Airbus frets over global trade tensions amid EU-China spat

Wed, Jun 12, 2024
By Tim Hepher

PARIS (Reuters) - Europe's Airbus on Wednesday highlighted the impact of growing trade tensions after Europe followed the United States in increasing tariffs on Chinese electric vehicles.

Asked to comment on a European Commission decision to impose extra duties of up to 38.1%, a spokesperson for the world's largest jetmaker did not comment directly on the move but said that trade tensions were challenging for global businesses.

"We see increasing tensions on trade around the world and these are testing the resilience of global companies such as Airbus," the spokesperson said in an emailed statement.

"We sell to customers globally. Trade tariffs increase complexity and costs for our supply-chain, Airbus and for our customers," the statement added.

Airbus has recently been in talks with China over a major potential airplane order, Reuters reported in April.

Speaking before the EU announcement, two people familiar with the matter said the two sides had been exploring a potentially historic deal for as many as 600-750 aircraft.

But analysts note that bulk plane orders from China's state buying agency tend to include a mixture of new business and repeat announcements and that the timing of such announcements reflects the ebb and flow of trade relations.

Chinese foreign ministry spokesperson Lin Jian said earlier the EU's action would damage China-EU economic cooperation.

A third industry source, speaking after the EU announcement, said an imminent sale to China appeared increasingly ambitious amid the trade spat and political uncertainty in Europe.

Airbus said it never comments on aircraft negotiations.

China's CASC state buying agency could not immediately be reached out of hours in Beijing.

Bloomberg News reported last week that Airbus was discussing an order for 100 wide-body planes from China.

China has historically roughly split its import needs between Airbus and its U.S. rival Boeing, but Chinese orders for Boeing planes have been scarce in recent years - a period coinciding with turbulence in China-U.S. relations.

(Reporting by Tim Hepher; Editing by Jane Merriman)

China became the world's factory by selling cheap goods. This strategy won't work for EVs.

Huileng Tan

INSIDER
Updated Thu, June 13, 2024 

China, the world's factory, is known for producing affordable goods quickly.


But China EV makers shouldn't leverage on their price advantage in the long run as it's not sustainable, said a Bain consultant.


The EU will impose up to 48.1% tariffs on Chinese EV imports next month to protect European economies.

China has been the world's factory floor for the last 40 years, propelling it into the position of the world's second-largest economy.

This ability to make affordable products quickly is one of China's key advantages in many product categories.

However, this isn't what Chinese electric makers should be leveraging in the long run, a management consultant said on Wednesday.

"The pricing advantage will eventually run out of steam. It is product quality, technology, and brand awareness that holds the key to Chinese carmakers' success," Helen Liu, a partner at consultancy firm Bain told reporters, per the South China Morning Post.

Liu's assessment came as the European Commission announced it will impose tariffs of up to 38.1% on Chinese EV imports from next month — on top of the existing 10%.

The move follows a monthslong probe into Chinese subsidies for Chinese EV makers.

The European Commission said in its announcement that the EV value chain in China benefits from unfair subsidization that causes a "threat of economic injury" to the EU's EV makers.

The latest blow to Chinese EV makers came after President Joe Biden announced a sweeping set of tariffs in May on $18 billion worth of Chinese imports — including a 100% tax on Chinese vehicles.

Chinese EVs have nearly no presence in the US, but account for 8% of the EV market share in auto powerhouse Europe, making the industry a geopolitical hot potato.
The West hits out over China's overcapacity

In recent months, Western countries have been lining up to criticize China for its barrage of cheap exports flooding the world's markets. They say China's dumping and unfair trade practices has hurt their economies.

However, Beijing has consistently pushed back on the West's criticism that it is dumping cheap goods on the world market. Chinese authorities say the West's accusations are protectionist and aimed at containing China's economic growth.

One contentious sector of dispute between the two sides is the hot new energy sector.

China is producing a lot of new energy products as the country navigates a painful economic transition, from one reliant on real estate and low-cost manufacturing to the hot "new three" sectors of electric vehicles, lithium batteries, and solar panels.

However, the West is also eyeing these fast-rising industries.

Philip Nothard, insight and strategy director at automotive services company Cox Automotive told Business Insider's Tom Carter on Wednesday that the EU's tariff hike will not be enough to keep Chinese EV companies away from Europe.

This is because big Chinese EV players like BYD have "highly efficient" manufacturing supply chains and are very quick to adjust their strategies.

"Chinese companies have the potential to redefine electric cars so that they can convince global customers of their products' competitiveness in performance and technology," said Bain's Liu, per SCMP.


Chinese EV makers are hit with new EU tariffs

Tom Carter

INSIDER

Updated Thu, June 13, 2024


The EU has imposed tariffs of up to 38.1% on Chinese EVs.


Joe Biden also launched a crackdown on Chinese EVs last month, hitting them with a 100% tax.


Trade barriers come amid fears a wave of cheap Chinese brands could take over Western markets.

The EU is cracking down on China's EV companies.

The bloc will impose tariffs as high as 38.1% on EVs imported from China to Europe from next month, the European Commission said on Wednesday.

Tesla rivals BYD will face a tariff of 17.4%, Geely 20%, and SAIC Motor 38.1%. The new tariffs are on top of the EU's existing 10% duty on imported EVs.

EV producers in China who did co-operate with the EU's ongoing investigation will face rates of 21%, while those that have not will be slapped with 38.1% import taxes.

The European Commission launched an investigation into Chinese EVs last October, examining whether state subsidies in China were keeping the price of their electric vehicles artificially low.

Its latest findings come after Joe Biden announced a sweeping set of tariffs in May on $18 billion worth of Chinese goods, including a 100% tax on Chinese vehicles.

Chinese-branded EVs have almost no presence in the US, thanks to existing trade barriers.

But in Europe, they have been making steady inroads, with Tesla rival BYD building a factory in Hungary and startups Nio and Xpeng releasing models in several European countries.

Chinese brands rose from under 1% of Europe's EV market in 2019 to 8% in 2023, according to the European Commission, and are expected to hit 15% by 2025.

Despite the crackdown, Philip Nothard, insight and strategy director at automotive services company Cox Automotive told Business Insider that the measures will not be enough to keep Chinese EV companies at bay in Europe.

"Even with tariffs, it's not going to slow the growth down," Nothard said.

"If you look at companies like BYD, they have a highly efficient manufacturing supply chain. That makes them extremely agile when it comes to changing products for different marketplaces," he added, suggesting that Chinese companies could adjust their growth plans to keep prices low even with new tariffs.

The trade barriers will also raise fears that China might retaliate with import duties of its own.

Chinese officials have hinted that the Asian superpower could impose taxes as high as 25% on imported cars in response to European and US tariffs.

Europe Needs More Cheap EVs. Tariffs Will Keep Prices High

Elisabeth Behrmann and Craig Trudell

BLOOMBERG 
Thu, June 13, 2024 












(Bloomberg) -- The European Union needs more and cheaper electric vehicles. Brussels’ decision to impose new tariffs on Chinese-made models will keep prices higher for longer, and act as a deterrent to sales.

The bloc waded into a messy battle over global EV trade on Wednesday, announcing that it will hike tariffs to as high as 48% on vehicles imported from China. In messaging that chimed with the case Washington has been making for months, the European Commission vowed to protect a mainstay industry from what it said were illegal subsidies.

Reactions were swift: this is unhelpful for getting down high EV prices, and may hurt rather than help homegrown companies like Volkswagen AG and Renault SA, as China threatens to retaliate.

“Shielding automakers from competition and stopping consumers from accessing affordable EVs today is not going to help them meet their climate goals, nor will it help their domestic industries,” Aleksandra O’Donovan, who leads BloombergNEF’s Electrified Transport research team, said in an interview. “At the moment, it feels as though the decarbonization targets might not be the priority.”

Europe’s ambitious green goals to phase out sales of new gas guzzlers by 2035 were already under strain. After phenomenal growth, EVs remain too expensive for average consumers from Berlin to Bulgaria. Chinese companies led by BYD Co. and MG maker SAIC Motor Corp. have been gearing up cheaper imports, but with the new levies, prices are set to remain out of reach longer for many potential buyers.

In its annual Electric Vehicle Outlook published Wednesday, BloombergNEF cut its global EV sales projections by 6.7 million vehicles through 2026, seeing a much slower ramp-up than forecast only a year ago. A few Nordic countries and the state of California are the lone places on pace to eliminate passenger vehicle fleet emissions by 2050, BNEF said.

The EU’s tariffs will likely cut imports from China by a quarter, or roughly $4 billion worth of cars, according to Germany’s Kiel Institute for the World Economy.

SAIC stands to be hit the hardest, after the EU deemed the state-run company uncooperative with its probe. The manufacturer started shipping electric MGs into Europe about five years ago and has gained more traction than Chinese brands with cars like the relatively affordable MG4 sedan at €34,990 ($37,960).

BYD’s push to sell its low-cost Seagull city car in Europe as soon as late 2025 for less than €20,000 may now be at risk as well.

The impact isn’t limited to Chinese carmakers. While almost one-fifth of fully electric vehicles sold in the EU last year were made in China, shipments are dominated by Tesla Inc., which imports Model 3 sedans from Shanghai. The share is set to rise to 25% this year, according to lobby group Transport & Environment, with BMW, Volvo Car and Renault also shipping significant numbers of vehicles.

These carmakers will also have to pay up, with those cooperating with the investigation set for a 21% additional levy that takes effect July 4. Tesla and potentially others could see an adjustment based on individual factors.

“This decision for additional import duties is the wrong way to go,” BMW Chief Executive Officer Oliver Zipse said in a statement. “Protectionism risks starting a spiral: tariffs lead to new tariffs, to isolation rather than cooperation.”

China has threatened retaliation across agriculture, aviation and cars with large engines, saying it’s deeply disappointed and firmly opposed to the measures on EVs.

Beijing will nevertheless likely be careful to maintain access to the European market as a lucrative destination for exports. At home, EV makers like Nio Inc. and Xpeng Inc. are struggling with losses amid significant overcapacity.

“Today’s announcement is more likely to accelerate the extent to which Chinese OEMs and suppliers manufacture their products within Europe –- something that we have already started to see,” said Andrew Bergbaum, global co-head of the automotive practice at consulting firm AlixPartners.

Growth Options

Shares of Chinese manufacturers rose on Thursday after investors concluded that the carmakers have several options to keep growing.

Shifting production to Europe will help carmakers recoup some of the lost sales, new markets in the Middle East, Latin America and Southeast Asia could also absorb more EVs as demand grows from a small base.

BYD shares jumped as much as 8.8% in Hong Kong trading Thursday, leading gains among Chinese EV makers.

The EU has made the levies provisional for now, signaling it could adjust course before a Nov. 4 deadline, should further talks produce a negotiated settlement. The bloc’s slide to the political right following this past weekend’s parliamentary elections could also alter the course of events.

“There is now an opportunity to try and hopefully succeed in stopping this spiral that is threatening,” Germany’s Economy Minister Robert Habeck said. “If we enter into a tariff race with China, then the baby would be thrown out with the bathwater.”

--With assistance from Petra Sorge and Jorge Valero.

Bloomberg Businessweek


The EU slapped massive tariff hikes on China's EV giants. Investors don't seem to care.

Huileng Tan
Thu, June 13, 2024 


The European Commission announced additional tariffs on Chinese electric vehicle imports on Wednesday.


The tariffs follow a probe into Chinese subsidies and include up to 48.1% in duties.


Stocks of China's EV makers surged despite the tariffs, driven by perceived manageability.

The European Commission, or EC, announced it will be slapping hefty tariffs on China's electric vehicle imports — but most investors seem unfazed.

On Wednesday, the EC said it will impose tariffs of up to 38.1% on Chinese EV imports from next month — on top of existing 10% duties.

All Chinese EV imports will be subject to additional tariffs from next month, but the commission singled out three major EV makers: BYD, Geely, and SAIC.

BYD will be subject to an additional 17.4% in duties, while Geely will pay an extra 20%. State-backed SAIC will be subject to additional levies of 38.1%.

On Thursday — less than a day after EC dropped its bombshell announcement — the shares of most Chinese EV automakers were up.

EV giant BYD was surging as much as 8.8% in Hong Kong, while Geely gained as much as 2.4%. The shares of EV startups Nio and Li Auto were also higher.

Shanghai-listed SAIC was an outlier in Thursday's Chinese stock rally, declining by as much as 3%.

The unlikely rally for most Chinese EV companies appears to stem from the perception that the European Union's tariffs were "modest," as Vincent Sun, an equity analyst at Morningstar, wrote in a note on Wednesday.

After all, US President Joe Biden's administration is levying a 100% tax on Chinese EVs.

BYD, one of the world's largest EV makers alongside Tesla, would be less impacted by the new EU tariffs than its peers, Bloomberg Intelligence analyst Joanna Chen said on Thursday.

"BYD will likely be able to absorb most of the burden from EU import duties, since its cars carry peer-beating profitability," said Chen.

Even though the market indicates that the EU's tariff hike on Chinese EVs is manageable, Beijing is still extremely displeased.

"I would like to stress that the anti-subsidy probe is typical protectionism," Chinese foreign ministry spokesperson Lin Jian said of the EU's tariffs on Wednesday.

"To levy additional tariffs on EVs imported from China violates market economy principles and international trade rules, disrupts China-EU economic and trade cooperation and the global automotive industrial and supply chains and will eventually hurt Europe's own interests," said Lin.

In recent months, Western countries have been lining up to criticize China for its barrage of cheap exports flooding the world's markets. They say China's dumping and unfair trade practices have hurt their economies.

However, Beijing has consistently pushed back on the West's criticisms. Chinese authorities say the West's accusations are protectionist and aimed at containing China's economic growth.

EU threatens China EVs with tariffs of up to 38%

Mitchell Labiak - Business reporter
Thu, June 13, 2024 a

[Getty Images]


Chinese electric cars may become pricier in the European Union (EU) after politicians called them a threat to its own industry.

It has "provisionally concluded" that Chinese electric vehicle (EV) manufacturers will face tariffs from 4 July "should discussions with Chinese authorities not lead to an effective solution".

The EU's announcement comes as it continues an investigation into what it claims is a flood of cheap, government-subsidised Chinese cars into the trade bloc.

China alleged the tariffs violated international trade rules and described the investigation as "protectionism".

EV makers who co-operated with the investigation, which the EU's governing European Commission launched in October, will face an average 21% duty, while those who did not will face one of 38.1%.

Meanwhile, specific charges will apply to three companies:

BYD: 17.4%


Geely: 20%


SAIC: 38.1%

Non-Chinese car companies who produce some EVs in China, including EU-based ones like BMW, will also be affected.

The commission said Tesla may receive an "individually calculated duty rate" because of a specific request it had made.

These charges would come on top of the current rate of 10% tariff levied on all electric cars produced in China.

The EU's intervention comes after the US made the much bolder move of raising its tariff on Chinese electric cars from 25% to 100% last month.

The decision has drawn criticism not just from China, but also from politicians within the EU and several industry figures.

China's foreign ministry spokesperson Lin Jian said the "anti-subsidy investigation is a typical case of protectionism".

He added that the tariffs might also risk damaging "China-EU economic and trade co-operation and the stability of the global automobile production and supply chain".

The tariffs will apply definitively from November unless there is a qualified majority of EU states - 15 countries representing at least 65% of the bloc's population - voting against the move.

Germany's Transport Minister, Volker Wissing, said it risked a "trade war" with Beijing.

"The European Commission's punitive tariffs hit German companies and their top products," he wrote on X, formerly known as Twitter.

The ACEA, the European Automobile Manufacturers' Association, said that "free and fair trade" was essential in making sure that the European car industry remains competitive.

They added, however, that it was just one piece of the puzzle when thinking about how to boost the adoption of electric cars.

Mercedes-Benz and Stellantis — which owns Citroën, Peugeot, Vauxhall, Fiat, and several other brands — also spoke out, emphasising the importance of free trade.

Stellantis said it does not support measures that "contribute to the world fragmentation [of trade]".

Some EU car companies have called for a bloc-wide industrial policy to deal with global competition.

Last year, more than eight million electric vehicles were sold in China – about 60% of the global total, according to the International Energy Agency’s annual Global EV Outlook.

 Hungary condemns EU tariffs on Chinese EV imports

Reuters
Wed, June 12, 2024 

FILE PHOTO: Cars to be exported sit at a terminal in the port of Yantai

BUDAPEST (Reuters) - Hungary disagrees with Europe's "brutal" punishment of Chinese electric car manufacturers, its economy ministry said on Wednesday, hours after the European Commission said it would impose tariffs on Chinese electric vehicle (EV) imports.

Hungary under right-leaning Prime Minister Viktor Orban has become an important trade and investment partner for China, in contrast with some other European Union nations seeking to become less dependent on the world's second-largest economy.

"Instead of punitive tariffs, the EU should support the European EV industry," the ministry said in a statement.

The European Commission said earlier on Wednesday it would impose extra duties of up to 38.1% on imported Chinese EVs from July.

"We disagree with the brutal European punishment of Chinese electric car manufacturers with punitive tariffs," the ministry added. "Protectionism is not the solution."

Hungary has invested heavily by spending more than $1 billion in recent years to support new battery plants on its soil, among others Chinese battery giant CATL's.

Hungary also secured the first European factory investment by a Chinese automaker, announced last year by EV giant BYD, with the country offering cash for creating jobs, tax breaks, and relaxed regulation in targeted zones to attract foreign investment.

(Reporting by Boldizsar Gyori; Editing by Mark Potter)

Germany and Sweden dragged into trade war against their will as EU slaps 38% tariffs on Chinese EVs

Fortune· Costfoto/NurPhoto via Getty Images

Ryan Hogg
Wed, Jun 12, 2024, 4:37 AM MDT4 min read

Some of Europe’s biggest hitting economies are digesting a new phase in its trade war with China, as the EU finally hits the country’s carmakers with prohibitive tariffs.

Chinese automakers have been slapped with import tariffs reaching up to 38.1%, the European Commission confirmed on Wednesday. The tariffs follow a probe launched by the European Commission last year into anti-competitive subsidies for China’s biggest carmakers BYD, Geely, and SAIC.

BYD has received the most lenient tariff of 17.4% on its imports. Geely was hit with a 20% duty on its cars, while SAIC faced the most aggressive tariff of 38.1%. The EU said all BEV producers in China that didn’t cooperate with the EU’s investigation would also receive 38.1% tariffs. They will come into place next month before a final decision is made in November

It concludes a lengthy lobbying battle that split Europe between countries in favor of punishing China, and those nervous about the backlash Chinese retaliation might have on its exporting industries.

The Financial Times and Politico reported that German Chancellor Olaf Scholz has been intensely lobbying to minimize the scale of tariffs introduced by the EU.

Scholz, alongside lawmkers in Sweden and Hungary, is concerned about retaliatory tariffs that could be imposed by China. China placed tariffs on French brandy in January in the first sign of a stewing trade war between the regions.

Other countries, namely France and Spain, have been defiant in arguing the EU should place aggressive tariffs on Chinese EVs.

The tariffs leave the EU at a halfway house. The bloc is too reliant on China’s economy to follow the U.S. in placing 100% tariffs on EV imports, but it also can’t afford to take a laissez-faire approach to a price war its crucial native carmakers are destined to lose.

In addition to the effect subsidies have on artificially lowering prices, Chinese EV makers’ control of their supply chain also makes them several orders of magnitude cheaper than European cars.

There are 13.8 million people employed directly and indirectly in Europe’s automotive sector whose long term futures have been the source of debate.

Chinese automakers have sped up plans to build factories in Europe to skirt import tariffs. Optimists say that while that would be a pain for carmakers, it would at least provide employment opportunities for workers on the continent.

In a note to Fortune, the Economist Intelligence Unit’s industry director, Ana Nicholls, said there would undoubtedly be negotiations between European and Chinese authorities before a final decision is reached later this year.

“This offers a chance to ward off a trade war that could result in China restricting access to some key EV inputs, such as batteries or critical minerals,” Nicholls said.

A representative for BYD declined to comment.
Will it work?

The question facing European lawmakers now is whether the tariff will be effective in blunting China’s onslaught into Europe.

Research from campaign group Rhodium found that China’s profitbaility in Europe meant only import tariffs exceeding 50% would be enough to put a dent in China’s shipments to the bloc.

However, the think tank Kiel Institute for the World Economy cut a more optimistic tone. In research published in May, predicted a 25% tariff on Chinese EVs would reduce imports by a quarter.

While the net impact would be fewer EVs in Europe, carmakers on the continent would likely be the biggest beneficiaries according to Kiel, followed by those in the U.K.

“For consumers, this is likely to result in higher prices for electric vehicles because production within the EU is significantly more expensive than in China due to higher energy and material prices and, above all, significantly higher labor costs,” says Julian Hinz, a trade researcher at the Kiel Institute.

Felipe Munoz, global automotive expert at JATO Dynamics, says there are now two problems facing Western automakers. The first involves a shift in China from Western cars to Chinese ones among consumers. Retaliatory tariffs from China on European EVs will likely speed up that transition.

The second is that the West is still highly dependent on Chinese components for its batteries, another risk in a new trade war reality.

“The West is not in the best position right now,” Munoz says.

This story was originally featured on Fortune.com

Hungary agrees not to veto NATO support to Ukraine as long as it's not forced to help out

PUTIN'S PUPPET

LORNE COOK

AP
Updated Wed, June 12, 2024 

BRUSSELS (AP) — Hungary agreed on Wednesday not to veto NATO support for Ukraine but Prime Minister Viktor Orbán insisted that his government would provide neither funds nor military personnel for any joint assistance effort.

At a summit in Washington next month, U.S. President Joe Biden and his NATO counterparts are expected to agree on a new system to provide more predictable, long-term security help and military training to Ukraine’s beleaguered armed forces.

Ukraine’s Western allies are trying to bolster military support for Kyiv as Russian troops launch attacks along the more than 1,000-kilometer (620-mile) front line, taking advantage of a lengthy delay in U.S. military aid.

“Hungary made it clear at today’s meeting that it does not want to block decisions in NATO that … are decisions shared and advocated by the other member states,” Orbán told reporters after talks in Budapest with NATO Secretary-General Jens Stoltenberg.

“I asked the Secretary-General to make it clear that all military action outside NATO territory can only be voluntary in nature, according to NATO rules and our traditions,” said Orbán, who has tried to style himself as a peacemaker. “Hungary has received the guarantees we need.”

As an organization, the world’s biggest security alliance does not send weapons or ammunition to Ukraine and has no plans to put troops on the ground. But many of its members give help on a bilateral basis, and jointly provide more than 90% of the country’s military support.

The other 31 allies see Russia’s war on Ukraine as an existential security threat to Europe, but most of them, including Biden, have been extremely cautious to ensure that NATO is not drawn into a wider conflict with Russia.

NATO operates on the basis that an attack on any single ally will be met with a response from them all.

Stoltenberg confirmed that Hungary would not take part in NATO's plans and said: “I accept this position.” NATO's top civilian official said he and Orbán had “agreed modalities for Hungary’s non-participation in NATO’s support for Ukraine,” but did not elaborate on how that would work.

“At the same time, the prime minister has assured me that Hungary will not oppose these efforts, enabling other allies to move forward, and he has confirmed that Hungary will continue to meet its NATO commitments in full,” Stoltenberg added.

NATO takes all its decisions by consensus, effectively giving any one of the 32 allies a veto.

U.S. envoy to NATO, Ambassador Julianne Smith, played down the impact of Hungary’s decision.

“I think the message that was delivered is not dissimilar from what we’ve heard from other allies throughout the alliance’s history. Not every member of the alliance always participates in every single NATO activity or mission,” Smith told reporters.

But Hungary’s stridently nationalist government has increasingly become a thorn in the side of NATO — and the European Union — by undermining their efforts to help Ukraine. Orbán is also holding up moves to nominate outgoing Dutch Prime Minister Mark Rutte as the alliance's next secretary-general.

Orbán, one of the friendliest European leaders toward Russian President Vladimir Putin, has labelled his EU and NATO partners assisting Ukraine as being “pro-war.” He has also advocated for former U.S. President Donald Trump's victory in the November election.

Since Russia’s full-fledged invasion in February 2022, Ukraine’s Western backers have routinely met as part of the Ukraine Defense Contact Group, run by the Pentagon, to drum up weapons and ammunition for Kyiv.

Stoltenberg has spearheaded an effort to have NATO coordinate that process, partly by using the alliance's command structure and drawing on funds from its common budget.

Plans are afoot for NATO’s leaders to commit on July 9-11 to maintain the level of military support they have provided Ukraine since the invasion began. Stoltenberg said later Wednesday that this amounts to around 40 billion euros ($43 billion) worth of equipment each year.

“The purpose of this is to make it possible to end the war,” he told reporters at NATO headquarters in Brussels. “Now, President Putin believes that he can wait us out and therefore the war continues.”

Stoltenberg said that he hoped NATO defense ministers, meeting in Brussels over two days from Thursday, would be able to seal agreement on details of the plan.

At their summit in Lithuania last year, Biden and his counterparts promised that they would “be in a position to extend an invitation to Ukraine to join the alliance when allies agree and conditions are met.” The consensus among members is that it should not happen while war rages on.

___

Associated Press journalist Bela Szandelszky in Budapest, Hungary contributed to this report.

Hungary won’t have to send military aid to Ukraine in NATO carve-out deal

Joe Barnes

THE TELEGRAPH
Wed, June 12, 2024

Jens Stoltenberg (L), Nato's secretary-general, and Viktor Orban, the Hungarian PM. Hungary will not veto any Nato plans to support Ukraine - ATTILA KISBENEDEK/AFP

Hungary will not have to contribute money or military personnel to support Ukraine under a Nato carve-out deal negotiated with the bloc.

The concession was granted to Budapest to ensure smooth passage for the Western alliance’s planned “Mission for Ukraine”, which will raise and co-ordinate an estimated €40 billion in annual military support for Kyiv.

In exchange Hungary will not veto any Nato plans to support Ukraine, despite Budapest’s harsh criticism of the war and soft stance on Vladimir Putin.

The Mission for Ukraine scheme will hand Nato control of the US-led Ramstein group of more than 50 countries and allow the military alliance to manage deliveries of lethal aid to Ukraine for the first time since Russia’s full-scale invasion in February 2022.

Hungary has raised objections to the mission, arguing it could drag Nato into a direct conflict with Russia.

‘Support must be voluntary’

Viktor Orban, the Hungarian prime minister, has refused to supply arms to Ukraine, and recently suggested he would “redefine” Budapest’s position in the alliance to prevent any participation in operations “outside Nato territory”.

The nationalist leader has been repeatedly accused of cosying up to Putin throughout the war by delaying sanctions, refusing to provide military support to Ukraine and objecting to its accession to the EU.

But Mr Orban assured Jens Stoltenberg, Nato’s secretary-general, that he wouldn’t stand in the way of the alliance’s plans to support Ukraine, as long as they were “voluntary”.

“Hungary has made it clear she does not intend to block decisions in Nato that might be different from our, we believe rational, analysis,” the Hungarian said in a joint news conference in Budapest.

“I have asked the secretary-general to make this clear that any out-of-area military operation can be voluntary. Therefore, Hungary has been granted the guarantees that she requires.”

Demands approved

Deals inside Nato require the backing of all 32 members before they can be fully signed off, often leading to months of tricky negotiations.

But with Mr Stoltenberg stepping down from his role in October, he is determined to reach an agreement before the Nato leaders’ summit.

To prevent Hungary from blocking, the top official approved demands to make the scheme voluntary.

“At the summit I expect allies to agree on a leading role for Nato in coordinating and providing security assistance and training for Ukraine,” Mr Stoltenberg told the news conference.

“I also expect that allies will agree to a long-term financial pledge… prime minister Orban has made it clear that Hungary will participate in these Nato efforts, and I accept his decision.

“I’m glad the prime minister and I have agreed the modalities for Hungary’s non-participation for support to Ukraine. No Hungarian personnel will take part in these activities and no Hungarian funds will be used to support them.”

He recently urged member states to commit to providing Ukraine at least €40 billion a year in military aid to ensure long-term support for the war-torn country against Russian aggression.

The pledge is part of a strategy known internally as the “three Ms” – money, mission and membership.

The money will help sustain Ukraine’s war efforts for at least two more years, with future negotiations expected to tweak the figure depending on the state of the conflict.

‘Trump proofing’

Contributions from Nato’s 31 participating members will likely be determined by a percentage of Gross Domestic Products – in line with alliance defence spending goals – to ensure the burden of supporting Kyiv is shared equally, sources said.

This particular element of the package has been dubbed as “Trump proofing” ahead of November’s US presidential elections because the expected Republican candidate has previously railed against European nations not paying their way.

The envisaged model would still see the US foot the bill for over half of future aid to Ukraine because of the size of the country’s economy compared to its European allies.

The mission will see Nato’s Supreme allied commander, a US general, take over Ramstein – also known as the Ukraine Defence Contact Group – as well as a separate training scheme run by the UK.

It will leave Nato commanders making decisions on arming Ukraine and drilling its troops while the conflict is still raging as well as developing a post-war force capable of deterring Russian aggression and preparing Kyiv to join the alliance.

However, Nato will not take over any role in assisting Ukraine’s armed forces with targeting advice or battle plans from the US because this could trigger escalation from Moscow.

“There are certain elements that will stay where they are,” a source said.

The Ukrainian bid to join Nato will not be progressed from a previous promise that the country would one day become a member at the Washington summit, as The Telegraph previously reported.

But Kyiv will be offered language in a summit communique that suggests promises of future finance and weapons deliveries will act as a “bridge” or stop-gap until the alliance is ready to extend a full invitation.

DEUTCHE DRAFT

Germany's government proposes a new law to fast-track young men to join its depleted armed forces

WHAT ABOUT WOMEN?!

KIRSTEN GRIESHABER
Wed, June 12, 2024 a


- German soldiers take part in the Lithuanian-German division-level international military exercise 'Grand Quadriga 2024' at a training range in Pabrade, north of the capital Vilnius, Lithuania on Wednesday, May 29, 2024. Germany’s defense minister is lobbying for legislation that would help refill the depleted ranks of the armed forces to bolster the country's defense capabilities.

 (AP Photo/Mindaugas Kulbis, File)



BERLIN (AP) — Germany's defense minister announced on Wednesday plans for new legislation that would help refill the depleted ranks of the armed forces to bolster the country's defense capabilities.

Boris Pistorius said the proposed bill would allow the government to send letters to all young men who turn 18 — about 400,000 every year — asking about their willingness and ability to serve in the military.

Under the law, those who receive the letter would have to fill out the questions. The army would then invite those interested in serving for a medical checkup and choose the most qualified to serve in the military for a period of 6-23 months.


Speaking to reporters in Berlin, Pistorius explained that the threat levels have changed from what they were a few years ago.

“Russia has now been waging a war against Ukraine for two and a half years — it is not only calling the rules-based international order into question, it is destroying it," he said. “This is a new threat situation.”

The campaign is part of efforts to boost active forces numbers to 203,000 from the current just under 181,000 figure. Germany had over 500,000 troops during the Cold War.

If the bill passes, the new military service would still be voluntary and a far cry from compulsory conscription for young men, which was suspended in Germany in 2011, after 55 years. Since then, there has been no mandatory military and civilian service in the country.

Germany’s conscription act still stipulates that compulsory military service for men can be revived if the parliament declares a state of emergency for defense.

Women who turn 18 would also receive the letters, Pistorius said, but would not be obliged to answer, since Germany's constitution does not foresee mandatory service for them.

After Russia launched its full-scale invasion of Ukraine in 2022, leading to one of most brutal wars in Europe since World War II, calls have steadily grown in Germany to reintroduce some kind of military service to be better prepared for possible future wars.

Only days after Russia attacked Ukraine, German Chancellor Olaf Scholz pledged to increase Germany’s defense spending to a NATO target of 2% of gross domestic product and set up the 100 billion-euro ($107 billion) special fund. He said that the invasion marked a “turning point.”

Pistorius himself has repeatedly said that Germany must become “fit for war” in order to be able to act as a credible deterrent together with its NATO allies.

If the proposal becomes law, Pistorius expects that of the about 400,000 young men who fill out the questionnaire each year, around a quarter would express an interest in serving in the military. Of those, the army is likely to choose 5,000 most qualified men but hopes to increase that number in the long-term.

Germany's lack of military personnel and equipment is a known problem. In March, the parliament's commissioner for the armed forces said in her annual report that Germany’s military still has “too little of everything.”

“The Bundeswehr is aging and shrinking,” Eva Hoegl said and acknowledged at the time that “the issue of personnel has very clearly arrived on the political agenda.”

In the face of perceived growing threats by Russia, other European countries are also considering new forms of military service.

In Britain, the governing Conservative Party said in May that all 18-year-olds in the country would have to perform a year of mandatory military or civilian national service if it wins the July 4 national election.

German defence minister proposes 'selective' military service system

DPA
Wed, June 12, 2024

German Minister of Defense Boris Pistorius and Ukrainian President Volodymyr Zelensky soldiers in front of "Patriot" anti-aircraft missile systems during their visit to a military training area. Jens Büttner/dpa

German Defence Minister Boris Pistorius on Wednesday proposed that the country require young men to register for potential military service, in a move that comes 13 years after Germany effectively abolished national conscription.

The step would not reinstate conscription. Pistorius instead stressed that he anticipates using the registration questionnaires to see who might have interest in voluntarily doing service with Germany's military, known as the Bundeswehr.

Pistorius described the idea as "selective military service," designed to allow the military to call up only "the fittest, most suitable and most motivated" for training.

Young men would be required to fill out the questionnaires, but young women would also be given copies and be asked to voluntarily submit the form as well, Pistorius said at a news conference on Wednesday afternoon.

Pistorius said that's because the military service requirement, which remains in Germany's constitution, applies only to men.

Around 40,000 expected to be mustered

Pistorius said that military planners estimate that 400,000 people will have to complete the planned questionnaire each year, and about a quarter of the men could express an interest in entering the military.

Some 40,000 candidates could then take part in the physical check-up. That call-up would be mandatory for those who receive it, but Pistorius stressed that he anticipates only summoning those who indicate a voluntary interest.

"We don't want a boring, meaningless military service," Pistorius said. "But rather a military service that is meaningful and makes sense."

There is currently capacity to train between 5,000 to 7,000 recruits, but this is set to grow. The military service is expected to last six or 12 months.

The proposal represents a first step towards potentially reinstating some form of mandatory military service, a controversial issue in Germany, and would require a change to the military service law.

Pistorius stressed on Wednesday that no one would be forced to serve in the military against their will or beliefs: "Of course people will have the right to refuse military service. That remains unchanged."

Military struggling to recruit

Germany effectively abolished conscription in 2011 after 55 years, with a system that also generally allowed men to opt out of the military and do civilian service instead.

Although many of the institutions and facilities for the conscription system have since been dismantled, the country's law continues to allow for mandatory service in the event of war or other tensions.

The Bundeswehr has struggled to recruit enough volunteers to fill the ranks, and last year shrank to 181,500 soldiers despite new efforts to attract volunteers.

Russia's full-scale invasion of Ukraine has put the military's shortfalls into renewed focus, and Chancellor Olaf Scholz has pledged to rebuild the armed forces.

Adding more recruits is intended to help make the army "war-ready," as Pistorius describes it.

Pistorius commissioned studies of various models of compulsory service ahead of Wednesday's announcement.

Mixed reaction from politicians

The proposal met with a mixed response from leading German politicians in parliament. The idea of bringing back compulsory military service is very controversial in the country.

Some lawmakers welcomed the proposal as a useful idea to address military manpower shortages, even as many expressed hesitation over the mandatory elements.

Florian Hahn of the centre-right CDU/CSU opposition bloc said he expected Pistorius to unveil more far-reaching plans that may have included actually bringing back compulsory service, and suspected that Scholz and the coalition had "let him run out of steam" during a nine-month review of the issue.

Dirk Vöpel, who like Pistorius is a member of Scholz's Social Democrats (SPD), expressed support for Pistorius' proposal.

"In case of defence, we need a stronger reserve," he said, adding that it's now crucial to "revive structures that have been completely destroyed with the suspension of compulsory military service."

Vöpel, however, did not comment specifically on the compulsory questionnaires and a physical examinations proposed by Pistorius, which are controversial within the SPD.

"Regardless of what the legal requirements will look like in concrete terms, the aim must be to recruit significantly more young men and women to serve in the Bundeswehr than before," he said.

Sara Nanni of the Greens said her party was prepared to engage constructively with the proposal, even if there were still many unanswered questions. She said Germany needs an impetus that tells young people "your country needs you," but said the mandatory elements raise legal and social questions.

Alexander Müller of the free-market liberal Free Democrats (FDP) called it an interesting concept but remained uncommitted. He said a light version of compulsory service would be difficult for his party to back.

Rüdiger Lucassen of the far-right Alternative for Germany (AfD), meanwhile, dismissed the proposal as insufficient while also accusing Pistorius of escalating tensions with Russia.

"It puts our entire population in turmoil, because of course it clearly creates a mood of war, which he [Pistorius] also feeds by saying that the Russian Federation and [Russian President Vladimir] Putin would be ready to attack in 2029," said Lucassen.

German Minister of Defense Boris Pistorius presents plans for a new form of military service at a press conference. Kay Nietfeld/dpa


Germany Unveils Plan to Plug Yawning Shortage in Troop Numbers

Arne Delfs
Wed, June 12, 2024 

(Bloomberg) -- Germany presented proposals to help address a shortage of armed-forces personnel that relies on recruits volunteering for service, part of a drive to expand the military triggered by Russia’s war on Ukraine.

Defense Minister Boris Pistorius had suggested attempting to plug the shortfall of regular troops of around 20,000 with a reintroduction of some form of conscription. Chancellor Olaf Scholz was among senior figures in the government to push back, saying its abolition in 2011 shouldn’t be reversed, even with an increased threat of Kremlin aggression.

“The threat situation is a completely different one compared with a few years ago,” Pistorius said Wednesday at a news conference in Berlin.

Russian President Vladimir Putin has unleashed a massive increase in defense spending and is effectively operating a war economy, while verbal attacks on NATO members are increasing, Pistorius added.

“We must assume that Russia will be able from 2029 onwards to attack a NATO member or a neighbor,” he said.

The proposed model would oblige young men to fill out a questionnaire about their health and basic motivation — completing the form would be voluntary for young women. A number of respondents would then be asked to volunteer for a basic training of six months with an option to extend that by 17 months.

That would enable the armed forces, or Bundeswehr, to recruit an additional 5,000 troops per year, on top of the 10,000 volunteers currently, according to a paper distributed by the defense ministry.

The Bundeswehr has long suffered from a shortfall in personnel and last year shrank to about 180,000 regular troops despite sustained efforts to attract volunteers.

To fulfill its obligations as a member of NATO, Germany will need a total of about 460,000 personnel, the ministry estimates. Of those, around 200,000 would be active troops and the rest reserves.

Germany abolished compulsory military or civil service for men in 2011 under former Chancellor Angela Merkel, though German law still provides for possible conscription in the event of war or other conflict.

Immediately after Russia’s full-scale invasion of Ukraine in February 2022, Scholz proclaimed a “turning point” in German military and security policy.

A key element was the establishment of a debt-financed €100 billion ($108 billion) fund for investment in the Bundeswehr to help reverse years of neglect.

Ocasio-Cortez, Raskin to introduce legislation to ‘rein in a fundamentally unaccountable and rogue’ Supreme Court

Miranda Nazzaro

THE HILL
Tue, June 11, 2024 


Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Jamie Raskin (D-Md.) said Tuesday they will introduce legislation in response to the increased ethics concerns related to the Supreme Court.

Raskin and Ocasio-Cortez, who serve as the ranking and vice-ranking members, respectively, on the House Oversight and Accountability Committee, were part of a committee roundtable Tuesday regarding these concerns. They explored various “avenues” for holding Supreme Court justices accountable, they told MSNBC anchor Chris Hayes.

“And so, it is not a question … of if Congress has jurisdiction and power over the Supreme Court. It is, what power are we going to exercise in order to rein in a fundamentally unaccountable and rogue court?” Ocasio-Cortez said Tuesday night.

“Congressman Raskin and myself will be introducing forthcoming legislation to even have the Supreme Court be subject to the same $50 gift rule that he and I are subject to, as everyone else who are members of Congress,” she added later.

The Supreme Court has come under scrutiny over the past year following a series of reports detailing various undisclosed luxury trips, gifts, and questionable extrajudicial activities involving multiple justices. The reports spiked interest in congressional oversight of the justices’ behavior and the gifts they accept.

Senate Judiciary Committee Democrats have repeatedly pushed for legislation to increase oversight of the Supreme Court. This pressure increased last month after reports surfaced about a pair of flags flown over Supreme Court Justice Samuel Alito’s homes, including an upside-down American flag over his Alexandria, Va., residence in the days surrounding the Jan. 6, 2021, Capitol riot and President Biden’s inauguration.

“It’s the highest court in the land with the lowest ethical standards. These are the only governmental officials in the land who are not governed by a binding ethics code. There’s no process by which we can hold any of them accountable,” Raskin said.

“And so, we need to clean that up. And that’s why we said we’re going to start with something simple that the whole country will be able to understand immediately and intuitively,” Raskin said. “We want a $50 gift ban for U.S. Supreme Court justices. They make $300,000 a year. Pay for your own lunch and pay for your own vacation.”

Earlier on Tuesday, Senate Judiciary Committee Chair Dick Durbin (D-Ill.) told reporters Democrats are planning to try moving legislation on Supreme Court ethics on the floor this week via unanimous consent. A Republican senator is widely expected to deny consent.

The Supreme Court adopted a new code of ethics in November, but Democrats said its impact is hampered by the ability for each justice to enforce it upon themselves.

US Senators examine youth vaping epidemic, call for more enforcement over illegal products

Kirstin Garriss
Wed, June 12, 2024 

There are new efforts underway to get e-cigarettes out of the hands of middle and high school students. More than two million teens are currently using e-cigarettes, according to the 2023 National Youth Tobacco Survey.

Josephine Shapiro from Seattle, Washington said she’s one of them.

“My first vape that I ever tried was a blueberry ice vape and I was 13 at the time,” she said.

Shapiro is now a senior at Lincoln High School. She said initially she didn’t think vaping was bad because some flavors tasted like candy.

“It’s like that motion, the flavor, the taste, that’s what you’re craving,” said Shapiro. “And so the constant rush or the flavor is what you want, you know, so it’s like, you’re hitting it maybe I don’t know 100 times a day.”

Now after years of vaping, she’s trying to quit.

“It’s really hard because it’s everywhere and like honestly, I haven’t been clean for more than two months since I decided to quit,” said Shapiro.

Wednesday, she shared her struggles with nicotine products directly with Congress during a Senate hearing about youth vaping.

“I was already addicted, and little did I know it was about to get worse,” said Shapiro during the hearing.

She wants lawmakers to ban all flavored tobacco products.

“My friends have started with vapes, the flavored tobacco product, and transformed into cigarettes and transformed into other drugs because it’s a gateway,” she said.

Tony Abboud with the Vaping Technology Association told Congress he agrees that teens shouldn’t be using these products.

“We don’t want any kids doing this. That’s why we raised the age to 21 and we advocated for that and that’s why we’ve made this product illegal,” said Abboud. “That’s why we’ve worked hard doing the other things making more commonsense regulations to ensure these products don’t get into their hands.”

Abboud believes Congress should consider tougher restrictions for marketing.

“We can get to those concerns, we can get to access restrictions and do things that doesn’t’ require removing all the products that adults are using,” he said.

This week, the U.S. Food and Drug Administration (FDA) and the Justice Department announced a new task force to target illegal sales and distribution of e-cigarettes. The task force will include officials from the US Marshals Service, the US Postal Inspection Service, the Federal Trade Commission, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

But both Democrats and Republicans slammed these agencies for what they call years of inaction on the issue.

“The FDA and the Justice Department have the tools to prevent this epidemic. They have failed to use them,” said Sen. Dick Durbin, D – Illinois.

“The FDA’s refusal to follow congressional intent and implement the Tobacco Control Act has led to disastrous consequences for public health and American jobs,” said Sen. Thom Tillis, R – North Carolina.

Now FDA officials say it’s stepping up enforcement over illegal products.

“We participated in a landmark joint operation with Customs and Border Protection resulting in the seizure of $18 million worth of unauthorized e-cigs,” said Brian King, director of the FDA’s Center for Tobacco Products.

King said the agency is also asking Congress for more support to help address a backlog in tobacco product application approvals.

“We seek authorization for FDA to collect user fees from e-cigarette manufacturers, all of whom are paying no fees, to increase collections by $114 million to account for increased workload,” said King.

With graduation on the horizon, Shapiro said she’ll continue her quitting journey.

“I want to be a doctor; I want to be successful. I want to live a full life without nicotine products,” said Shapiro.

Recently, the FDA said it has also issued more than 1,100 warnings to several distributors, manufacturers, and retailers for illegally selling unauthorized tobacco products like e-cigarettes.

‘What the hell are you waiting for?’ Senators grill FDA, DOJ about lack of action on youth vaping epidemic

Jen Christensen
Wed, June 12, 2024



Republicans and Democrats on the US Senate Judiciary Committee showed rare agreement Wednesday as they took to task the US Food and Drug Administration and the US Department of Justice for what they described as inaction on the country’s youth vaping epidemic.

Nearly three years ago, a federal court ruled that the FDA was violating the Tobacco Control Act by allowing e-cigarette products that did not have FDA pre-authorization to stay on the market.

An FDA official testified Wednesday that the topic was a “top priority,” but the agency has missed the September 2021 deadline that the court set to for the agency to complete its review of e-cigarette makers’ applications to sell their products.

Since that time, one study found, an estimated 2.1 million children have used e-cigarettes regularly, and the majority use flavored products.

“After the court-ordered deadline passed on September 9, 2021, the FDA could have ordered every single unauthorized e-cigarette off the market, and that’s what it should have done,” Sen. Dick Durbin, D-Illinois, told Dr. Brian King, director of the FDA’s Center for Tobacco Products, at Wednesday’s hearing. “Instead, thousands of unauthorized e-cigarettes flooded the market.”

In fact, Durbin said, his staffers found vapes in flavors like Red Bull, strawberry, dragonfruit and watermelon bubble gum at a shop just a mile from FDA headquarters.

“Not a single one of these products has been authorized by the FDA. None of them. These illegal products, clearly designed for kids by their flavors, are being sold” even in the shadow of FDA headquarters, he said.

Placing one of the products in front of him, Durbin asked how the FDA could let such sales happen.

“The volume of those applications and the volume of the market requires us to prioritize our enforcement efforts,” King testified.

Sen. Marsha Blackburn, R-Tennessee, also told the representatives from the FDA and the Department of Justice that she was displeased.

“I think it’s disappointing to hear you kind of talk in circles about what you are planning to do, but you haven’t established a plan, and you’re not certain what your way forward is going to be,” she said.

King said the FDA has received 27 million applications for e-cigarette products. But unlike with companies that make drugs and medical devices, which pay user fees that fund the agency’s work, the FDA is not allowed to collect fees from e-cigarette makers. King asked the Senate committee for the authority to fund this increased workload.

“The rapidly evolving tobacco product landscape presents an unprecedented time and resource challenge that no other center at FDA has ever faced,” King said.

Since June, the FDA has authorized only 23 e-cigarette products – none of them flavored – and has denied many more. Hundreds of thousands of additional applications are still pending.

From 2020 to 2023, there was a 1,500% increase in flavored tobacco products sold in the US, said Sen. John Cornyn, R-Texas. He also brought in flavored vape products that his staffers bought, including watermelon bubble gum, apple melon berry and one called Tyson Heavyweight.

“Dr. King, those are clearly designed for consumption by children, correct?” Cornyn asked.

“I can’t speak to the intent of the manufacturer, but I can say that flavors do appeal to kids. Ninety percent of youth who use e-cigarettes use flavored varieties,” King testified.

About 10% of high school-age adolescents and nearly 5% of middle school students use e-cigarettes, according to the US Centers for Disease Control and Prevention. Over the past five years, there has been a 60% decline in the number of middle and high school students using e-cigarettes, King said. But when they do vape, teens and young adults are much more likely to use flavored e-cigarettes than adults.

“More work is definitely needed,” he testified.

Enforcement of the law is the other challenge, the FDA and DOJ said at the hearing. The FDA has conducted thousands of inspections of e-cigarette manufacturers and distributors resulting in nearly 900 warning letters, King said. More than 500 warning letters have gone to retail stores, King said, but if the letters are ignored that’s as far as the FDA can go, so it must rely on the DOJ and other agencies. It was only this week that the FDA and several law enforcement agencies announced that they were creating a task force that will use the criminal and civil tools available to fight the illegal sale and distribution of e-cigarettes.

“What in the hell have you been waiting for?” Durbin asked Arun Rao, deputy assistant attorney general for the Civil Division’s Consumer Protection Branch in the Department of Justice.

“Senator, we have been acting on a number of fronts,” Rao replied. He said the Justice Department has been working with the US Marshals Service and the FDA on seizures of illegal products, but he admitted that “many manufactures have exploited the premarket authorization process.”

Rao testified that many manufacturers whose products have been denied FDA authorization make minimal alterations and resubmit for approval. Some overseas e-cigarette makers will also misrepresent shipments in an effort to slip past regulators, and some stores make their own products.

“Taken together, these factors have made illegal e-cigarettes all too accessible,” Rao said.

Many products come from China, but that country has banned flavored e-cigarettes, and the products are not sold in Chinese stores – a point that wasn’t lost on the committee.

“You can’t sell them in China, but you can sell them in the United States and essentially victimize and addict our children to these nicotine delivery devices,” Cornyn said.

Nicotine is highly addictive and hurts kids, testified Dr. Susan Walley, immediate past chair of the American Academy of Pediatrics’ Section on Nicotine and Tobacco Prevention and Treatment. Nicotine can permanently hurt a teen’s developing brain, studies show, impairing working memory and attention.

Flavored products are too tempting and easy to access, said Walley, who brought with her a flavored e-cigarette product called OMG Blow Pop that she said she purchased within walking distance of a school.

“Simply put, this is unacceptable,” she said. “We need the federal government to get these illegal products off the market.”

Even representatives of the vaping industry testified that they were unhappy with the FDA’s authorization process.

“This is a hot mess right now,” said Tony Abboud, executive director of the Vapor Technology Association. He complained that there was no clear pathway through the approval process and said that without one, “we are going to persist in having an illicit market.”

A high school senior, Josie Shapiro of Seattle, told the committee that vaping products are too easy to access. She said she started vaping after several friends did.

“They thought vapes were harmless because of the fun flavors and colorful packaging,” Shapiro testified.

Shapiro said she has tried to quit several times, but vaping has taken over her and her friends’ lives.

“I’ve felt completely out of control, helpless and alone,” she said. “I couldn’t spend quality time with my friends without thinking about when we were going to get our next hit.”


‘You’re failing!’: the federal government is having a reckoning over youth vaping, as senators tear into FDA and DOJ

Eva Roytburg
Wed, June 12, 2024 


Millions of American youth are hooked on nicotine—and politicians tore into top public health officials during a contentious hearing Wednesday on the meteoric rise of illegal e-cigarettes.

Particularly, the senators blamed the Food and Drug Administration (FDA) and the Department of Justice (DOJ) for not enforcing the Tobacco Control Act, which authorizes federal agencies to regulate tobacco products.

“While these two agencies sit on their hands, during both the Trump and Biden administrations, e-cigarette companies addicted a new generation of children to nicotine, erasing the hard work so many of us did to convince them not to smoke tobacco cigarettes, and ultimately save their lives,” Judiciary Chairman Dick Durbin (D-IL) said during his opening remarks.

Frustration was a bipartisan emotion during the hearing, where senators yelled, pointed, and cursed in their questioning. Much of the anger pointed toward a flood of illegal disposable vapes from China, which come in flavors and colors attractive to youth.

Twice as many high school and middle school students are using e-cigarettes than adults, Durbin said during the hearing. The disposable vapes, which come in flavors like blueberry ice and watermelon bubble gum, don’t fulfill their marketed promise of helping existing smokers cease, but rather pull in a new crowd of vapers, he added.

Key to Durbin’s ire was a missed deadline. The FDA was required to complete a review of every product on its docket by September 9, 2021, via a court order from the District Court of Maryland. After the deadline passed, the FDA could have ordered every unauthorized e-cigarette off the market, but it didn’t.

“Instead, these unauthorized e-cigarettes flooded the market, designed to and effectively addicting millions of young Americans,” Durbin said.
‘How is that allowed to happen?’

In the last three years, 2.1 million children have picked up vaping, according to a study by the NIH. As proof, Durbin trotted out an enlarged photograph of a selection of vapes at a smoke shop less than a mile away from the FDA’s Maryland headquarters.

““These illegal products, clearly designed for children by their flavors, are being sold in the shadow of FDA’s building,” Durbin said. “How is that allowed to happen?”

Brian King, the director of the FDA’s Center for Tobacco Products, blamed the lack of enforcement on a massive backlog of applications that tobacco products have submitted for FDA approval—27 million applications, as of this week.

FDA approval for tobacco products is extraordinarily rare – the agency has only approved one-thousandth of one percent of all e-cigarette applications it has received, and none in two years, Sen. Thom Tillis (R-N.C.) said during the hearing. Only 23 vape products are considered FDA approved and legal: all other products, including established giants such as Juul, are being sold illegally, he said.

However, these products are thriving in the market, a point which prompted a heated exchange between Deputy Assistant Attorney General Arun Rao, representing the justice department, and Durbin.

“Mr. Rao, are these tobacco company lawyers beating you to death, to the point where you don’t enforce the law as it is written?” Durbin snarked. “You call this an urgent need. What is urgent about waiting three years and doing nothing?”

Rao replied that the executive branch is signaling aggressive enforcement, but Durbin cut him off.

“I’m sorry, I’m against signals,” Durbin said. “Do something!"

Rao said that the department stood ready to fine unlawful tobacco companies and had begun seizing illicit products—but Durbin cut him off again.

“You’re failing!” Durbin said, pointing to the photograph of the Maryland smoke shop’s disposable vape selection. “Within a mile of the FDA, there’s evidence of your failures.”

High school student Josie Shapiro also spoke during the hearing, testifying about the effects nicotine addiction had on her. She started vaping when she was 14 years old.

“The effect that nicotine had on my mind was intense and scary,” she said. “I felt completely helpless, out of control and alone.”
New task force

The hearing comes during a busy week for the FDA’s tobacco regulators. On Monday, the agency announced a multi-agency task force to combat the meteoric rise of illegal e-cigarettes.

Four other federal agencies will be involved in the task force, including the Federal Trade Commission (FTC) and the U.S. Postal Inspection Service.

Tillis called the creation of the task force a “political stunt,” and said that the exclusion of Customs and Border Protection makes it “crystal clear” that the FDA is not serious about enforcing laws against e-cigarettes. (The state he represents, North Carolina, is the U.S.’ largest tobacco producer.)

The criticism comes amid a war that King has almost single-handedly been battling against an influx of illegal flavored disposable vapes.

Of the youth who currently use e-cigarettes, 90% use flavored products, with popular brands such as Elf Bar and Esco Bar dominating the market, according to 2023 FDA data.

Beyond teens, disposable vapes have also dominated the young adult market. One-third of British 18-to-24-year-olds adults are hooked on nicotine, with research suggesting that the disposable vapes created a market among young people who wouldn’t have otherwise smoked.

The FDA has attempted to impose import bans on these products; however, vape companies maneuver around the orders with ease. For example, Shenzhen iMiracle, the privately owned Chinese company that manufactures fan-favorite Elf Bar, simply changed the name of the product when regulators cracked down. Now, you can purchase “EB Create” products in flavors such as orange creamsicle and watermelon ice.

Shenzhen iMiracle generated around $3.5 to $4 billion last year from EB Create, Elf Bar, Lost Mary, and other e-cigarette products, while brick-and-mortar sellers retained 30% of their profits from the brand.

To date, the FDA has issued a number of warning letters to domestic manufacturers of vapes, in addition to the import bans. However, the inclusion of the U.S. Postal Inspection Service in the new task force signals that the federal government is ready to take a stronger stance against illegal vape imports.
Juul Labs comes back to market

The government’s announcement comes only a few days after the FDA rescinded its marketing ban on Juul Labs.

It has been nearly two years since the federal health agency ordered Juul’s e-cigarettes and vaping products off the market. At the time, the FDA said that Juul “lacked sufficient evidence” and had “conflicting data” that its products were appropriate for the protection of public health.

Juul has continuously argued that its products help smokers quit cigarettes, though several public health organizations, such as the American Lung Association, have long disputed their effectiveness.

Two weeks after the marketing ban, in July of 2022, the FDA “administratively stayed” the ban, meaning that it suspended, but did not rescind the order.

That meant Juul was back on the shelves, but the damage to the company was already done. Its valuation plummeted, and the company laid off hundreds of employees to avoid bankruptcy.

The FDA will now place Juul products back under scientific review, a kind of purgatory where thousands of e-cigarettes and vapes await approval.

Senator John Cornyn (R-Texas) said that it amazed him that U.S. vaping companies – such as Juul – faced “kafkaesque” bureaucracy, navigating complex litigation and changing regulation.

“Meanwhile, these Chinese vapes make $3 billion a year advertising directly to American citizens. Is that accurate?” Cornyn asked, which King affirmed.

Cornyn said he looked forward to working with Durbin on upcoming legislation to address the “outrageous” status quo.

This story was originally featured on Fortune.com