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EDF’s new UK plants should be negotiated as one, French energy minister says

French group has been concerned about shouldering cost overruns of Hinkley Point and Sizewell nuclear projects

EDF’s two UK nuclear construction projects at Hinkley Point and Sizewell should be negotiated as a single financial venture, France’s energy minister has urged, to prevent the French energy group shouldering significant cost overruns. 

Marc Ferracci said he had held discussions on the projects with Britain’s energy minister Ed Miliband on Thursday, on the sidelines of an energy security summit in London.

“France and EDF are very committed to deliver the projects but we have to find a way to accelerate them and we have to find a way to consolidate the financial schemes of both projects,” Ferracci told the FT.

France has been lobbying the UK government to help EDF with the finances of Hinkley Point C in Somerset for more than a year. It argues that the French state-owned electricity operator should not be left on the hook for cost overruns that have taken the total bill to as high as £46bn. 

EDF — which has also experienced long delays on other projects using the same reactor technology in Finland and France — has warned that the first of two reactors at Hinkley Point C could be delayed to as late as 2031, which would be six years later than its original target. 

The French company has a smaller equity stake in the Sizewell C project in Suffolk, which it is also developing.

Ferracci denied that the French government was seeking to use Sizewell as “leverage” to help bail it out of financial difficulties at Hinkley.

“It is not a discussion about leverage, it is a discussion between friends and allies,” he said. “We need to stick together on many subjects — on Ukraine, on all dimensions of our relationship. So there is a way through and I hope we will be able to find it in the next few months.” 

Ministers are hoping to greenlight the Sizewell nuclear plant after a government spending review due to be completed in June. France has argued for a “global solution” that would result in a deal cut across both projects to help smooth EDF’s overall returns. 

“It is a good approach to have a global approach to our relationship,” said Ferracci. He added that more “grid connections between France and the UK” could also form part of the broader negotiations.

EDF declined to comment.

China grants some tariff exemptions for US imports as trade war bites

Sign of relief for foreign businesses comes as Donald Trump insists talks are under way to reduce levies

China has granted some tariff exemptions on American imports and is considering lifting other duties, according to the local US business lobby group, in a sign of possible relief for companies hit by Donald Trump’s trade war.

China’s ministry of commerce is reviewing sectors affected by Beijing’s 125 per cent tariffs on US goods, Michael Hart, American Chamber of Commerce in China president, said on Friday.

Hart said that healthcare imports to China were under review for possible tariff exemptions.

Companies in sectors including aviation and industrial chemicals said that some of their products had already been granted a reprieve, while local media reported that some semiconductors had been spared tariffs.

Hart added that the US commerce department was also reviewing the impact of the duties on companies. 

“It’s good to see that both sides are reviewing the tariffs and it looks like they’re starting to produce lists of exclusions for specific categories,” Hart said. 

China’s commerce ministry did not respond to a request for comment on the tariff exemptions. The foreign ministry said it was not familiar with any exemptions and reiterated that there had been no direct talks with the US on reducing levies.

US President Donald Trump has already excluded high-value Chinese goods such as smartphones and electronics from his tariffs of up to 145 per cent, though he later clarified that those exemptions would be temporary.

Beijing’s retaliatory levies of 125 per cent have hit American agricultural goods and energy.

Hart said China’s commerce ministry had met representatives from the chamber and its member companies to determine the fallout from the tit-for-tat tariffs.

“Our member companies have reported that even within the last week, they had a few shipments that were imported that did not have tariffs levied on them,” he said. 

“So I think for the critical sectors, we may be able to assume that that’s already in place, but I don’t think it’s a specific policy. I think right now it’s more of a one-off.”

French aerospace engine maker Safran also said on Friday that China had granted some import tariff exemptions. Chief executive Olivier Andriès said on an earnings call that “China decided to exempt from tax any deliveries of engines, nacelles, landing gear or parts”.

Hart also identified pharmaceuticals and medical devices as industries that were potentially vulnerable, given their high levels of imports.

If the tariffs remained in place at the current levels, he said, “it would be hard to imagine that we wouldn’t see some companies close and leave”.

The efforts by both sides to mitigate the worst effects of a looming trade war come as Trump has insisted — despite Chinese denials — that negotiations are under way and the levies will soon be reduced.

China’s commerce ministry on Thursday called on Washington to “cancel all unilateral tariff measures” if it wanted to begin trade talks.

Economists have warned that bilateral trade in some sectors is at risk of coming to a halt, with the current level of tariffs making US imports unviable for many Chinese businesses. 

Chinese President Xi Jinping said on Friday Beijing had to “fully prepare emergency plans” to boost the economy at a meeting of the Communist party’s 24-member politburo on Friday.

Xi called on the government to increase support to businesses, accelerate efforts to boost consumption and more quickly resolve a years-long downturn in the property sector.

Officials should “co-ordinate domestic economic work and international economic and trade struggles”, he said.

Draft terms require non-EU nations to negotiate agreements before their defence industries can get access

The UK will be expected to pay a fee to guarantee British companies access to a €150bn EU weapons fund to buy weapons, under plans being discussed by diplomats in Brussels.

The EU and UK are set to sign a broad defence and security pact at a May 19 summit, but a second, more detailed agreement will be required before companies such as BAE Systems can win contracts funded by the Security Action For Europe (Safe) fund, according to diplomats and officials involved in the negotiations.

“The pact is a nonbinding instrument. The more difficult hurdle is going to be a bilateral agreement that would include a financial contribution,” said an EU diplomat.

Safe, proposed by the European Commission to help EU countries increase defence spending in response to Russia’s invasion of Ukraine and fears over the long-term US security commitment to Europe, will issue cheap loans to EU governments to collectively spend on weapons.

The €150bn fund can be used to buy weapons from companies in non-EU countries that have a security pact with the bloc. But the draft terms of the fund require non-EU nations to negotiate additional agreements specifically related to Safe before their defence industries get access.

Thomas Regnier, the commission’s defence spokesperson, said third countries must “negotiate specific, mutually beneficial agreements on the participation of their respective industries in procurements”.

“To get your industry in the game, you need a second agreement. The commission will negotiate that, and will first look at what each country has to offer,” said a second EU diplomat involved in the negotiations, adding that the deal was likely to hinge on market access for particular weapons systems.

“Of course, the French will try to complicate it for the Brits,” they added. “I imagine that there will be some form of [financial] contribution involved.”

A third EU diplomat said: “The actual effective association to the programme requires a specific arrangement. We need to discuss the rules, what contribution and so on.”

A senior commission official confirmed that it would require London to pay, but it was unclear whether it was a small administrative fee or something larger.

All of the EU diplomats and officials said they believed a deal would be done, but said it would take some time and could place some restrictions on which British-made equipment was eligible.

The bilateral agreement must “ensure a fair balance as regards the contributions and benefits of the third country,” according to the draft Safe regulation.

It would also require “an increase in the standardisation of defence systems and a greater interoperability between Member States’ and these other third countries’ capabilities” and stipulate the financial contribution 

Other countries that already have defence pacts with the EU, such as South Korea and Japan, will need to do the same for their companies to be eligible.

Arms companies from Ukraine, plus the European Free Trade Association and European Economic Area, including Norway and Switzerland, which pay to participate in the EU single market, get automatic access. 

Commission officials expect Safe negotiations between EU member states to be concluded next month, after which it will require approval by the European parliament. There is no guarantee that the entire €150bn will be utilised.

Countries must band together and apply for funding for a concrete project within six months of the fund’s launch and each must be approved by Brussels.

Ursula von der Leyen, commission president, told Prime Minister Sir Keir Starmer at a meeting on Thursday that the defence and security pact “might then pave the way to a joint procurement and UK participation in our Safe programme”, hinting that the pact alone was not sufficient.

Downing Street did not immediately comment.

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