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Is international free trade coming to an end?

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Where in the world is “free trade” really free? The European Union, and maybe China… The number of countries that feel bound to the World Trade Organization (WTO) rules, especially considering the last “protective” measures of the USA, does not go beyond the fingers of one hand.

The Inflation Reduction Act (IRA), signed by Joe Biden, seems to be a continuation of Donald Trump’s “America First” policy to many. The law provides government support for the transition from seemingly innocent fossil fuels to green energy. It is no secret that the role of states in the transition to renewable energy should increase. It does not seem possible to make progress in such a large infrastructure transformation without public intervention.

In the IRA, the issue that bothers EU in particular is government incentives for electric cars. In addition to financial support to automotive companies producing in the United States, tax breaks are also foreseen for consumers. The summary is that an electric Ford, GM or Tesla may cost $7,500 less under this law than an electric Volkswagen or Hyundai, depending on where and how it is produced. Let’s also say that in the IRA, Canada and Mexico are granted exemptions.

South Korea and Japan are also concerned

Of course, this is not just about the EU. Japan and South Korea also have world-renowned automotive companies that produce electric vehicles. These countries also think that the US’s new industrial policy is a violation of international trade rules.

The Japanese government said in a note to the US Treasury Department in early November that the IRA would challenge the competitiveness of Japanese automotive companies in the North American market. Tokyo warned its interlocutor that the new law could deter Japanese manufacturers from making new investments in the United States, which could lead to unemployment in the United States.

The CEO of the Japanese huge company Nissan said the IRA must be given some time before its entry into force. Nissan has a factory in Canton, Mississippi, but according to the CEO, the number of these factories could increase with the IRA. Nissan expects its electric models to account for 40 percent of US sales by 2030.

The South Korean government also said that the implementation of the IRA should be given a minimum of three years. Seoul has also reported that the IRA may violate the free trade agreement signed between the United States and South Korea. Companies like South Korean Hyundai and Kia are expected to increase their investment in the US.

Speaking to Axios, a South Korean official said that the issue almost led to a diplomatic crisis. The United States and South Korea have discussed the issue twice at the presidential level, but it seems unlikely that the Biden administration will make any changes to the law.

South Korea thinks that they cannot meet every request from the USA, for example, they cannot unite against China. Some officials think that US-Japan-South Korea-Taiwan co-operation on the semiconductors issue would have been easier to move forward without the IRA.

Along with the IRA, it is stated that Hyundai Ioniq 5, Kia EV6, Subaru Solterra and Toyota bZ4X models are not impossible to compete in the USA market. Rivian Automotive, Hyundai Motor and Kia Corp recently suggested to the US that the pressure on them could be reduced by arranging “commercial clean cars” regulation for the IRA.

US barrier to chip trade angers Netherlands

Yet another trade that the Biden administration is trying to block with IRA is the chip trade.

The US has recently imposed tight barriers to the sale of advanced chip and chip-making equipment. Dutch and Japanese companies are among the leading companies in this regard.

The United States has not yet reached an agreement with these countries on banning the sale of chips. But it is reported that Dutch chip makers will resist moving out of the Chinese market.

The Netherlands-based ASML is one of the largest suppliers to the global semiconductor industry. A Dutch official told Bloomberg last month that they would protect their own economic interests when it comes to selling chip equipment to China.

Dutch officials have emphasized that the United States should not expect its own countries to unquestionably comply with Washington’s restrictions on China.

Despite this, the Netherlands refuses to sell extremely ultraviolet lithography machines to China under US’ pressure. But ASML continues to sell less advanced chip-making systems to China.

US pressure on ASML and Japanese firm Tokyo Electron continues. ASML told its staff in the US to stop doing business with Chinese customers as a result of a new regulation that came into force in the US in October.

Dutch Foreign Trade and Development Co-operation Minister Liesje Schreinemacher insisted last week that his government’s “national security interests are really important”.

Dutch Economy Minister Micky Adriaansens told the Financial Times last week that his country was “very positive” about relations with China and emphasized that Europe and the Netherlands “should have their own strategies” for controlling exports to China.

Macron’s visit and concern in Europe

“Joe Biden wants to strengthen the American economy – to the detriment of Europe,” wrote the German newspaper Die Zeit, while the French economic newspaper Les Echos cited “America First, Europe Last.”

The fact that French President Emmanuel Macron was greeted like a king in Washington last week does not seem to have solved the problem. US President Joe Biden admitted there may be flaws in the IRA, but then mentioned the negotiations of the US-EU trade delegations.

Describing the IRA as “super aggressive” during a closed-door meeting with US senators, Macron invited the EU to adopt its own “Europe First” law before heading to the US. French Economy and Finance Minister Bruno Le Maire also suggested that the United States was pursuing a Chinese-style industrial policy.

In a statement with Mr Biden, Macron said it was now time for Europe to “synchronise” itself with US’ steps. This word is thought to refer to the EU’s own state incentives.

French authorities are concerned that European companies, whose operational costs have already risen due to inflation, will start to migrate investment to North America. But Stefano Sannino, secretary-general of the EU’s Foreign Relations Service, who was in Washington for the visit, argued that a scenario in which the United States on one side, and the EU on the other, started to provide incentives would not be “rational”.

At the same time, Denis Redonnet, the EU’s trade chief, said they could report the IRA to the WTO. European Commissioner for the Internal Market Thierry Breton also announced that he will not attend the EU-US Trade and Technology Council meetings later this week. Breton argued that the meetings were insufficient to address the concerns of Europe’s industry and labour ministers, noting instead that Europe would focus on the urgent need to protect the competitiveness of its industrial infrastructure.

EU officials are considering negotiating a free trade agreement between the EU and the United States as another option. However, the fact that this process takes too long and the bureaucratic procedures reduce the possibility of this option.

Meanwhile, Italian automotive companies are more concerned about the entry of Chinese electric cars into the European market than the IRA, according to the Italian newspaper La Stampa. The Germans fear the IRA more than the Chinese.

Czech Trade Minister Jozef Síkela reminded in November that the People’s Republic of China would be the winner of the EU-US trade wars.

Giga factory investments multiply in the US

We can say that the fears of Germans and the French are coming true. While Europeans are worried about the US “sucking up” investment in Europe, alarm bells are ringing in battery production.

Until recently, Europe’s production of lithium-ion batteries was a league ahead of the United States. But with the rise in energy prices and the IRA, the picture seems to have changed.

Since the day the IRA was announced, there has been a 35 percent increase in capacity in the United States. That’s 17 percent in Europe. Despite all this, Europe is still far ahead of the United States in terms of capacity. In 2031, Europe’s annual production capacity is estimated to be 1,186.2GWh, and the US 957.6GWh.

The Turkish company Kontrolmatik announced that it is considering increasing the size of the giga factory in the United States, while Norway-based FREYR announced that it will accelerate its plans in the United States. In Europe, there are reports that such plans have been delayed.

Towards a European protectionism

“The new ambitious industrial policy from our competitors requires a structural response,” said European Commission President Ursula von der Leyen, delivering the message that the EU will start playing by the rules: “Europe will always do what is right for Europe.”

According to Estonian Entrepreneurship Minister Kristjan Järvan, the EU has always supported free trade, and this was a good thing, but “non-democratic forces” were now using free trade against the EU.

Trying to balance the trade wars between the US and China for a long time, Brussels may now start to change its attitude towards friendly fire as Joe Biden jumps on the “protectionist” train. Von der Leyen’s speech Sunday also suggested that the EU should reconsider its own state subsidies.

“There is a risk that the IRA will lead to unfair competition, close markets, and dismantle the same critical supply chains that have already been challenged by COVID-19,” Leyen said, bringing up the possibility that manufacturers will move from Europe to the US.

The fear of subsidies in the EU’s ultra-liberal and pro-free trade departments is at a heightened level. European Commissioner for Trade Valdis Dombrovskis, among them, argued that the subsidy race would be “expensive and inefficient”. EU competition chief Margrethe Vestager said no one wants a subsidy war.

However, the genie has definitely came out of the bottle. If EU takes a step towards government incentive, it will be the last nail to be put in the coffin of international free trade, which hasn’t been really practiced for a long time.

Diplomacy

FIFA abandons $4.2 billion commercial stake sale following widespread revolt

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FIFA and Gianni Infantino have backed down from plans to sell a stake in the organization’s commercial and event operations following widespread backlash.

In a statement issued late Friday night, the embattled FIFA president said:

“After carefully listening to all views, it has become clear that this project, regardless of the level of support, causes divisions that are now contrary to the interests of the objective originally established. Our goal has always been, and will always be, to unite and improve. As a result, this proposal will not be implemented.”

Infantino’s proposal met with fierce resistance from UEFA, CONCACAF, and the Asian Football Confederation (AFC).

UEFA indicated that all 55 of its members would boycott FIFA competitions, including the World Cup, if the plans remained on the table.

In its statement, FIFA noted that “nobody is selling football,” and while asserting that it “acknowledges and respects the feedback and concerns expressed publicly,” emphasized that it would continue to implement suggestions.

It added that it “reaffirms its commitment to an open and democratic process of consultation.”

Shortly after FIFA issued its statement, the AFC released its own declaration of solidarity with UEFA and the Confederation of North, Central America and Caribbean Association Football (CONCACAF).

Infantino subsequently suffered two major internal blows.

First, his adviser Carlos Cordeiro resigned from his position, sharply criticizing the plan in a statement as “a bad deal for FIFA member associations, a bad deal for football, and a bad deal for the long-term future of the game.”

Then, FIFA Chief Operating Officer Kevin Lamour told the Associated Press that staff felt “deceived” by Infantino and that after raising the issue, he would “sleep better, even at the cost of losing his job.”

Lamour said:

“This is the project of a single person. Leaving aside that this project should not proceed… it is now time for the political leaders of world football to ask themselves the right questions and make the right decisions.”

These developments left Infantino cornered, and by Friday afternoon, numerous figures within the organization—speaking to The Athletic on condition of anonymity to protect their jobs—believed it was no longer a question of “if” the cord would be cut, but “when.”

Joshua Kushner’s venture capital firm Thrive had not withdrawn from the deal as of Friday night, but that became moot when FIFA management ultimately decided to kill the project via a public statement.

Joshua Kushner is the brother of Jared Kushner, the son-in-law of Donald Trump.

On Tuesday, world football’s governing body had announced its intention to establish FIFA Forward Enterprises (FFE), a new private entity to manage its flagship events, including the World Cup and the Club World Cup, with plans to sell a 21% minority stake in FFE to external investors.

The sale was targeted to generate $4.2 billion (£3.2 billion) in revenue. FIFA stated that this amount could be immediately distributed to its 211 member associations under a new funding stream named the “FIFA Fast-Forward Program” (FFFP).

Under the plan, FIFA’s total development funding would have exceeded $10 billion over the next four years.

Despite mounting criticism in recent days, FIFA confirmed that if member associations opposed the FFE plan but the proposal was accepted, the dissenting federations would each receive $20 million (£14.9 million) for the 2027–30 cycle, regardless of whether shares in FFE were sold to private investors (to be followed by $22 million for 2031–34 and $24 million for 2035–38).

However, had a given member association accepted the FFE proposal, it would have received $40 million for the 2027–30 period, with subsequent payouts remaining the same.

The three confederations that explicitly took a stand against FIFA’s plan represent 137 of the 211 FIFA member associations.

FIFA had stated that for the proposal to move forward, it required the approval of a majority of the 211 member associations as well as the 37-member FIFA Council, which consists of Infantino and eight FIFA vice presidents.

Strategic reactions and leadership crisis

South American football confederation CONMEBOL did not reject the plans in a statement on Friday, but noted that financial and commercial decisions “must always serve the interests of football and never take precedence over the essence of the game.”

According to a report by The Athletic, Infantino’s future leadership of FIFA was called into question during UEFA and CONCACAF meetings held on Thursday.

Infantino assumed the FIFA presidency in February 2016, succeeding Sepp Blatter, and was expected to run unopposed in the next election scheduled for March 2027.

There is also talk among European officials of putting forward Nasser Al-Khelaifi, the Qatari CEO of beIN Media, to run against Infantino.

Lise Klaveness, President of the Norwegian Football Federation, told VG: “My clear impression right now is that he has suffered a major loss of trust. We did not vote for him last time and were skeptical about this. There are many good aspects to FIFA, but if you take a lax approach to governance principles and rules, you lose trust quickly.”

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Defense Priorities director warns US air strategy in Middle East faces tactical limits

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The collapse of a tentative memorandum of understanding between Washington and Tehran, coupled with the diminishing strategic returns of American air power, has left the United States locked in an unsustainable, low-intensity conflict with Iran, according to Benjamin Friedman, Policy Director at the Washington-based think tank Defense Priorities.

Speaking in an interview on the YouTube channel Harici with host Sarp Sinan Hacır, Friedman attributed the failure of the short-lived US-Iran memorandum primarily to the Trump administration’s diplomatic missteps, vague draft language, and unrealistic expectations regarding a comprehensive settlement.

“Both sides really deserve some blame, but the Trump administration deserves the bulk of the blame for drafting an agreement that was so vague on key terms,” Friedman said, citing ambiguities surrounding the timeline for unfreezing Iranian assets and the scope of American commitments to restrain Israeli military operations in Lebanon.

Friedman emphasized that deep-seated mistrust in Tehran, exacerbated by repeated instances where diplomatic engagement was followed by Israeli or American military strikes, led Iranian negotiators to adopt an unyielding posture. At the same time, he noted that Iran likely miscalculated by using disruptions in the Strait of Hormuz to aggressively force leverage.

“The Trump administration remained intent on this sort of grand bargain that would restrain Iran seeking weapons development… and I think they continue to misread the Iranian willingness to sign that kind of deal,” Friedman noted, adding that Tehran viewed its leverage over the Strait of Hormuz as essential despite the risk of provoking further strikes.

Expressing deep skepticism over the prospects for a lasting diplomatic breakthrough, Friedman criticized the administration’s reliance on informal envoys such as Steve Bannon and Jared Kushner over professional diplomatic channels, predicting that the baseline outcome will remain an unpredictable, episodic conflict.

“What’s more likely is a kind of on-off-again kind of war—sort of what we’re in now, where we have occasional strikes, with the United States perhaps by accident adopting the Israeli model of ‘mowing the lawn’ periodically,” Friedman said.

Addressing the efficacy of US air power, Friedman argued that military operations against Iranian targets have reached a point of diminishing returns. While early strikes successfully eliminated critical high-value assets—such as over-the-horizon radar systems that targeted anti-ship missiles—Iran’s ballistic missile and long-range drone capabilities remain largely intact and operational.

He pointed to a recent strike on a base hosting US personnel in Jordan, launched from western Iran over a distance exceeding 1,000 kilometers, as evidence of Tehran’s sustained strike precision and the tactical limits of American interdiction efforts.

“The war is a failure for air power even in a tactical sense,” Friedman stated. “Initially, we looked at it and said we had a lot of success in destroying targets, but as more information came out, it turned out they had maybe more than half of their missiles and launchers survive the initial phase of the war.”

Friedman observed that the global proliferation of low-cost, high-precision guidance technology has permanently altered the strategic landscape, neutralizing the traditional invulnerability of forward-deployed US installations. “The precise effects of air power that used to be almost a monopoly of the United States… is actually making our posture in the region less sustainable,” he said, warning that similar vulnerabilities would be vastly amplified in any potential high-intensity conflict with China.

As an alternative to open-ended military engagement, Friedman suggested that Washington consider a complete military withdrawal from the region, even if it entails accepting Iranian transit fees on commercial shipping through the Strait of Hormuz. “The cost of preventing that through perpetual outbursts of warfare is much higher than just accepting it,” he noted.

Turning to regional dynamics, Friedman addressed Israel’s current absence from active strike operations against Iran, characterizing it as a calculated move to preserve its own air defense interceptors while relying on Washington to bear the operational and political burdens of containment.

On European security and the broader alliance structure, Friedman offered a critical assessment of the NATO summit in Ankara and the administration’s “NATO 3.0” concept. He described the white paper led by Defense Secretary Pete Hegseth as an effort to coerce European states into escalating defense expenditures and purchasing American hardware under the threat of reduced security guarantees, rather than executing a structured, strategic US posture adjustment.

“This is not a real US withdrawal; it’s a kind of pressure to up your loyalty in a particular way,” Friedman said, noting that major European powers such as Germany, France, and the UK lack a compelling existential incentive to construct independent, large-scale conventional war-fighting capabilities.

Regarding bilateral relations with Ankara, Friedman noted that US-Turkish tensions have eased considerably following the shift in American posture in Syria and progress toward resolving long-standing friction points, including the F-35 program and S-400 procurement. He added that while Israeli leadership under Prime Minister Benjamin Netanyahu has expressed frustration over Washington’s constructive engagement with President Recep Tayyip Erdoğan, the White House has maintained its strategic course despite pressure from domestic pro-Israel lobbying groups.

Addressing internal Republican Party dynamics, Friedman highlighted the evolving public stance of Vice President J.D. Vance, whose cautious criticism of Israeli influence and emphasis on divergent national interests reflects broader ideological shifts within the conservative base.

“Vance is more representative of the shift in the Republican Party,” Friedman said. “He’s criticizing them in a limited way and saying, ‘Our interests are different.’ From the perspective of those of us who would like the United States to have a more distant relationship from Israel, it’s progress.”

Looking ahead to the upcoming US midterm elections, Friedman anticipated that a loss of congressional control by the Republican Party would severely curtail the administration’s domestic executive overreach, though its structural impact on foreign policy execution and Middle Eastern operations would remain comparatively limited.

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UK Prime Minister Andy Burnham pledges full support to Ukraine in meeting with Zelenskyy

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UK Prime Minister Andy Burnham has met with Ukrainian President Volodymyr Zelenskyy in Portsmouth, England.

Zelenskyy is the first world leader Burnham has met in person since taking office, with the prime minister committing to building a “firm partnership” between the United Kingdom and Ukraine.

Demonstrating their support, the two leaders toured a military base in Portsmouth where 200 Ukrainian troops are currently undergoing naval training exercises.

Burnham described his meeting with the Ukrainian president as “warm” and said he plans to visit Ukraine soon.

“We will build this together and address the various issues President Zelenskyy is facing, many of which we discussed today,” Burnham said.

The meeting follows an announcement by London that it will share intellectual property rights to assist Kyiv’s war effort.

The new prime minister announced that the UK will share the “Stone Cloak” electronic warfare system—which is fitted to drones to prevent detection—and will assist Ukraine in mass-producing the technology.

Burnham has focused primarily on domestic matters since replacing Keir Starmer, who faced criticism from elements within his own party for spending too much time abroad and focusing heavily on foreign affairs.

However, Burnham sought to signal continuity in Britain’s policy toward Ukraine. In one of his first phone calls after becoming prime minister last week, Burnham invited Zelenskyy to visit the UK “as soon as possible.”

Starmer spent his final full day as prime minister in Kyiv, where he announced £255 million in funding for Ukraine.

Speaking to Sky on Monday, Zelenskyy said his telephone conversation with Burnham had been “very good.”

The Ukrainian leader noted that Starmer had previously assured him that “the new government would maintain the policy of supporting Ukraine during the war.”

The new prime minister told the Ukrainian leader it was “no coincidence” that he was his first international visitor since moving into Downing Street.

“The purpose of this is to send a very clear message. We stand 100% with Ukraine, I personally stand 100% with you, and I will fully deliver on every commitment this country has made to Ukraine,” Burnham said.

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