Brussels Edition: Restricting China

Follow Us Get the newsletter For all the talk of keeping Europe open to trade, the EU could be about to get tougher on firms funded by foreign governments. With China and its vast network of state-owned enterprises in its sights, the European Commission will today lay out potential measures including probing firms that undercut rivals, to check whether they have a credit line or tax breaks from non-EU states. There's also the possibility of levying fines, or even forcing businesses to sell units. The blocking of takeovers funded by subsidized firms could also be on the agenda, adding to extra scrutiny of foreign purchases already being rolled out. There's still a long way to go though: The commission will seek feedback on the plans until September and draft legislation next year. — Aoife White and Ian Wishart What's Happening Recovery Deal | German Chancellor Angela Merkel expects the EU to agree on a recovery plan in July, despite strong opposition to the proposal for jointly-financed grants to the countries hit most by the pandemic. Ahead of Friday's virtual summit of EU leaders, positions remain entrenched and far apart, so don't expect a breakthrough this time round. Car Question | Fiat's plan to merge with Peugeot is today set to enter a lengthy probe from the European Commission. It's unclear how far the EU will take account of plummeting car sales during the pandemic; that could see the companies dodge some of the harsh concessions that have burned other deals in the past.  Worst Hit | Britain's fault lines have opened up in some familiar places at a critical time for Prime Minister Boris Johnson. The most disadvantaged, Brexit-supporting regions that did so much to empower him at the last election are now the places disproportionately hit by coronavirus and will bear the brunt of the economic fallout. Time to Talk | Serbia and Kosovo plan to start a dialog to mend ties under the auspices of the U.S. later this month, snubbing EU efforts to bring the former wartime foes back to the negotiating table. Leaders of the two Balkan neighbors are expected at the White House. Defense Demands | How to deter a more aggressive Russia is back on the agenda for North Atlantic Treaty Organization defense ministers when they hold a two-day video conference starting this afternoon. They'll also prepare for a possible second wave of the coronavirus and broach the thorny issue of the U.S.'s Germany troop pullout (see below). In Case You Missed It Pulling Out | German officials lined up to condemn Donald Trump's latest verbal attack, after the U.S. leader confirmed his plan to withdraw troops from the country unless Angela Merkel's government boosts defense spending. The move to cut troop strength by more than a quarter to 25,000 is the latest sign of deteriorating relations between the two nations.  Trade Loss | China spent four years fighting for recognition as a market economy, a designation that would strengthen its position in trade disputes. This week, China quietly lost that battle. Moving Slowly | Giant American banks including JPMorgan Chase, Morgan Stanley and Goldman Sachs have lost precious months during the pandemic lockdowns in moving employees to EU financial hubs. With Brexit talks deadlocked, firms are finally reactivating plans to shift staff from London — only to find they can't move fast enough. Another Bite | Apple faces a twin-pronged attack from Margrethe Vestager amid concerns the U.S. tech giant's App Store and Apple Pay services squeeze developers and potential rivals. The move shows how the EU's powerful antitrust chief is trying to rewrite big tech's rulebooks. Chart of the Day   Poverty in Italy declined for the first time in five years before the coronavirus froze economies around the world, with the number of people unable to afford basic goods and services falling to 7.7% in 2019. The reduction coincided with the introduction of a controversial "c itizens' income, " which currently pays an average of 519 euros ($590) a month to 2.8 million people. The decline is set to be a one-off as the virus-related downturn pushes Italy into a  severe recession , eliminating jobs. Today's Agenda All times CET. EU Commission unveils proposal on how to defend bloc's companies from subsidized foreign competition and also a strategy for the development of a Covid-19 vaccine EU Justice Commissioner Didier Reynders holds a video conference call with Kent Walker, Senior Vice President Global Affairs at Google 3 p.m. Video meeting of NATO defense ministers. Press conference due at 6 p.m.  3:15 p.m. Members of the European Parliament discuss Brexit negotiations and preparations for this weeks leaders' call with Commission and Council  Chancellor Angela Merkel meets regional German leaders to discuss virus response, energy issues Like the Brussels Edition? Don't keep it to yourself. Colleagues and friends can sign up here. We also publish the Brexit Bulletin, a daily briefing on the latest on the U.K.'s departure from the EU.  For even more: Subscribe to Bloomberg All Access for full global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close. 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