Sweden’s EU presidency must find compromises for bloc’s competition issues

Sweden’s EU presidency must find compromises for bloc’s competition issues

The start of 2023 has seen Sweden assume the EU Council presidency as the bloc faces a range of crises, from the war in Ukraine and inflation to replacing Russian energy and tackling climate change. During its 6-month reign, these challenges are set to feature high on the Swedish agenda, the responses to which have strong implications for another top priority: competition.

This issue has heated up in Brussels in recent months, with the United States’ Inflation Reduction Act (IRA)—notably aimed at ramping up domestic clean energy production and manufacturing— provoking the ire of European leaders including French President Emmanuel Macron and EU Commission President Ursula von der Leyen due to its massive green energy subsidies favouring American-made products at the competitive expense of European firms.

Macron and von der Leyen are among the loudest voices calling for reform of the bloc’s stringent state aid rules as a competitive counterbalance to the IRA, putting them at loggerheads with the more conservative, fervently free market approach of the Swedish presidency. On another crucial competition front for the EU’s green transition and strategic autonomy—agriculture—EU countries are facing pressing international and internal challenges that the Swedish presidency must find compromise solutions to given diverging member-state interests.

Free trade sparking divisions

As a staunch advocate of free trade as a means to bolster EU competitiveness, Sweden will likely use its presidency to progress active trade negotiations with countries including India, Australia and Indonesia as well as to ratify the landmark trade agreement with the South American Mercosur bloc. Yet recent events suggest that such moves will face fierce opposition from agricultural producer member-states.

For example, the new EU-Chile Advanced Framework Agreement agreed in December, which has removed most trade tariffs between the two entities for meat imports, has not gone down well among French farmers. Yann Nédéléc, director of French poultry industry body ANVOL, has decried that while European farmers gladly abide by strict environmental, health and animal welfare regulations, this deal will “bring in products that do not respect the same rules as ours,” putting the bloc’s farmers at a competitive disadvantage.

Earlier in 2022, France had actively opposed the Chile trade negotiations, as well as those with New Zealand on similar unfair competition grounds, with the Gallic country emerging as the EU’s leading free-trade sceptic voice in recent years. Agreed last June, the EU-New Zealand free trade agreement received broader backlash from the bloc’s dairy industry, with Giuseppe Ambrosi, president of the European Dairy Association claiming that it gives “a unilateral advantage to the New Zealand dairy industry” and creates “tougher market conditions” for EU dairy farmers, mirroring Ireland’s Mercosur opposition to protect its beef farmers’ competitiveness. 

Bloc-wide food label conundrum

But for EU farmers, competition threats are not coming only from overseas. After a delay to its initial year-end deadline, the EU Commission is expected to publish its proposal for a mandatory, bloc-wide front-of-package (FOP) food label in 2023, possibly during the Swedish presidency.

Developing this harmonised FOP, which aims to tackle obesity and improve dietary health by providing consumers with user-friendly nutritional information, has generated an unexpected level of political tension within the bloc. After emerging as the early favourite, the French-developed Nutri-Score traffic-light system has garnered considerable opposition from local farmers, politicians and nutritionists in countries including Italy, Greece, Spain and Romania.

This resistance has focused on Nutri-Score’s flawed, reductive algorithm, which grades a product based on its sugar, salt and fats content without factoring in wider nutritional benefits, moderate consumption and individual health needs. As a result, many traditional European products, such as olive oil and Protected Designation of Origin (PDO) cured hams and cheeses, receive unfairly negative scores that put local farmers at a distinct competitive disadvantage while threatening regional culinary heritage and misleading consumers on food healthiness.

Even Nutri-Score’s backers have had to accept the algorithm’s shortcomings, establishing a scientific committee that has recommended alterations to be implemented in 2023. Yet by maintaining an overly-narrow focus on “negative” nutrients, which undermines the effectiveness of healthy food labels according to expert nutritionist Dr Carrie Ruxton, these changes fail to correct Nutri-Score’s fundamental issues, while the very necessity for an update undermines the scheme’s scientific credibility.

Striking evasive compromises

These free trade and food label-related competition debates exemplify the dangers of a top-down Brussels approach failing to consider the diverging interests of member-states. Over its 6-month EU Council presidency, Sweden should therefore use its influence to help shape compromise solutions.

Regarding the free trade divide, Sweden will need to look beyond its domestic reliance on foreign trade and take into account the diversity of economic needs across the EU-27, notably the farmers that EU trade deals have often failed to adequately consider. In light of new realities across the Atlantic and Pacific, state aid reforms should be given a greater role relative to free trade deals in bolstering EU competitiveness, while ensuring that new state aid rules do undermine fair competition within the Single Market by giving richer member-states, like Germany, a market advantage over smaller and debt-ridden countries with less headroom for public investment in national industries.

As for the food label debate, the regional voice has been heard in Brussels, which has tentatively stated that Nutri-Score will not be chosen as the EU-wide FOP. But with multiple existing options under review, including Italy’s NutrInform Battery and Sweden’s Keyhole system, everything is left to play for. Given that it has its own system, Sweden may be well-placed to advocate for the virtue of national choice in FOP. Crucially, Sweden should work to persuade the Commission to avoid “one size fits all approach” that “may not be the best approach for all regions,” as Czech agriculture minister Zdeněk Nekula has rightly argued.

Encouragingly, Swedish Prime Minister Ulf Kristersson has promised to use its presidency to “find comprises…safeguard common European interests, and be humble in the face of the member states’ diversity.” Time will tell if Sweden is able to deliver on this commitment.

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