This may change everything in global trade. Next month, the European Commission will propose a levy on the import of products ranging from steel to aluminum, to cement and electricity to account for the carbon footprint in their production. According to the draft proposal we saw, the cost will be linked to the price of carbon permits European industries already have to purchase. The aim is to introduce a level playing field between Europe, a pioneer in the transition to a low-carbon economy, and competitors abroad, and prevent so-called carbon-leakage to jurisdictions where environmental sensitivities leave something to be desired. The proposals are subject to approval by EU governments, which have repeatedly voiced their support for punishing polluters abroad. For anyone wishing to sell anything to Europe's vast single market, heavy investment in clean technologies will become compulsory. - Alberto Nardelli, Ewa Krukowska and John Follain

What’s Happening

Digital Wallets | European Union citizens may soon be able to access a range of services across the bloc by storing identity data and official documents from driving licenses to medical prescriptions in digital wallets. That’s according to a proposal the European Commission is due to unveil today, detailed in a draft we had a peek at. The move would take the bloc one step toward closer integration in the aftermath of the pandemic.

Orban's Challenge | Hungarian Prime Minister Viktor Orban will find out from the EU's top court today if he won a challenge against a 2018 European Parliament vote that paved the way for a probe into the erosion of democratic standards in his country. The ruling comes just as the EU's justice chief said the commission wants to aggressively use its sanctioning powers and may trigger new measures later this year.

Clean Air | Germany could face a rebuke from the EU's top court for not doing enough to clean up air in cities from Berlin to Cologne, in another ruling on a 2018 challenge by the Commission. In similar cases, the court decided that France and the U.K. had “systematically and persistently” exceeded annual nitrogen oxide limits, mostly through cars.

Fiscal Flows | EU member states can count on a waiver allowing them to spend their way out of the pandemic-prompted recession remaining in place through next year. The Commission said withdrawing fiscal stimulus too early would hinder recovery, so there will be no targets for deficit reduction in 2022. 

In Case You Missed It

Tax Tussle | Global negotiators are wrangling over a threshold for corporate revenue as they seek to rewrite tax rules — and resolve how to tax giants like Amazon and Facebook. European officials are considering a U.S. proposal to make companies with at least $20 billion in annual revenue pay more of their tax bill in places they operate, we’re told by people familiar with the talks. 

Elusive Deal | World powers adjourned their Vienna talks as differences between Iran and the U.S. over how to restore the 2015 nuclear deal seem likely to delay the Islamic Republic’s return to oil markets. Markets have been watching for signs the U.S. will ease sanctions on Iran’s energy.

Digital Currency | Countries that decide not to introduce digital versions of their currencies may face threats to their financial systems and monetary autonomy, the European Central Bank warned. Consumers and businesses in places that don’t have their own digital currency could end up being reliant on a small number of dominant payment-service providers, including foreign tech giants, the ECB said.

Breakthrough Energy | The Commission and Bill Gates joined forces to mobilize as much as $1 billion for investment in clean technologies such as green hydrogen and sustainable fuels. The Commission and Gates want to build large-scale, commercial-demonstration projects that deliver significant reductions in carbon dioxide.

Chart of the Day

The pandemic will cause a “sustained and pronounced increase in unemployment” with low- and middle-income countries that have lagged behind in vaccinations suffering the most. The International Labor Organization fears not enough jobs will be created to accommodate those who lost employment, plus new labor-market entrants.

Today’s Agenda (All times CET.)

• 9:30 a.m. The EU's top court gives a binding ruling in Hungary's challenge of a 2018 EU Parliament decision to open a procedure for allegedly undermining the rule of law
• 9:30 a.m. The EU's top court rules in a challenge by the European Commission against Germany over worsening air quality levels
• 9:30 a.m. The EU's top court rules on Recylex's bid to get a reduction in its EU antitrust fine for fixing prices for car batteries
• 9:30 a.m. The EU's top court gives a non-binding opinion in the appeals by Sony a Hitachi-LG joint venture and Toshiba-Samsung against a 2015 EU cartel fine
• 9:30 a.m. The EU's top court gives a non-binding opinion in a Commission challenge against a lower court 2018 decision regarding the U.K. Capacity market
• 10 a.m. EU transport ministers meet in Luxembourg
• 2:30 p.m. European Commission Executive Vice President Margrethe Vestager and Commissioner Thierry Breton hold news conference on European e-ID