calls for a global set of regulations by 2016, and for that system to be carried out “from 2020 as part of a basket of measures which also include technologies, operational improvements and sustainable alternative fuels.”

On Wednesday, the International Civil Aviation Organization, a United Nations group based in Montreal, agreed to forward the European compromise proposal to a meeting of its general assembly that will start this month. The group is examining ways to regulate pollution from aircraft engines, which account for about 3 percent of greenhouse gas emissions.

European officials said paring back their system in exchange for a global deal would represent a better outcome. Under the new proposal, emissions would be reduced 37 percent by 2050 from 2005 levels, compared with just 20 percent under the original plan.

But some environmentalists said they had doubts about the value of the compromise.

“Timing is everything when it comes to global warming because of the cumulative effect of CO2 emissions,” said Bill Hemmings, an aviation expert at Transport and Environment, an environmental group based in Brussels. “So why would we give up on a law that is already cutting aviation emissions when it is very uncertain what the climate will get in return?”

Anthony Concil, a spokesman for the International Air Transport Association, an industry group representing the world’s major carriers, declined to comment on Europe’s new proposal. Instead, Mr. Concil encouraged nations at the International Civil Aviation Organization meeting to “achieve a global agreement” allowing airlines to offset their carbon emissions and avoid “a patchwork of uncoordinated measures.”

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U.S. Reassures an Impatient Europe on Trade

DAVOS, Switzerland — President Barack Obama is committed to reaching an agreement to smooth trade with the European Union, the United States’ top negotiator has said, but only if it is constructed in a way that would overcome objections from farm groups and that could win congressional approval.

In an interview Saturday in Davos, Ron Kirk, the U.S. trade representative, responded to European leaders who in the past week renewed their calls for a U.S.-Europe deal to dismantle tariffs and other barriers, which they badly want as a way of stimulating their ailing economies.

At the World Economic Forum, David Cameron, the British prime minister, and Angela Merkel, the German chancellor, were among a host of leaders and business people pleading for a pact that would eliminate tariffs as well as regulations that impede trade. Even without changes, the United States and Europe between them already have the world’s largest trading market.

On both sides of the Atlantic, proponents of a deal have expressed frustration about the delaying of an official report by a U.S.-European working group that would set the stage for formal talks. The delay has fed the widespread perception that Mr. Obama does not care that much about a trade pact or, for that matter, about Europe in general.

“We greatly value the trans-Atlantic relationship,” Mr. Kirk said at a hotel in Davos. “We have devoted an extraordinary amount of time” to a possible trade agreement, he said. But the administration wants to make sure objections from farmers and other constituencies are addressed first, he said. Otherwise, officials might spend years negotiating an agreement only for Congress to reject it.

“If we do this, we want there to be a bridge to somewhere and we want to get there on one tank of gas,” Mr. Kirk said. He declined to predict when formal talks might begin.

Trade had been one of the main topics of discussion at the World Economic Forum, which concluded Saturday. There were signs of progress toward a trade accord, which, if it proved durable, could provide a riposte to the eternal criticism of the elite event: that the annual Davos forum is just an expensive cocktail party where little of substance is ever accomplished.

While it is true that Davos is rarely the venue for concrete agreements, the event attracts a diverse international crowd in an informal setting. It can be a place where political and business leaders work toward consensus on difficult issues like trade. That may have been the case in the past week, some of the people involved said.

“I’m carefully optimistic we will kick off negotiations this year,” Alexander Stubb, the Finnish minister for foreign affairs and trade, said after a panel on trade issues at the forum Saturday. “It’s going in the right direction.”

Noting that trade ministers from more than 20 nations were in town, Mr. Kirk said: “It’s a great opportunity to touch base with a number of them bilaterally. This saves me a trip to nine other countries.”

“Everybody criticizes Davos until they come,” Mr. Kirk said.

Friction-free commerce between the United States and Europe could create jobs and add an estimated $50 billion a year to the U.S. economy, Mr. Kirk said. European political leaders fervently want a deal to help their anemic economies grow. There is also strong support from business groups on both sides of the Atlantic.

“Half a dozen senior leaders in Europe are ready to move forward,” Thomas J. Donohue, president of the U.S. Chamber of Commerce, said in an interview in Davos on Thursday. He said that a deal could be concluded within 18 months if both sides set their minds to it.

But others are skeptical, noting that Europe and the United States have been talking on and off about a trade deal for years. While U.S. companies like General Electric have expressed strong support for an agreement, progress has always been stymied by objections from interest groups, particularly over agricultural issues. Some Europeans, for example, object to imports of U.S. food containing genetically modified plants.

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DealBook: Deutsche Börse Gaining as Deal Deadline Nears

The Frankfurt Stock Exchange in Germany is operated by Deutsche Börse.Alex Domanski/ReutersThe Frankfurt Stock Exchange in Germany is operated by Deutsche Börse.

7:32 p.m. | Updated

Deutsche Börse said on Wednesday that it had collected a majority of its shares through a tender offer tied to the German exchange operator’s proposed $9 billion merger with NYSE Euronext, but it was still short of its goal.

By Wednesday afternoon, Deutsche Börse said that it had received 60.2 percent of outstanding shares. But under German market rules, it must collect 75 percent by midnight Central European time.

The exchange operator does not expect to know the final tally until later this week, possibly not until Friday. In last-minute discussions this week, Deutsche Börse told investors it would not extend the deadline.

The tender offer is the biggest hurdle yet for Deutsche Börse and NYSE Euronext. The exchanges are hoping to create a trans-Atlantic colossus in an industry that increasingly prizes scale and a global footprint.

Rivals have failed in their proposed market mergers. A tie-up of the London Stock Exchange and the TMX Group of Canada collapsed amid nationalistic concerns, while a regulator blocked a combination of the Singapore and Australian stock exchanges.

Deutsche Börse has made significant strides in the tender offer since July 6, when it reported having collected only 11.1 percent of its outstanding shares. On Tuesday, the company reported having received about 34.5 percent of shares.

Deutsche Börse and NYSE Euronext had argued repeatedly that the majority of shareholders would tender their holdings close to the deadline. Some investors had waited for the results of NYSE Euronext’s shareholder vote on the merger last Thursday before voting, to make sure that proposal passed. NYSE shareholders owning 65.7 percent of its stock approved the deal.

Last month, the two companies added a sweetener to the deal, promising to pay shareholders of the combined exchange operator a special dividend.

People close to the German market operator conceded that the results of the tender offer could be close, but remained hopeful that they would cross the 75 percent threshold.

But more hurdles remain since the deal must still be blessed by regulators on both sides of the Atlantic. While the merger is expected to easily win approval from American antitrust officials, their European counterparts could more closely scrutinize the proposal, given that the tie-up would combine two of the Continent’s big derivatives markets.

Legal teams for both companies have been meeting with European Union competition regulators, with the aim of reaching a second phase of the review next month. Deutsche Börse and NYSE Euronext officials hope to receive a final decision by early next year.

Shares in Deutsche Börse closed up 1.68 percent on Wednesday, at 53.29 euros. Shares in NYSE Euronext rose 1.99 percent, to $33.85.

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