What to expect from the Polish EU Presidency?

By
Pieter Cleppe
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Copyright: Prime Minister Donald Tusk of Poland in the Oval Office in 2024 The White House, Public domain, via Wikimedia Commons

On January 1st, Poland took over the rotating Presidency of the EU Council, meaning Polish Ministers are now chairing the meetings of the EU’s ultimate decision making body. What to expect? An overview.

Ukraine

The very first priority for Poland will of course be the war in Ukraine. Here, it will be dedicated to trying to convince other EU member states to agree yet more sanctions on Russia, despite the fact that these have had virtually no impact on stopping Russian President Vladimir Putin’s aggression.

The idea is to agree a new sanctions package in February 2025 whereby the so-called “no-Russia clause” would be extended to subsidiaries of EU companies. This clause bans European companies from re-exporting to Russia. The question is if more restrictions will simply not cause more loopholes to be found. Furthermore, the new package would also foresee restricting the freedom of movement of Russian diplomats in the passport-free Schengen zone, sanctions on aluminum, as well as extra restrictions on oil and gas trade with Russia.

Evidently, Donald Trump’s inauguration as US President on January 20th, will be on everyone’s watch. Trump has vowed to fix the war in Ukraine in “24 hours”, and according to speculation, the plan would aim to freeze the lines of conflict. Already, Russian Minister of Foreign Affairs Sergey Lavrov has said that Moscow is “not satisfied” with elements of this peace plan, as for example deploying a contingent of EU and U.K. peacekeepers in Ukraine. As much as Trump has leverage over Ukraine, it is not clear at all what Putin has to gain from ending a foreign war, something which always comes in handy for any autocrat keen to suppress dissent at home.

On the sidelines, Poland will be tasked with chairing negotiations on the overhaul of Ukraine’s trading relationship with the EU. That basically entails updating the existing EU-Ukraine agreement from 2016, revising quotas and removing tariffs on agricultural trade, in order to prepare Ukraine’s eventual membership of the EU. The latter may well never happen, looking at public opinion in Western Europe, but any progress towards it is deemed important as to offer some hope for Ukraine. For the Polish government, it won’t be evident to convince the country’s agricultural sector to go along with this agenda.

Trade

A much more urgent trade topic will of course be Donald Trump’s threats to impose tariffs on imports from the EU and China. Even if the former could be somehow avoided, for example by buying more US LNG gas, something Trump has already suggested, any US tariffs on Chinese imports are likely to also cause transatlantic tensions, as those Chinese goods may then be diverted to the European market.

“Today, nobody knows exactly what President Trump will do in terms of tariff barriers,” Sobkowiak-Czarnecka, Poland’s undersecretary of state for EU affairs has said.

For what it’s worth, according to Bloomberg, “Trump’s decision to pick Scott Bessent to serve as his next Treasury secretary has been read as a Wall Street-friendly choice to prioritize market stability over economic disorder.” A big question will be whether blatant protectionist Robert Lighthizer, who implemented Trump’s original tariffs, during his first term, will have a formal place in the new administration.

Bloomberg Economics assumes the “base case” to be “three waves of tariff hikes, starting in summer 2025, with levies on China ultimately tripling by the end of 2026 and a smaller hike on the rest of the world — focused on intermediate and capital goods that don’t directly impact consumer prices. The combined impact would be a tripling of average US tariffs to almost 8% by the end of 2026. If that’s how things play out, US imports and exports of goods will drop from 21% of the global total today to 18%, including a plunge in US-China trade.”

Will it play out like this or will compromise prevail? Importantly, Trump is only able to lose three Republican senators if he wants to get his plan for tax cuts through the Senate, Kyle Pomerleau, a senior fellow at the American Enterprise Institute, has pointed out, adding that both GOP members from farm states and free traders may object to Trump’s tariffs as an alternative way to raise revenue. As a result of Trump’s China policy during his first term, U.S. soy exports to China dropped from $10.5 billion (62% of U.S. soy exports) in 2016 and $12.2 billion (57%) in 2017, to only $3.1 billion (18%) in 2018. Those U.S. farmers that are dependent on exports have not forgotten this. Some farmers may be protectionist, but certainly not all. Those are all key factors that EU policy makers better watch closely in determining how to react to any US tariffs. 

Mercosur

Another important topic on the Polish Presidency’s plate will be the EU-Mercosur deal. Yes, this was unblocked after 25 years at the end of last year, but EU member states still need to give their approval to it. Together with France, Poland is attempting to achieve a blocking minority in the Council, but it looks like there is a chance after all that Italy, which is the Kingmaker here, may end up endorsing the EU-Mercosur deal after all.

In December, minister of Agriculture Francesco Lollobrigida declared that “There is no total closure. A solution can be found if Europe does not once again sacrifice farmers.” In other words: as always, Italy is open to horse-trading. The European Commission’s proposal for the next long term EU budget period is expected to be presented in the second half of 2025, under the Danish presidency of the Council of the EU. Expect Italy to bring up avoiding cuts to EU regional and agricultural subsidies as a means to “not sacrificing farmers.”

On the sidelines, Poland will also need to chair talks on how to proceed with the EU’s deforestation directive (EUDR), whose implementation has been postponed until early 2026. The directive has deeply troubled relations between the EU and trading partners. First, Malaysia and Indonesia were complaining about this, as they found it unfair that the EU refuses to recognise their local deforestation standards for their palm oil exports, despite NGOs praising them for decreasing deforestation just last year. Malaysia has also introduced “carbon sequestration” in the palm oil industry as well as its tree planting programmes – stimulated by the Malaysian Palm Oil Green Conservation Foundation (MPOGCF). The UK does recognise the country’s local standards, which shows that an alternative approach is possible. It helped Britain to get access to the “trans-pacific” CPTPP trade bloc, which has a combined GDP of £12 trillion. This has been seen as a major win following Brexit, while in recent years, the EU has fail to agree almost any new trade deal.  

Later, the likes of Australia, Brazil and also the United States joined the protest against EUDR. It led to a one-year postponement of the directive, but the legislation is still not off the table. Certainly Trump won’t be much milder on the issue than Biden, so EU governments will need to ask themselves the fundamental question of whether burdening trading partners with lots of extra bureaucracy is the right path to follow.

Defence

Prominently on the EU agenda will be the attempts to increase European defence investment, spurred by Donald Trump’s rather direct encouragement for allies to be more serious about this. Despite the fact that defence is a national competence and that NATO, not the EU, is the international cooperation platform here, the Financial Times reported in December that European countries are talking about pooling funds to create a 500 billion euro fund to buy weapons and fund joint military projects.

Importantly, unlike with the EU’s Covid Recovery Fund, not the EU budget would be serving as collateral for these jointly issued loans, but national budgets. This would allow countries not willing to take part, as for example those EU member states that are not part of NATO – Austria, Cyprus, Ireland, and Malta – to stay out. It would also allow non-EU states such as the UK and Norway to take part. Reportedly, the UK has not yet agreed to take part, according to European officials. The FT quotes a senior British official describing the initiative as an “encouraging” sign of resolve.

The funds would be raised through a special purpose vehicle (SPV) and the European Investment Bank would assist where possible, amongst others to “help manage national guarantees underpinning the SPV”. For the European Investment Bank, it is illegal to directly finance arms investments, so this very much looks like an attempt to circumvent EU restrictions on using common funds for military purposes. It reminds of how the “European Peace Facility” (EPF) ended up being used as a means to provide joint procurement of ammunition and missiles for Ukraine. The EPF is an off-budget funding tool, separate from  the European Defence Industry Programme (EDIP), which merely has a budget of €1.5 billion until 2027. The new possible scheme which is aimed to raise 500 billion euro is meant to be a massive alternative. 

Given Polish PM Donald Tusk (picture)’s strong support for EU federalism and rearming, one can expect this to be a top priority for Poland. Whether it will be agreed, remains to be seen. According to the FT, “the Netherlands, Finland and Denmark are broadly supportive of the idea”, while “Germany’s stance is uncertain and will depend on its federal elections in February.”

In any case, one should hope that European governments will be wise enough to embed all of this in a NATO architecture, minding the warning issued by former NATO Secretary-General Jens Stoltenberg. In September 2024, during his farewell speech, he warned that European countries should avoid “duplicating” NATO defence efforts with EU initiatives. At the time, senior NATO officials pointed out that the EU’s defence efforts were already diverting resources from existing Nato structures.

Ongoing EU files

Last but not least, Polish dignitaries will be chairing meetings deciding EU regulation. Important “files” that will need to be discussed are the implementation of the EU’s policy for “Foreign direct investment screening”, the creation of a centralized new EU authority for customs and new regulation that would exempt gene-edited food, using the CRISPR technique, from restrictive GMO legislation. Poland itself is looking skeptically at the latter.

Furthermore, there are some remnants from the EU’s green regulatory drive during the first von der Leyen – Commission. A so-called new European “soil law” would force EU member states to observe and report progress on restoring all the EU’s soils by 2050. New EU anti-greenwashing rules would “prevent companies from misleading consumers with unfounded claims that their products and services are good for the planet.” When it comes to the latter, the European Parliament is pushing to unleash a whole extra range of bureaucracy on companies, forcing them to come up with proof to substantiate environmental claims. It is like the 2024 European Parliament election, where the greens received a hammering, never happened. Poland is more sensible when it comes to environmental policy, so in all likelihood, it will act as a restraining factor here. 

Last but not least, the Polish Presidency will oversee the entering into force of the EU’s AI Act, in 2025. This legislation which sets the world’s first set of rules aimed at regulating machine learning tools, including virtual assistants and large language models such as ChatGPT, will create new regulatory burdens that threaten to only benefit American and Chinese competitors of EU companies, reducing the chance that European AI champions emerge.

Furthermore, the EU is not content with regulating digital space, but it also feels the need to start regulating the Outer Space. For the first time, the new European Commission has an EU Commissioner for Space, Lithuania’s Andrius Kubilius. The Commission aims to come out with a proposal for an EU “Space Law”, as it reportedly thinks that “the likes of  are setting their own rules by virtue of getting there first with the SpaceX Starlink mega constellation”. As always, we can expect an innovation-hostile piece of legislation: The first draft was “scrapped at the last minute amid concerns many of its measures would be too onerous to implement by industry.”

 

 

 

 

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