Today, the Commission presents the Clean Industrial Deal, a bold business plan to support the competitiveness and resilience of our industry. The Deal will accelerate decarbonisation, while securing the future of manufacturing in Europe.
Faced with high energy costs and fierce and often unfair global competition, our industries need urgent support. This Deal positions decarbonisation as a powerful driver of growth for European industries. This framework can drive competitiveness as it gives certainty and predictability to companies and investors that Europe remains committed to become a decarbonised economy by 2050.
President Ursula von der Leyen said: “Europe is not only a continent of industrial innovation, but also a continent of industrial production. However, the demand for clean products has slowed down, and some investments have moved to other regions. We know that too many obstacles still stand in the way of our European companies from high energy prices to excessive regulatory burden. The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”
The Commission is also taking actions to make our regulatory environment more efficient while reducing bureaucratic hurdles for businesses. Today’s measures are the results  of the active engagement with industry leaders, social partners and civil society in the context of the Antwerp Declaration for a European Industrial Deal and the European Commission’s Clean Transition Dialogues.
A business plan to decarbonise, reindustrialise and innovate
The Deal focuses mainly on two closely linked sectors: energy-intensive industries and clean tech.
i) Energy-intensive industries as they require urgent support to decarbonise and electrify. The sector faces high energy costs, unfair global competition and complex regulations, harming its competitiveness. ii) Clean Tech is at the heart of future competitiveness and growth as well as crucial for industrial transformation. Circularity is also a central element of the Deal, as we need to maximise EU’s limited resources and reduce overdependencies on third country suppliers for raw materials.
The Deal presents measures strengthening the entire value chain. It serves as a framework to tailor action in specific sectors. The Commission will present an Action Plan for the automotive industry in March and an Action Plan on steel and metals in Spring. Other tailored actions are planned for the chemical and clean tech industry.
Today’s Communication identifies business drivers for industry to succeed in the EU:

Lower energy costs

Affordable energy is the foundation of competitiveness. The Commission therefore adopted today an Action Plan on Affordable Energy to lower energy bills for industries, businesses and households. The Act will speed up the roll-out of clean energy, accelerate electrification, complete our internal energy market with physical interconnections, and use energy more efficiently and cut dependence on imported fossil fuels.

Boosting demand for clean products

The Industrial Decarbonisation Accelerator Act will increase demand for EU-made clean products, by introducing sustainability, resilience, and made in Europe criteria in public and private procurements. With the review of the Public Procurement Framework in 2026, the Commission will introduce sustainability, resilience and European preference criteria in public procurement for strategic sectors.
The Industrial Decarbonisation Accelerator Act will also launch a voluntary carbon intensity label for industrial products, starting with steel in 2025, followed by cement. The Commission will simplify and harmonise carbon accounting methodologies. These labels will inform consumers and allow manufacturers to reap a premium on their decarbonisation efforts.

Financing the Clean Transition

In the short-term, the Clean Industrial Deal will mobilise over €100 billion to support EU-made clean manufacturing. This amount includes an additional €1 billion guarantees under the current Multiannual Financial Framework.
The Commission will:

Adopt a new Clean Industrial Deal State Aid Framework. It will allow for simplified and quicker approval of State aid measures for the roll-out of renewable energy, deploy industrial decarbonisation and ensure sufficient manufacturing capacity of clean tech.
Strengthen the Innovation Fund and propose an Industrial Decarbonisation Bank, aiming for €100 billion in funding, based on available funds in the Innovation Fund, additional revenues resulting from parts of the ETS as well as the revision of InvestEU.
Amend the InvestEU Regulation to increase InvestEU’s risk bearing capacity. This will mobilise up to €50 billion in additional private and public investment, including in clean tech, clean mobility and waste reduction.

The European Investment Bank (EIB) Group will also launch a series of concrete new financing instruments to support the Clean Industrial Deal. The EIB will launch: i) a ‘Grids manufacturing package’ to provide counter-guarantees and other de-risking support to manufacturers of grid components; ii) a joint European Commission-EIB pilot programme of counter-guarantees for Power Purchase Agreements (PPAs) undertaken by SMEs and energy intensive industries; and iii) launch a CleanTech guarantee Facility under the Tech EU programme powered by InvestEU.

Circularity and access to materials

Critical raw materials are key for our industry. The EU therefore has to secure access to such materials and reduce exposure to unreliable suppliers. At the same time, placing circularity at the core of our decarbonisation strategy helps maximising the EU’s limited resources. The Commission will therefore:

Set up a mechanism enabling European companies to come together and aggregate their demand for critical raw materials.
Create an EU Critical Raw Material Centre to jointly purchase raw materials on behalf of interested companies. Joint purchases create economies of scale and offer more leverage to negotiate better prices and conditions.
Adopt a Circular Economy Act in 2026 to accelerate the circular transition and ensure that scarce materials are used and reused efficiently, reduce our global dependencies and create high quality jobs. The aim is to have 24% of materials circular by 2030.

Acting on a global scale

The EU needs reliable global partners more than ever. In addition to ongoing and new trade agreements, the Commission will soon launch the first Clean Trade and Investment Partnerships, which will diversify supply chains and forge mutually beneficial deals. At the same time, the Commission will act even more decisively to protect our industries from unfair global competition and overcapacities through a range of Trade Defence and other instruments. The Commission will also simplify and strengthen the Carbon Border Adjustment Mechanism (CBAM).

Ensuring access to a skilled workforce

The transformation of our industry requires skilled people and top talents. The Commission will establish a Union of Skills that invests in workers, develops skills and creates quality jobs. With Up to €90 million from Erasmus+, the Deal will help reinforce sectoral skills for strategic industries linked to the Clean Industrial Deal. The Deal also supports quality jobs, promote social conditionalities and provide further support to workers in transitions.
Background
In her political guidelines (2024-2029), President von der Leyen announced to deliver the Clean Industrial Deal within the first 100 days of the Commission’s mandate as a priority to ensure competitiveness and prosperity in the EU.
The Clean Industrial Deal builds further on the active engagement from industry leaders, social partners and civil society in the context of the Antwerp Declaration for a European Industrial Deal and the Clean Transition Dialogues.
 
Compliments of the European CommissionThe post European Commission | A Clean Industrial Deal for competitiveness and decarbonisation in the EU first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

“Check against delivery”

Thank you for your warm welcome and for hosting this timely discussion.
It has been almost exactly a year since I last visited Washington, D.C. In fact, I realised that I have been here every February since 2022 – when Russia invaded Ukraine –each time marking a significant moment in our relationship.
This year is no different, as I am here to address a critical issue: the U.S. administration’s proposal to impose tariffs on EU exports.
This has sparked concerns about the state of our transatlantic partnership, prompting some to wonder whether it is temporarily under the weather.
Last year, I quoted the American industrial pioneer, Henry Ford, who said: “Coming together is a beginning, keeping together is progress, working together is success.” These words resonate even more strongly today.
The European Union is built on free trade among its members, and our commitment to opening up world trade is deeply embedded in our DNA. It should therefore come as no surprise that the EU is the world’s largest trading bloc.
We have free trade agreements with 76 countries and are the leading trading partner for 72 nations, accounting for 38% of global GDP.
So, we know a thing or two about trade.
*
The EU is also the United States’ most important trading partner. Over the past decade, EU-U.S. bilateral trade in goods and services has doubled, surpassing $1.7 trillion in 2023.
Put simply, the EU-U.S. economic relationship is the largest in the world. Together, we represent nearly 30% of global trade, with daily exchanges worth over $4.5 billion.
This unique bond benefits both sides of the Atlantic. It is the very definition of a win-win partnership, and there is nothing unfair about it.
Let me give you a few examples:

Boeing and Airbus build civil aircraft in the U.S. with cutting-edge electronics, power systems and fuselages from European companies.
U.S. battle tanks and armoured fighting vehicles rely on EU technology, such as drivetrains and cannons.
U.S. semiconductor production depends on EU-made lithography machines.
Even the U.S. Mint uses EU-made high-tech printing machines to print U.S. dollars and prevent counterfeiting.

The EU too is a massive market for American products.
For example, 50% of our LNG imports come from the U.S., and in return, Europe is your largest LNG export market, accounting for over 60% of U.S. LNG exports—double the U.S. flows to Asia.
In 2019, I had the privilege of joining President Trump at the opening of an LNG export terminal in Hackberry, Louisiana. I also worked closely with U.S. LNG producers to spearhead our pioneering joint gas purchases, designed to replace Russian gas supplies.
It is true that the EU enjoys a relatively small trade surplus, but let me put this into perspective:

The surplus represents only 3% of our total bilateral trade—$50 billion out of $1.7 trillion. This is a small fraction – a drop in the ocean, if you will – of our overall economic exchanges.
The U.S. enjoys a large trade surplus in services, from financial services to streaming platforms and social media. Even a Tesla car is full of services. The EU imports twice as many digital services from the U.S. as from all of the Asia-Pacific region.

Thus, the deficits in goods and services nearly balance out. This reflects the natural structure of our economies, driven by the preferences of European and American consumers.
It is simply a market-driven allocation of resources, and this is what well-functioning international trade is all about—benefiting both parties. Neither side is losing out. We are both gaining.
When it comes to investment, the numbers are just as impressive.
EU foreign direct investment in the U.S. totals $2.8 trillion, a figure ten times greater than EU investment in India and China combined.
European companies are the largest foreign investors in the U.S., contributing capital, jobs, and technology. They employ 3.5 million people on American soil and pay taxes into the U.S. budget.
So, while the late Madeleine Albright called the U.S. the “indispensable nation,” one could argue that, given our mutual interdependencies, the EU and the U.S. share an indispensable partnership.
*
Now, let’s address the pressing issue—tariffs.
I am reminded of the words of President Ronald Reagan, who said: “We’re in the same boat with our trading partners. If one partner shoots a hole in the boat, does it make sense for the other one to shoot another hole in the boat? […] We should be working together to plug them up.”
He advocated for free markets and fair trade, emphasising their importance for both economic prosperity and political stability.
We often hear claims that the EU imposes higher tariffs on imports than the U.S. But the data tells a different story.
The EU is one of the most open economies in the world, with over 70% of imports entering at zero tariff.
With regard to our EU-US trade relations, the overall picture is very balanced, providing a robust level playing field for businesses on both sides of the pond.

The average EU duty on U.S. goods is 0.9%, whereas EU exports to the U.S. face an average tariff of 1.5%.
For certain products, the level of duties varies, but tariff peaks exist on both sides. For example, the EU has a peak tariff on cars, while the U.S. has a peak on trucks.
In some sectors, U.S. tariffs are higher. For example, U.S. agri-food products face a 3.5% tariff when entering the EU, while EU agricultural products are subject to a 5.7% tariff in the U.S.

Given these facts, the EU sees no justification for sudden, unilateral tariff increases by the U.S.
Our businesses rely on economic stability, predictability and certainty on both sides of the Atlantic. If the U.S. imposes tariffs on EU products, it would create unnecessary barriers to European exports, harming businesses and workers on both sides.
Therefore, to protect European interests, we will have no choice but to respond firmly and swiftly. But we do hope to avoid that scenario – meaning the unnecessary pain of measures and counter measures – and remain committed to constructive dialogue.
That is why I am here this week.
Once more, paraphrasing Ronald Reagan: “Commerce is not warfare; it is an economic alliance, benefiting both countries […] and peaceful trading partners are allies, not enemies.”
So, the EU remains convinced that free and fair trade is worth fighting for. And in this context, we will continue to shape our own destiny. With a clear plan, and a clear sense of urgency, the EU is focused on unleashing the potential of our economy.
*
First, competitiveness is front and centre in these efforts.
We plan to increase production within the EU – and this goes for both energy-intensive industries and clean-tech sectors.
There are no electric cars without steel and without batteries, while there are no batteries without chemicals or processed critical minerals. It is simple as that.
Second, trade remains at the core of our alliances.
We are actively expanding our network of trade agreements, most recently updating our relationship with Switzerland, finalising the EU-Mercosur partnership, modernising the EU-Mexico trade agreement and relaunching negotiations with Malaysia.
We are also pursuing negotiations with India, Indonesia, Thailand, and the Philippines, while exploring opportunities with Gulf countries.
Overall, we see clear momentum. In uncertain times, many countries seek continuity, stability, and predictability in their trade partners—and they turn to us.
Third, our openness does not mean we will not protect our interests and our European market when necessary.
Make no mistake: as we expand our trade network, we also invest considerable thought, time, and effort into strengthening our trade defence instruments and enhancing our toolbox for economic security.
For instance, we have the Anti-Coercion Instrument to protect the EU from economic coercion by third countries. The range of countermeasures is broad and can be deployed swiftly, including import and export restrictions, limitations on access to the EU market, and more.
We are also revising our Foreign Direct Investment screening regulation to help us address risks to the EU’s security and public order.
We are taking steps to prevent EU outbound investments—such as in semiconductors, artificial intelligence, and quantum technologies—from negatively impacting the economic security of the EU by ensuring that key technologies and expertise do not fall into the wrong hands.
With all these steps, we are sending a clear signal to our industries: the EU is an excellent place to do business, and we want you to thrive.
And by the way, this signal is not only for EU businesses. Europe is open for American trade and investment, and we believe we have a very attractive offering to help your fantastic companies expand, creating American jobs and American wealth.
I will be making this point to my American counterparts when I meet them later today. The EU is interested in making deals – deals that foster fairness, burden-sharing and mutual benefits.
*
To conclude, it is worth reiterating that the transatlantic bond is the most natural for us. I firmly believe that it makes sense for both the EU and the U.S. to work together to strengthen this relationship and expand it into new areas.
So, let’s continue to make our trade and investment relationship— one-of-a-kind, truly unique on the global stage—great. As you say here in America, if it ain’t broke, don’t fix it.
Thank you.

 
Compliments of the European CommissionThe post European Commission | Speech by Commissioner Šefčovič at the American Enterprise Institute event on ‘EU-US Cooperation on Trade and Economic Security’ first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

“Check against delivery”
Bundespräsident Steinmeier,
Ministerpräsident Söder,
Excellencies,
Ladies and Gentlemen,
Like so many of you, I have been coming here for many years. From the times when it was an exclusively transatlantic audience to today, when we see political, business and thought leaders from right across the world. This is a testament not only to the great success of the Munich Security Conference. But it also reflects on how the rest of the world impacts our security and our transatlantic relationship.
Our task here in Munich is not just to describe this new geopolitical landscape, but to shape it. And shape it in a way that ensures that our transatlantic values endure, and our interests are defended. Because there is a clear attempt by some to build spheres of influence. Competing visions of the world order are leading to a more transactional approach to global affairs. And Europe has to change to thrive in this new reality. We have to be smart and clear-eyed about what is ahead of us. From a rogue Russia on our borders to challenges to our sovereignty and our security. And we should not underestimate the disruptive potential of intense competition – or even a bipolar conflict between China and the US. This may be uncomfortable to hear. But this is a time for plain speaking.
The good news is that, as we approach this new year of change, Europe is already reforming. The pandemic, the war in Ukraine and the full-scale energy crisis have been brutal times for all of us. But in Europe they showed us also that when we adopt an urgency mentality, we are a force that can move mountains. From vaccines to the unwavering support of Ukraine or energy security, Europe has shown that it can master the moment. We must adopt this urgency mentality more permanently.
This is why what you have seen in the first 100 days of the new Commission is the tone and speed I intend to set for the whole mandate. We are strengthening our competitiveness. We are stepping up on defence. We are enabling innovation for AI. Action is what really matters in this new reality. And we know a stronger Europe is better for all of us. A stronger Europe works with the United States to deter the threats we have in common as partners. And this is why we believe that trade wars and punitive tariffs make no sense. Tariffs act like a tax. They drive inflation. The hardest hit are inevitably workers, companies and the middle classes. On both sides of the Atlantic. And we know how quickly tariffs can affect essential transatlantic supply chains. We do not believe this is good business. And we want to avoid a global race to the bottom. But as we have already made clear, unjustified tariffs on the EU will not go unanswered. Let me speak plainly. We are one of the world’s largest markets. We will use our tools to safeguard our economic security and interests. And we will protect our workers, businesses and consumers at every turn. Of course, we are ready to find agreements that work for all – to work together to make each other more prosperous and more secure.
Ladies and Gentlemen,
At the heart of this is, of course: defence and the security of Ukraine, our Continent and the wider world. In this room we all feel what is at stake – that this is a moment in history. More great challenges loom. There has been a lot of talk in the last few days. But it is always instructive to look beyond the words. And to recognise that we are just at the beginning of this process.
Let us take stock of the starting positions: Contrast the approach taken by President Zelenskyy to that of President Putin. In the most difficult of circumstances, President Zelenskyy is prepared to work towards a peace that honours the sacrifice of his country and his fallen compatriots. As Volodymyr Zelenskyy said from the start, Ukraine wants peace more than anyone else. One that is just and lasting so that the horrors of the last years are not revisited ever again. On the other hand, President Putin says he is willing to meet, but on what terms? It is up to him to demonstrate that his interest is not to prolong this war. It is up to him to show that he has given up his ambition to destroy Ukraine. And let me be very clear. A failed Ukraine would weaken Europe, but it would also weaken the United States. It would intensify the challenges in the Indo-Pacific and threaten our shared interests. Because what we have seen is – the Authoritarians of this world are carefully watching whether there is any impunity if you invade your neighbour and violate international borders. Or whether there are real deterrents. They are watching us, what actions we choose to take. This is why it is so important that we get this right.
Ukraine needs peace through strength. Europe wants peace through strength. And as President Trump has made clear: the United States is firmly committed to peace through strength. So I believe that by working together, we can deliver that just and lasting peace. There is a lot that Europe already has brought to the table. Historic amounts, actually. Financially and militarily the overall support amounts to EUR 134 billion. That is more than anybody else has contributed. This includes USD 52 billion of military assistance – on par with the US. And we have put in place hard hitting sanctions, substantially weakening Russia’s economy. We have broken one taboo after another and smashed our reliance on Russian gas, making us more resilient – permanently. And we are about to do more. We are working with Ukraine on their EU accession. Because Ukraine is part of our European family. And this is where their future lies.
Ladies and Gentlemen,
This leads me to the discussions we have had in Europe over the course of the last few weeks. Many in the security circles in Europe were confused – some even worried – by the comments made by senior US officials earlier this week. But we need to be honest here. And we need to avoid outrage and outcry. Because if we listen to the substance of the remarks, we do not only understand where they are coming from but recognise there are some remarks we can agree on. Because yes, both the EU and the US want an end to the bloodshed. We want a just and lasting peace, one that leads to a sovereign and prosperous Ukraine. And Ukraine should be given solid security guarantees. But perhaps what resonates with me the most is the need for Europe not only to speak frankly but also to act accordingly. So let there be no room for any doubt. I believe that when it comes to European security, Europe has to do more. Europe must bring more to the table. And to achieve this, we need a surge in European defence spending. Currently the EU27 are spending around 2% of GDP on defence. And yes, our defence spending went up from just over EUR 200 billion before the war to over EUR 320 billion last year. But we will need to increase that number considerably once again. Because from just below 2% to above 3% will mean hundreds of billions of more investment every year. So, we need a bold approach.
Let us take one step back. In previous extraordinary crises, look at what we did. We empowered Member States with extra fiscal room by activating the escape clause. In simple terms, we empowered Member States to substantially increase public investments linked to the crisis. I believe we are now in another period of crisis which warrants a similar approach. This is why I can announce that I will propose to activate the escape clause for defence investments. This will allow Member States to substantially increase their defence expenditure. Of course, we will do this in a controlled and conditional way. And we will also propose a wider package of tailor-made tools to address the specific situation of each of our Member States. From their current level of defence spending to their fiscal situation. Second, for a massive defence package we also need a European approach in setting our investment priorities. This will allow the investments in much needed defence projects of common European interest. Thirdly, we will step up our work to accelerate the accession process of Ukraine to the European Union. We have made significant progress already, but now is the time again to move mountains. My message is: you see Europe adapting, Europe stepping up, Europe making a difference – immediately.
Ladies and Gentlemen,
What is being discussed here today is ultimately about us. Our prosperity, our economy, our security, our borders, our ability to make good on Europe’s enduring promise of peace. Our values do not change – they are universal. But because the world is changing, we have to adapt the way we act. We need a Europe that is more pragmatic, more focused, more determined. One that will counter its threats, one that will leverage its enormous strengths and power, one that is standing by Ukraine and its partners. There is a lot that this Europe can do – and it will rise to the moment.
Long live Europe.
 
Compliments of the European CommissionThe post European Commission | Speech by President von der Leyen at the Munich Security Conference 2025 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The outlook for the global economy is characterised by shifting financial conditions and geopolitical uncertainty. Against this backdrop, it is important that we remain attentive to global financial stability.
This letter was submitted to G20 Finance Ministers and Central Bank Governors (FMCBG) ahead of the G20’s meeting on 26-27 February.
Under the G20’s leadership, and working through its members, the FSB has developed extensive reforms in recent years to enhance resilience by addressing key financial system vulnerabilities.
With key reforms developed or nearing completion, the letter sets out the prominent role that the promotion and monitoring of implementation will play in the FSB’s work this year. The letter also sets out the other work underway at the FSB in 2025 and its relevance to global financial stability.
Read full letter here.
 
Compliments of the Financial Stability Board – a global economic advisory boardThe post Financial Stability Board | FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: February 2025 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Blog post by Thomas Cantens, Herve Tourpe | New generative AI tools can redefine the relationship between governments and citizens, but strong leadership and safeguards are fundamental.
New technologies have the potential to improve the relationship between governments and citizens. Tax portals, customs IT systems and online services have simplified interactions with public authorities, reduced bureaucratic hurdles, and increased transparency. Now, generative artificial intelligence (GenAI) is emerging as the next transformative force. Known for its ability to understand and produce human language, GenAI opens possibilities that go beyond simple automation. However, in an area as politically sensitive as taxation, it also raises important questions that could quickly undermine trust.
Tax authorities are beginning to explore GenAI, though most efforts are still at an early, experimental stage. The most evident area so far has been on improving communication with taxpayers.
In Singapore, a virtual assistant answers tax questions in multiple languages and has cut call-center inquiries by half. Korea has deployed an AI guide to help citizens file and pay taxes. In France, AI can analyze incoming emails and propose draft responses for civil servants to validate. While these applications are promising, a more profound question emerges: Can GenAI significantly alter the relationship between governments and citizens? Furthermore, how will it influence the way citizens experience and perceive taxation—a politically sensitive process that is governed by law yet deeply intertwined with social norms and practices?
What’s new with GenAI?
Most AI systems currently used by tax and customs authorities are predictive and built for a single function. They analyze large sets of structured data—like past tax declarations or transactions—to produce things like risk scores to indicate possible fraud. By contrast, GenAI is a generalist system that understands almost all forms of information and is designed to interact with humans in any language. It can handle a range of tasks, from drafting letters to providing interactive guidance about tax regulations and assisting officers in their investigations.
By training a GenAI agent with legal texts, tax codes, operating procedures, and internal guidelines, administrations can adapt it to specific needs. The result is a dynamic system capable of understanding and producing content that both civil servants and taxpayers can interact with.
Transforming the State-Society Relationship
While AI tools already in use often enhance efficiency, they have not fundamentally changed the way revenue authorities work or engage with citizens. They mostly replaced manual tasks or systems for econometric or statistical modelling.
With GenAI, there are more profound implications. Internally, it can help tax and customs officials to focus on analytical and judgment-based roles, allowing them to become oversight specialists and increasing their productivity. Externally, it can reduce the knowledge gap between administrations and taxpayers, aiding in the interpretation of complex provisions, navigating laws, identifying deductions, and even auto-filling forms.
For low-income countries, GenAI offers the opportunity to drive organizational reforms and leapfrog into the most modern systems. For example, in Madagascar, the customs authority wants to use GenAI to improve risk management, combat fraud and increase revenue, using data accumulated over 10 years to train its system.
The human-like interactions offered by AI chat tools can personalize the process, as shown in Singapore and Korea, where users can ask questions and receive plain language replies. Citizens’ organizations, academics, and political parties can also use GenAI to examine proposed reforms, compare scenarios, and engage in deeper policy debates. This two-way transformation could increase overall trust, making taxation feel less like a frustrating obligation and more like a shared responsibility of both taxpayers and governments.
Preconditions for success
Despite its potential, GenAI also comes with challenges. Issues related to data quality, ethics, privacy concerns and hallucinations (i.e., incorrect results) must be addressed to reinforce and not erode trust. For instance, Korea’s approach—directing particularly sensitive queries to human agents—reflects the need for careful oversight of confidential matters. Results must be explainable and perceived as fair in all cases.
Effective knowledge management is another requirement. Revenue authorities have extensive laws, regulations, case records, and operational manuals. However, scattered archives and incomplete digitization can hamper efforts to train AI systems effectively. A human must determine which documents are accurate, relevant, and suitable for inclusion in the training material.
As GenAI becomes integrated into various aspects of revenue administration, employees will need to be trained to interpret, correct, and complement its outputs. Policymakers must ensure that errors are reported and addressed promptly.
By providing human-like capabilities to support taxpayers and tax authorities, GenAI can act as both taxman and taxpayer assistant, automating routine tasks, clarifying complex issues, and fostering a more transparent and collaborative relationship. This technology can lower administrative hurdles, demystify tax obligations, and invite broader participation in policy debates. However, shaping it properly requires strong leadership, ethical policy frameworks, and vigilant oversight of data quality, privacy, and accuracy.
 
Compliments of the International Monetary FundThe post IMF | How AI Can Help Both Tax Collectors and Taxpayers first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

by Dennis Essers, Laura Lebastard, Michele Mancini, Ludovic Panon and Jacopo Timini[1] | Using firm-level data for five EU Member States we study how disruptions to the supply of foreign critical inputs (FCIs) might affect value added. Our findings suggest a 50% reduction in imports of FCIs from China and China-aligned countries would lead to transitory value added losses in manufacturing of about 2-3%, with significant variation across firms, sectors, regions and countries. This has implications for the wider economy, growth and price stability.

Global disruptions reveal the EU’s reliance on foreign inputs
Global disruptions have highlighted the euro area’s reliance on foreign input sourcing. Not only the COVID-19 pandemic and Russia’s invasion of Ukraine but also, more recently, the announcement of new US tariffs and the heightened geopolitical risks stemming from tensions in the Middle East have focused attention on international supply chains. Mapping strategic vulnerabilities and quantifying the impact of disruptions to the supply of key inputs are central to building resilience.
China is the EU’s top provider of FCIs. These are defined as inputs sourced mostly from outside the EU and falling into one of the following three categories: difficult to substitute,[2] high-tech products, and/or items that are vital for the green transition. This list includes microchips, turbine parts, optical equipment, and chemicals used to produce drugs and batteries for electric cars. FCIs represent 17% of extra-EU imports. The European Bank for Reconstruction and Development’s “Transition Report 2023-24” highlights that China dominates the production of most critical raw materials. According to country-level trade data, in 2022 a third of FCIs imported by the EU came from China (Chart 1). For the EU, other relevant, geopolitically distant suppliers of FCIs are Russia and Hong Kong.

Chart 1
Non-EU countries’ share of FCI imports to the EU and partner alignment

Source: CEPII BACI.
Notes: The size of the circles represents the relative share of each non-EU country’s exports in FCIs imported into the EU. Blue circles signal US-aligned countries, red circles China-aligned countries and grey circles neutral countries. China’s circle represents 30% of FCIs imported into the EU, the US circle 18%.

2-3% drop in value added if China-aligned FCIs are halved
In Panon et al. (2024), we use firm-level trade and balance sheet data for five euro area countries − Belgium, Spain, France, Italy and Slovenia – to shed quantitative light on the exposure to foreign supply risks. We employ a firm-level partial equilibrium model, based on a production function approach, to assess the short-term effect on manufacturing value added of disruptions to the supply of FCIs from China and other countries with a similar geopolitical orientation (“China-aligned countries”). We base geopolitical orientation on United Nations voting patterns, the frequency of sanctions and other measures of geopolitical alignment (den Besten et al., 2023; Capital Economics, 2023). In the model, firms combine labour, capital and intermediate goods, the latter being produced using FCIs and non-FCIs.
Our baseline scenario consists of a sudden drop that halves the supply of FCIs from China-aligned countries. In line with business survey evidence (Attinasi et al., 2023; Bottone et al., 2024) and the economic literature (Barrot and Sauvagnat, 2016; Atalay, 2017; Boehm et al.,2019), we assume that firms cannot substitute these inputs in the short run. Such FCI supply disruptions would generate a drop in manufacturing value added of 2.0% for Belgium, 2.5% for France, 2.9% for Spain and 3.1% for Italy and Slovenia in the short term (Chart 2). Large firms drive the overall change, accounting for about 75% of the value added decline in all countries. This finding confirms the message from Gabaix (2011): the behaviour of large firms explains a substantial share of aggregate fluctuations. The results for the top 1% of firms display more heterogeneity, explaining about one-sixth of the decline in Italy and Spain, a third in France and Belgium, and more than half in Slovenia.

Chart 2
Breakdown of change in manufacturing value added by size of firm

(percentage)

Notes: The chart reports the change in value added (as a percentage) resulting from a 50% drop in FCI supply from China-aligned countries. Percentiles are calculated using the value added of the firm (the percentile calculation only includes firms exposed to changes in access to FCIs). Only manufacturing firms are included.

The road to resilience is longer for some sectors and regions
The simulated impact varies greatly across sectors. The electrical equipment industry stands out as the most affected, with a median decline in value added across countries of about 7%, more than double the overall median of 3%. Other industries experiencing declines greater than the median include chemicals, basic metals, electronics, and machinery (Chart 3). Together, these five industries account for nearly one-third of manufacturing value added in the five countries in the sample. Some sectors show a similar decline across the five countries (e.g. electronics), while for others the results vary much more at the country level (e.g. chemicals, machinery). This reflects different sub-sector compositions and firm-specific sourcing patterns.

Chart 3
Change in value added by manufacturing sector across countries

(percentage)

Notes: The chart reports the change in value added (as a percentage) across the most exposed manufacturing sectors for a 50% drop in FCI supply from China-aligned countries.

Regional results are also mixed (Chart 4). The large heterogeneity across regions within countries is driven by two factors: specialisation and concentration. The most affected regions are those specialised in sectors heavily reliant on FCIs imported from non-EU countries. For instance, the Italian region of Marche is relatively more specialised than other regions in the production of electrical equipment, which is an industry that relies heavily on sourcing FCIs from China-aligned countries. The concentration of top producers in some regions also contributes to this uneven impact: where large firms are reliant on FCIs the effect of a 50% drop on the value added of their region is more substantial. This is consistent with the aggregate effects shown in Chart 2.

Chart 4
Change in manufacturing value added at the regional level

(percentage)

Notes: The chart reports the percentage change in value added across regions resulting from a 50% drop in FCI supply from China-aligned countries. Only manufacturing sectors are considered.

Destination EU resilience
Identifying firms exposed to disruptions of critical inputs is key for policymakers to better prepare for forthcoming shocks with potential implications for growth and price stability. Microdata are crucial not only for mapping strategic dependencies, but also for quantifying their importance if a shock hits. A negative supply shock like the one modelled in this paper would have a temporary inflationary effect on the countries concerned; its intensity would depend on the degree of substitution of the affected goods. A deeper, more granular understanding of exposure to foreign dependencies would enhance our ability to pinpoint where and to what extent price pressures may arise, while also improving the assessment of economic and financial stability risks. At the same time, this insight is essential for designing more effective industrial policies and improving supply chain resilience. This aligns with the European Commission advocating for “strategic autonomy”, in particular increasing our use of technologies that do not rely on materials provided by potentially unreliable trading partners. We therefore support the call of Pichler et al. (2023) for “an alliance to map global supply networks”, and agree with them on the importance of collecting microdata and making them available for research purposes.[3]
References
Arjona, R., Connell, W. and Herghelegiu C. (2023), “An enhanced methodology to monitor the EU’s strategic dependencies and vulnerabilities”, European Commission Single Market Economy Paper, No 2023/14.
Atalay, E. (2017), “How important are sectoral shocks?” American Economic Journal: Macroeconomics, No 9, pp. 254-280.
Attinasi, M.G., Ioannou, D., Lebastard L. and Morris R. (2023), “Global production and supply chain risks: insights from a survey of leading companies”, ECB Economic Bulletin, Issue 7, Box 1.
Attinasi M.G., Mancini, M., Boeckelmann, L., Giordano, C., Meunier, B., Panon, L., Almeida, A., Balteanu, I., Bańbura, M., Bobeica, E., Borgogno, O., Borin, A., Caka, P., Campos, R., Carluccio, J., Di Casola, P., Essers, D., Gaulier, G., Gerinovics, R., Ioannou, D., Khalil, M., Lebastard, L., Lechthaler, W., Martínez Hernández, C., Morris, R., Savini Zangrandi, M., Schmidt, K., Serafini, R., Strobel, F., Stumpner, S., Timini, J., Viani, F., Bottone, M., Conteduca, F., De Castro Martins, B., Giglioli, S., Kaaresvirta, J., Kutten, A., Matavulj, N., Nuutilainen, R., Quintana, J., Smagghue, G. (2024), “Navigating a fragmenting global trading system: insights for central banks”, ECB Occasional Paper Series, No 365.
Barrot, J.-N. and Sauvagnat J. (2016), “Input specificity and the propagation of idiosyncratic shocks in production networks”, The Quarterly Journal of Economics, No 131, pp. 1543-1592.
Boehm, C.E., Flaaen, A. and Pandalai-Nayar, N. (2019), “Input linkages and the transmission of shocks: firm-level evidence from the 2011 Tohoku earthquake”, Review of Economics and Statistics, No 101, pp. 60-75.
Bottone, M., Mancini, M., Boffelli, A., Pegoraro, D., Kutten, A., Balteanu, I. and Quintana, J. (2024), “Sourcing governance and de-risking strategies in Europe: a comparative study of Germany, Italy, and Spain”, Bank of Italy Occasional Papers, No 880.
Capital Economics (2023), Global Fracturing Dashboard, https://www.capitaleconomics.com/fracturing-dashboard.
Den Besten, T., Di Casola, P. and Habib, M. (2023), “Geopolitical fragmentation risks and international currencies”, The international role of the euro, Special feature A, ECB, June.
European Bank for Reconstruction and Development (2024), “Transition Report 2023-24”.
European Commission (2021), “Strategic dependencies and capacities”, Commission Staff Working Document, No 352.
Gabaix, X. (2011), “The granular origins of aggregate fluctuations”, Econometrica, No 79, pp. 733-772.
Panon, L., Lebastard, L., Mancini, M., Borin, A., Caka, P., Cariola, G., Essers, D., Gentili, E., Linarello, A., Padellini, T., Requena, F. and Timini, J. (2024), “Inputs in distress: geoeconomic fragmentation and firms’ sourcing”, Bank of Italy Occasional Papers, No 861.
Pichler, A., Diem, C., Brintrup, A., Lafond, F., Magerman, G., Buiten, G., Choi, T., Carvalho, V., Farmer, J. and Thurner, S. (2023), “Building an alliance to map global supply networks”, Science, No 382, pp. 270-272.

This article was written by Dennis Essers (Nationale Bank van België/Banque Nationale de Belgique), Laura Lebastard (Directorate General Economics, European Central Bank), Michele Mancini (Banca d’Italia), Ludovic Panon (Banca d’Italia), and Jacopo Timini(Banco de España). The Research Bulletin article is based on Panon, L., Lebastard, L., Mancini, M., Borin, A., Caka, P., Cariola, G., Essers, D., Gentili, E., Linarello, A., Padellini, T., Requena, T. and Timini, J. (2024): “Inputs in distress: geoeconomic fragmentation and firms’ sourcing”, ECB Working Paper Series, No 2992. The authors gratefully acknowledge the comments of Alexander Popov and Zoë Sprokel. The views expressed here are those of the authors and do not necessarily represent the views of the Nationale Bank van België/Banque Nationale de Belgique, Banco de España, Banca d’Italia, Banka Slovenije, the European Central Bank or the Eurosystem.
European Commission, 2023; Arjona et al., 2023.
Our work is part of the effort of the European System of Central Banks (ESCB) to enhance its understanding of the ongoing geoeconomic trade fragmentation process. The 2024 ESCB Report on Geoeconomic Trade Fragmentation by Attinasi, Mancini, et al. highlights the need to look beyond aggregate trade data and improve the detailed monitoring of supply chains, including through increased cooperation among central banks and other international organisations.

 
Compliments of the European Central BankThe post ECB | Critical input disruptions – mapping out the road to EU resilience first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Blog post by Pedro Baptista, Colm Bates, António Dias da Silva, Maarten Dossche and Marco Weissler | Euro area firms hold on to their workforce, despite poor economic conditions. For a significant share of workers this means a lower workload than usual. In turn, many put more money aside as they worry about job security and wages, as the ECB Blog shows.
When the economy slows down, so does labour productivity. This link is often attributed to the role of labour utilisation. In good times firms have more work to do, and their employees’ workloads increase. In bad times, productivity lags and firms engage in labour hoarding, i.e. they hold on to more workers than they actually need. For a significant share of employees, that comes with a lower workload than usual.
Drawing on the ECB’s Consumer Expectations Survey (CES) we explore how employees’ perceptions of their workloads affect their expectations regarding job security, chances of a pay rise, as well as their future spending and saving decisions. We find that, overall, workers who experience a lower workload tend to fear for their jobs and expect low wage increases. Also, they expect to be careful with spending money. To put it simply, during a downturn those who have less on their plate have more on their mind.
These results show that in an economy with weak growth yet a robust job market, labour hoarding and related low labour utilisation may drag on consumption.
Unequal workloads among workers and across sectors
To understand their economic expectations the ECB interviews consumers in 11 euro area member states on a regular basis (CES). In the survey’s June, July, and October 2024 editions, about 37% of respondents answered that they were working more than usual. On the other hand, 10% of workers reported a lower than usual workload, with 2% saying that their current workload was much lower and 8% saying that it was somewhat lower (Chart 1, left).
At first sight, it is surprising that the group of workers reporting higher workload is dominating, given the economic downturn. However, social bias effects lead to the fact that in such surveys many respondents tend to report that they have a lot of work to do. This is consistent with other CES information data showing a similar share of individuals working more than their contractual hours. In this context, the 10% of workers reporting a lower workload than usual is actually rather high.
Workloads are significantly lower in construction and industry than in other sectors, as illustrated in the second panel of Chart 1, which shows the net percentage of workers facing higher versus lower workloads. This, in turn, is in line with macroeconomic indicators which show weaker growth in these sectors in comparison with services. This suggests that the data effectively capture the cyclical component of workloads experienced by workers.

Chart 1
Workloads of employees in the euro area – by sector

Workload

Workload by sector

(percentage of employed respondents)

(net percentage between “higher” and “lower” reported workloads)

Sources: Consumer Expectations Survey.
Notes: Weighted data. Data are for June, July and October 2024. Net percentage refers to the difference between the share of respondents answering higher workload and those answering lower.

More job worries and less consumption
So, what impact does the lower than usual workload have on employees? First, workers who report lower workloads feel more at risk of losing their jobs within the next three months. Such fear scales alongside the change in workload, with workers who experience only modest workload changes not worrying much about losing their jobs. Yet, those who see big changes worry greatly. That effect applies to both those who see much higher workloads and those who see much lower workloads than usual. However, it is greatest for the second group. Their fear of losing their jobs is 8 percentage points higher than that of workers with no changes in workload (Chart 2). Furthermore, those who express very high and very low workloads are also more likely to express low job satisfaction.

Chart 2
Job loss expectations by workload perceptions

(percentage points)

Sources: Consumer Expectations Survey.
Notes: Weighted data. Data are for June, July and October 2024. Estimates are presented relative to the middle category and based on a linear regression with sector and country fixed effects, controlled for gender, age, income, and worker characteristics. The estimated coefficients are depicted in bars with the error bars representing the 95% confidence interval.

Second, lower workloads are associated with little hope of pay rises. Workers with higher workloads have higher wage expectations than those whose workloads are unchanged, while those with much lower workloads have lower expectations (Chart 3). In fact, workers reporting higher workloads expect wage increases three times larger than those experiencing much lower workloads. Applying a regression analysis that controls for job loss expectations and other individual characteristics further shows us that workers expect a currently low workload to impact their future earnings, even if their jobs aren’t at risk. Apparently, they are also factoring in lower productivity and weakened bargaining power.

Chart 3
Wage growth expectations by workload perceptions

(percentage points)

Sources: Consumer Expectations Survey.
Notes: Weighted data. Data are for June, July and October 2024. Estimates are presented relative to the middle category and based on a linear regression with sector and country fixed effects, controlled for gender, age, income, and worker characteristics. The estimated coefficients are depicted in bars with the error bars representing the 95% confidence interval.

Third, changing workloads could influence savings and consumption. And this is especially interesting for monetary policy considerations. Employees with less work than usual report that they expect to spend less and save more. This precautionary effect holds even when we control for job loss expectations and demographics (Chart 4).

Chart 4
Perceived workload and consumption behaviour

Marginal effects of workload perceptions on precautionary savings

Marginal effects of workload perceptions on spending growth expectations

(percentage of household income)

(percentage points)

Sources: Consumer Expectations Survey.
Notes: Weighted data. Data are for June, July and October 2024. Marginal effect estimates of the interaction between workload and job loss expectations are based on a linear regression with country fixed effects, controlled for gender, age, income, and worker characteristics. The estimated coefficients are depicted in bars with the error bars representing the 95% confidence interval.

Conclusion
Our results show that labour hoarding and the related substantial share of workers with low workloads could negatively impact wage growth and spending decisions. Workers with lower workloads are more pessimistic than others and expect to act accordingly. They worry most about losing their job and expect the lowest pay rise. Also, they plan to reduce consumption, and put more money aside. Thus, in a context of low growth and persistent labour underutilisation, weaker demand could have further knock-on effects on wage growth and consumer spending. This would then again weigh on economic growth.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.
Check out The ECB Blog and subscribe for future posts.
 
Compliments of the European Central BankThe post ECB | Those who work less worry more: the effect of lower workloads on consumption first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

India, Mexico, Brazil, and some other major emerging economies recorded strong growth, while the United States continued to extend its lead as the top destination for direct investment
Global foreign direct investment grew again in 2023 after declining the previous year. Inward direct investment climbed $1.75 trillion, or 4.4 percent, reaching a record $41 trillion, according to the IMF’s latest Coordinated Direct Investment Survey, which provides detailed information on direct investment positions between countries.
FDI rose in most regions, with Central and South Asia, Europe, and North and Central America contributing most. Direct investment between advanced economies grew by $880 billion, or 3.6 percent, while those from advanced economies to emerging market and developing economies rose by $538 billion, or 7.6 percent.
As our Chart of the Week shows, the United States extended its lead as the top destination for direct investment. Singapore recorded the largest gain in 2023, with its position rising $307 billion, followed by $227 billion for the United States and $164 billion for Germany. Meanwhile, the Netherlands and Luxembourg posted the steepest declines but remained in the top five, alongside the United States, China, and the United Kingdom.
Strong growth was also seen in many emerging economies. Most notably, India, Mexico, and Brazil each saw their inward direct investment positions rise by around $130 billion or about 20 percent, marking the largest increase for these three economies in total since the survey began in 2009.
—The IMF’s annual Coordinated Direct Investment Survey is the only worldwide source of bilateral FDI positions between economies. It aims to provide a geographic distribution of inward and outward FDI worldwide, contribute to a better understanding of the extent of globalization, and support the analysis of cross-border linkages and spillovers in an increasingly interconnected world. For more IMF data, see the beta version of our new data portal, which features a redesigned, unified platform for macroeconomic data.
 
Compliments of the International Monetary FundThe post IMF | Foreign Direct Investment Increased to a Record $41 Trillion first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The LRS Taskforce in its new composition will continue to provide a forum for engagement between public- and private-sector experts to support the G20 Roadmap for enhancing cross-border payments.

The Financial Stability Board has renewed the composition of its Taskforce on Legal, Regulatory, and Supervisory matters (LRS Taskforce). The Taskforce aims to strengthen collaboration between the public sector and senior managers from the private sector to support the G20 Roadmap for enhancing cross-border payments.
Following a public call for nominations for senior private-sector applicants with significant experience and direct responsibilities related to cross-border payments in the areas of compliance, legal, cross-border operations or risk management, the FSB has invited 12 new members to join the Taskforce. The selection aims to achieve a diverse membership from both a geographic and business perspective.
The FSB LRS Taskforce will continue to work in close cooperation with the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) Taskforce on Cross-border Payments Interoperability and Extension.
The LRS Taskforce composition is renewed periodically every two years.

 
Compliments of the Financial Stability Board – a global economic advisory boardThe post The Financial Stability Board appoints new members to its Taskforce on Legal, Regulatory and Supervisory matters first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.