Dear Readers,

There is a lot to read about Europe these days. And most of it is not good news. Looking to the European elections in June, there are growing fears of a shift to the right. The old continent is groaning under the weight of debt, social contributions and bureaucracy. A vague fear of foreign infiltration mixes with well-founded concerns about loss of standing and economic decline.

And how is Brussels reacting? Marie-Agnes Strack-Zimmermann, the FDP's lead candidate for the European Parliament, put it this way: "Ursula von der Leyen is tattooing ants". The lively liberal from the Lower Rhine has always had an acerbic wit -  but tattooing ants?

On closer inspection, however, the comparison turns out to be entirely justified. Instead of plotting the way forward, instead of developing a vision and relieving citizens of the burden of rules, instead of finding answers to fascism, anti-Semitism, new-age nonsense, Trumpism, Putinism, economic paralysis, reliance on the nanny state and lack of education, the Commission President is barricading herself behind dirigiste legislative minutiae that either overlooks reality (Supply Chain Act), amounts to economic nonsense (Chips Act) or simply comes too late (AI Act). In short: she is tattooing ants.

"It's actually always the same with the planned economy: first, decisions are made, then reality sets in, then things get tough, then rationing is introduced - then everything is ruined," wrote Ben Krischke recently in Cicero. That's exactly what it’s like. You decide on the Green Deal, the green taxonomy, the digital euro and other highly ambitious prestige projects, only to be crushed by the facts. And then those responsible are surprised when voters lose interest in the European project.

High time to replace ants with elephants. Europe is too big and too important to be left to dull management consultants and pedantic bureaucrats.

Stay tuned!

Yours
Dr. Jörg Köpke  

"Ursula von der Leyen is tattooing ants": FDP top candidate Marie-Agnes Strack-Zimmermann criticises the Commission President's policies ahead of the European elections.

Defence Policy: Strengthening the European Defence Industry

On 27 February, the Commission intends to present a European Defence Industrial Strategy and a Regulation on the European Defence Investment Programme. The Commission is thereby aiming to strengthen the European defence industry and enable Member States to acquire new defence equipment. The Regulation, which is also known as the Defence Production Act, is intended to promote joint development and procurement projects that are of great common interest to the security of the Member States. It will also enable companies to deliver defence equipment quickly when needed.

On 27 February, the Commission will submit a Communication on reform of the EU. The Communication will evaluate the current EU rules in the light of the accession of further Member States. In addition, reform proposals are presented that are intended to ensure the functioning of the EU with 30 or more Member States. Possible accession candidates are Ukraine, Moldova and the Western Balkans.

Critical Medicines Alliance: Commission Invites People to Get Involved

Until 15 February, anyone, including companies, can apply for Membership of the Alliance for Critical Medicines being launched by the Commission. The alliance is one of the key measures in the fight against medicine shortages, which the Commission announced last year. Its main aim is to help find practical solutions to combat supply shortages. The new alliance will bring together all relevant stakeholders and strengthen cooperation between the Commission, national governments, industry and civil society. It will also act as a network to speed up the implementation of specific measures. It will draw up recommendations (see also cepInput 12/2023) and advise both the Commission and the Member States. The alliance is scheduled to begin its actual work in April.

On 6 February, the Commission will submit an EU climate target for 2040. The EU wants to reduce its emissions of greenhouse gases (GHG) to net zero by 2050 ("climate neutrality") and by 55% by 2030 compared to 1990 (EU climate target 2030). According to the European Climate Law [Regulation (EU) 2021/1119; see cepPolicyBrief 3/2020] the Commission is obliged to propose a GHG reduction target for 2040 (EU climate target 2040). It will also present possible measures to reduce GHG emissions and options for CO2 removal.

Digital Networks and Infrastructures: Commission Publishes Connectivity Package

On 21 February 2024, the Commission will present a connectivity package on digital networks and infrastructure. It is set to contain ideas for a future Digital Networks Act (DNA) aimed at developing a future-proof telecommunications and digital sector and is essentially based on four pillars. The Commission wants to explore steps to attract more funding to the sector, particularly from private investors. Otherwise, it fears that the digital goals it has set itself for the end of the decade will not be achieved. It will be interesting to see whether and, if so, what alternatives it will present to the widely debated fair share financing models. These provided for a mandatory contribution from the Tech Giants to the cost of setting up network infrastructure; outline visions for the digital infrastructures of tomorrow as part of a white paper. Among other things, this will look at how to establish digital infrastructure operators on the market that are active throughout the EU. The focus here will be most notably on competition and consolidation issues. In addition, steps towards deregulation, further Europeanisation of radio spectrum policy and reducing the costs for the rapid introduction of new digital technologies could be presented; present considerations on how the EU can maintain competitiveness in software and cloud-based networks, and regarding hardware-based telecommunications equipment, in order to hold its own against companies from third countries; present measures to strengthen the security of digital infrastructures against the backdrop of growing geopolitical tensions. It is expected to submit a non-binding recommendation in this regard. One focus will probably be on the protection of submarine cables and the identification and financing of cable projects that are strategically important for the EU.

On 6 February, the Commission intends to present a strategy for the increased promotion of technologies for the industrial storage and utilisation of CO2. A rapid market ramp-up of such technologies is essential to achieve the goal of a climate-neutral EU by 2050 (see cepInput 1/2024). Areas of application include both the capture of emissions in industrial sectors that are difficult to decarbonise and the extraction of CO2 directly from the atmosphere or in the context of using biomass as an energy source. With this strategy, the Commission intends to create planning certainty for investment in separation plants, pipelines and storage facilities. To this end, an EU-wide set of rules for the development of a CO2 infrastructure will be developed. Incentives for the industrial utilisation of captured CO2 as a raw material, e.g. in the chemical industry, are to be strengthened by means of more detailed recording and a greater ability to set off the positive climate impact.

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.

On 2 February 2024, a provisional political agreement was reached on the Directive to promote repair ("right to repair") [see cepPolicyBrief 10/2023]. This aims to make it easier for consumers to have products repaired, especially after the warranty period has expired. The Directive is directly linked to the ecodesign requirements [see cepPolicyBrief 10/2022] and initially only applies to certain products, e.g. washing machines, refrigerators, televisions and smartphones. Under the ecodesign requirements, products actually have to be designed in a way that makes them, among other things, easy to repair and reusable. The new Directive means that consumers can now require the manufacturer to repair a product even after the warranty period has expired - but at their own expense. During the warranty period, consumers are still free to choose whether to have a defective product replaced or repaired. The Directive also aims to make repairs more attractive. It therefore provides for the warranty period to be extended by 12 months if a defective product is repaired rather than replaced. Member States can even increase this extension period. There will also be an EU-wide online platform enabling consumers to find a suitable repair centre in the EU.

On 5 December 2023, a provisional political agreement was reached on the Ecodesign Regulation [see cepPolicyBrief 10/2022]. While the previous 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 products, food and animal feed, product groups that are subject to more specific regulations, such as construction products or cars, are also excluded. In addition to energy consumption, other product characteristics will also be regulated in future. For example, products should be more durable throughout their entire life cycle and be easier to repair, reuse and recycle. A digital product passport with information on the sustainability of products will also be introduced. This should facilitate the correct handling of products along the supply chain and enable consumers to find out about the sustainability of products.

On 18 January 2024, a provisional political agreement was reached to amend the Regulation on CO2 emission standards for new heavy duty vehicles - lorries, buses and their trailers - [see cepPolicyBrief 13/2023]. For heavy lorries over 7.5 tonnes, and coaches, further reduction targets of 45% for 2030, 65% for 2035 and 90% for 2040 now apply in addition to the existing CO2 reduction target of 15% for 2025 compared to 2019. City buses must emit 90% less from 2030 and have zero emissions from 2035. From 2030, a reduction target of 7.5% applies to trailers and 10% to semi-trailers. The review of the 2027 Regulation will assess the role of a CO2 correction factor for alternative fuels and a methodology for the registration of heavy duty vehicles that run exclusively on CO2-neutral fuels.

On 5 February 2024 the Council and the European Parliament reached a provisional agreement on the Regulation on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities. The Commission had presented a proposal in June 2023 [COM(2023) 314].
ESG rating agencies assess the sustainability profile of companies and financial products and play an increasingly important role in financial markets. The new Regulation aims to improve the reliability and comparability of these ratings and to prevent greenwashing. ESG rating providers will have to be authorised by the European Securities and Markets Authority (ESMA). They will also have to meet a number of transparency requirements. For example, they will have to describe in detail the methods used to produce the ratings and the sources of information used. In principle, it should also be possible for providers to issue separate ratings for each dimension, i.e. for environmental, social or governance factors. Special rules are foreseen for small ESG rating providers. For example, they will be subject to simplified approval procedures.
The agreement still needs to be formally adopted by the European Parliament and the Council.

On 18 January 2024, the Council and the European Parliament reached a provisional agreement regarding the Directive on measures to be taken by Member States to prevent the financial system from being used for the purpose of money laundering and terrorist financing (6th Anti-Money Laundering Directive). The Commission had already presented the proposed Regulation in July 2021 [COM(2021) 423]. The revised Directive includes the following new provisions: Beneficial owners’ registers. The content and functioning of the registers, which disclose the natural persons who own or control legal entities (beneficial owners), will be further harmonised. In future, information will be digitally accessible both in national registers and via an EU-wide interconnected system of registers. As a rule, the information will be available for a minimum of five and a maximum of ten years. In addition to the supervisory authorities and the organisations obliged to combat money laundering and terrorist financing (obliged entities), members of the public with a legitimate interest (such as representatives of the press and civil society) will also be able to inspect the data. Financial Intelligence Units (FIUs): The existing FIUs are to be given additional competences and powers to analyse and detect money laundering and terrorist financing. They will also share information with the competent supervisory authorities, the new EU anti-money laundering authority (AMLA, see cepNewsletter 1/2024) Europol, Eurojust and the European Public Prosecutor's Office. In cross-border cases, they will also be able to carry out investigations in conjunction with AMLA. Supervision and sanctions: The powers of the supervisory authorities and the measures they can take will be more harmonised. This is intended to ensure that all so-called obliged entities domiciled in the Member States are supervised appropriately, effectively and on the basis of a risk-based approach. Furthermore, the sanctions for breaching the rules on money laundering will be tightened. 

The agreement that has 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.
 

On 18 January 2024, the Council and the European Parliament reached a provisional agreement on a new Regulation to prevent the financial system from being used for the purpose of money laundering and terrorist financing. The Commission had already presented the proposed Regulation in July 2021 [COM(2021) 420]. The Regulation contains the following new provisions, among others:
In future, there is to be an EU-wide limit for cash transactions of 10,000 euros. However, the member states can also set lower upper limits. However, if the transactions take place between two private individuals and they are not acting in a professional capacity, the upper limit will not apply.
In addition, the group of organisations that are obliged to combat money laundering and terrorist financing ("obliged entities") will be expanded. In addition to financial institutions, banks and casinos, crypto-asset service providers and dealers in certain luxury goods (e.g. precious metals, watches, luxury cars, yachts, works of art) are to be included. Professional football clubs and intermediaries will also be subject to money laundering requirements in future, although the member states may provide for exemptions for low-risk transactions, clubs below the first division and those with an annual turnover of less than €5 million calculated over two years. The extensions will apply three years after the new regulation comes into force, but only after five years in the case of clubs and intermediaries.
In addition, financial institutions and banks will in future have to comply with stricter due diligence obligations towards so-called ultra-rich individuals. These are persons with total assets of at least 50 million euros (excluding their main residence).

The agreement that has been reached still has to be formally adopted by the European Parliament and the Council.

Listing Act I: Agreement on Facilitating Access to the Capital Markets

On 1 February 2024, the Council and the European Parliament reached a provisional agreement on a Directive to amend the Markets in Financial Instruments Directive and a Regulation amending the Prospectus Regulation, the Market Abuse Regulation and the Markets in Financial Instruments Regulation. The Commission submitted proposals on this in December 2022 [COM(2022) 760 and COM(2022) 762, see cepPolicyBrief 9/2023]. They are part of a package of measures to facilitate stock exchange listings ("Listing Act").
The new rules are intended to increase the attractiveness of public markets in the EU and reduce the requirements imposed on issuers. At the same time, investor protection and market integrity are to be maintained. According to the agreement, existing rules, e.g. on the disclosure of insider information in the case of delayed transactions, will be relaxed. The bureaucratic burden associated with the preparation of securities prospectuses is also to be reduced. In addition, existing regulatory requirements for the preparation of market analyses will be adapted so that more such analyses of small and medium-sized enterprises (SMEs) are available in future, and their visibility is improved. Furthermore, the re-bundling of payments for financial analyses and the execution of orders will be allowed, in future.
The agreement that has now been reached still has to be formally adopted by the European Parliament and the Council. 
 
Listing Act II: Agreement on Multiple-vote Share Structures

On 1 February 2024, the Council and the European Parliament reached a provisional agreement on a new Directive on multiple-vote share structures. The Commission submitted a proposal on this back in 2012 [COM(2012) 761, see cepPolicyBrief 7/2012]. It is part of a package of measures to facilitate stock exchange listings ("Listing Act").
Many small family businesses, start-ups, founders and companies with long-term projects shy away from going public because they are afraid of losing control over key operating and investment decisions. Multiple-vote share structures can be used as a way to counteract this. Under the new Directive, Member States will now be obliged to allow companies to utilise such structures. In Germany, for example, these structures were banned for a long time but have been permitted again since the Future Financing Act (ZuFinG) was passed at the end of 2023.
By contrast with the Commission proposal, the agreement no longer focuses solely on trading venues that specialise in small and medium-sized enterprises (SMEs) ("SME growth market") but also includes other so-called multilateral trading facilities (MTFs). When it comes to the definition of safeguards to limit the impact of the increased voting weight of multiple-vote shares, the negotiators agreed that Member States can provide for either a maximum voting ratio or a restriction for (most) qualified majority decisions by the general meeting.
The agreement that has now been reached still has to be formally adopted by the European Parliament and the Council.

Gigabit Infrastructure Act: Agreement on Steps to Reduce Network Deployment Costs

On 6 February 2024, the Council and the European Parliament reached a provisional agreement on the Regulation on measures to reduce the cost of deploying gigabit electronic communications networks (Gigabit Infrastructure Act). The Regulation is intended to replace an existing Directive on measures to reduce the cost of deploying high-speed electronic communications networks [2014/61/EU, see cepPolicyBrief). The Commission presented its proposal in February 2023 [COM(2023) 94].
The Regulation is intended to reduce the costs of network roll-out through several measures. In particular, it aims to improve coordination between network operators when expanding the physical infrastructure – e.g. ducts and masts – required for gigabit networks. Furthermore, the bureaucratic burden of network deployment is to be reduced through more streamlined and less complex authorisation procedures and an increased focus on digital processes. The access to in-building physical infrastructure will also be newly regulated. One particular point of conflict in the negotiations was how to deal with the charges that EU citizens have to pay if they want to call or text another person who is in another EU country. These charges are already capped. The outcome of the negotiations now stipulates that the price caps of 19 cents per minute for calls and 6 cents per text message should continue to apply – at least until 2032.

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:

Evaluation and Review of the General Data Protection Regulation

In mid-2024, in its second report on the evaluation and review of the General Data Protection Regulation (GDPR), the Commission intends to take stock of the application of the GDPR to date. In this regard, it is using a Consultation firstly, to find out what experiences companies, civil society and people working in the field of data protection have had with the application of the GDPR, and also what challenges there are. Specifically, the Commission is hoping for feedback on problems in the exercise of data subjects' rights and on ways in which small and medium-sized enterprises (SMEs) could be better supported in the application of the GDPR. The Commission is also asking about experiences with data protection officers, data protection authorities and the guidelines of the European Data Protection Board. It is also asking about experiences with the principle of accountability, the risk-based approach of the GDPR, technical and organisational measures (TOMs) and data protection impact assessments. Finally, the Commission asks about experiences with the use of standard contractual clauses, other transfer tools, codes of conduct and certifications.

Secondly, the Commission is asking for opinions regarding the impact of the GDPR on innovation and new technologies and on the interaction between the GDPR and other initiatives such as the Data Act, the Data Governance Act and the European Health Data Space.
 
The submission period for opinions ends on 8 February 2024.
Go to Consultation

Evaluation of the Regulation on Serious Threats to Health
 
The EU Commission has launched a consultation on its initiative to evaluate the Regulation on serious cross-border threats to health adopted in 2022 (cepPolicyBrief 19/2021). The evaluation mainly concerns the operation of the Early Warning and Response System and the epidemiological surveillance network; the coordination of the response to a health crisis in the Health Security Committee and the Commission's work to improve preparedness and response activities provided for in the Regulation.
 
The submission period for opinions ends on 12 February 2024.
Go to consultation
 
Assessment of the new EU Health Authority HERA

The Commission has launched a consultation on the initiative to evaluate the new EU health authority HERA (see also cepInput 8/2022). HERA is one of the main pillars of the European Health Union (see also cepInput 4/2021) and aims to enable a more coordinated and better response to cross-border health threats such as the COVID-19 pandemic. It also aims to ensure that the EU is better prepared for future health threats. The evaluation will focus on the extent to which HERA is able to contribute effectively and efficiently to these policy objectives and fulfil its tasks on the basis of its mandate and instruments.
 
The submission period for opinions ends on 19 February 2024.
Go to Consultation

Wind Power: Recommendations for the Allocation of Expansion Support

The Commission is planning non-binding recommendations and guidelines for the design of auctions used by Member States to allocate support for renewable energy expansion. Currently, the award criteria are based mainly or entirely on price, while environmental and social standards are hardly taken into account. The Commission also intends to recommend pre-qualification criteria for cybersecurity, and measures to promote full and timely project completion.

The submission period for opinions ends on 1 March 2024.

Go to Consultation

Economic Security: Investments in Third Countries and Research on Dual-use Goods

On 24 January 2024, the EU Commission presented a package of five measures to strengthen the EU's economic security. It consists of a new Regulation on the screening of foreign investments, which replaces the existing Regulation [(EU) 2019/452, see cepPolicyBrief 32/2017 and cepAdhoc 5/2020] and is intended to counter risks to security and public order in the EU; a White Paper on outbound investments which proposes, for example, that risks associated with such investments, such as strengthening the military and intelligence capabilities of actors in third countries, should first be analysed and, on the basis of this analysis, an examination carried out as to whether further steps are required; a White Paper on export controls, which outlines measures for more effective control over exports of dual-use goods such as toxic substances and electronics; a White Paper on support for research and development involving technologies with dual-use potential, which outlines options for the EU to compete in these technologies; a Recommendation of the Council on strengthening research security in order to counter potential threats to international cooperation in the field of research, such as the use of research results for military purposes. 

As part of this package of measures, the Commission is also launching two calls for consultation. Thus, in a Consultation it asks for feedback on the White Paper on support for research and development of technologies with dual use potential. In a further Consultation on the White Paper on outbound investments, it is asking for contributions and reactions to the approaches presented in the White Paper.
 
The submission periods for opinions end on 17 April 2024 and 30 April 2024, respectively.
You can find the consultations  here and here.

5 - 8 February 2024
Strasbourg
Meeting of the European Parliament for the plenary session. This includes voting on a Regulation on instant credit transfers (see cepPolicyBrief 4/2023) and two Directives aimed at regulating investment funds (AIFM and UCITS Directives, see cepPolicyBrief 7/2022).

9 February 2024
Brussels
Meeting of the Committee of Permanent Representatives (Coreper). It deals with the vote on the controversial EU Supply Chain Directive (see cepPolicyBrief 16/2022) and the granting of a partial negotiating mandate on the EU Cybersolidarity Act.

13 February 2024
Brussels
Meeting of the Committee on the Internal Market and Consumer Protection (IMCO) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE). Final votes in the lead committees on the Regulation on harmonised rules for artificial intelligence (AI Act, see cepPolicyBrief 27/2021).

13 February 2024
Brussels
Meeting of the Committee on the Internal Market and Consumer Protection. Topics include the European Right to Repair (see cepPolicyBrief 10/2023) and the Single Market Emergency Instrument (see cepPolicyBrief 6/2023).

cepPublictions

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 are some examples from the past month.

The following was recognised as far back as the 18th century by French aristocrat and politician François VI, Duke de La Rochefoucauld, who noted that: "Those who concern themselves too much with small things become incapable of big things."