| | Dear Readers,
The new year begins as the old one ended: the European Union is being made to wait. Once again, the hold-up has a name: Viktor Orbán. At the end of last year, Hungary's prime minister refused to approve a € 50 billion aid package for Ukraine.
Without the yes vote of this erratic troublemaker, decisions that require the unanimity of all 27 EU Member States are blocked. Orbán, who is considered to be a confidant of Russian dictator Vladimir Putin, is making good use of this right of veto.
True, he did recently make way for EU accession talks with Ukraine by leaving the chamber before the vote. But this highly uncharacteristic behaviour was made less painful for him by the promise of around twelve billion euros in EU subsidies. The funds though were frozen - due to repeated massive violations of the rule of law by Hungary.
It has been like this for years now. Hungary's premier is leading the EU a right old merry dance. "After Putin, Orbán is one of the biggest security risks for Europe," tweeted Michael Roth (SPD), Minister of State for Europe at the German Federal Foreign Office, following Orban's latest refusal. Can Europe really afford such a costly, anti-democratic risk to its security? In other words: Is there a way to kick Budapest out?
The Treaty of Lisbon does not provide a way to do this; club members enjoy occupier’s rights in perpetuity. Leaving must be of their own volition - see Brexit. Armies of European lawyers are tearing their hair out over this one. A reform of the EU Treaty would help. But Orbán would also have to agree to this; it is an intractable situation.
If the EU finally wants to regain its ability to act, it must cut the Gordian knot. Against this backdrop, 2024 marks a fateful year for Europe. It is not just about more arms deliveries to Ukraine or preserving democracy and the rule of law. It is about the survival of an epoch-making peace project that is crucial to security and prosperity.
On behalf of all cep employees, I wish you a healthy and successful New Year - and for Europe an end to apathy and despondency.
Yours
Dr. Jörg Köpke |
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| | | | "One of the greatest security risks for Europe": Hungary's Prime Minister Viktor Orbán is coming under increasing pressure in the EU. |
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| | | | Latest EU Proposals in Focus |
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| | | EU Economic Security Package
On 24 January, the Commission will present a package to improve the EU's economic security. The aim of the package is to minimise risks arising from economic activities in the context of increasing geopolitical tensions and accelerated technological change. The package will consist of six parts: a Communication on the EU's economic security; a Proposal to amend Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union (cepPolicyBrief 32/2017); a White Paper on export control; an Initiative on foreign investment; a Recommendation of the Council on the safety of research; a White Paper on dual-use research. |
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| | | | | | | AI: Commission Facilitates Access to Supercomputers
On 21 February, the Commission will publish an initiative to open up European supercomputing capacities to ethical and responsible start-ups in the field of artificial intelligence (AI). Access to supercomputers is essential for the development and scaling of AI models because high-performance computers can significantly reduce the training times of AI and thus provide a strong competitive advantage in a dynamically developing market. This initiative follows an announcement by EU Commission President von der Leyen in her 2023 State of the Union address, in which she held out the prospect of using European supercomputers in this way for the first time. Start-ups and high-performance computing centres are to cooperate more closely in order to drive digital innovation and make the European AI industry ecosystem more competitive. This cooperation is intended to accelerate the development of European AI offerings and establish the EU as a global competitor. |
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| | | | | | | | The Commission, the Council and the European Parliament regularly negotiate in the so-called trilogue on EU legislative proposals in order to find a common position. We have put together a summary of the most important trilogue decisions since the last Newsletter. |
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| | | Trilogue Agreement on the Supply Chain Directive
On 14 December 2023, a provisional political agreement on the Corporate Sustainability Due Diligence Directive (CSDDD, cepPolicyBrief 16/2022) was reached. Similar to the German law on corporate due diligence in supply chains, the Directive is intended to protect the environment and human rights worldwide. In some areas, however, the Directive goes further than the German law. For example, its scope is widened to include companies with at least 500 employees and a global turnover of € 150 million. The Directive is highly controversial. Numerous business organisations fear that companies will be overburdened by bureaucracy. Other interest groups, such as environmental organisations, believe that the Directive does not go far enough. |
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| | | | Internal Market| Environment |
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| Trilogue Agreement on Construction Products Regulation
On 13 December 2023, a provisional political agreement was reached on the Construction Products Regulation [(EU) 305/2011, see cepDossier 3/2022]. Harmonised EU rules on construction products are intended to remove barriers in the internal market and reduce the administrative burden. They will also ensure that construction products are in line with circular economy principles. Thus, a digital passport modelled on the Ecodesign Regulation is to be introduced, in which all players along the supply chain can access important information about products. The implementing acts are retained for standardisation procedures. The new standards will be legally binding. In order to counteract delays in the standardisation process, the Commission is authorised, under specific conditions and as a fallback option, to define harmonised technical specifications itself by means of implementing acts.
Trilogue Agreement on the Regulation for Classification, Labelling and Packaging of Chemical Substances (CLP Regulation)
On 5 December 2023, a provisional political agreement was reached on the Regulation relating to the classification, labelling and packaging of chemical substances [CLP Regulation (EC) No. 1272/2008]. The CLP Regulation covers the identification and assessment of hazards posed by chemicals and the provision of information to consumers in this regard. The update is intended to clarify the rules on the labelling of chemicals sold online. It also aims to promote the circularity of chemical products and make labelling clearer and easier to understand. |
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| | | | | Trilogue Agreement on the Ecodesign Regulation
On 5 December 2023, a provisional political agreement was reached on the Ecodesign Regulation [see cepPolicyBrief 10/2022]. While the existing Ecodesign Directive [2009/125/EC; see cepPolicyBrief] only covers "energy-related" products - such as dishwashers and washing machines - the scope of the new Ecodesign Regulation is to be extended to almost all physical goods. In addition to medical devices, food and animal feed, product groups that are subject to more specific regulations - such as construction products and cars - will be exempt . In future, apart from energy consumption, other product properties will also be regulated. The aim is to make products more durable throughout their entire life cycle and easier to repair, reuse and recycle. A digital product passport with information on the environmental sustainability of products is also being introduced. This should facilitate the correct handling of products along the supply chain and enable consumers to obtain information about the sustainability of products. |
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| | | | | Trilogue Agreement on Electricity Market Design
On 14 December 2023 a provisional political agreement was reached on the Regulation to reform electricity market design [COM(2023) 148]. This aims to make electricity prices less dependent on fossil fuel prices. Thus, the Council will have the power to declare a crisis on the basis of certain criteria, such as the average wholesale price or a sharp rise in electricity retail prices. In addition, two-way contracts for difference (CFDs) or equivalent schemes should be used if public funding, in the form of direct price support schemes, is involved in long-term contracts. These will then apply to electricity generation from wind energy, solar energy, geothermal energy, hydropower without reservoir and nuclear power.
Trilogue Agreement on the Gas Package
On 8 December 2023 , an agreement was reached on the Regulation establishing common internal market rules for renewable and natural gases and for hydrogen [COM(2021) 804]. The aim is to facilitate the use of renewable and low-carbon gases, in particular hydrogen and biomethane, in the energy system. A new EU entity for Hydrogen Networks Operators (ENNOH) will be introduced. This is independent of the existing European Network of Transmission System Operators for Gas (ENTSOG) and the European Network of Transmission System Operators for Electricity (ENTSO-E).
Trilogue Agreement on the Energy Performance of Buildings Directive
On 7 December 2023, an agreement was reached to revise the Energy Performance of Buildings Directive [see cepPolicyBrief 14/2022]. This stipulates that from 2030 new buildings must not produce any fossil fuel emissions on site - public buildings from as early as 2028. The 16% least energy efficient non-residential buildings must be renovated by 2030 and the 26% least energy efficient non-residential buildings must be renovated by 2033. With regard to residential buildings, each Member State must set a national trajectory to reduce average primary energy consumption by 16% by 2030 and by 20 to 22% by 2035. The use of boilers that run on fossil fuels will be banned from 2040. |
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| | | | | Trilogue Agreement on EURO 7 Emission Standard for Motor Vehicles
On 8 December 2023, a provisional political agreement was reached on the EURO 7 emissions standard [see cepPolicyBrief 5/2023] for motor vehicles. In the case of cars and vans, the emission limits and the test regime of the EURO 6 emissions standard will be retained. With regard to heavy duty vehicles - lorries and buses -, on the other hand, the limits on exhaust emissions are being tightened, particularly for nitrogen dioxide and particulate matter. In the case of fine particulate matter, limits will apply to much smaller particles - with a diameter of less than ten nanometres - in future. For the first time, limits on particle emissions from tyre and brake abrasion have been set for all vehicle classes. Batteries for electric cars must also have a capacity of at least 72 percent after eight years or a mileage of 120,000 kilometres. |
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| | | | | Trilogue Agreement on Rules for Blood, Tissues and Cells
On 14 December, a provisional political agreement was reached regarding a Regulation on substances of human origin (“SoHO”). This is primarily intended to ensure the high quality of blood, tissue and cells in the interests of patient safety (see cepPolicyBrief 15/2022). The new Regulation also aims to improve the protection of donors and facilitate the cross-border exchange of SoHO by means of, among other things, an EU-wide database. In addition, donations will continue to be voluntary and unpaid. There should be no financial incentives for donations - where appropriate donors may receive compensation for expenses. |
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| | | | Consumer | Internal Market |
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| Trilogue Agreement on Design Protection
On 5 December, a provisional political agreement was reached on two legislative proposals of the so-called design package. This is a reform of 20-year-old design legislation, consisting of the Directive on the legal protection of designs and the Regulation on Community designs. The new legislation is primarily intended to facilitate the registration of designs at EU level. In addition, a "repair clause" is introduced which excludes from design protection certain spare parts used to repair complex products. This aims to liberalise the spare parts market so that consumers can benefit from lower prices. The reform also includes a ban on registering elements of cultural heritage as private designs. |
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| | | | | Bank Settlement: Revised Regulatory Framework for Daisy Chains
On 6 December 2023, the Council and the European Parliament reached a provisional agreement was reached on the proposal for the so-called "Daisy Chains" Directive [COM(2023) 229]. This provides for targeted amendments to the Bank Recovery and Resolution Directive (BRRD, see cepPolicyBrief 10/2013 and cepPolicyBrief 11/2013) and to the Regulation on the Single Resolution Mechanism (SRMR, see cepPolicyBrief 42/2013) and is an independent component of the so-called "CMDI package" on crisis management and deposit protection, which the EU Commission presented on 18 April 2023.
The so-called "bail-in instrument" can be used for bank resolutions. This involves writing off the creditor's claims against the bank or converting the bank's liabilities into equity. In order to enable the effective resolution of banks using the instrument, for some time they have had to fulfil minimum requirements for own funds and eligible liabilities (MREL). This is intended to ensure that banks have sufficient so-called "bail-inable" capital in the event of resolution, which can be used to absorb losses and for recapitalisation purposes.
The "Daisy Chains" Directive now makes adjustments to the MREL requirements for banking groups. For example, resolution authorities are to be given the right to set the "internal MREL" on a consolidated basis subject to certain conditions. Where an MREL is issued by a subsidiary but subscribed by its parent company, it is referred to as "internal MREL". If the internal MREL is set at consolidated level, the subsidiaries will no longer be obliged to deduct their own holdings of internal MREL from their own funds. In addition, the proposal introduces a specific treatment for "liquidation entities", i.e. entities within a banking group that are not subject to resolution action in the event of a crisis but are earmarked for liquidation.
The agreement that has now been reached must now be officially approved by the Council and the European Parliament. The new regulations are expected to start applying in the 3rd quarter of 2024.
Insurance (1): Revision of the Solvency II Directive
On 13 December 2023, the Council and the European Parliament provisionally agreed on a revision of the Solvency II Directive [2009/138/EC, see cepPolicyBrief]. The Commission first initiated the revision of the Directive in September 2021 [COM(2022) 581, see cepPolicyBrief 2/2022].
The Solvency II Directive lays down rules for insurance and reinsurance companies. It has been in force since 2016 and includes provisions on solvency capital, governance, risk management, supervision, as well as reporting and disclosure obligations. Its revision is intended to make the existing rules for insurance companies more proportionate. Furthermore, insurance companies will have to take more account of sustainability-related risks. The supervisory authorities are to be given new macroprudential instruments and the supervision of insurance companies operating across borders is to be improved. In addition, the reporting obligations for insurance companies are to be adapted and the solvency and capital requirements adjusted. The latter is intended to contribute, in particular, to the long-term and sustainable financing of the economy. Thus, the incentives for insurers to make investments in support of the EU Green Deal will be increased. The agreement that has now been reached still has to be formally adopted by the European Parliament and the Council. The Member States must then transpose the revised Directive into national law.
Insurance (2): Insurance Recovery and Resolution
On 14 December 2023, the Council and the European Parliament agreed, provisionally and for the first time, on rules for the recovery and resolution of (re)insurance undertakings [Insurance Recovery and Resolution Directive, IRRD]. The Commission first initiated its proposal to create such a recovery and resolution framework in September 2021 [COM(2022) 582].
Under the new Directive, (re)insurers that account for at least 60% of the respective (re)insurance market must in future draw up preventive plans for their orderly recovery in the event of a crisis. They must submit these plans to their national supervisory authorities. For their part, the authorities must draw up plans for resolving (re-)insurance companies in an orderly manner. This applies to all (re)insurers that account for at least 40% of the respective (re)insurance market. The Directive is also intended to give the authorities additional powers. In this way, they will be able to intervene preventively and thus at an early stage, as well as implement appropriate resolution measures in the event of insolvency. Several instruments - e.g. the write-downs or conversions of capital instruments, so-called run-off management or the (partial) transfer of an insurer's business to a publicly controlled company - will be available to them to implement these measures. The European Insurance and Occupational Pensions Authority (EIOPA) is to play a coordinating role in cross-border matters. The agreement that has now been reached still has to be formally adopted by the European Parliament and the Council. The Member States must then transpose the new Directive into national law.
Money Laundering: Establishment of an EU Money Laundering Authority (AMLA)
On 13 December 2023, the Council and the European Parliament provisionally agreed on the creation of a new EU authority to combat money laundering and terrorist financing (Anti-Money Laundering Authority, AMLA). AMLA is to be given direct supervisory powers over certain credit and financial institutions. This applies in particular to institutions that represent a high risk in several Member States. Under the direction of AMLA, these institutions are to be supervised by joint supervisory teams.
The Commission first presented a package of four legislative proposals to combat money laundering and terrorist financing back in July 2021. In addition to the Regulation establishing AMLA [COM(2021) 421], on which agreement has now been reached, the package also contains measures to strengthen the transparency of crypto asset transfers. An agreement on the corresponding Regulation was reached back in June 2022 (see here). There is still no agreement between the Council and the European Parliament on two other projects - a Regulation on anti-money-laundering requirements for the private sector [COM(2021) 420] and a Directive on anti-money laundering mechanisms [COM(2021) 423]. Negotiations are still ongoing in this regard.
It is still unclear where AMLA is to be based. This will be decided at a later date but, on 18 December 2023, the Council and the European Parliament did reach an agreement regarding the procedure for choosing the location of AMLA’s seat. There will be public hearings at which the Member States nominating candidates for the seat can present their applications. The decision on the location of AMLA’s seat will then be taken jointly by the Council and representatives of the European Parliament. Both sides will have the same number of votes. |
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| | | | | Trilogue Agreement on the AI Act
On 9 December 2023, a ground breaking political agreement was reached on rules for artificial intelligence (AI) that aims to set global standards (for an assessment, see cepAktuell of 11 December 2023). The AI Act aims to ensure that AI systems used in the European single market are safe, respect fundamental rights and are in line with EU values. The legislation centres on a risk-based framework that distinguishes between high-risk applications, such as the use of AI in critical infrastructures, and lower-risk applications, such as AI-supported spam filters. Manipulative AI techniques, for example in children's toys, and social scoring, among other things, are banned. Basic models such as the chatbot developed by OpenAI, now referred to as "general-purpose AI models", are to be subject to specific transparency obligations. In addition, an AI Office will be set up at Commission level to monitor advanced AI models and promote standards and testing procedures. The final document will be adopted after further technical meetings in the second quarter of 2024; comprehensive bans on certain AI uses would then come into force in early 2025; and the entire law will be fully enforceable from summer 2026.
Trilogue Agreement on Platform Work
On 13 December 2023, the negotiators of the Platform Work Directive [COM(2021) 762] reached a provisional political agreement on rules to combat bogus self-employment on large digital platforms, such as the transport service provider Uber. The compromise, which is the first legislation of its kind in the world, could potentially guarantee that five million platform workers in the EU have protection against dismissal, a minimum wage and other employee rights from now on. In order to be considered as employed, such employees must fulfil at least two of the following five criteria: The employer sets upper limits on payment, monitors performance electronically, controls working conditions and working hours, specifies rules on work clothing and/or monitors the allocation of tasks. Member States may add additional criteria. The compromise also allows authorities and trade unions to initiate proceedings if there is a suspicion that self-employed workers are actually employees, with the burden of proof borne by the platform.
Trilogue Agreement on Product Liability in the Digital Age
On 14 December 2023, the EU Council and Parliament agreed on an amendment to the Directive on liability for defective products (COM(2022) 495) which will adapt it to the digital era and the requirements of a European circular economy. The Directive now covers software as a product (excluding free and open source software) and allows consumers to hold online platforms liable for defective products. In addition, natural persons will have a claim for damages where data is destroyed or damaged due to defective products. In future, it will be easier for consumers to gain access to evidence held by the manufacturer. The rules also cover products from outside the EU, whereby consumers can hold the importer or the manufacturer's authorised representative liable for damage. The burden of proof is reduced, making it easier for consumers to obtain compensation in court in complex cases. The revised Directive will apply to all products placed on the European internal market, 24 months after its entry into force. Even though the new rules explicitly include artificial intelligence, the Commission is currently preparing a separate product liability Directive for Artificial Intelligence as a special law, which will probably not be adopted until after the AI Act has been passed (and therefore not until the next legislative period).
Trilogue Agreement on Europe-wide Media Freedom
On 15 December 2023, the European Parliament and the Council reached a political agreement on the European Media Freedom Act, which was proposed by the Commission in September 2022 (COM/2022/457). In response to several high-profile murders of journalists in recent years, it calls on Member States to respect the effective editorial freedom of media providers and to improve the protection of journalistic sources. The rules will ensure the independence of public media, guarantee transparency of media ownership and provide safeguards against the unwarranted removal of media content by large online platforms (as defined by the Digital Services Act). In addition, the effects of media market concentrations on pluralism and editorial independence are to be assessed in future by way of tests. Users of media services will be given the right to change default settings according to their own preferences. A new and independent body, the "European Board for Media Services", will monitor the effective and consistent application of the EU media law framework. |
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| | | | | | The EU Commission asks decision-makers and interested parties from civil society for their opinion on European policy proposals. Here is our short-list of the most important consultations: |
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| | | Availability of Medical Devices
The Directorate-General for Health and Food Safety (DG SANTE) has commissioned a Study on the availability of medical devices in the EU in the context of the implementation of the Medical Devices Regulation and the In Vitro Diagnostic Medical Devices Regulation [(EU) 2017/745]. The information required for this will be collected through targeted surveys of the key stakeholders. The current consultation is aimed at medical device manufacturers.
The submission period for opinions ends on 15 January 2024.
Go to Consultation |
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| | | | | Adapting to Climate Change: Managing EU Climate Risks
The EU Commission has launched a Consultation on a planned Communication regarding the assessment of EU-wide climate risks. The Communication aims to build on the EU Adaptation Strategy 2021 [COM(2021) 82; see cepPolicyBrief 16/2021], communicate the results of the EU Climate Risk Assessment and support the EU and its Member States in taking informed decisions about mitigating the risks from the impact of climate change.
The submission period for opinions ends on 14 January 2024.
Go to Consultation |
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| | | | | Protecting Waters: Pollution caused by Nitrates
The EU Commission has launched a Consultation on evaluating the Nitrates Directive [91/676/EEC]. This aims to protect water quality in the EU by reducing and preventing pollution caused by nitrates from agriculture. The Commission wants to assess the extent to which the rules are effective and still fit for purpose in view of the stricter environmental and climate policy requirements.
The submission period for opinions ends on 8 March 2024.
Go to Consultation |
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| | | | | 15 January 2024
Brussels
Meeting of the Eurogroup.
15-18 January 2024
Strasbourg
Session of the European Parliament. Among other things, this will include empowering consumers for the green transition (see cepDossier 4/2022) and virtual worlds/metaverse (see cepPolicyBrief 14/2023).
16 January 2024
Brussels
Meeting of the Economic and Financial Affairs Council (Ecofin). Among other things, it will discuss EU projects on financial services, the European Semester 2024 and the economic and financial consequences of Russia's aggression against Ukraine.
1 February 2024
Brussels
Special European Council. |
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| | | | | | cepPolicyBrief: Digital Euro Regulation |
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| | | Whether in China or the USA: digital currencies are on the rise worldwide. While the European Central Bank (ECB) has been pushing ahead with the introduction of a digital euro for years and the Commission followed suit this summer with a legal framework, the Centres for European Policy Network (cep) rejects the introduction of a European digital currency.
Go to cepPolicyBrief |
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| | | | cepAdhoc: Data Protection Limits on "Scoring" |
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| | | Online ratings based on algorithms are increasingly penetrating people's everyday lives. Scoring is increasingly deciding on the allocation of housing or loans. The European Court of Justice (ECJ) has now placed stricter limits on credit rating agencies - such as the German Schufa - but according to the Centrum für Europäische Politik (cep), this does not yet clarify crucial issues.
Go to cepAdhoc |
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| | | | cepPolicyBrief: Dimensions and Weights of Commercial Vehicles |
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| | | Heavy duty vehicles cause more than 6% of all greenhouse gases in Europe - and the trend is rising. The Commission wants to reduce CO2 emissions by promoting zero-emission vehicles and more efficient road freight transport. The Centre for European Policy (cep) supports the proposal but calls for fair competitive conditions for rail and inland shipping.
Go to cepPolicyBrief |
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| | | | cepStudy: Euro-Clearing after Brexit |
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| | | Derivatives contracts in the EU are increasingly being cleared via central counterparties (CCPs). A large proportion of this clearing, particularly for euro-denominated derivatives contracts ("euro clearing"), is carried out by clearing houses in the UK - outside the EU since Brexit. A study by the Centre for European Policy (cep), supported by Deutsche Börse, considers efforts to relocate euro clearing to the EU to be necessary.
Go to cepStudy |
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| | | | | | The international website "Common Ground of Europe" is an initiative of the Centres for European Policy Network (cep). On the commongroundeurope.eu website, cep collects mainly English-language contributions, articles and interviews from decision-makers and experts in politics, business and science. We cordially invite you to take a look through our window on Europe. Here is one example from the past month. |
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| Roderich Kiesewetter: "Germany Slumbers on"
He has been a Member of the Bundestag for the CDU since 2009: In an exclusive interview with cep's Head of Communications Jörg Köpke, foreign affairs expert Roderich Kiesewetter explains Russia's vision of a new world order - and why Germany is not prepared.
Go to article |
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| | | | | Dear Readers,
Johann Wolfgang von Goethe wrote: "It's not enough to want, you also have to do." I wish you an energetic New Year in a hopefully revitalised Europe.
Stay tuned!
Yours
Dr. Jörg Köpke |
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