European Parliamentary Research Service Blog

Written by Clare Ferguson with Sophia Stone.

During its third plenary session of February, Parliament continues to focus on the energy and climate crises, alongside other urgent priorities. The Council and European Commission are expected to make statements on the EU response to the effects of the recent earthquake in Turkey and Syria, and also on the establishment of an independent EU ethics body. Following President Volodymyr Zelenskyy’s address to a special sitting of Parliament on 9 February, the Council and Commission are also expected to give statements as we approach one year since Russia’s invasion of Ukraine. As part of the regular debates on breaches of human rights, democracy and the rule of law, Members are due to debate the Russian regime’s inhuman treatment of Alexey Navalny and other political prisoners. On Tuesday morning, the President of the Republic of Latvia, Egils Levits, will address Members in a formal sitting.

Reaching the end of the legislative procedure on the file, Members are expected to consider the provisional agreement reached with the Council on REPowerEU chapters in recovery and resilience plans on Monday evening. If approved, the amendments to the Recovery and Resilience Facility (RRF) should enable EU countries to use their RRF plans to fund additional energy investment and reform measures necessitated by the twin climate and energy crises. Parliament’s negotiators have ensured that the RRF amendments prioritise tackling energy poverty and small businesses, and that spending under the plans will be fully transparent.

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In line with measures to tackle climate change, on Tuesday morning Members are set to debate an agreement reached with the Council on reducing road transport emissions under the ‘Fit for 55’ initiative. Transport is the only sector where greenhouse gas (GHG) emissions have continued to rise. To set stricter CO2 emission standards for new cars and vans, Parliament’s negotiators have succeeded in introducing more ambitious zero low emission vehicle (ZLEV) incentives; limits to the maximum contribution of sustainable production (or ‘eco-innovation’) to CO2 reduction efforts; and have ensured measures are based on real-world energy consumption and emissions data.

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Christine Lagarde, President of the European Central Bank (ECB), is expected to attend the plenary on Wednesday afternoon, for a debate on an Economic and Monetary Affairs (ECON) Committee own-initiative report on the 2021 ECB annual report. The report raises concerns about the high levels of inflation – at 2.6 % on average in 2021, but subsequently reaching 9.2 % in 2022. The ECON committee welcomes ECB measures to raise interest rates and its recognition of the need to progress fiscal integration in the EU. However, it also warns that measures must be gradual, targeted and justified. The ECON committee particularly welcomes the ECB’s plans to incorporate climate risk in monetary policy. One area in which inflation has hit hard is agriculture, where farmers have been facing steeply rising prices for fertilisers. An oral question to the Commission on the availability of affordable fertilisers is scheduled for Thursday morning

The digital communications that power much of modern life depend on satellites as well as cabling (e.g. location services, phone calls in rural areas). But the EU depends on other countries for satellite-based service infrastructure. On Monday evening, Members are expected to debate an agreement on a proposal to ensure resilient, interconnected and secure satellite infrastructure in the EU. Known as IRIS², this secure connectivity programme should run until 2027, setting up dedicated EU infrastructure, designed and deployed under private partnership. The programme should focus on improving five areas: multi-orbital infrastructure; cyber-resilience and cybersecurity; links with the EU space programme; deployment of innovative technology; and high-speed broadband and seamless connectivity (including current communication ‘dead zones’). The agreement on the proposal reflects Parliament’s priority for improved telecommunications security and a more sustainable space policy. If Members adopt the text, the EU agency for the space programme (EUSPA) will provide governance.

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The Council of Europe’s Convention on preventing and combating violence against women and domestic violence (known as the Istanbul Convention) sets standards on prevention, protection, prosecution and services for those at risk of gender-based violence (GBV). Parliament has repeatedly called for EU accession to the Istanbul Convention as well as its ratification by those individual EU countries that have yet to do so. However, certain ‘deliberate misinterpretations’ persist. Members are due to debate a joint report from Parliament’s Committees on Women’s Rights and Gender Equality (FEMM) and Civil Liberties, Justice and Home Affairs (LIBE) on EU accession to the Istanbul Convention on Tuesday afternoon. The report calls for constructive dialogue, aimed at dispelling remaining Member State concerns, and stresses that while not exempting individual countries from the need to ratify, EU accession can take place before all have done so.

The European Parliament supports EU enlargement and the European perspective for all Western Balkan countries, and Members are expected to hear from the Commission during the Question Time session on Tuesday afternoon about the strengthened EU Western Balkans enlargement policy. Parliament closely monitors candidates’ overall progress and their implementation of the EU acquis, and has direct influence over the amounts allocated to tools such as the IPA III. While the reform agenda and accession tempo vary for the region’s six countries, Parliament has stressed the need to build on the positive results already achieved to nurture constructive political dialogue.

Nearly 13.7 million EU citizens live in an EU country of which they are not a national. Sometimes termed ‘mobile’ citizens, they have been able to vote in European elections for 30 years, a right safeguarded by the Treaties. In a joint debate scheduled for Monday evening, Parliament is due to debate and vote on a Committee on Constitutional Affairs (AFCO) report on proposals to eliminate barriers to exercising the electoral rights of European citizens in European Parliament elections, such as a lack of information or difficult registration procedures. Seeking to square the proposal with other similar files, the AFCO report underlines the need for improved access to voting booths, and encourages civil society involvement in ensuring citizens can obtain information, including in their own language. At the same time, Members are due to debate a Committee on Civil Liberties, Justice and Home Affairs (LIBE) report on proposals reinforcing mobile citizens’ electoral rights in municipal elections. The LIBE committee would like to see derogations and restrictions removed, information provided in the language of the voter’s choice, and harmonised data indicators. The committee also urges Member States to facilitate voting for citizens with disabilities. Both files fall under the consultation procedure (where Council is not bound by Parliament’s opinion), and the Council has to adopt the proposals unanimously.

Further reading

• Agenda for the European Parliament Plenary Session
• Agreement on REPowerEU chapters in recovery and resilience plans
• CO2 emission standards for new cars and vans
• European Central Bank annual report – 2021
• Ensuring fertilisers are available and affordable in the EU
• EU secure connectivity programme 2023-2027
• EU accession to the Istanbul Convention
• Question Time: EU Western Balkans enlargement policy
• Electoral rights of mobile EU citizens in European Parliament elections
• Electoral rights of mobile EU citizens in municipal elections

Written by Marcin Szczepański.

The European Union-United States Trade and Technology Council (TTC) was launched during a June 2021 summit. The aim was to revitalise transatlantic cooperation, boost bilateral trade and investment, and strengthen the parties’ technological and industrial leadership, while preserving shared values. The TTC has held three high-level political meetings so far. These ministerial meetings steer cooperation within the TTC and guide its 10 working groups on technology standards, secure supply chains, tech regulation, global trade challenges, climate and green technologies, investment screening and export controls. The first two meetings focused on launching the TTC and setting its agenda, while the third – in December 2022 – was described as a ‘shift to deliverables’.

The war in Ukraine has strengthened the transatlantic alliance and created numerous new challenges, to which the TTC has responded, in particular with a swift and coordinated roll-out of export controls. The latest TTC meeting agenda was also influenced by the US Inflation Reduction Act (IRA). Adopted in August 2022, this act earmarked nearly US$370 billion to boost the US fight against climate change and its domestic industry. While some in the EU have approved this increased commitment on the part of the US to climate-related spending, others have voiced concerns about the risks of the IRA triggering a relocation of EU businesses to the US in pursuit of the generous subsidies, grants and tax credits the newly adopted act has promised.

So far, the TTC’s work has focused mostly on information sharing, joint mapping, defining best practice, identifying risks and exploring options for closer cooperation. The third meeting made progress on artificial intelligence standards, global connectivity, transparency of semiconductor supply chains, meaningful dialogue on forced labour and due diligence, sustainable trade, post‑quantum encryption and China’s non-market practices. Observers are divided on whether the TTC should tackle major bilateral trade irritants or work mainly on the forward-looking policies. All agree, however, that the next meeting, set to take place in May or June 2023 in Sweden, must deliver substantial and tangible results if the TTC is to remain relevant and not lose momentum.

Read this briefing on ‘EU-US Trade and Technology Council: Modest progress in a challenging context‘ in the Think Tank pages of the European Parliament.

Incentives for private buyers of electric vehicles (in € thousands). EU, US and UK climate-related spending by 2025 (% of GDP)

Written by Sebastian Clapp.

Following joint declarations by the EU and NATO in 2016 and 2018, a third joint declaration was signed on 10 January 2023. While some laud the declaration as a manifesto for increased cooperation, others perceive its 14 clauses to be mere symbolism. Russia’s illegal war against Ukraine, and Finland and Sweden’s push to join NATO, have recently highlighted the importance of strong cooperation between the EU and NATO.

Background: EU-NATO cooperation

EU-NATO cooperation focuses on issues of common interest. Relations between the two organisations were institutionalised in the early 2000s through the Berlin Plus agreement. A first EU-NATO declaration, signed at NATO’s 2016 Warsaw Summit, focused on cooperation in seven strategic areas (hybrid threats, operational cooperation (including maritime issues), cyber security, defence capabilities, industry and research, coordinated exercises and capacity building). As a follow-up, 74 measures were endorsed with a view to advancing EU-NATO cooperation: 42 in December 2016 and a further 32 in December 2017. A second EU-NATO joint declaration, signed in 2018, built on the objectives of the 2016 declaration. In addition, the parties committed to making swift progress in areas such as military mobility and counter-terrorism and promoting the women, peace and security agenda.

Progress on commitments in the areas of cooperation are assessed in annual progress reports, most recently in June 2022. Both the 2022 NATO Strategic Concept – a document that outlines the Alliance’s strategy, defence and deterrence posture and core tasks – and the 2022 EU Strategic Compass – a concrete plan of action for the EU’s security and defence until 2030 – underline the partnership’s importance. They also note that cooperation must be enhanced further on issues of common interest such as military mobility, emerging disruptive technologies, and hybrid and cyber threats.

However, challenges in cooperation remain, first and foremost owing to tensions between Turkey and Cyprus, but also arising from the comparatively weak European defence capabilities and budgets (though these are improving), which has led to fighting over ‘burden-sharing‘. While some argue that the European Allies are ‘freeloading shamelessly on the US’, others urge caution, arguing that ‘freeloading’ depends entirely on the indicators used. Another recent challenge has been Turkey’s opposition to Sweden’s NATO accession, citing inter alia Sweden’s ‘refusal’ to extradite people allegedly tied to Kurdish militant groups. Experts however argue that Turkey will likely eventually ratify Sweden’s accession.

Recently, Russia’s war on Ukraine, and Sweden and Finland‘s push to join NATO, have given the EU and NATO fresh impetus to build on their cooperation (once the two countries do join NATO, the organisations will have 23 members in common). Since the war began, the two organisations have sought to ensure that their responses to the invasion complement each other. For instance, NATO Allies have coordinated weapons deliveries with the EU. It is in this context that the third EU-NATO declaration was negotiated.

Third EU-NATO declaration

The intention to sign a third EU-NATO joint declaration was announced by the Commission President, Ursula von der Leyen, in her 2021 State of the Union address, which stated that it would be presented before the end of 2021. The declaration was finally signed on 10 January 2023. While no reason was given for the delay, experts note that several issues may have contributed: Turkey-Cyprus tensions, difficult negotiations on the wording regarding the EU’s defence role, and similarly on the wording dealing with China. According to one analyst, the two sides spent 2022 privately criticising each other for blocking parts of the declaration.

At the press conference following the signing of the declaration, NATO Secretary General, Jens Stoltenberg, noted that NATO and the EU ‘are determined to take the partnership … to the next level’. The declaration has 14 clauses, with rather little substance in terms of concrete deliverables and calls to action. Most clauses are observations or assessments of progress or statements of principles. The most important points are:

• common threats: the declaration underlines that both organisations are faced with threats, including ‘the gravest threat to Euro-Atlantic security in decades’: the Russian aggression against Ukraine, but also inter alia challenges stemming from authoritarian actors, persistent conflict, fragility and instability in the European common neighbourhood, and terrorist groups. These challenges ‘more than ever’ highlight the importance of the transatlantic bond, a sentiment reflected in the EU’s 2022 Strategic Compass and NATO’s 2022 Strategic Concept;
• areas of cooperation: the declaration underlines that ‘unprecedented progress’ has been achieved in all areas of cooperation, though experts note that progress has been relatively slow. It describes ‘tangible results’ in countering cyber and hybrid threats, but also as regards operational cooperation, defence capabilities, defence industry and research, exercises, counter-terrorism and capacity-building of partners. It vows to deepen cooperation on existing issues and expand cooperation to tackle growing ‘geostrategic competition, resilience issues, protection of critical infrastructures, emerging and disruptive technologies, space, the security implications of climate change and foreign information manipulation and interference’. In a first sign of progress since the signing of the declaration, on 11 January 2023 NATO and the EU agreed to launch a taskforce on resilience and critical infrastructure protection;
• European defence: while NATO ‘remains the foundation of collective defence for its Allies’, the declaration acknowledges that a ‘stronger and more capable European defence’ is a positive contribution to transatlantic and global security and is interoperable with NATO. NATO had already stated as much in its 2022 Strategic Concept. This has however not always been the case, as the United States – widely considered the most important player in the Alliance – has traditionally been sceptical of European defence ambitions. The Biden administration has however repeatedly expressed support for European defence efforts. Some experts however deem the wording in the declaration as US scepticism of EU defence efforts;
• China: the declaration is the first to mention China, noting that ‘China’s growing assertiveness and policies present challenges that we need to address’. This formulation is neither a condemnation nor a specific call for action, but rather a cautious statement. Experts note, however, that it is markedly different from the Strategic Compass, which describes China as ‘a partner for cooperation, an economic competitor and a systemic rival’, and more similar to the US national security strategy, showcasing the US influence on the wording. To address these challenges, NATO and the EU are increasing their engagement with Indo-Pacific partners.

While some, such as the Lithuanian President, Gitanas Nauseda, have welcomed the declaration as ‘a highly important manifesto consolidating [NATO and the EU’s] strategic partnership’, which sends a strong message of transatlantic unity, others see its significance as mainly ‘symbolic’. Some experts have long argued that there should be a division of labour between the two organisations and that it is feasible. One opinion voiced is that, as NATO remains the cornerstone of collective defence, the EU should focus on resilience against non-military threats. Others argue that a division of labour ‘may seem rational … [but] it would not work’. However, this issue is not taken up at all in the declaration. In the US, some have called the declaration a ‘defeat for the American people’, arguing that the US should not continue to guarantee EU security and that the US taxpayer should stop subsidising EU defence. Others see the end of European strategic autonomy efforts in the declaration, arguing that faced with the worst security crisis since 1945, the EU and NATO ‘have agreed it’s probably safer to just rely on Uncle Sam’s F-35s… and nuclear capabilities’.

European Parliament position

Parliament’s resolution on the 2022 annual report on the implementation of the CSDP and its resolution on the 2022 annual report on the implementation of the CFSP, both adopted on 18 January 2023, stress the importance of enhancing the strategic partnership with NATO and welcome the third joint EU-NATO declaration. The former highlights the need for further steps to deepen the partnership based on what the Strategic Concept and Strategic Compass envisage, particularly in the areas of military mobility, dual-use infrastructure, resilience and joint exercises. In its resolution of 7 July 2021 on EU-NATO cooperation, Parliament recognised, among other things, NATO’s role as the cornerstone of collective security for those Member States that are also NATO members and highlighted the importance of EU-NATO cooperation.

Read this ‘at a glance’ on ‘The third joint EU-NATO declaration‘ in the Think Tank pages of the European Parliament.

Written by Nera Kuljanic.

By 2050, an estimated two thirds of the world population will live in urban areas. Could vertical farming help feed this growing urban population sustainably by reducing the demand for agricultural land and shortening the travel distance between food production and consumption?

Vertical farming is the practice of producing food in vertically stacked layers or vertically inclined surfaces, sometimes integrated into buildings, without soil or sunlight. The food produced consists primarily of leafy green vegetables, fruits and herbs, such as lettuce, spinach, kale, tomatoes, peppers, strawberries and basil, but not cereals or legumes such as wheat, rice, corn or soy. The plants are grown in hydro- or aeroponic systems, meaning that they are suspended in water or air/mist and receive all their nutrients via this medium. Aquaponic systems combine hydroponics and aquaculture. Methods of controlled-environment agriculture (CEA) are used to manage humidity, temperature, gases, light (amount and wavelength), nutrients, acidity level, carbon dioxide, water and pathogens.

The promises of vertical farming are plenty: year-round, predictable production, independent of weather, season or climate (and therefore climate change) and consequently without large seasonal price fluctuations. A short chain between producer and consumer would drastically reduce food miles and result in fresher, more nutrient-rich produce. Vertical farming could attain higher yields while requiring considerably less water and pesticides or herbicides. It is even possible to alter the nutrient content and flavour of the plants by controlling the growth medium. The bottlenecks slowing down the full-scale application of vertical farms are their high energy demand and related environmental sustainability issues, efficiency of the light use by the plant, and the high start-up and scale-up costs. Will growing food vertically be a distinctive feature of the urban architecture of the future?

Potential impacts and developments

Vertical farming is connected to urban farming initiatives. The idea that food could be grown in stacked layers is being tried and tested all over the world, from New Jersey (US), to Belgium, and from Dubai to Japan, and researchers are also looking into the efficiency of vertical farming. Future developments may bring about kitchen cupboard-sized vertical farms for home gardening enthusiasts or vertical farming aisles in local supermarkets. On a larger scale, by re-using and repurposing empty warehouses, factories and plants, vertical farming could play a role in the reconversion of industrial areas, though this may first involve restoring contaminated land.

While it is in theory possible to grow practically any crop vertically, the most cost-effective are fast-growing crops with little or no inedible parts like roots and stems and with high market value. The technologies underlying such soilless farming in strictly controlled environmental conditions include lighting, watering and waste management systems, harnessing renewable energy, sensors of all kinds, and other smart devices to autonomously control and fine-tune environmental parameters. Machine learning and automation are used to optimise growth conditions and manage the installations. For example, the partly EU-funded company Infarm has connected its widespread point-of-sale farms to a central platform that learns from the growth data of each farm, adjusting conditions and optimising growth. The redesign of buildings and innovation in construction materials and techniques also plays a role in shaping vertical farms.

Vertical farms are energy-hungry. Some of the energy-related costs can be offset by savings from not using agri-chemicals, from considerably smaller transport, storage and distribution costs, and from less spoilage and waste. But the current energy crisis could have dire consequences for the sector. Sustainable generation of electricity, improvements in battery storage and in the efficiency of LED lights will be essential for the sustainability and economic viability of vertical farming. The use of energy also has implications for the carbon footprint of the vertical farms: whether they are fossil fuel- or renewable-powered makes a significant difference. Shorter distribution chains mean fewer transport emissions, but that does not necessarily imply fewer emissions overall for vertical farming. Therefore, research is ambiguous about whether overall carbon emissions are lower for vertical farming than for traditional farming methods.

The number of vertical farming initiatives in Europe is relatively small. While some focus on selling fresh produce, others offer agriculture-as-a-service or sell model vertical farms. On the global market, estimated at €4 billion, Europe comes behind North America and the Asia-Pacific. The sector is young, capital-intensive, and starting a business comes with a risk. Scaling up vertical farms is not straightforward: what works for some companies or on a small scale, might not be the right model for others.

Vertical farmers will require a high level of specialisation, with farms most likely managed by teams of experts with different backgrounds. These will include mechanical, electrical, agricultural and biological engineers, growth managers, architects, data scientists, software developers and cyber-experts. Moreover, with using autonomous robots to handle harvesting, planting and logistics, vertical farming will requires less traditional agricultural manual labour, bringing fear of job losses. The artificiality of vertical farming may scare consumers that have romanticised images of traditional farming, often kept alive by advertising. However, the hyper-local nature of vertical farming may also reconnect consumers with the food production process and help make some fruits and vegetables more readily available.

Since almost 50 % of the calories we consume come from cereals such as rice and wheat that are not grown vertically, vertical farmers will not feed the world. However, vertical farming proposes solutions to the challenges of modern agriculture while contributing to urban sustainability. With all the advantages and challenges of vertical farming, and indoor farming alternatives such as greenhouses, cost-effectiveness is questionable. However, with further technological development and the confidence and knowledge arising from experience in the industry, the performance of vertical farming is likely to improve while costs fall. Finally, the approach may work particularly well for some crops in some environments, such as urban food deserts and metropolises where land is scarce and expensive, or for farming in extreme environmental conditions, for instance in space.

Anticipatory policy-making

Urban agriculture, including vertical farming, has the potential to contribute to viable food production, sustainable management of natural resources, climate action, and balanced territorial development. In March 2020, the European Commission adopted a new circular economy action plan with food, water and nutrients representing one of the key value chains, and, in May 2020, the farm to fork strategy at the heart of the European Green Deal. Vertical farming could contribute to these objectives by reducing the use of agri-chemicals and water in agriculture, and by countering soil degradation, deforestation and water eutrophication (increased nutrient load).

Vertical farming is included in US federal agricultural policy as of 2018. While the EU has been funding initiatives with a vertical farming-related theme under research programmes, the European Regional Development Fund (ERDF) and the European Agricultural Fund for Rural Development (EAFRD), it is not covered by EU agricultural and climate policies. This could partially be attributed to the nature of vertical faming as a policy theme, as it is found at the intersection of rural and urban planning, and research and development (R&D) and agricultural policies. To make vertical farming a successful contributor to the food supply, it will have to be recognised in public policy. R&D efforts could focus on reducing operational costs and the high energy demand, as well as addressing challenges related to economic profitability and consumer acceptance. Financial incentives from governments should also make vertical faming feasible for small producers, not just big tech.

Under the EU rules currently in force, vertical farming is not considered as organic farming. A special certification system may be needed, as well as establishing standards for vertical farming facilities and practices. Similarly, vertical farming managers and workers will need certified, and recognised training and education opportunities.

Fruit and vegetables grown in vertical food factories might come with premium price tags catering to affluent citizens, leaving those worse off without access to the food grown in their neighbourhoods. Lastly, similar to many other emerging applications, a close watch will have to be kept over the cybersecurity issues related to smart farming.

Read this ‘at a glance’ on ‘What if we grew plants vertically?‘ in the Think Tank pages of the European Parliament.

Listen to podcast ‘What if we grew plants vertically?’ on YouTube.

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Written by Alessandro D’Alfonso, Martin Höflmayr, Karoline Kowald, Sidonia Mazur, Marin Mileusnic and Marianna Pari.

The economic outlook for 2023 is marked by a large degree of uncertainty, the prospect of a shallow and likely short-lived recession at the start of the year, inflation at elevated levels, and a remarkably robust labour market. However, forward-looking economic data such as production and sentiment indicators give reason for hope that a recession can be fended off despite the gloomy prospects. While at the beginning of last year, the economic momentum for a recovery from the COVID-19 pandemic was strong, supported by decisive fiscal and monetary policies, the Russian invasion of Ukraine in February 2022 put a premature brake on the economic recovery. Alongside the humanitarian tragedy of the war, Europe was hit by a substantial shock in import prices that severely dented the economic outlook and aggravated price increases. In particular, soaring energy prices pushed EU inflation to unprecedented levels not reached since the advent of the economic and monetary union. In 2022, average annual inflation reached a record of 9.2 %. With fading pressures from energy prices, and monetary policy measures taken by the European Central Bank (ECB) achieving their desired results, overall inflation is expected to fall significantly in 2023. However, it will then remain above the 2 % target, as projections assume that wages will pick up and fiscal measures, which are currently curbing energy prices, will be withdrawn later, pushing inflation up, with a carry-over effect until 2025. The latter effect prompted the ECB to revise its latest inflation projections upwards (Chapter 2). That illustrates the growing divide between fiscal and monetary policy objectives, as monetary authorities are fighting inflation while fiscal policy tries to cushion the impact of high energy prices on households and firms.

While economic growth and inflation trajectories are going in opposite directions – unlike the oil price shocks of the 1970s, which led to a period of stagflation – labour markets have proven particularly resilient. Unemployment rates are at record low levels as demand for labour remains high. In an environment of slowing growth, high inflation, elevated post-pandemic debt levels and eroding real incomes, the economic outlook is heavily influenced by the development of the geopolitical situation and its reverberations in commodity markets; forecasts are thus surrounded by a significant degree of uncertainty. In such an environment, policy responses need careful calibration, as policy coordination in the EU remains limited.

To ensure budgetary discipline and financial planning in an orderly manner, the EU’s finances are established around a medium-term structure, lasting for seven years. The current multiannual financial framework (MFF) – the sixth since the 1980s – was decided at the end of 2020 (Chapter 3). The pandemic has had a major impact on its design. It resulted in the adoption of an unprecedented budgetary package that combines the €1 210.9 billion MFF for the years 2021 to 2027 with the €806.9 billion Next Generation EU (NGEU) temporary recovery instrument. In that new financial architecture, the EU budget and NGEU play a major role in the EU’s strategy to relaunch the economy. Beyond supporting the recovery from the pandemic, the 2023 EU budget (Chapter 4), set at €186.6 billion in commitments, is providing additional funding for several programmes and policies designed to help face the consequences of Russia’s war of aggression against Ukraine, including the energy crisis, while backing the green and digital transition and biodiversity.

However, in the face of multiple challenges, notably the war on Ukraine and its repercussions, the European Commission will examine, in the second quarter of 2023, whether EU finances are sufficient to cope with the evolving context. The European Parliament has repeatedly voiced its concern that the EU’s long-term budget (Chapter 5) may already have reached its limits, and calls for an ambitious revision to increase the EU budget and make it more flexible. Parliament supports the EU budget being subject to respect of the rule of law, an essential precondition for sound financial management and effective use of EU funding. Moreover, Parliament is a proponent of strengthening parliamentary scrutiny and transparency over EU expenditure, including through NGEU and other EU financing tools, in particular off-budget instruments. Some of these issues will be examined in connection with the forthcoming modification of the EU’s financial rules.

NGEU (Chapter 6) is a major but temporary innovation in EU finances. Overall, it reinforces significantly the resources channelled through EU budgetary instruments up until 2026, supporting ambitious packages of investment and reform measures designed to make the EU economy more sustainable, innovative and inclusive. In 2023, NGEU is projected to finance additional grants worth €113.9 billion in commitments and €130.7 billion in payments, while its main expenditure tool, the Recovery and Resilience Facility (RRF), enters a crucial stage in its lifecycle following its first year of full deployment. The national recovery and resilience plans financed by the RRF focus their action on six priority areas of European relevance that have been identified as vital for strengthening the EU’s resilience, including the green transition (at least 37 % of each national plan) and the digital transformation (at least 20 %).

In addition, the RRF is expected to become the main funding tool of the REPowerEU plan, which seeks to end the EU’s dependence on Russian fossil fuels and accelerate the green transition. That development is meant to further reinforce the recovery plan’s already strong energy dimension. The European Parliament has repeatedly underlined the importance of NGEU and RRF implementation and monitoring, given the size and strategic nature of their expenditure. Lessons learnt from the RRF are feeding into the debate on the revision of the EU’s economic governance framework.

The economic focus of this year’s edition of the Economic and Budgetary Outlook is the EU economic governance framework and its forthcoming revision (Chapter 7). The chapter consists of two parts. The first examines the current design of the EU fiscal framework and its effectiveness, in particular by tracking public finance indicators and national compliance with the EU fiscal rules. The forward-looking part takes stock of the main orientations for a revised fiscal framework the European Commission has put forward. That section touches on the question of how greater investment levels across the EU could be sustained – whether through well-designed fiscal rules, an EU fiscal capacity, or by combining the two.

Policymakers and academics commonly agree that the EU economic governance framework is complex, rigid and prone to boosting domestic fiscal policies’ pro-cyclicality. Moreover, the rules have not contributed to the debt sustainability of Member States with particularly high debt-to-gross domestic product ratios, all the more so since the start of the pandemic crisis. In particular, the activation of the general escape clause by temporarily suspending the application of common fiscal rules has signalled the need for a revision of the EU fiscal framework to strengthen growth and investment prospects. The European Commission is expected to table legislative proposals in 2023with the aim of reforming the economic governance framework. Main elements of the forthcoming reforms include improved debt sustainability, stricter fiscal surveillance by the Commission within the European Semester exercise, the development of national fiscal plans (while evoking analogies with the national recovery and resilience plans under the RRF), and increased national ownership through empowered independent national fiscal institutions.

Read the complete study on ‘Economic and Budgetary Outlook for the European Union 2023‘ in the Think Tank pages of the European Parliament.

Written by Maria Niestat (1st edition).

The European Commission published on 7 November 2022 a proposal for a regulation on data collection and sharing relating to short-term accommodation rental services. The proposal contributes to the Commission’s priorities to make the EU fit for the digital age, and to build a future-ready economy that works for people and builds on the recent Digital Services Act, the proposal regulates online platforms, which connect hosts and guests for short-term accommodation rentals.

The regulation should facilitate the registration of hosts and their short-term rental properties and reduce inconsistencies in how online platforms share data. Platforms would have to check whether hosts register their units, and share data about rented nights and guests with public authorities. The regulation should also help to avoid large volumes of differing data requests imposing a heavy burden on online platforms, impairing their ability to offer services across the single market. It should also increase consumer confidence in these services.

The European Parliament and the Council need to set their positions on the file. In Parliament, the file has been assigned to the Committee on Internal Market and Consumer Protection (IMCO). In the Council, the working party on competitiveness and growth (tourism) is working on the proposal.

Versions

• February 2023: Data collection and sharing relating to short-term accommodation rental services (1st edition)

Proposal for a regulation of the European Parliament and of the Council on data collection and sharing relating to short-term accommodation rental services and amending Regulation (EU) 2018/1724 Committee responsible:Internal Market and Consumer Protection (IMCO)COM(2022) 571
7.11.2022
Rapporteur:Kim Van Sparrentak (Greens/EFA/The Netherlands)2022/0358(COD)Shadow rapporteurs:Kateřina Konečná (The Left/Czechia)Ordinary legislative procedure (COD)
(Parliament and Council on equal footing
– formerly ‘co-decision’) Next steps expected: Publication of draft report Guest nights spent at short-term accommodation, 2019 (booked via Airbnb, Booking, Expedia Group and Tripadvisor)

Written by Antonio Albaladejo Román.

People in the EU consume millions of tonnes of meat, fish, eggs, and dairy products every year. Animal products, which many consider essential for a balanced and nutritious diet, account for more than a third of the EU’s total agricultural output, and are an integral part of Europe’s rich and diverse gastronomic culture. Meeting the high demand for nutritious and affordable products of animal origin is a key task of the EU’s agricultural sector, which employs millions across all Member States. However, the challenges posed by the COVID-19 pandemic, climate change, and Russia’s war on Ukraine mean that feeding Europe’s livestock is becoming increasingly difficult.

Thanks to the common agricultural policy, the EU is not facing a food availability crisis. Nevertheless, with feedstuffs already now the highest producer input, rising costs for farmers translate into higher prices for basic commodities such as meat, eggs and milk. Inflation rates for food – the highest after those for energy – reached 13.8 % in December 2022 and remain the main concern for EU citizens, particularly lower-income households.

The European Parliament has repeatedly called for the sources of animal feed to be diversified. EU leaders have expressed their commitment to ensuring the EU’s food security and tackling rising food prices by reducing the EU’s dependency on key imported agricultural products and inputs, in particular vegetal proteins for animal feed.

The need for greater autonomy and diversification of animal feed sources, and the growing emphasis on the agricultural supply chains’ sustainability and circularity, is encouraging innovation in animal nutrition. Boosting the EU’s domestic production of feedstuffs, in particular of plant-based proteins, will increase the EU’s competitiveness and resilience against future supply disruptions.

Read the complete briefing on ‘EU feed autonomy: Closing the gaps in European food security‘ in the Think Tank pages of the European Parliament.

Annual price changes (in %) for agricultural outputs and inputs

Written by Liselotte Jensen with Chiara Scalamandrè.

Agrifood systems encompass the production and distribution of food and non-food products of agricultural origin. Unlike others, this sector has not seen a significant reduction in greenhouse gas (GHG) emissions in recent decades. While some of the sector’s emissions are hard to abate, for others there may be off-the-shelf options. Certain EU policies and instruments could also help reduce the agrifood system’s GHG emissions.

EU agrifood system emissions

The EU supports the transition towards sustainable agrifood systems. While total EU GHG emissions have dropped by a third since 1990, emissions from agrifood systems have fallen more slowly. In its latest analytical brief, FAOSTAT presents the results of its first database on agrifood systems, going beyond the farm gate. FAOSTAT reports that the agrifood system is responsible for a third of global GHG emissions. They are generated by farm production activities (crop and livestock); land use change (such as deforestation and peatland drainage); and pre-/post-production processes (for instance, retail, consumption and disposal). In 2020, the contribution of agrifood systems to total EU emissions was 31 %, within which the shares of emissions from ‘farm gate’ and ‘pre- and post- production’ activities accounted for circa 48 % and 48 % respectively, while 4 % was due to land use change.

Obstacles and trends

Agriculture plays a major role within the agrifood system. In 2020, the agricultural sector accounted for 11 % of the EU’s total domestic GHG emissions. Emissions from the agriculture sector fell by 15 % between 1990 and 2000 in the EU. From 2000 onwards, emissions kept falling but at a slower pace and, since 2005, the sector’s GHG emissions have been relatively constant, dropping by only 2 %. Even though, in the 2000-2018 period, carbon intensity (tonnes of carbon dioxide equivalent (tCO2e) released per million US dollars of value added from the farm gate in fixed 2015 prices) decreased on average by 6 % across 25 EU Member States (data unavailable for Estonia and Hungary), the major reduction occurred during the first 5 years. The most significant reductions in emission intensity within the farm gate were seen in Slovakia (-82 %), the Netherlands (-30 %) and Greece (-27 %), with only a few countries experiencing an opposite trend (in particular Luxembourg (+73 %), Finland (+40 %) and Cyprus (+35 %)). Overall, cuts in emissions were likely offset by a general increase in production. In 2020, methane emissions accounted for close to half (43 %) of the agricultural sector’s (farm gate) total emissions. Methane is a short-lived GHG, but has a much more potent global warming potential than CO2. Since natural processes, such as livestock manure, gastro-enteric releases and land use, are key sources of methane emissions, agriculture is considered a hard-to-abate sector. In addition, fertilisers have an adverse impact on climate through the release of nitrous oxide. There are however off-the-shelf solutions to reduce emissions from agrifood systems, including fuel switching and efficiency gains through automation. Thanks to efficiency gains, it has been possible to reduce the emission intensity (the level of GHGs released per kg of product) of specific food commodities (see Figure 2). EU production of pork and chicken meat, as well as cow milk and cereals (rice excluded), have decreased in emission intensity in recent decades. According to calculations by the European Topic Centre on Climate Change Mitigation, policies and measures currently in place are expected to prompt only a 1.5 % reduction in the agricultural sector’s emissions between now and 2040.

Impact of current tools and instruments Figure 2 − EU-27 Emission intensity evolution per kg of product (in kg of CO2e)

For agriculture, the common agricultural policy’s (CAP) goal is to supply affordable food to European citizens and guarantee a fair standard of living for farmers, while preserving the environment and its natural resources. To help achieve the CAP goals, as of January 2023 Member States are implementing national strategic plans including stricter environmental conditions, and a new tool to reward farmers who act in an environmentally friendly way (eco-schemes), which has received some criticism. Moreover, a special report by the European Court of Auditors, to which the European Commission replied, noted that, although half of all climate spending from the 2014-2020 EU budget related to agriculture, farm emissions had not decreased. Providing funds for innovation within the agrifood system, for instance optimisation of livestock diets and fertiliser management, can help to cut methane and nitrous oxide emissions respectively.

The EU is a frontrunner in terms of climate action and its climate and energy acquis covers aspects from energy production and efficiency to GHG emissions more broadly across all sectors. Reaching climate neutrality by 2050 will require agricultural practices and technological solutions to reduce CO2 emissions and increase carbon sequestration in carbon sinks.

Relevant Commission proposals and European Parliament position

To address challenges relating to agrifood chains, in 2020 the Commission adopted a communication on a ‘farm to fork strategy’. A report on regenerative agriculture from the European science academies makes policy recommendations for successful implementation of the strategy. In 2021, the Parliament passed a resolution on the strategy encouraging the Commission to translate the strategy into concrete action and stressing the importance of building sustainable food policy, boosting sustainability transitions and producing healthier food. There are a number of ongoing and planned initiatives beyond food production.

To align the acquis with the EU Climate Law’s 2030 target of at least a 55 % net emissions reduction, the Commission put forward the ‘Fit for 55‘ package on 14 July 2021. The proposals influencing the agrifood system are primarily the regulation on the inclusion of GHG from land use, land-use change and forestry (LULUCF), the Effort Sharing Regulation (ESR), which also covers agriculture, and the EU emission trading system (ETS), which impacts the entire food supply chain as it will cover not only emissions related to energy use and fertilisers but also fuels used for buildings and transportation. Moreover, in 2020 the Commission put forward a strategy to reduce methane emissions in the energy, agricultural, waste and wastewater sectors. In addition, the November 2022 legislative proposal (COM(2022) 672) on a Union framework for the certification of carbon removals has a strong focus on carbon farming.

In February 2021, a Parliament resolution underlined the role of a circular economy in decarbonisation and called on the Commission to set up a regulatory framework for certification of all nature-based and technological carbon removal solutions. Methane emissions, as well as sustainable carbon cycles, have been the focus of own initiative procedures within the Committee on Environment, Public Health and Food Safety (ENVI). For sustainable carbon cycles, the draft report stresses the importance of the agricultural and forestry sectors in contributing towards achieving climate neutrality. For methane, in October 2021 Parliament passed a resolution calling for a legislative framework with reduction targets and stressing the importance of emissions monitoring. To date, only a proposal to cover energy-related methane emissions has been put forward by the Commission.

Read this ‘at a glance’ on ‘Climate impact of the EU agrifood system‘ in the Think Tank pages of the European Parliament.

Written by Ralf Drachenberg and Annastiina Papunen.

EU Heads of State or Government will gather on 9 and 10 February 2023 for a special European Council meeting. In addition to Russia’s war on Ukraine, which will notably be addressed in the context of the EU–Ukraine summit held on 3 February 2023, the main agenda points will include migration and the EU’s economy. On migration, EU leaders will consider immediate operational action to address growing migratory pressure at the EU’s borders. In particular, they will discuss measures to strengthen EU external border control, improve cooperation with countries of origin and transit, enhance return rates, fight migrant trafficking and increase availability of data on migration flows. In the context of the challenges which high energy prices and the US Inflation Reduction Act subsidy plan pose to EU business, EU leaders will discuss ways of boosting the EU’s economic competitiveness in the short term, and attempt to find a common approach on possible support for European industries and/or further adaptations to State aid rules. For the longer term, they will consider the question of whether to establish a sovereignty fund for investment.

European Council agenda

The Indicative Leaders’ Agenda 2022, which offered an overview of EU leaders’ meetings and topics for the year, expired in December 2022, and has not yet been updated. It remains to be seen whether the European Council President, Charles Michel, will use this special European Council meeting as the occasion to present a new document covering 2023.

European Council meeting Russia’s war of aggression against Ukraine

Almost a year into Russia’s military aggression against Ukraine, EU leaders will discuss the situation in Ukraine for the ninth time. They will most probably reiterate their determination to support Ukraine’s sovereignty and territorial integrity for as long as the war takes, and confirm the EU’s commitment to continue providing political, financial, humanitarian and military support. As regards financial support, the EU has pledged €18 billion in macro-financial assistance for 2023, of which €3 billion has already been disbursed. With respect to military support, the EU has pledged €3.6 billion under the European peace facility, while individual Member States have promised different types of military equipment including, most recently, Leopard 2 tanks, for an estimated €8.4 billion. EU leaders are also likely to discuss outstanding points from the 10th sanctions package. As is now the tradition, the President of Ukraine, Volodymyr Zelenskyy, will most probably address the European Council again.

The European Council meeting was preceded by a meeting between the college of Commissioners and the Ukrainian government on 2 February in Kyiv, and then an EU–Ukraine summit the following day, attended by European Council President Charles Michel, European Commission President Ursula von der Leyen, and President Zelenskyy. The main topics discussed during both meetings were Ukraine’s EU accession, EU–Ukraine cooperation on reconstruction, energy and connectivity, the war’s impact on global food security, EU support to Ukraine in response to Russia’s war of aggression, and the 10th package of sanctions against Russia currently in preparation. The main challenge for both meetings was to manage time expectations. EU accession remains a process driven by the fulfilment of the Copenhagen criteria, hence the importance of Ukraine staying the course of reforms and meeting the conditions set in the Commission’s opinion on the membership application, a required step in view of opening pre-accession negotiations. The joint summit statement supported the Ukraine Peace Formula initiative, while President Michel stressed that ‘the future of Ukraine is with the European Union’. In preparation for the EU–Ukraine summit, the European Parliament adopted a resolution in which it expressed support for Ukraine. It noted that Ukraine has to meet the conditions set by the Commission in its opinion, and supported the efforts made to ensure war crimes perpetrated in Ukraine do not remain unpunished.

Migration

Migration had dominated the European Council agenda from the outbreak of the migration crisis in 2015 until late 2018. However, it received less attention in the following years, owing to fewer migrants arriving than during the 2015 and 2016 peaks. In 2022, debate on refugees in the European Council was linked solely to the support for people fleeing Russia’s war against Ukraine. To date, close to 8 million refugees from Ukraine have been recorded across Europe, 5 million of whom have been registered through the EU’s temporary protection or similar national protection schemes.

Figure 1 – Illegal border crossings 2009-2022

Considering an increase of 64 % in irregular border crossings in 2022 compared with the previous year, and the resulting pressure at the EU’s external borders, President Michel announced at the December 2022 European Council meeting that EU leaders would hold an in-depth debate on migration during a special European Council meeting on 9‑10 February 2023.

Frontex, the European Boarder and Coast Guard Agency, recorded 330 000 irregular border crossings in 2022, the highest level since 2016 (Figure 1). While the western Mediterranean route (i.e. via Spain) registered a reduction in irregular border crossings by 21 %, the central Mediterranean route (via Italy) saw an increase of 51 %, and the Western Balkans (via Serbia) and eastern Mediterranean (via Greece) routes an increase of 136 % and 108 % respectively.

In his report to Parliament on 18 January 2023, Charles Michel indicated that EU leaders would address the external dimension of migration, including partnerships with third countries, and the strengthening of the EU’s external border control. Another critical point is the Commission’s migration and asylum pact. On 7 September 2022, Parliament and the rotating presidencies of the Council of the EU agreed on a joint roadmap, committing to conclude the reform of the EU asylum system by March 2024. Italy stresses in its contribution to the forthcoming meeting that ‘mandatory relocations must be the heart of any solidarity mechanism’, which is unacceptable for others.

EU leaders will thus primarily consider immediate operational measures to improve EU external border control while increasing cooperation with countries of origin and transit, notably by calling for the development of action plans with the countries concerned. A highly debated aspect in this context is whether to finance fences or walls with EU money. While the Commission has so far positioned itself against this approach, the number of supporters is growing. At the same time, the leaders are expected to deliberate further actions to fight trafficking and migrant smuggling. As different foreign countries have instrumentalised refugees to ‘destabilise’ EU countries, EU leaders are expected to condemn this behaviour again for political purposes and call for further action. They are also likely to call for completion of the update of Frontex’s mandate.

With a return rate at a low of 22 %, EU leaders are expected to follow up on the EU justice and home affairs ministers’ meeting of 26 January 2023, and stress the need for an efficient and well-functioning system of returns. The Swedish EU Presidency statement stressed that ‘current return rates are not acceptable’, and that for cooperation with countries of origin in the context of returns, ‘both positive incentives and restrictive measures are required’.

Another migration point likely to require considerable discussion time is the return of the 2018 proposal for setting up disembarkation centres (i.e. centres outside the EU that would carry out a first screening of asylum applications). Originally proposed by Austria and mentioned at the June 2018 European Council meeting, the idea is currently championed by the Danish government.

Some Member States, such as Austria and the Netherlands, have been pushing to include migration on the European Council agenda, in particular as a consequence of the higher number of secondary movements of irregular migrants (i.e. moving from the country in which they first arrived to seek protection or permanent resettlement elsewhere). EU leaders are thus expected to call for improved availability of data on migration flows, including on secondary movements.

Migration policy is part of the wider area of freedom, security and justice, in which the European Council has an important strategic role, notably to define the strategic guidelines for legislative and operational planning. Although the European Council was expected to adopt the guidelines in spring 2020, nearly three years later, EU leaders have still not complied with this Treaty obligation.

Economy

In a context of high inflation, high energy prices and looming recession, boosting European competitiveness, strengthening the EU’s industrial and technological base, and providing a common EU response to the challenges posed by the United States’ Inflation Reduction Act (IRA) are expected to be at the centre of discussions at the special EU-leaders’ meeting on 9-10 February.

As shown by the Organisation for Economic Co-operation and Development (OECD), the use of subsidies has been growing worldwide, not least in the form of support for investment in green technologies. In the EU, this has given rise to fears that if Europe does not do the same – and in particular, react swiftly to the IRA’s US$369 billion dollar subsidy push to ensure a level playing field – businesses might start to relocate, damaging the EU’s economic base.

In preparation for the discussions during the EU leaders’ meeting, and building on the March 2022 Versailles declaration, President Michel published an op-ed, Going big for EU industry, in Politico. His main message: the war in Ukraine has created a new geopolitical reality in which ‘we must give Member States more leeway to provide State aid to their businesses, and look into a potential sovereignty fund for investment in important projects’. However, some of his proposals have been met with a mixed response in the Member States. There are diverging views on i) how the State aid system can be reformed to support EU industry more effectively (and respond more quickly to business needs), without creating an uneven playing field in the internal market, and ii) whether only existing funds should be repurposed and utilised, or whether additional funds are required.  

France, which had called for a ‘made in Europe’ industrial strategy, has been at the forefront of pleading for a relaxation of State aid rules, supported in this by Germany – together they account for some 80 % of State aid currently. Countries such as Italy and Portugal warned against solely loosening State aid rules without further measures, underlining that not all Member States ‘have the same capacity to spend’. In these countries’ view, the relaxation of State aid rules needs to be accompanied by decisions on the level of financing, to avoid imbalances in the EU’s single market.

Several Member States oppose new subsidies and new common loans to support industry as a response to the US IRA. In a letter addressed to Commission Vice-President Dombrovskis on 26 January, seven Member States (Czechia, Denmark, Estonia, Ireland, Austria, Slovakia and Finland) rejected the possibility of EU debt-based instruments. Together with Belgium, Germany and the Netherlands, they point to the existence of unused funds under the Next Generation EU recovery instrument, which could be used to support green technology.

Despite remaining differences on the means, the European Council does agree, however, on the need to strengthen the EU’s economic and industrial basis and, in its December 2022 conclusions, invited the Commission to ‘present a strategy in early 2023 to boost EU competitiveness and productivity’.

Building on the Commission’s communication on a ‘Green Deal Industrial Plan‘, published on 1 February 2023, and aiming to ‘make Europe the home of clean tech and industrial innovation on the road to net zero’, the European Council is expected to call for urgent action in five areas: i) adapting State aid policy to make procedures simpler and predictable while allowing targeted temporary support in strategic sectors for the green transition; ii) redeploying EU-funding to enable full mobilisation of existing funding and targeted support for strategic sectors; iii) improving the regulatory environment; iv) developing skills to meet needs, in particular for the green and digital transition; and v) closing the investment gap with both public and private investment. In that context, the European Council will most likely also take note of the Commission President’s intention to put forward a European sovereignty fund by summer 2023, to support strategic investment.

Based on the feedback received from EU leaders, the Commission will develop amended proposals before the European Council’s March meeting, and submit linked legislative proposals: the net-zero industry act, the critical raw materials act, and a reform of the design of electricity markets. In the longer term, President von der Leyen intends to work on the European sovereignty fund

Moreover, as the European single market turns 30 this year, EU leaders are expected to mark the occasion by underlining the need to use the full potential of the single market as a means to strengthen EU competitiveness and productivity. As access to finance is crucial for business to be able to innovate and invest, EU leaders will most likely also call for quicker implementation of the European capital markets action plan. Finally, the European Council is likely to underline the importance of pursuing an ambitious and robust trade agenda to ensure a level playing field and fair competition. In both the strategic agenda and the Versailles declaration, trade is closely linked to efforts meant to boost EU competitiveness. Therefore, in the current geopolitical context, the European Council may also reiterate calls seeking to i) defend the internal market and safeguard EU interests from unfair trade practices through the use of trade defences tools; and to ii) step up effort to diversify supply chains, particularly of critical raw materials. EU leaders will have a more thorough debate on Europe’s long-term competitiveness, trade and internal market policy at the March 2023 European Council meeting.

Read this briefing on ‘Outlook for the special European Council meeting of 9-10 February 2023‘ in the Think Tank pages of the European Parliament.

Written by Rafał Mańko.

Sixty years ago, on 5 February 1963, the European Court of Justice handed down the first in a series of landmark judgments that laid the constitutional foundations of the EU legal order. The seminal case of Van Gend & Loos offered the Court an opportunity to proclaim the doctrine of the direct effect of EU law within the legal orders of the Member States. In practice, this means that individuals may claim rights directly under EU law and enforce those rights before national courts.

The Van Gend & Loos case was triggered by a company that claimed that Dutch customs duties on a product imported from West Germany were in violation of the standstill clause contained in Article 12 of the Treaty of Rome. The clause prohibited Member States from introducing new customs duties on products originating from other Member States, or from raising existing customs duties. In Van Gend & Loos, the product in question was subject to a duty of 3 % at the time of the entry into force of the Treaty of Rome, but this was later raised to 8 %.

At that time, the constitutional laws of the Member States were not consistent as regards the effects of the EU Treaties before national courts. The Dutch court asked the European Court of Justice whether the standstill clause had direct effect before national courts and, if so, whether changing the customs classification of the product in question, with the effect of making the customs duties higher, was in breach of the clause. The European Court, rejecting the opinion of the Advocate General and that of three of the six Member States, said yes to the first question, thereby inaugurating the doctrine of direct effect in EU law and empowering individuals to enforce rights derived from EU law before national courts.

Marking the 60th anniversary of Van Gend & Loos, this briefing takes a closer look at the landmark decision, outlines the legal background to the dispute, examines the Court’s findings, analyses its reasoning and concludes with an analysis of the broader implications of the decision for EU law.

Read the complete briefing on ‘60 years of Van Gend & Loos: Direct effect of EU law and a ‘new legal order’‘ in the Think Tank pages of the European Parliament.

Written by Michael Adam with Sanne Keijer.

The heavy sanctions imposed by the West on Russia over its war against Ukraine have had a considerable impact on the Russian digital sector. Russia has made efforts to circumvent the sanctions; counteracting these efforts requires consistent implementation and enforcement. Further coordination in this regard would increase the impact of existing sanctions and form a step towards ending the war.

Background

Since the outbreak of Russia’s war on Ukraine, the European Union (EU) and its Western allies have imposed nine consecutive sanctions packages on Russia, all aimed at curtailing its ability to continue waging the war. The sanctions – unprecedented in EU history – include dual-use technologies that can be used for civilian and military purposes. Export controls have been imposed on semiconductors, aircraft components and military equipment. Aside from sanctions on goods, over a thousand individuals and entities have been subject to sanctions. Notably, the eighth package also placed a full ban on crypto-asset wallets and sanctions on the provision of information technology (IT) and IT consultancy. The ninth package, adopted in December 2022, placed additional export bans on drones, drone engines, laptops and generators to prevent them from being used by the Russian military.

Sanctions and their effect on the Russian economy

Western sanctions are intended to weaken the Russian economy, which was the world’s 11th largest in 2021. Initial analysis predicted that Russia would face enormous economic challenges in 2022 due to the sanctions. While the country’s oil and gas profits allowed it to demonstrate a certain degree of resilience in the short term, it has also been argued – despite the absence of definitive data – that sanctions have indeed had a crippling effect on its economy. At present, Russia is entering a recession; this situation is expected to deteriorate in the future.

Russia’s failed technological autonomy

Russia has long worked towards becoming technologically autonomous; to this end, the use of foreign components in weapons production is strictly regulated at national level. Nevertheless, the fact that Russia’s semiconductor imports have been increasing since 2014 means that technological autonomy is a distant prospect. The impact of Western sanctions arguably has the potential to set Russia’s technological progress back by decades.

Digital scarcity in Russian daily life

Due to the shortage of semiconductors, banks are cannibalising old credit cards, and cars are produced without important components. Smartphones are not functioning properly, due to disruptions linked to Nokia and Ericsson exiting the market. Cellular networks are slower and the coverage and quality of communication have declined. More recently, senior executives at Yandex (the Russian Google), have been hit by individual EU sanctions. In August 2022, the company’s news platform was sold to the state, a clear sign of Putin gaining further control of the internet. To limit free communication on the internet, in March that year Russia had banned Twitter and Facebook. Yet again, Putin has weaponised censorship to shape public opinion and achieve an internet that is separate from the rest of the world.

Tech brain drain

The war and the sanctions have affected the Russian digital economy severely; one of their effects has been a brain drain. During the first six months of the war, an estimated 250 000-500 000 qualified workers left Russia to continue their careers elsewhere. In a similar fashion, many Western companies with digital business have been leaving Russia and pulling out their digital expertise. According to the Russian deputy minister of the interior, the country was already experiencing a shortage of 170 000 IT specialists in June 2022. The Russian minister for digital development is quoted as saying that 100 000 IT specialists have left Russia since the war broke out. War mobilisation has reduced the Russian tech workforce even further.

Lack of semiconductors for the Russian military

Semiconductors are essential to military equipment such as drones, missiles and military communication systems. Due to their shortage, Russia is struggling to supply its army and military aviation sector with such equipment and is turning to third countries, such as China, which often supply less advanced semiconductors. Chinese semiconductor producers are strategically positioned on the US market; the US is their top trade partner. These producers are therefore hesitant to deepen their ties with Russia, at the price of potentially being driven away from Western markets and targeted by US secondary sanctions.

Russian efforts to circumvent sanctions

Technological isolation has forced Russia to look for ways to circumvent sanctions. It has built a network to acquire technology under sanctions through front companies and false documents. For instance, Iran has supplied Russia with Shahed-36 drones to use in its war on Ukraine. A recently created US taskforce is investigating the presence of US technology in these drones, which were likely smuggled or cannibalised from kitchen appliances. The repurposing of low-technology goods allows Russia to circumvent the sanctions to some extent.

Recent research has found that at least one of the Russian Kh-101 cruise missiles used in recent attacks on Kyiv had been produced by Russia only months before, suggesting Russia’s stockpiles are low. This research showed that Russia is still able to produce missiles despite the sanctions; it also noted that advanced military gear used by Russia contained semiconductors from the West. In sum, Russia is still able to circumvent sanctions; better enforcement is therefore necessary.

Implementation and enforcement

Coherent implementation is key but also time-consuming. A time lag is inevitable, and new technologies, such as crypto-assets, bring an extra risk of circumvention. The EU Member States are implementing the sanctions by appointing, at their own discretion, national competent authorities to oversee the process. In some cases, this role is played by the Ministry of Foreign Affairs, in others by up to 10 different public bodies. The Commission oversees the implementation of sanctions and monitors their enforcement.

Member States’ practices regarding enforcement vary. Some regard violation of sanctions as a criminal offence, others as an administrative one. To overcome this disparity, the Commission has proposed adding such violations to the list of serious crimes under Article 83(1) of the Treaty on the Functioning of the EU. Harmonising sanctions may help counter legal loopholes while also serving as a deterrent.

Member States can contribute to a uniform approach by increasing engagement in self-reporting and information-sharing with each other. Additionally, better coordination can be achieved at the national level if Member States start appointing fewer competent authorities or appoint a coordinating authority.

International coordination is essential to the success of Western sanctions. In December 2022, the EU-US Trade and Technology Council agreed to further cooperation on export controls, especially in the field of information-sharing. The EU has also created the role of International Special Envoy for the implementation of EU sanctions. Furthermore, international cooperation may also foster implementation.

European Parliament position

In a resolution of 6 October 2022, the Parliament condemned the violations of human rights and war crimes committed by the Russian armed forces. It called on the Member States to actively prevent and prosecute circumvention of sanctions. In another resolution of 23 November 2022, Parliament recognised Russia as a state sponsor of terrorism.

Read this ‘at a glance’ on ‘Sanctions on the Russian digital sector: How effective are they?‘ in the Think Tank pages of the European Parliament.

Written by Marcin Grajewski.

Last year’s UN Climate Change Conference, COP27, made some headway in efforts to fight climate change, but its overall progress was limited. The gathering agreed to create a loss-and-damage fund, to support poorer countries disproportionately affected by climate change while only being responsible for a small share of global greenhouse gas emissions.

Governments at COP27 also called for reform of the International Monetary Fund and the multilateral development banks, to align global public finance with the goals of the Paris Agreement on climate. However, the meeting produced barely any new initiatives on climate mitigation, which are needed to take to keep alive the Paris 1.5°C temperature-reduction goal.

The European Union is debating a response to the US Inflation Reduction Act, which provides for US$369 billion investment in energy security and combatting climate change, but may threaten to lure away from Europe some clean-tech corporate investment.

This note offers links to recent commentaries, studies and reports from international think tanks on climate issues. More papers on the topic can be found in a previous edition of ‘What Think Tanks are Thinking.

Where is the carbon premium? Global performance of green and brown stocks
Brookings Institution, January 2023

Methane comes front and center in climate change policy
Brookings Institution, January 2023

What to expect on climate change from the New Congress
Brookings Institution, January 2023

Concessional climate finance: The Bridgetown Initiative
Bruegel, January 2023

The climatization of finance
Centro Euro-Mediterraneo sui Cambiamenti Climatici, January 2023

Be prepared for the polycrisis era
Centro Euro-Mediterraneo sui Cambiamenti Climatici, January 2023

Military capabilities affected by climate change
Clingendael, January 2023

Where next for the Coalition of Trade Ministers on Climate?
E3G, January 2023

The EU must mitigate climate-related financial risks
E3G, January 2023

Global solidarity or collective suicide: Why we cannot abandon the Paris Agreement’s global warming target
European Council on Foreign Relations, January 2023

Synergising climate and biodiversity agendas is an imperative challenge for the century
Institute for European Environmental Policy, January 203

Impacts of climate change on global food trade networks
Stockholm Environment Institute, January 2023

Integration of short-lived climate pollutant and air pollutant mitigation in nationally determined contributions
Stockholm Environment Institute, January 2023

Can COP keep up with an evolving climate effort?
Brookings Institution, December 2022

How can we measure the impact of carbon prices on global warming?
Brookings Institution, December 2022

Climate policy curves: Linking policy choices to climate outcomes
Brookings Institution, December 2022

A Green Fiscal Pact for the EU: Increasing climate investments while consolidating budgets
Bruegel, December 2022

Europe’s Green Investment Requirements and the role of NextGenerationEU
Bruegel, December 2022

The future for global trade in a changing climate
Chatham House, December 2022

Climate change is fuelling migration. Do climate migrants have legal protections?
Council on Foreign Relations, December 2022

How will global health survive climate change?
Council on Foreign Relations, December 2022

Playing catch up: How COP27 politics are trailing economic realities
E3G, December 2022

International finance to address climate loss and damage
E3G, December 2022

If not now, when? Climate disaster and the Green vote following the 2021 Germany floods
European University Institute, December 2022

Policy challenges and policy actions for a just climate transition: Five recovery plans in comparison
Foundation for European Progressive Studies, Friedrich Ebert Stiftung, December 2022

Companies at COP27: Clean air is a catalyst for climate action
Friends of Europe, December 2022

EU climate policy amid Russia’s war in Ukraine: A critical overview of key REPowerEU challenges and trajectories towards net-zero
Globsec, December 2022

Walking out of the woods: EU industrial policy between the energy crisis and decarbonisation
Istituto Affari Internazionali, December 2022

Climate change and food insecurity: Unleashing the promise and potential of agroecology in the Mediterranean
Istituto Affari Internazionali, December 2022

Taxation and ecological transition during climate and energy crises: The main conclusions of the 2022 Spanish White Book on tax reform
Real Instituto Elcano

Net-zero targets and non-CO2 mitigation
Stiftung Wissenschaft und Politik, December 2022

Adaptation without borders: A brief to participants in COP27
Stockholm Environment Institute, December 2022

The big success and bigger failure of COP27
Atlantic Council, November 2022

Renewing global climate change action for fragile and developing countries
Brooking Institution, November 2022

The unexpected breakthroughs at COP27
Carnegie Europe, November 2022

COP27 agreed compensation for loss and damage… but the fear is we’ll just end up seeing even more loss and damage
Centre for European Policy Studies, November 2022

In a green subsidy race, the EU should not imitate the US
Centre for European Policy Studies, November 2022

COP27 didn’t make enough progress to prevent climate catastrophe
Council on Foreign Relations, November 2022

Gender, displacement, and climate change
Deutsche Gesellschaft für Auswärtige Politik, November 2022

Opportunities for health engagement in European climate policies
Ecologic, November 2022

The EU: At the forefront of the climate change battle
Istituto per gli Studi di Politica Internazionale, November 2022

Climate action: On track to meet agreed targets?
Istituto per gli Studi di Politica Internazionale, November 2022

Read this briefing on ‘Climate change‘ in the Think Tank pages of the European Parliament.

Written by Laurence Amand-Eeckhout.

Cancer can affect everyone, regardless of age, gender or social status and puts immense pressure on European health systems. Fighting cancer is one of the priorities of the European Health Union. Delivering better long-term care for patients living with cancer also means reducing significant disparities, both between and within Member States. World Cancer Day, marked every year on 4 February, reminds us that cancer is a huge health threat to our society.

World Cancer Day

World Cancer Day was established on 4 February 2000 at the World Summit Against Cancer for the New Millennium, held in Paris, on the initiative of the Union for International Cancer Control (UICC). The theme for the ongoing three-year campaign (2022-2024) ‘Close the Care Gap‘ aims to reduce inequalities in access to quality cancer prevention, diagnosis, care and treatment services worldwide.

Background

As defined by the World Health Organization (WHO), cancer is a generic term for a large group of diseases that can affect any part of the body. One defining feature of cancer is the rapid creation of abnormal cells that grow beyond their usual boundaries, which can then invade adjoining parts of the body and spread to other organs (metastasis). Cancer arises from the transformation of normal cells into tumour cells in a multi-stage process that generally progresses from a pre-cancerous lesion to a malignant tumour.

According to the WHO’s International Agency for Research on Cancer (IARC), based on scientific evidence, at least 40 % of all cancer cases could be prevented with effective primary prevention measures. Tobacco use, alcohol consumption, unhealthy diet, lack of physical activity and air pollution are some of the risk factors for cancer. In addition, Hepatitis B and C viruses and some types of human papillomavirus (HPV) increase the risks for liver and cervical cancer.

The impact of cancer can also be reduced through early detection (even if screening programmes are not effective for all cancer types) and appropriate treatment and care of patients who develop cancer.

The COVID-19 pandemic severely impacted cancer care, disrupting prevention, diagnosis, treatment, and access to medicines; cancer research was also impacted, with clinical trials delayed. According to the European Cancer Organisation, an estimated 100 million screening tests were not performed in Europe during the pandemic and an estimated one million cancer cases could be undiagnosed.

Facts and figures

In 2020, 2.7 million people in the EU were newly diagnosed with cancer and 1.27 million people died from cancer. This makes cancer the second most common cause of death in the EU, after cardiovascular diseases (and the primary cause of death for Europeans under 65).

Cancer cases are set to increase by 24 % by 2035, making it the leading cause of death in the EU.

Differences in cancer survival rates across the EU Member States exceed 25 %, illustrating healthcare inequalities.

The European Cancer Information System (ECIS), managed by the Joint Research Centre (JRC), provides the latest information on indicators that quantify cancer burden across Europe. More men than women are likely to develop cancer across the EU (54 % men and 46 % women, 2020). Among men, the main diagnoses are prostate cancer (23 % of all new cancers diagnosed in 2020), followed by lung cancer (14 %) and colorectal cancer (13 %). Among women, breast cancer is the main diagnosis (29 %).

The economic burden of cancer across the EU is difficult to calculate. In 2021, the Commission estimated the overall economic impact of cancer to exceed €100 billion annually.

EU action on cancer

EU Member States are responsible for their own healthcare policies and systems. However, according to Article 168 of the Treaty on the Functioning of the European Union, EU action should complement national policies. As far back as 1985, the EU has been fighting cancer alongside Member States, in collaboration with the WHO, the JRC and the IARC. The EU focuses on prevention, research and information (e.g. awareness campaigns) while also fostering cooperation between Member States. The EU also complements Member States’ efforts by adopting legislation to address cancer risk factors (such as exposure to environmental pollution or hazardous substances and radiation, harmful alcohol and tobacco consumption) and ensuring specific policy rules reflect cancer-related concerns.

In February 2021, as part of a push for a strong European Health Union, the European Commission adopted the Europe’s Beating Cancer Plan to address cancer-related inequalities and help improve prevention, treatment and care. The plan, focusing on actions where the EU can add the most value, is structured around four key action areas (prevention; early detection; diagnosis and treatment; and quality of life) with ten flagship initiatives. Some of these have already been implemented:

1. The Knowledge Centre on Cancer was set up in June 2021 to help coordinate EU research efforts.
2. The EU network of national comprehensive cancer centres was launched in December 2021 to help Member States establish at least one integrated national cancer centre (aimed at having the network in place by 2025).
3. Calls for proposals for the ‘cancer diagnostic and treatment for all’ initiative were launched in 2022.
4. The European Cancer Inequalities Registry was set up in February 2022 to identify trends, disparities and inequalities between Member States and regions in terms of cancer prevention and care.
5. A Council recommendation on cancer screening was adopted in December 2022 to strengthen cancer prevention through early detection.
6. European initiative to understand cancer: coordination and support were launched in 2022.
7. Better life for cancer patients’ initiative: a report on access to financial services for persons with a history of cancer was published in May 2022, and work started on a code of conduct.
8. A call for evidence on vaccination against cancer-causing viruses (HPV and Hepatitis B), in view of a Council recommendation, was launched by the Commission in January 2023.
9. The European cancer imaging initiative was launched in January 2023 to create a digital infrastructure linking cancer imaging data resources and databases across the EU.
10. Helping children with cancer initiative: the EU Network of Youth Cancer Survivors was launched in February 2022, a new section on paediatric cancers has been added to ECIS.

‘Europe’s Beating Cancer Plan’ has a strong focus on research and innovation as the starting point towards a new approach to cancer prevention, treatment and care. The EU has continuously invested in cancer research through successive framework programmes for research and innovation. Under the latest programme, Horizon Europe (2021-2027), the EU Mission on Cancer aims to offer a distinct and comprehensive approach by bringing together research, innovation and policy development. The work programme for 2023-2024 notably addresses poorly understood cancers, cancers in children, adolescents and young adults, and cancers in socio-economically vulnerable populations. As part of this mission, the Commission is organising a conference on 7 February 2023, ‘Addressing the Needs of Young Cancer Survivors‘.

European Parliament

In June 2020, Parliament set up a Special Committee on Beating Cancer (BECA) to review EU action on tackling cancer and its effects on people’s lives. BECA ended its mandate on 23 December 2021. The final report ‘Strengthening Europe in the fight against cancer – towards a comprehensive and coordinated strategy‘ (Rapporteur: Véronique Trillet-Lenoir, Renew Europe, France) including recommendations was adopted by Parliament in February 2022. They focus on cancer prevention, equal access to cancer care across borders, and a European approach addressing medicine shortages.

Read this ‘at a glance’ on ‘World Cancer Day 2023‘ in the Think Tank pages of the European Parliament.

Written by Clare Ferguson and Katarzyna Sochacka.

Highlights of the February I 2023 plenary session included debates with the Council and the European Commission on preparation of the 3 February EU-Ukraine Summit, and a vote on a resolution addressing Ukraine’s EU accession perspective, calling for increased military, economic and humanitarian support for Ukraine, and stressing the importance of preparing a comprehensive recovery package for the country. Members also heard about preparations for the special European Council meeting on 9 and 10 February, in particular the need to reform migration and asylum rules to develop sustainable solutions to migratory issues. Members also held debates on the need for an urgent update of the EU list of high-risk third countries for money laundering and terrorist financing, on Afghanistan, and on the situation of the former President of Georgia, Mikheil Saakashvili.

Transparency and targeting of political advertising

With the next European elections on the horizon, updating the rules on political advertising is increasingly urgent. Digital technologies and social media, which allow political actors to reach large audiences with personalised messages during electoral campaigns, have greatly increased risks in political advertising (such as the spread of false information, polarisation of the political debate, and voter manipulation). Members debated and adopted a Committee on Internal Market and Consumer Protection (IMCO) report on a proposal to adopt a regulation on the transparency and targeting of political advertising. The report proposes tighter rules on online targeting and delivery of political advertising, prohibiting the use of sensitive data. The vote sets the Parliament’s position for interinstitutional negotiations with the Council.

Conservation of southern bluefin tuna

Southern bluefin tuna is overfished, classified as ‘endangered’ on the International Union for Conservation of Nature Red List of threatened species, and faces a high risk of extinction in the wild. To counteract this downward trend, Members adopted a provisional agreement with the Council to transpose conservation and fisheries management measures adopted by the Commission for the Conservation of Southern Bluefin Tuna (CCSBT), of which the EU is a member. The proposal prohibits EU vessels from targeting southern bluefin tuna, with only by-catches allowed, and brings the legislation into line with EU data protection rules.

European Works Councils Directive

Debated during the January II plenary session, Members voted in favour of a legislative-initiative report on European works councils (EWCs). EWCs represent EU employees of large multinational companies, ensuring their rights are protected when multinational companies take decisions affecting workers in workplaces remote from the decision-makers. However, despite an evident lack of effective consultation, the European Commission has no plans to revise the current EWC Directive. The Committee on Employment and Social Affairs (EMPL) report calls on the Commission to ensure European works councils provide meaningful consultation, end exemptions, introduce tougher penalties and improve access to justice.

Opening of trilogue negotiations

Members voted to confirm the mandate for negotiations from the EMPL committee, tabled in January, on the proposal for a directive on improving working conditions in platform work.

Members also confirmed, without a vote, the Civil Liberties, Justice and Home Affairs (LIBE) Committee’s decision to enter into interinstitutional negotiations on the proposal for a directive amending Directive (EU) 2019/1153 on access of competent authorities to centralised bank account registries through the single access point.

Read this ‘at a glance’ on ‘Plenary round-up – February I 2023‘ in the Think Tank pages of the European Parliament.

Written by Beatrix Immenkamp with Julie Claustre.

Even though the EU and Iran have worked together over the past 4 years to save the nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA), relations between the two sides have reached a new low. The EU is concerned about the acceleration of Iran’s nuclear programme in violation of the JCPOA and the country’s reluctance to cooperate fully with the International Atomic Energy Agency. In addition, the Iranian authorities’ violent crackdown on and execution of peaceful protesters has outraged Europeans – and their allies – and drawn new attention to human rights violations in the country.

Iran’s military support for Russia in the context of Russia’s war against Ukraine has put the spotlight on Iran’s conventional weapons capabilities. Moreover, Iran continues to stoke tensions in the Middle East, providing military, financial and political support to non-state actors in countries such as Iraq, Lebanon, Syria and Yemen, as well as the Gaza Strip.

In response to these concerns, the EU has imposed restrictive measures on an increasing number of high-ranking Iranian individuals and entities under four EU sanctions regimes. Sanctions include an asset freeze and a prohibition on making funds and economic resources available to the listed individuals and entities; individuals are also banned from travelling to the EU.

Nevertheless, in December 2022, EU Member States reaffirmed their commitment to, and continued support for, the full and effective implementation of a restored JCPOA.

The European Parliament has adopted several resolutions critical of human rights violations in Iran, most recently in January 2023, and has called for the Islamic Revolutionary Guard Corps to be added to the EU terrorist list, while also expressing its continued support for the JCPOA. After Iran began to sanction certain of its Members in October 2022, Parliament decided in November 2022 that delegations and committees would no longer engage with the Iranian authorities.

Read the complete briefing on ‘EU relations with Iran‘ in the Think Tank pages of the European Parliament.

Written by Clare Ferguson with Sophia Stone.

Members gather on 1 and 2 February for a plenary session in Brussels. Although  short, some major and pressing points are on the agenda nonetheless. On Wednesday, Members are due to hear Council and European Commission statements on the preparation of the special European Council meeting on 9 and 10 February, where the need to develop sustainable solutions on asylum and migration  is expected to be one of the main topics discussed. Members are also due to hear statements on the need for urgent update of the EU list of high-risk third countries for anti-money-laundering and terrorist financing purposes. The High Representative of the European Union for Foreign Affairs and Security Policy/Vice-President of the European Commission, Josep Borrell, is expected to make a statement on the situation on Afghanistan , where life for Afghans – and women in particular – has worsened since the Taliban takeover in 2021.

The main debate on Thursday morning is set for Members to hear Council and Commission statements on preparations  for the EU-Ukraine Summit, to be held in Kyiv on 3 February. Members are likely to restate their continued support for Ukraine’s independence, sovereignty and territorial integrity within its internationally recognised borders. Parliament condemns Russia’s aggression against Ukraine, and demands that Russia immediately terminates all military activity in Ukraine. In the meantime, following lengthy discussions, EU Member States, Norway, the UK and the US have decided to send Western-made main battle tanks (MBT) to Ukraine. However, the mix of different types of tank promised is not without issues.

With the next European elections on the horizon, measures to bring up to date the rules on political campaigning are increasingly urgent. Advances in digital technologies and social media, which allow political actors to reach large audiences with personalised messages during electoral campaigns, meant that risks such as the spread of false information, polarisation of the political debate, and voter manipulation, have greatly increased in political advertising. Members are due to vote on a Committee on Internal Market and Consumer Protection (IMCO) report on the proposal to adopt a regulation on the transparency and targeting of political advertising, on Wednesday. While the report excludes political views expressed as editorials and sets criteria for political advertisements, it adds measures to prevent risks of foreign interference, with labelling and transparency obligations enhanced. The report proposes tighter rules on online targeting and delivery of political advertising, prohibiting the use of sensitive data. Subject to any amendments voted in plenary, the vote on the IMCO report should form the position for trilogue negotiations with the Council.

Members are expected to vote on two files initially scheduled for the January II plenary session and postponed to February. The first, scheduled for vote on Thursday morning, concerns European works councils (EWCs), which represent EU employees of large multinational companies, ensuring that their rights are protected when multinational companies take decisions affecting workers far from their workplace. The European Commission does not plan to revise the current EWC Directive, despite an evident lack of effective consultation. Members are therefore due to vote on a legislative-initiative report from the Committee on Employment and Social Affairs (EMPL), calling on the Commission to take action to ensure European works councils provide meaningful consultation, and an end to exemptions, tougher penalties and access to justice.

The second file concerns a report by the Committee on Employment and Social Affairs (EMPL) on the proposal for a directive to improve working conditions in platform wor . The report proposes to ensure correct employment status and promote transparency, fairness and accountability in platforms’ algorithmic management. The committee further recommends that the relevant labour, social protection and tax authorities should exchange information when people carry out platform work in a different EU country to that of the digital labour platform. The committee’s mandate to enter into trilogue negotiations with the Council was challenged during the January session, and the plenary will now vote on whether to confirm the mandate.

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Southern bluefin tuna is in high demand, overfished and classified as ‘endangered’ on the International Union for Conservation of Nature (IUCN) Red List of threatened species, meaning they face a high risk of extinction in the wild. To counteract this downward trend, Members are due to vote on Thursday on a provisional agreement with the Council to transpose conservation and fisheries management measures adopted by the Commission for the Conservation of Southern Bluefin Tuna (CCSBT), of which the EU is a member. The proposal prohibits targeting southern bluefin tuna by EU vessels, with only by-catches allowed, and also brings the legislation into line with EU data protection rules.

Further reading

• European Parliament Plenary Session – February I, 2023, agenda
• Anti-money-laundering authority (AMLA): Countering money laundering and the financing of terrorism
• Regulating political advertising
• Revision of European Works Council Directive
• Improving the working conditions of platform workers
• Conservation of southern bluefin tuna: Transposing fisheries management measures

Written by Sebastian Clapp.

Following Ukraine’s repeated requests, and almost a year of hesitation and delicate negotiations, in January 2023, EU Member States, Norway, the UK and the US finally decided to send Western-made main battle tanks (MBTs) to Ukraine. This issue of whether to supply such tanks has been particularly contentious since the start of the war.

Background: Weapons deliveries to Ukraine

For the first time in European Union history, on 28 February 2022, EU Member Statesagreed to jointly finance the provision of lethal weapons to a country at war, namely Ukraine. Funding for the move comes from the European Peace Facility (EPF) – an off-budget financing instrument initially worth €5 billion in 2018 prices (there is political agreement to increase the financial ceiling to €10.5 billion) and operational since July 2021. At the time of writing, support for Ukraine under the EPF amounts to €3.6 billion to date. The EU also, on 15 November 2022, launched an EU military assistance mission to train the Ukrainian army. The equipment so far delivered to Ukraine ranges from Soviet-era tanks to protective equipment. To coordinate supply and demand, the EU Military Staff has set up a clearing-house. Despite these efforts, EU countries were criticised for not providing weapons Ukraine needs, particularly modern Western-made battle tanks, which Ukraine had requested. This issue of whether to supply such tanks has been particularly contentious.

Definition of ‘battle tanks’
Defining ‘battle tank’ is rather difficult, and definitions have changed considerably with the evolution of military doctrine over the more than 100 years of tank history. The MBT is generally believed to be a universal tank that provides a combination of mobility, firepower and protection. The Bundestag Research Service highlights the difficulties of finding a definition in a recent study. Rather than defining the term, it highlights characteristics, such as having the best armour and strongest firepower in direct combat on the battlefield. It explains that two common categories are used to differentiate between MBTs and other armoured vehicles: the armoured personnel carrier (APC) and the infantry fighting vehicle (IFV). The study explains that ‘when speaking generally of a “tank”, these armoured vehicles are … explicitly not meant. What is generally meant … is only the “main battle tank”‘ [author’s translation]. The study concludes that a final, definitive and binding definition of a ‘(battle-) tank’ is ‘practically impossible’.
In terms of legal definitions, the 1992 Treaty on Conventional Armed Forces in Europe (the CFE Treaty ceased to apply in 2007, when Russia withdrew unilaterally), provides some answers. It states:
– Battle tank: ‘means a self-propelled armoured fighting vehicle, capable of heavy firepower, primarily of a high muzzle velocity direct fire main gun necessary to engage armoured and other targets, with high cross-country mobility, with a high level of self-protection, and which is not designed and equipped primarily to transport combat troops … [it weighs] at least 16.5 metric tonnes unladen weight and which are armed with a 360‑degree traverse gun of at least 75 millimetres calibre.’
– Armoured personnel carrier: ‘means an armoured combat vehicle which is designed and equipped to transport a combat infantry squad and which, as a rule, is armed with an integral or organic weapon of less than 20 millimetres calibre.’
– Armoured infantry fighting vehicle: ‘means an armoured combat vehicle which is designed and equipped primarily to transport a combat infantry squad, which normally provides the capability for the troops to deliver fire from inside the vehicle under armoured protection, and which is armed with an integral or organic cannon of at least 20 millimetres calibre.’ Western-made tanks for Ukraine

Ukraine appealed directly for Western-made main battle tanks (MBTs) from at least April 2022 (Some EU countries have already delivered over 250 Soviet-era T‑72 tanks of various versions, but not Western-made MBTs). Some in the West fear that sending such tanks could escalate the war, drag NATO directly into the conflict or, in the worst case, even result in nuclear war. Though these fears are not baseless, experts dispute that deliveries of Western MBTs would escalate the war. They note that Poland, for instance, has already delivered 260 Soviet-era tanks to Ukraine, without leading to escalation or drawing Poland into the conflict. They also argue that no Russian army decision to increase the intensity of its offensive has been linked to delivery of new Western weaponry to date. Others cite risks of misuse, potential loss or diversion of Western equipment, giving the example of weapons falling into the hands of the Taliban.

In a major step, the United Kingdom confirmed in January 2023, that it intends to deliver 14 British-made Challenger 2 MBTs to Ukraine, being the first country to supply Ukraine with Western-made MBTs. Later in January 2023, the United States (US), Norway and EU Member States, including Germany, also decided to send MBTs and approve such deliveries by others – Germany must issue re-export licences for other countries to send their Leopard 2 tanks to Ukraine. Germany had previously shown reluctance, citing concerns that the move would escalate the war, that it would not consider unilateral action, and linking MBT deliveries to a US decision. In early January 2023, France, the US and Germany had already decided to deliver infantry fighting vehicles/armoured fighting vehicles to Ukraine. These have been portrayed – though definitions are difficult (see box) – by some as ‘light’ battle tanks. However, calling them tanks ‘is technically a stretch’.

The head of the Ukrainian armed forces has said that 300 Western MBTs would be needed for a successful counter-offensive to push the Russians back to the 23 February 2022 line (all of Ukrainian territory except Crimea). Experts note that at least 100 tanks would be needed to have ‘any significant effect on the fighting’. At the time of writing, over 100 tanks have indeed been promised, with the first due to arrive in three or four months. Training for Ukrainian crews will also be provided, to become operational by early spring.

Western-made MBTs are likely to provide the Ukrainian army with an advantage over Russian systems, as experts note that Western MBTs are ‘technically superior’ (see Annex I). Most importantly however, there is enough ammunition for Western MBTs, while supplies for T‑72s are critically low. Experts warn however that it is necessary to remain ‘realistic about their likely impact on the battlefield’, arguing that they will not work miracles ‘even if deployed on a large scale and for prolonged periods of time’. Furthermore, Ukraine will have to overcome significant training and logistical challenges to operate them. A further issue is that Western-made MBTs are generally much heavier than T‑72s and there is little Ukrainian infrastructure, including bridges, which could support such tanks. Moreover, operating and maintaining four different MBTs (Challenger 2, M1 Abrams, Leopard 2, T‑72) will be ‘highly impractical’, require ‘enormous logistical support effort’ and would ‘consume vast … resources’. Experts therefore believe that the Leopard 2 should be the MBT of choice. The Ukrainian armed forces would need less training (as little as six weeks), they consume less fuel, and better European logistics and repair capacities exist. Indeed, according to some, the US M1 Abrams would be less suitable, as more challenging to maintain – unlike most Western tanks and the T-72, which have diesel engines, they have a gas turbine – and it consumes much more fuel. Training on Abrams takes up to 22 weeks, though in the current emergency could be cut down to 7 to 11 weeks, according to an expert. More, importantly Leopards are readily available in Europe. The Leopard 2 is operated by 13 European armies, which have over 2 000 such tanks in total. In September 2022, experts from the European Council on Foreign Relations therefore proposed the ‘creation of a consortium of European Leopard 2 users’ with the purpose of training and equipping a Ukrainian armoured brigade of approximately 90 tanks, with the EPF reimbursing countries that delivered tanks, so the latest version can be purchased for their own stocks. Poland has already announced its intent to ask for EU compensation for supplying its Leopard 2s.

European Parliament position

Parliament’s January 2023 resolution on the 2022 annual report on the implementation of the CSDP calls on the EU to step up and accelerate its efforts to provide Ukraine with necessary military aid and equipment, ‘including lethal equipment and especially heavy weaponry, including Leopard tanks and modern air defence systems, needed to win this war’. Members call on Member States to speed up their military assistance to Ukraine and specifically call on German Chancellor Olaf Scholz ‘to initiate a European consortium of relevant European countries in order to deliver Leopard 2 main battle tanks to Ukraine without further delay’. The European Parliament resolution of 6 October 2022 on Russia’s escalation of its war of aggression against Ukraine also ‘calls for consideration to be given to the possibility of a lend-lease military assistance facility for Ukraine’.

Read this ‘at a glance’ on ‘Russia’s war on Ukraine: Western-made tanks for Ukraine‘ in the Think Tank pages of the European Parliament.

Written by Issam Hallak (1st edition).

Directive 2009/138/EC – also known as Solvency II – sets out the prudential regulatory framework for the insurance sector in the EU. The framework aims to establish the single market for insurance services further, while strengthening policyholders’ protection.

On 22 September 2021, the European Commission tabled a proposal for a directive that would amend Solvency II in essentially three ways: i) lowering regulatory obligations on small and low-risk profile insurance companies, ii) taking into account long-term and climate change risks, and iii) enhancing group-level and cross-border supervision.

In the European Parliament, the referral to the Committee on Economic and Monetary Affairs (ECON) was announced in plenary on 22 November 2021. Rapporteur Markus Ferber (EPP, Germany) tabled his draft report on 6 June 2022. The vote in committee has not yet been scheduled. The Council agreed its position in June 2022.

Versions

• January 2023: Proposal amending the Solvency II Directive (1st edition)

Directive amending Directive 2009/138/EC as regards proportionality, quality of supervision, reporting, long-term guarantee measures, macro-prudential tools, sustainability risks, group and cross-border supervision Committee responsible:Economic and Monetary Affairs (ECON)COM(2021) 581
22.9.2021
Rapporteur:Markus Ferber (EPP, Germany)2021/0295(COD)Shadow rapporteurs:Eero Heinäluoma (S&D, Finland) Stéphanie Yon-Courtin (Renew, France) Henrike Hahn (Greens, Germany) Marco Zanni (ID, Italy) Johan van Overtveldt (ECR, Belgium) Chris MacManus (The Left, Ireland)Ordinary legislative procedure (COD)
(Parliament and Council on equal footing
– formerly ‘co-decision’) Next steps expected: Committee vote

Written by Liselotte Jensen (1st edition).

On 30 November 2022, as part of the European Green Deal, the Commission presented the legislative proposal for a Union certification framework for carbon removals. The initiative was first announced in the March 2020 new circular economy action plan and again highlighted in the climate target plan, as well as in the proposed ‘fit for 55’ revision of the regulation on land use, land-use change and forestry (LULUCF), as an essential tool to drive progress towards the 2050 climate neutrality target. The stated aim of the initiative is to ensure high-quality EU certified carbon removals, through a transparent and credible governance framework. In doing so, this would open up the possibility for further investments towards carbon removal activities and increased deployment.

In Parliament, the file has been referred to the Committee on the Environment, Public Health and Food Safety (ENVI).

Versions

• January 2023: A Union certification framework for carbon removals (1st edition)

Proposal for a regulation of the European Parliament and of the Council establishing a Union certification framework for carbon removals Committee responsible:Environment, Public Health and Food Safety (ENVI)COM(2022) 672
31.11.2022
Rapporteur:Lídia Pereira (EPP, Portugal)2020/ 394 (COD)Shadow rapporteurs:Ordinary legislative procedure (COD)
(Parliament and Council on equal footing
– formerly ‘co-decision’) Next steps expected: Publication of draft report

Written by Pieter Baert (1st edition).

The crypto-asset sector, while still relatively new, has already changed the world of payments and investment forever. The fast-changing, mobile nature of the sector and its growing market prominence poses challenges, however, for tax authorities, which are not always able to track the capital gains made from trading crypto-assets.

On 8 December 2022, the European Commission proposed to set up a reporting framework which would require crypto-asset service providers to report transactions made by EU clients. This would help tax authorities to track the trade of crypto-assets and the proceeds gained, thereby reducing the risk of tax fraud and evasion. The reporting framework would be set-up by amending the Directive on Administrative Cooperation (DAC), which is the main framework for other data exchanges between tax authorities. The proposal also puts forward a series of (smaller) changes to improve the existing exchange of tax-related information.

The proposed directive is subject to a special legislative procedure, requiring unanimous support in the Council, following consultation of the European Parliament and the European Economic and Social Committee.

Versions

• January 2023: Tax transparency rules for crypto-asset transactions (DAC8) (1st edition)

Proposal for amending Directive 2011/16/EU on administrative cooperation in the field of taxation Committee responsible:Economic and Monetary Affairs (ECON)COM(2022) 707
8.12.2022
Rapporteur:Not yet appointed2022/0413(CNS)Shadow rapporteurs:Consultation procedure
(CNS) – Parliament adopts
a non-binding opinion Next steps expected: Initial discussions in committee