The EU took a break from the regular Brexit fare after another extraordinary summit that granted six months of breathing space British Prime Minister Theresa May to get her house in order before Britain withdraws from the bloc.

The break also gives Brussels time to shift its focus on formulating the rest of its agenda prior to the May elections and to turn its attention to trade talks with the US.

Brexit break

With the new extension set to run until the end of Jean-Claude Juncker‘s mandate as president of the Commission, the EU-27 will now focus on building a more positive image for the European electorate in the run-up to the European elections on 23-26 May.

Brussels remains steadfast in its position that the EU-UK Withdrawal Agreement will not be renegotiated even if May struggles to get it approved in the British House of Commons. “There will be no renegotiation of the withdrawal agreement during the time of the extension,” said the chief spokesman of the Commission.“What I want to say is we are now, in this house, taking a Brexit break. We are back to our positive agenda.”

The Commons has been in recess since 12 April will next reconvene on 23 April.

The road to Sibiu

Six weeks after the initial Brexit date passed, and only two weeks ahead of the EU elections, Europe’s leaders will meet in Sibiu, Romania, to discuss the future of the bloc. “In Sibiu, we will need to convince our fellow citizens that, when it comes to the essential points, we share the same ideas on the purpose of our Union. Europeans deserve better,” said Juncker during his last State of the Union speech in the European Parliament.

The ratification of EU-Japan agreement, a deal for the EU budget after 2020, the Erasmus programme, more funding for start-ups, a common European defence structure, an increase to the EU’s investment in Africa, the strengthening of the international role of the euro in the international scene, the deepening of the Economic and Monetary Union, and the consolidation of the EU’s foreign policy are  the main items that the EU heads will discuss in Sibiu.

EU-US trade talks ahead

A reality check for the Commission will not only come from London’s possible inability to break the impasse over Brexit but also from the need to take a step further and deepen its security and trade relations with the US; effectively abandoning any residual hopes that the Transatlantic Trade and Investment Partnership (TTIP) could somehow be revived.

The EU’s ambassadors have approved Brussels’ negotiating mandate for trade talks with the US to reduce industrial tariffs in an attempt to ease relations between Brussels and Washington, according to an EU diplomatic source.

The EU has sought clearance for two negotiating mandates, one to cut tariffs on industrial goods, the other to make it easier for companies’ products to meet EU or U.S. standards. Both decisions are to be ratified at a political level by a minister in the European Council.

Macron’s hard lines

The administration of the French President Emmanuel Macron has taken a hard line on several key issues, particularly after Paris insisted that it wanted a short Brexit extension. Macron may not have been alone in pushing for significantly shorter extension window as only 19 of the EU’s leaders were in favour of a long extension.

France was the only county to signal unhappiness with the mandate set to be given to the European Commission’s trade chief, Cecilia Malmstrom, due to France’s objection to US President Donald J. Trump’s decision to withdraw from the Paris climate agreement. As a French government source has already signalled, France would not give up its right to veto a potential trade deal with the US. Paris has already warned that it would mostly vote against the opening of negotiations.

The trade talks will be limited to discussions over industrial goods and will not include key industries for the European side, including. agriculture, services or public procurement, and geographic indication products. For the Americans, they still hope to include agriculture in the talks, but Macron is expected to remain resolute in keeping an industry that is critical to France off the table.

Towards a ‘mini FTA’

A “mini Free Trade Agreement”, which was central to talks between Juncker and Trump in Washington in July 2018, would be limited in scope and be concluded by the end of the year, according to a source familiar with the matter.

The Commission has repeatedly said it was willing to discuss the auto industry as it pertains to the huge number of exports for Germany’s economy, but France, which exports few cars, wanted to deal with the issue after the European elections.

Airbus – Boeing 

An aviation dispute could hang over the negotiations as both the Americans and Europeans are displeased with one another about how the opposition side provides subsidies to their rival aeroplane manufacturing companies – Boeing in the US and the EU’s Airbus. Back in 2011, the Americans calculated the size of Airbus’ subsidies to be worth $11 billion, an amount that according to the EU should be significantly lower today.

The US’ trade representative wants to contact stakeholders and construct a list ranging from large commercial aircraft to dairy and wine products that could be targeted in retaliation for this amount. The EU is also soon expected to publish a similar list of products in retaliation for Boeing’s perceived violations.