Public Affairs Blog

 

It’s a cliché, but time really does fly when you’re having fun. I arrived in Brussels last September, one of nine hopeful (and nervous) undergraduates embarking on a ten-month internship at FleishmanHillard. It’s been a year full of new experiences, big and small – everything from attending COP21 in Paris to getting lost (a little too often) in the corridors of the European Parliament. I’ve worked with some great people and learnt a lot about EU policy, public affairs and what it‘s like to live and work in the heart of the European project, Brussels.

My fellow interns and I are almost at the end of our time in Brussels, but for anyone considering doing a similar internship, here are five insights into the “Brussels Bubble” and EU public affairs to help you on your way.

1. Don’t be shy – Break into the Brussels Bubble. Brussels is a small place and the EU quarter where decisions take place is miniscule. In fact, within the EU sphere everyone knows pretty much everyone. I once heard someone compare the city’s EU quarter to a university campus, which is not far from the truth. To make the most of your time here, both professionally and socially, networking is key. Whether it’s at a work event or over Thursday drinks at ‘Plux’ (Place du Luxembourg), don’t forget your business cards, push past the awkwardness of introducing yourself to a total stranger, and get talking about that latest POLITICO article or whatever is going on in the Bubble at the moment.
2. To tweet or not to tweet? The answer is easy – tweet. Social media like Twitter and LinkedIn are big in Brussels and can be very helpful, especially if you work in communications. They are good sources of information and an easy way to connect with people. So, create a Twitter account and update your LinkedIn profile now because you’re going to need it. Also, think about how you want to present yourself – do you want to keep it personal or profile yourself professionally? Many EU public affairs professionals use their social media platforms to discuss their chosen policy area. Whether or not you do the same, it’s always good to have a clear idea of what you want to achieve with your digital presence.
3. Stick your neck out. There’s a lot of room for initiative and creativity in EU public affairs. Don’t be afraid to find your niche and voice your ideas. Public affairs professionals in Brussels are an open and dynamic bunch, ready to embrace new ideas (even from newbie interns). Take this opportunity to get the most out of your internship and learn about your strengths and weaknesses in the work place.
4. Embrace your inner nerd. Working in Brussels is a great opportunity to get bogged down in a particular policy area (energy, financial services, food and health etc.) or the intricacies of European politics. It’s a city full of knowledgeable people, so don’t be afraid to ask questions and develop your particular area of interest (even if your friends may tire of hearing you drone on about the Energy Union, the Juncker Plan or the intricacies of the European Parliamentary groups…).
5. Learn by doing. Having studied European politics at university was a great help for me when I started my internship. However, you quickly realise that many of the ins and outs of EU politics are best understood by experiencing them first-hand as well. If you’re an EU geek like me, who loves the academic side of EU studies, an internship is a great way to get practical knowledge to complement your education. Brussels life puts everything you’ve theorised about into perspective. For example, there is nothing like following a legislative dossier for months through the different institutions to really appreciate the dynamics of how the European Commission, Parliament and Council interact with each other. Working in public affairs in particular is a unique experience, in that it gives you a birds-eye view of EU policymaking while allowing you to take an active part in the process yourself. So, make the most of this opportunity and learn by doing!

By: Louise Olander

 

Circular Economy aficionados are busy in June. Both the legislative proposals on waste and the broader circular economy action plan are on this month’s institutional agenda!

Today the Industry Committee (ITRE) discussed the draft opinions on the waste proposals. Tomorrow, the Environment Committee (ENVI) will discuss the draft reports. Next week, the action moves to the Council where Member States will discuss and adopt conclusions on the Circular Economy Action Plan on Monday 20 June. If you have had your ears open, you’ll have an idea of what is in those conclusions.

Make sure to follow our blog and @fleishman_eu Twitter stream

And of course, take a look at our Circular Economy Timeline and let us know whether you have any questions!

With only a couple of weeks left until the referendum on the UK’s membership in the EU, articles and analyses on Brexit make the headlines almost every single day. For the tech industry a potential Brexit is a major issue, given that every aspect of the economy and of our lives has been digitised, and we are dealing with an increasingly cross-border market. Through the Digital Single Market (DSM) strategy, the European Commission wants to put Europe on the digital map and remove the borders for the online world in order to boost the economy, and open up cross-border trade for businesses and consumers. However, countries outside of the EU will not be able to reap the benefits of full market access that Member States enjoy and will likely fall into a legal limbo.

Britain is already in the process of taking advantage of the benefits of the digital economy, so what would the UK tech sector look like if the UK leaves the EU?

London could lose its status as Europe’s tech hub

London is currently Europe’s tech hub and its tech sector is one of the success stories for the UK. According to the European Digital City Index, London is the number 1 city in Europe for supporting digital startups and scale-ups. Research by KPMG also shows that hiring in the UK tech sector has been growing in the last three years, and the business activity growth in the tech sector exceeded that of the entire UK economy.

The tech sector has a lot to gain from not being isolated from the advancement in the rest of Europe. According to Tim Farron, the leader of Liberal Democrat party, “Brexit would be a disaster for the UK’s tech sector … London’s status as the digital capital of Europe would be at risk if we shut the door on the world’s largest market”. If the UK leaves the EU, tech companies looking for opportunities could choose not go to London, but to other capitals with a high focus on technology, such as Berlin. One of the key reasons will be the high level of legal uncertainty and risk attached with a potential Brexit.

Tech companies in London have already shown their support for remaining in the UK. A poll of members of techUK, an association representing more than 900 tech companies in the UK, mostly SMEs, reveals widespread support for staying in the EU. Approximately 70% of its members favour remaining in the EU because EU membership makes the UK more attractive to international investment, more globally competitive and gives the UK a better position in trade relationships. They believe that leaving the EU could increase uncertainty for their businesses. Recently, Microsoft has also showed its support for the UK to remain in the EU. In a letter to its 5,000 British staff and to 25,000 businesses in its network, Microsoft UK CEO, Michel Van der Bel, wrote that the UK being part of the EU has been one of the main reasons why it is an attractive place for Microsoft investment in Europe. The company has been investing in Britain since it opened its first office there in 1982 and is the first US tech company to make a statement on the referendum.

British citizens might not get to benefit from a European digital single market

The European Commission launched its Digital Single Market (DSM) strategy in May 2015, aimed at positioning Europe as a tech leader and at creating a unified set of rules for all 28 Member States.

In the event of a Brexit, the legislative areas being harmonised by the DSM will no longer apply to the UK. This will leave businesses around the world in a state of legal uncertainty when working with companies in the UK. For instance, the Commission is currently working on creating EU-wide rules on e-commerce, which aim to make it easier to sell digital goods and content across the EU. If the UK leaves the EU, the British online shopping industry will lose access to the cross-border market of 27 other countries in the Union, and could risk missing out on online cross-border trade.

Regular citizens also have a lot to gain from the DSM. Take roaming charges for example, which will be abolished in the EU as of June 2017. The UK government has assured British consumers that they would still benefit from the drop in roaming charges even if they choose to leave the EU. However, after a Brexit, negotiations will have to take place to determine the conditions of the future EU-UK trading relationship. These are very likely to be extremely difficult negotiations, which will only be made worse by any moves from the UK to try and exclude freedom of movement from any EU-UK deal.

UK consumers will also benefit from one of the Commission’s latest reforms to allow for Europeans travelling anywhere in the EU to still have access to online services, such as Netflix, which they have paid for in their home country. British Prime Minister David Cameron has praised such reforms by saying they are one of the reasons why his country should not leave the EU: “The UK has been pushing for a digital single market that delivers for consumers across the EU … These proposals deliver just that.”

Data transfers between the EU and the UK could become illegal

Data protection and data transfers are very sensitive subjects in Europe, as the EU defends high standards on privacy. This became clear in October last year when the European Court of Justice invalidated the ‘Safe Harbour’ data transfer agreement with the US, on the basis that the US does not provide adequate protection for EU citizens’ data. Should Britain choose to leave, this situation could set a precedent for a similar call for the UK to demonstrate it protects EU citizens’ data. Proving this could be a particularly challenging task given the current reforms the British government is pushing through on government monitoring and access to data. These measures have been criticised by privacy activists and legal experts, who claim they do not meet EU data protection requirements. Recently, more than 200 senior lawyers signed a letter saying that the proposed Investigatory Powers Bill ‘compromises the essence of the fundamental right to privacy’ set out in EU law and fails to meet international standards for surveillance powers. In this context, it could prove difficult for the European Commission to credibly negotiate a data transfer agreement with the UK, leaving many companies in limbo or, worse, isolated from the European digital single market.

 

Technology is global, and it will impact every one of us, regardless of physical borders. As such, the impact of Brexit on the tech sector is also not simply contained to the UK. A potential Brexit will mean that the UK will not be able to influence EU legislation anymore, certainly not to the same extent as it does now, taking its pro-market, pro-technology voice out of the EU debate. Given the importance of tech legislation like the ones in the DSM strategy and the benefits of the digital economy, this opportunity should not be missed.

 

By Andreea Ghita, Technology Practice

The International Organization of Securities Commissions (IOSCO) was born 33 years ago, when 11 regulators from North and South America got together as markets were beginning to look global.  Today, there are 126 securities regulators from across all continents, who are members of IOSCO. IOSCO’s raison d’etre is to set global standards for securities regulation. It meets every year to review priorities; however, the annual AGM in Lima, Peru, earlier this month, was a bit different.

 New Leadership

Ex-US FINRA Paul Andrews had just succeeded long standing EU Commission servant David Wright as Secretary General, Hong Kong SFC Ashley Alder was elected as new chair of the IOSCO Board, replacing Australia’s ASSIC’s chair Greg Medcraft, and JP Servais provided the dose of Europe in the new IOSCO leadership, coming in as Vice-Chair.

New Agenda

While much of the focus was on market liquidity and the opportunities and threats of FinTech on securities markets, there were also some new items on the agenda:

• New powers granted to IOSCO members to more effectively deter cross-border misconduct and fraud in markets;
• New mandates relating to retail investors: to review industry practices on investor vulnerability; to apply insights from behavioral economics to investor initiatives; and to run a pilot world investor week in 2017;
• New working group on infrastructure finance;
• New mechanisms for securities regulators to gather and share information on cyber risk/security issues; and
• New ways for the financing of SMEs

New Challenges & Opportunities

• Award-winning costume designer Ed Stevenson once said: “Standards only move in one direction. At the beginning of the world, standards were established and they’ve been slipping ever since.”By contrast , IOSCO’s standards have got better and better over the years. Witness the recent EU negotiations on Benchmarks regulation, where the majority of public and private sector actors involved praised IOSCO’s work in that space (i.e its Principles for Financial Benchmarks and for Price Reporting Agencies). Will this be the new “benchmark” by which IOSCO standards are judged going forward?

• Not only does the EU Benchmarks legislation, adopted last month, reproduce (word for word at times) most of the IOSCO principles, it also places, for the first time in EU Regulation history, compliance with such principles at the heart of the Third-Country regime (i.e the ability for non-EU benchmarks to be used in the EU). Will IOSCO seek to promote this precedent in other areas? And could the fact that IOSCO standards increasingly gain the force of law through national/regional copy and pasting impact the dynamics within IOSCO?

• Certain provisions of the Benchmarks legislation were markedly influenced by central banks, given the potential financial stability implications of a benchmark (in particular a critical one) ceasing to exist. Central banks are also driving the global initiative to improve conduct in FX trading, which one might have expected to be classic securities regulators’ territory. It is of course, but it is also seen as a source of systemic risk. And so is market liquidity, the rise of electronic and algorithmic trading, bond funds redemptions, and many other traditional securities regulators’ topics. This year’s motto for the IOSCO AGM in Lima was “Strengthening global bridges for financial development”. Could next year’s be “Strengthening global bridges with central bankers?”.

• One final new challenge, coming from Europe at least, is the growing call for “democratic accountability”. Recall French ALDE MEP Sylvie Goulard’s recent own-initiative report on the EU in international fora, calling all global standard setters to be more transparent and establish a transparency register similar to what Brussels has, but also now taken on by Paris and Dublin. If Europe’s flexibility to develop its own rules is diminished as a result of an increased recognition of global standards agreed “upstairs”, is this a sacrifice worth making for international standard setters, and might this impact the future quality of their standards?

Ed Stevenson’s numerous film and television credits included Citizen Kane (1942), which is often cited as being among the greatest films of all time. FleihmanHillard is honoured to host Citizen Andrews, new IOSCO Secretary General, at a Roundtable in Brussels on 31st May, where we will hear Paul’s thoughts on some of the issues and questions listed above, as well as his priorities and broader vision for IOSCO going forward.

By Bertrand Huet, Senior Vice President & Partner.

The Benjamin Franklin quote above is increasingly becoming true, even to the old ‘certainty’ in the EU that common tax policies – demanding unanimous decision-making between Member States – will only move at glacier speed through the negotiations.

Corporate taxation currently features big on the European policy agenda, and is unlikely to lose ground any time soon. A combination of heightened media attention, revelations of tax evasion through Luxleaks or Panama Papers, budgetary constraints in many countries and increased awareness by the public have created unprecedented momentum for a more coordinated EU corporate tax policy.

The undeniable truth (?) of the Hart quote notwithstanding, this opportunity to be civilised in itself comes at a prize. The changes to tax rules that already have been and will be discussed have the potential to substantively impact how businesses pay and report taxes, how the companies are structured and not only how they do tax planning, but how they do business as such, in Europe.

Rules on interest deduction limitations, hybrid mismatches and controlled foreign companies, whilst seemingly ‘just’ an implementation of OECD guidelines might have further reaching consequences than any parties imagined when these issues where negotiated – in the context of voluntary guidelines – at the august Paris based institution.

In parallel, companies’ own corporate taxation policies are increasingly scrutinized by the public, with possible impact on reputation and side-effects on the ability to influence public policy not limited to taxation – and with layers to be further applied, if the Commission’s proposal on public country-by-country reporting gets tailwind through legislative negotiations.

Nevertheless… the time for thinking of EU tax policy is now! Work on greater harmonization of corporate taxation rules in the EU and to close loopholes stemming from different national tax laws is on full throttle as no EU government – or anyone else for that matter – wants to be seen as blocking the crack down on tax evasion. And rightly so!

Automatic exchange of tax rulings between EU Member States’ tax authorities and sharing detailed information on companies’ revenues, profits and taxes paid have already been agreed on – in both cases within only a few months after publication of the Commission’s legislative proposal.

Currently, EU countries – pushed forward by the ambitious Dutch Council Presidency – are working hard on the abovementioned issues of the anti-tax avoidance to tackle base erosion and profit shifting – where substantive changes to interest deductibility or hybrid mismatches are expected to be agreed on soon. A new proposal to increase tax transparency of multinational companies has also just been brought forward and later this year more work on a harmonized EU corporate tax base is expected.

But whilst the pace in acting affirmatively towards tax avoidance is laudable, the speed of the legislative process – leaving only a narrow window for the business community and experts to provide input – entails the risk that whilst the starting point and pace was benevolent and laudable, the end result might lead to unwarranted damages – as is always the risk, when regulation is hastened forward.

Martin Bresson

“The future belongs to those who wake up early,” say the French. The discussion during our roundtable on the Circular Economy Action Plan, which was unveiled last December, proves exactly that.

On 27 April, we had the pleasure to host Mrs. Pietikäinen, the European Parliament’s rapporteur on the 2015 Circular Economy own-initiative report, Mr. Radziejewski from European Commission Vice-President Katainen’s cabinet, as well as industry and NGO representatives for a roundtable discussion on the practical implementation of the Action Plan.

The roundtable clearly showed that no action will move forward without input from civil society and industry. Institutions – including the Council whose role was emphasised – will be looking at concrete case studies as well as proposals, in order to ensure that “Europe closes the loop”. Policy makers underlined they need to know how policy and regulation can support competitive and resource efficient business models.

Speakers and all participants who expressed their views showed genuine commitment to the Circular Economy agenda. Some of them however insisted on the extraordinary challenges that such transition present for both industry and society. These challenges will need to be addressed in the coming months.

“The future will be for those who get it & want to act” will be the institutions’ motto in the coming months, as they consult and work on turning the Action Plan into reality. The roundtable demonstrated  a clear interest and commitment to enhance dialogue between stakeholders.  At FleishmanHillard we are therefore planning further roundtables, focusing on specific actions, issues and sectors in order to mirror the institutional agendas.

Should you want to engage on this dossier or have a recommendation as far as next roundtables are concerned, don’t hesitate to get in touch with us – with Robert Anger to be precise at  Robert.anger@fleishmaneurope.com.

The FleishmanHillard Circular Economy team

“Digitising industry” should be more than wishful thinking and a catch phrase for eurocrats as “Europe’s pride” – traditional manufacturing and production methods have not proved immune to digital transformation; and this is for the best. Over the past year, private sector executives and decision makers from Davos to Washington D.C. have been using their brain power and time to discuss the impact of new technologies for the development of products and the future of the manufacturing sector at global level.

With the EU focusing on growth and jobs in order to maintain its competitiveness, Commission officials are no strangers to the concept of the digitisation of the European Industry. This new space, nonetheless, holds both challenges and opportunities; this is where the “Digitising European Industry Package” comes in.

In case you missed it, the Package, which was published on 19 April, is made up of four non-legislative communications and three accompanying staff working documents covering issues such as Cloud Computing, standardization, internet of things, and funding.

Making Europe strong again

In line with the Commission’s priorities and the pressure from global competitors two trends run through the documents. Firstly, the Commission identifies ‘areas where progress is to be made’ in European digital services and explains that urgent EU-level support is needed to ‘coordinate national and regional initiatives to digitise industry’. Interestingly as well, while European technology companies are trying to take over the world, there is an underlying protectionist sentiment in the texts. The Commission refers to a need to ‘open the door for new competitors’ in some data and web platforms as European businesses are concerned about being locked in with a ‘few suppliers or platform owners. An earlier draft of the package went even further, saying that European digital services had ‘major weaknesses compared to major competitors in the US’ which is why EU-level support is needed for Europe to ‘stay in and win the digital industrial race’.’

Is there space for engagement?

As with every Commission non-legislative proposal, there is an opportunity for the manufacturing sector to engage on some issues that will have a long term strategic and business impact.

Development of common standards and interoperable solutions: This is one of the Commission’s priorities and will be key for the development of the Internet of Things (IoT). New standards will cover areas such as 5G, Cloud Computing, IoT, Data technologies, and Cybersecurity; harmonised standardisation will complement internal market mechanisms and could enable European manufacturers to make their products more competitive. eHealth, smart energy, intelligent transport systems and connected and automated vehicles, including trains, advanced manufacturing, smart homes and cities, and smart farming could be some of the sectors that will benefit in the short to medium term. However, the Commission also acknowledges that standards should continue to be industry-led, voluntary and consensus-driven. This leaves space for prompt engagement, both at EU and national level.

Data protection – The Commission will propose a legislative initiative in 2016 to remove or prevent unjustified localisation requirements introduced by national legislation. Data ownership, access and re-use rules, particularly in relation to data generated by sensors and other collecting devices will be at the centre of the proposal. These are elements that are key for producers of smart devices, especially in the energy sector.  The Commission also highlights possible obstacles to data flow, such as uncertainty regarding the distinction between personal and non-personal data and obstacles regarding data interoperability and reliability.

 Promoting innovation – The Commission acknowledges that innovation will drive growth. For this reason it encourages new innovative research services, such as data mining, and breakthroughs in supercomputing and secure networking through the European Open Science Cloud and the use of quantum technologies. Alongside the European Data Infrastructure, the Commission believes this will contribute to the digitalisation of industry. With the manufacturing sector driving European excellence, smart cities, smart living environments, driverless cars, wearables, and mobile health will be some of the sectors that are expected to grow thanks to digitisation. Dedicated zones will be set up across Europe to test new technologies, free from some of the regulatory burdens that these sectors face when scaling up projects. As for those complaining about the lack of financial resources, the Communication mentions a number of areas where the Commission will invest Horizon 2020 funds. For example, these include €500 million focused on digital innovation hubs. This will give a boost to companies, mainly SMEs operating in these technology spheres.

Is more coming up?

Digitising the European Industry will be the gift that keeps on giving for the next few months. The next peak in activity will take place at the end of the year when the Commission will publish its initiative on the ‘free flow of data’ which could impact companies using private or public data. The Commission also makes sure that industry stakeholders stay on the bench as observers. The time to start thinking about cybersecurity implications for your firm is now, as the deadline for industry stakeholders to draw up ‘practical guidelines’ on cybersecurity in ICT standards has been set for the end of the year.

The new industrial revolution is happening now and the Commission is aiming to have the manufacturing sector at its side in order to improve the environment in which “traditional” European companies operate. Smart value chains will be at the heart of this revolution, embracing a much higher level of both automation and digitisation. While cybersecurity and data protection concerns could leave executives skeptical on the added value for the industry, the future of European manufacturing is fortunately at the mercy of tech geeks. So better start to talking to DG CONNECT in order to harness the opportunities digitisation brings along.

Ilektra Tsakalidou, Catherine Armitage, with the help of Crispin Maenpaa

Image by Malte Helligsøe

If you ever find yourself in a room filled with people working on European transport policy, the moment you mention “decarbonisation” heads will turn in curiosity (or despair). We bet this is what happened during the two-day informal council meeting in Amsterdam over the past two days!

Since the 2030 Climate and Energy Package and COP21, everyone has been talking about “decarbonisation of transport” yet no one really knows what the Commission has in its mind in order to solve this complex puzzle. Any action to reduce CO2 emissions from transport could impact everyone, from public transport users to freight operators.

Last week, the Commission shed some light on the strategy with the publication of its long-awaited Roadmap on decarbonising the transport sector. As expected the initiative (which is due to be agreed upon in College at the end of June) will not include legislation, but will provide the framework for a number of other initiatives that advance the transition towards carbon-free or less carbon intensive fuels, improving vehicle efficiency, and managing transport demand.  

The publication of the roadmap was preceded by rumors that the Commission was focusing on electrification, especially considering the long and complex discussions on the sustainability of biofuels and the rather weak agreement in favor of alternative fuels a couple of years ago. While the roadmap does not necessarily reflect this strong push on electrification, a study on third countries policies by the Joint Research Centre discusses in depth the many options including electrification.

Realistically, the approach showed in the roadmap is the most promising one to achieve results as it focuses on the idea that reducing emissions from transport requires coordinated action on several fronts:

• CO2 emissions from cars and vans
• Monitoring emissions from heavy duty vehicles
• Action plan for the deployment of electrification and advanced biofuels
• Revision of the Eurovignette Directive and electronic tolling
• Decision on Effort Sharing for non-ETS sectors
• Initiatives on intelligent transport
• Urban mobility initiatives
• Rules for market access for the haulage market

Daunting list, right?! Whether you are a vehicle manufacturer or provide components for vehicles, or even if you work in the electricity generation sector or are a fuel supplier, we would recommend that you:

• Look out – many initiatives will be coming your way in the next months and the time to engage is now
• Brush up your stats – whilst the Commission will not be conducting a public consultation on the Communication, some of its element will require engagement from stakeholders, with concrete data on business impacts preferred.
• Meet with key decision makers – technology neutrality is still the rule, so if you expect to see something specific about your sector this is not going to happen. If you want to stick out, act now.

Ilektra Tsakalidou, Laura Rozzo, and Michael Stanton-Geddes

Facts are few and speculation abounds about the European Parliament’s special Committee of Inquiry into Emission Measurements in the Automotive Sector—in short, the EMIS committee or Dieselgate inquiry.

While we wait for certainty, this document prepared by FleishmanHillard offers an overview of what is known: membership, leadership, mandate, and timetable.

FleishmanHillard overview of EMIS

There are 45 members, including 1 chairperson, 4 vice-chairs, 2 co-rapporteurs, and 9 group coordinators. 1 member is also the rapporteur on the Commission’s January Proposal for a Regulation on the approval and market surveillance of motor vehicles. In other words, nearly 40% of the EMIS members have some sort of formal function in the committee.

The members have already agreed on the broad direction and timetable; the details of what will be discussed and which guests will be invited are being thrashed out between coordinators and members and should be agreed during the April regular meetings and those to follow.

Currently, the status is that:

1. The rapporteurs are responsible for preparing a programme of hearings, which will be discussed by the coordinators. It appears that each group is currently preparing its list of guests to invite to appear before the committee. Keep in mind that the committee has already a calendar of 18 meetings, of two and a half hours each, for 2016, and has reserved the right to organise additional meetings in Brussels for hearings.
2. EMIS has asked the Parliament’s research division to prepare two briefings, one to cover the legal obligations of ‘economic operators’ which can mean the car manufacturers as well as testing centres, and a second to cover the implementation and enforcement of the legal obligations with a focus on penalties and the ban on defeat mechanisms.
3. The committee is planning missions, to be determined by the coordinators, though the number of missions will be limited to the minimum necessary.

Special committees happen once in a blue moon, so this offers an opportunity for MEPs to sink their teeth into a meaty issue that has the attention of the media as well as the interest of many European consumers. It is an occurrence to watch closely.

 

Michael Stanton-Geddes, Laura Rozzo and Ben Carpenter-Merritt

 

Irish election results show that austerity measures, even when resulting in economic recovery, will be punished by electorates.

The results are in. In the first general election since 2011, the previous coalition government of Fine Gael (centre-right) and Labour, has been rejected by the Irish people. This time around Fine Gael and Labour, despite an uptake in the economy, suffered unprecedented losses, and the main opposition parties Fianna Fáil (centre-right) and Sinn Fein (left) both gained a number of extra seats, as well as an increased number of disparate independent candidates. Without a doubt, on a national level this election has been seen as a huge blow to Fine Gael and a direct consequence of the unpopular austerity measures imposed on the Irish people.

Thus, since last Friday, two things have been undeniably changed: firstly, the Irish political landscape and secondly, claims that austerity measures, even when they bring economic stability, can be popular amongst an electorate. While at the EU level, Ireland may be seen as the star pupil amongst the P.I.G.S., closer to home, voters either aren’t feeling the recovery or are embittered with how the austerity measures were imposed. Indeed, at the EU level, the result represents the recurring theme, witnessed recently in Portugal and Spain, of centre-right austerity imposing government’s being rejected in recent general elections.

Ireland: the star pupil?

Among the P.I.G.S. (Portugal, Ireland, Greece, Spain, the EU members that received rescue packages from the EU following the economic downturn in 2008) Ireland has been touted as the poster child for recovery; the country that has bounced back from the depths of economic crisis unlike any of the others. Accepted by the then Fianna Fail government, and implemented by Fine Gael and Labour when they were elected in 2011, the package was seen as necessary in order to protect against a destroyed real estate sector, unprecedented levels of unemployment, increased taxes, excessive household debt and mass emigration of the country’s youth. The Irish people, fresh out of a period of economic prosperity referred to as the “Celtic Tiger” years, were hit hard.

Of course, there was push back. The rescue package offered by the EU and the IMF was deemed excessively harsh by a huge proportion of the Irish people. The last number of years has seen numerous anti-austerity protests and the founding of the new Anti-austerity Alliance party. Political anoraks all over the country and across Europe are saying that the election results indicate that the Irish people are saying “no thanks” to the austerity imposed over the last five years. Admittedly, the minority coalition partner for the previous government, the Labour party, was decimated over the weekend. But so have all minor coalition parties in the last few elections. Although this weekend’s election results replanted Fine Gael with the highest number of candidates elected, overall the huge drop in support for the party shows that the people of Ireland seem to have had little faith in Fine Gael’s campaign slogan to – “keep the recovery going”. Arguably Ireland’s great comeback: it is returning as the star pupil of an EU-led economic recovery, when failing miserably at the bottom of the class just a few years ago.  Yet the reality is that although the statistics show a successful economic recovery, unlike anything seen among its fellow P.I.G.S., the political class have massively underestimated the lasting psychological damage that the bailout had on the Irish psyche. In the minds of many of the Irish people, the bailout has not been a success.

Ireland: the class swot?

Ireland may have been absent from school the day political idealism was taught. As a nation, Ireland has not produced the same polarised anti-austerity movements to the extent that have emerged in its fellow hard-hit countries. Ireland has had no equivalent of the Syriza party, no Jeremy Corbyn and no Front Nationale emerging strongly following severe austerity. Irish politics have never experienced such polarised political views. This is evidenced perfectly by the fact that the parties in power have see-sawed back and forth since the founding of the state, from the centre-right Fine Gael (the nearest equivalent being the UK conservative party) and the centre-right Fianna Fáil (the nearest equivalent also being the UK conservative party). Why is this? Why has Ireland experienced similar tough measures imposed on its people, and yet never experienced the same level of public outrage and pushback? Is it perhaps not that Ireland is the success story of EU austerity measures, but rather, that our nation’s cultural inclination is too reluctant to rock the boat and to disagree with teacher?

What does this election mean for the EU?

The general elections taking place in this island nation affect neither legislative processes in Brussels, nor broader issues such as the upcoming Brexit referendum to any large extent. Although a member of the EU since the 1970’s and a strong supporter of the European Project, Ireland is far from the position of countries such as France, Germany or the UK. Despite debates over the stability of this newly elected government (and whether or not we will be rewriting this post in a few months’ time…) this election does indicate that a precedent has been set in terms of how we measure the success of EU bailout packages. It’s now clear that austerity, even when it successfully regenerates an economy, is political suicide on a national level.

True, the European Union can now use Ireland as a successful example: an EU member state, once in dire economic straits, has accepted the government that imposed austerity and has emerged with good results with the help of an EU bailout package. Pigs can fly, it seems. Yet, it would be foolish for the EU to ignore what has just happened in Ireland: the price of instability and the bailout has been paid by national politicians, not by Brussels. EU imposed recovery has not been successful, but the EU as an entity does not have to answer for the strict measures it helped to impose. The EU would do well to heed this warning.

Yasmin Hamed and Cillian O’Donoghue

“Europe has gone from 27 (sic) fragmented, independent, not-talking-to-each-other regulatory authorities in the healthcare space to one. That’s a big deal.”
Andrew Witty, CEO of GSK

Until relatively recently, the pharmaceutical sector has been more or less absent from the Brexit debate. Finally, the silence was broken by the likes of Merck, Eli Lilly and GSK, proving that the lack of noise throughout 2015 should never have been mistaken for a lack of interest by pharma or lack of concern on the issue. In fact, pharma has every reason to be worried about this. In Europe, the pharmaceutical sector will be negatively impacted by a Britain outside of the EU to the detriment of both the business and its patients.

Pharmaceuticals is one of the most highly regulated industries, and quite rightly so. We only have to look at the severity of the consequences of the misuse of medication (loss of trust in healthcare systems, drug resistance and even premature death) to understand why. Without the EU, this ‘regulation’ looks like 28 separate countries creating their own separate rules and consequently differing standards – making authorisation of and patient access to drugs a difficult process. Luckily, thanks to the EU, these 28 separate systems have been pulled under one ‘European Medicines Agency’ umbrella, meaning an authorisation of a drug in Germany, means relatively easy authorisation of a drug in the UK, for example. As a consequence, quicker access to the drug for patients.

Of course, if the UK leaves the EU (which puts into question its membership of the EMA); it is still going to be subject to the EU’s rules and regulations on pharmaceutical products. UK producers will have to abide by these rules to ensure that their products are authorised to be marketed and sold within the EU. Moving forward, not only will we most likely have to continue to abide by these rules, if we chose the EEA option for example after a vote ‘No’, but we will also lose our seat at the table in discussions on the development of further regulation. If we look at countries like Norway and Iceland, as part of the EEA, they’ve had to implement things such as the Falsified Medicines Directive, for better or for worse, without any say in its development. This has included things such as the implementation of electronically authenticating medicines. If the UK were to totally remove itself from the single market, and follow a Swiss model for example, then the UK will of course have to implement its own regulation, so that’s double regulatory burden for pharma companies to deal with and likely a host of complex bilateral deals with other member states. None of this is sounding ideal.

‘Brexit would be “challenging” for Merck’s scientists, who have “benefited from a world where they receive grants from the European Union.”’
Roger Perlmutter, Head of R&D at Merck & Co.

Let’s move away from regulation, the pharmaceutical sector lives or dies by its ability to research and develop new drugs and therapies. Scientists working at huge R&D sites in the UK will likely lose access to cross-European scientific research programmes, such as Horizon 2020 and the Innovative Medicines Initiative (IMI). These programmes are working on some of the world’s most significant health threats such as AMR and oncology. In January 2016, the European Investment Fund made a £24.8m commitment to help commercialise innovations at the University College London, with a specific focus on new medicines, further highlighting how the EU benefits British science. On the topic, just last week, more than 50 biotech and pharmaceuticals chief executives signed a letter putting across the business case for remaining in the EU.

Equally, the free movement of people contributes to the strength of Europe’s knowledge economy. The best researchers are able to travel freely from one member state to the next and collaborate with each other. What will happen to UK research institutions when this movement is restricted or becomes so burdensome it prevents us from hosting Europe’s scientific talents?

If the UK is to leave the EU, it’s going to have to think very carefully about whether or not it deviates away from current EU standards in pharmaceuticals. If it is, then I’d really like to know the rationale as to why. The EU (and the US) is recognised as having the highest standards in pharmaceuticals. If it’s not, it’s going to be subject to the same rules and regulations that it already is, without a seat at the table, potentially complex bilateral deals and perhaps even the burden of double regulation. All meaning one thing – it’s going to take longer for patients inside of the UK to get access to drugs launched in the EU, and vice versa. Furthermore, the UK, which is currently seen as a hub of excellence in scientific research, will likely suffer from a cut in funding and loss of some of its most talented scientists, stifling research and innovation. The impact of Brexit on the pharma sector doesn’t just impact the pharmaceutical business, its impact is likely to be most felt by the patient at the end of the supply chain.

Emma Cracknell, Healthcare Practice.

Despite its undoubted transformative potential, there still exists large swathes of people in the Brussels Bubble who just ‘don’t get’ Twitter. As a social strategist I sometimes find that pretty frustrating; there are so many great things which industries, associations and individuals could be doing, but there is just such little appetite for them. The challenge is to demonstrate to the bubble just how easy, accessible and effective Twitter is.

Although everybody knows that Twitter should be part of a successful public affairs strategy, many just don’t know how. To understand, we need to stop viewing it as this newfangled, modern tool and realize that it’s the same as other broadcasting platforms which we’ve been using for years. To explain, here are 3 similarities between Twitter and radio which demonstrate just how easy it is to build a successful social media strategy for your clients.

1. Stations with a clear direction are the most successful

In Radio, the most popular stations are often those with a clear and accessible offering. Popular stations are successful in part because they are synonymous with certain values, messages and content and they are consistent in the way they communicate all of these things. The same is true for Twitter. Too many accounts are run without a clear objective and so don’t stand out. Users who have a clear “brand” are typically successful and that’s because they have identified what works for them and have repeated it.

2. The key is being able to cut through the noise

Having a clear direction is the starting point, but it is increasingly not enough. In radio, there are a plethora of stations which occupy the same space, playing the same music and interviewing the same artists. Popular stations have to find a way to stand out. Twitter users are faced with the same problem. As I mentioned in my last post (and as our team constantly say to clients) in 2016 it’s not enough to just write tweets. Just like the best radio stations use quizzes, phone-ins and features to stand out, so Twitter users need to be bolder and more creative when it comes to communicating.

3. it’s essential to know your audience

The best radio stations are those that develop content which speaks to their own niche audience. If a station which specialized in classical music suddenly started playing Kanye West, their audience would quickly lose interest- no matter how good Ye’s songs may be. As I’m sure you’ve guessed by now, this also applies for Twitter. Interaction with an audience is useless unless it’s targeted and tailored to suit their needs. Otherwise they won’t be interested in what you say and if they’re not interested in what you say then you may as well not be tweeting to them at all.

As you can see, the similarities are as simple as they are obvious. Despite this, the majority of Twitter accounts in Brussels lack direction, produce little to no cutting edge content and fail to target their audience.

So, next time you’re typing out a tweet, think about how you can learn from your favourite radio station. If you do, you’re more likely to achieve your objective- and that’s always a good thing.

 

 

Alex Burchill

“This website uses cookies. By continuing to browse the site you are agreeing to our use of cookies. For more details about cookies and how to manage them, see our cookie policy”.

In 2007, the European Commission decided that people should be protected from spyware and other tracking software being planted in their devices without their knowledge. This led to the ‘cookie law’, designed to give people ‘clear and comprehensive’ information about what was being tracked and why, so that they could choose to allow it or not. The Commission’s logic is as follows: give people information, and they will make informed choices.

In a world where we exchange our data willingly for free services like email and search, most of us would like to be able to make informed choices about what data we share, based on how it will be used and what we get out of it. We are all vaguely aware that when we get something for free online,  our data is being used in some way to bring profit to the companies providing the services we use, for example for advertising.

Helping people make informed choices about how their data is used is a lot harder than it sounds.

Unfortunately, the cookie pop-ups we see on every website we visit don’t actually lead to us making informed choices about how our data is tracked and used. In many cases, the pop-up simply disappears after a few seconds – or, if needed, we just click the ‘close’ button and get on with what we came to the website to do. The Commission’s logic is wrong – if you give people information, it doesn’t necessarily mean they will use it to make informed choices. Helping people use information to make informed choices about how their data is used is actually a lot harder than it sounds.  When the cookie law came into force in the UK, I was in London working for tech business JustGiving. Like most companies, we understood there was a legal obligation to add this pop-up and we put aside valuable time and resources to do it. But the guidance from the Commission was unclear and contradictory. We looked at the Commission’s own website hoping for a best-in-class example of implementation, and were dismayed to see reams of text obscuring half of the homepage, written in legalistic language that most people wouldn’t understand. What is the point of this, we wondered?

Data protection law in the EU is also based on this logic. Companies have a wide remit to use our personal data for almost any purpose, as long as we consent to it. If we tick the box, EU law considers that we have made an informed choice. But again, in reality, how many of us tick the box without reading the privacy policy which comes before it?

We need a shift from the decades-old offline system of adding labels and warning.

The problem is that the Commission hasn’t invested enough in thinking about the best way to help people make informed choices. They simply transferred a decades-old system from the offline world to online – essentially, adding labels and warnings. This may be the only solution when it comes to adding product safety information to electronic appliances, for example. But online there are many more possible ways of displaying information – which could be more effective in helping people understand, learn more and make informed choices. Giving people information is important, but it needs to be done in the right way, at the right time.

In the e-commerce world, every word and picture on a website is chosen and positioned in exactly the right way to help people find the information they need. Every variable is tested thoroughly to improve the browsing experience. Should that link be in the top-left or top-right of the page? What size should the font be? What colour makes people click on it the most? How will it look on a smartphone, or a tablet? It would make sense to apply the same approach to the way information about privacy and cookies is presented to users. How should it be written and presented in order to make sure people actually read and engage with it, rather than simply clicking it away?

The geo-blocking debate risks following the same flawed logic as the cookie law.

Unfortunately, policymakers still seem to be pushing the same old logic of ‘give people information and they will make informed choices’, without further thought as to how this information should be presented. The logic is threatening to creep into new pieces of legislation that are currently being developed as part of the Digital Single Market. In recent documents published by the Commission about the upcoming geo-blocking legislative proposal, there are ominous references to ‘imposing transparency obligations’ to explain when and why geo-blocking is being used. This rings cookie law alarm bells in my head. The logic is there again – give people information about geo-blocking practices, and they will make informed choices. I can imagine pop-ups appearing every time I click on a different product as I do my online shopping:  “This product is only available in our UK, German, French and Dutch stores. It is not available in the Czech Republic, Bulgaria, Spain or Greece. It may be available in Estonia, Ireland and Luxembourg subject to our geo-blocking policy. By continuing to browse the site you are agreeing to our use of geo-blocking. For more details about geo-blocking and how to manage it, click here to read our geo-blocking policy”.

The challenges of the DSM are not purely regulatory. The implementation is also crucial.

Maybe it’s time for policymakers to step back and consider alternative ways to help people make informed choices online. Simply throwing information at us does not seem to be working. And the more information we have to wade through in order to do basic things online, the less we will care about what it actually says. As the Commission moves forward with the Digital Single Market (DSM), it has the opportunity to bring together expert stakeholders from across the tech sector to try and find a better way to achieve this. They could bring in UX experts, web designers, e-commerce and online marketing analysts, experts in online behaviour and monitoring and many, many others. The challenges of the DSM are not purely regulatory. The implementation is also crucial and, when it comes to digital policy, regulation needs to be designed with the implementation in mind. This can be done hand-in-hand with industry experts, who would welcome the opportunity to avoid another cookie law coming into force in several years’ time. Let’s not repeat the mistakes of the past with the geo-blocking proposal.

Catherine Armitage 

If you are reading this sentence then you must be curious to see how a country that is currently racked with political uncertainty, multiple regions seeking independence, a financial crisis, and both high public debt and unemployment can resolve its issues in the near future. Spain is suffering from ‘jobless growth’ and social and territorial cohesion cracking along the seams. While the DSM will not be the solution to resolve these issues, the future is clearly digital, driving e-commerce, online services and Spain’s growth potential.

After chairing a lunch discussion here at FleishmanHillard’s Brussels offices with leaders in the financial, consumer and government I was left with more questions than answers on if it was possible.

Let’s start with the facts. Economically it remains the 5th largest economy in the EU with its exports 3% higher than imports. According to the IMF, Spain’s expected GDP growth is set to outperform Germany and France in 2016. It was also earmarked by the Davos crowd in their Global Competitiveness Report to be in 10th place for having a world class infrastructure. Its public debt, unlike many EU countries, is dropping and there are signs that jobs (many short term) are returning back to the market with less people leaving the country looking for opportunities. But there is still a lot more room for improvement.

Some areas called out during the discussion included longer term investment in education and digital skills. Spain also needs to tackle the challenges being felt for cross border e-commerce. This includes problems of delivery often attributed with high costs, differing VAT regimes from country to country and ensuring there is a level of security that can increase consumer confidence. It would be safe to say this is not unique to Spain only but endemic across the EU.

Some felt that the DSM is too lengthy in its processes to tackle the issues Spain is experiencing. Many of the legislative processes will take several years before they are agreed and even longer to be implemented in each member state. There were calls for more urgency and more of a top down approach fast tracking specific legislative areas.

Clearly there was consensus in the room that DSM has a lot to prove to deliver results to Europe as a trading block helping it compete internationally. It will require massive coordination by local authorities throughout the 28 Member States as well in Brussels to ensure the goals of the DSM are not politicized and distorted.  Many pointed out the European Commission goals on key areas such as data flows, ecommerce geo-blocking, and cloud computing still remains unclear and definitions for each of those should be clarified before any legislative proposals are made. There was also concern on the changes to the upcoming legislative proposal for the DSM, as it makes its way through the European Commission, Council and Parliament.  But the rewards are also high with a professed €415 billion in growth and hundreds of thousands of new jobs.

 

Ray Pinto

EU data protection authorities have hinted at more uncertainty for companies when it comes to EU-US data transfers, at least until April.

So what do we know?

Companies which are still relying on the Safe Harbor framework to transfer data between the EU and the US could be investigated by national data protection authorities in the EU, said the chair of the Article 29 Working Party in Brussels today. Isabelle Falque-Pierrotin heads the group, which brings together all the national data protection authorities in Europe. In a live statement this afternoon, she confirmed that companies using other legal mechanisms to transfer data (such as Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs)) would escape investigation for a few more months, as data protection authorities continue to carry out a review on this issue which won’t be concluded until April at the earliest.

This review includes a thorough analysis that it has done on the US surveillance systems. The Article 29 Working Party has raised concerns that the scope of surveillance in the US and remedies available to citizens could impact the effectiveness of BCRs and SCCs.  The new Privacy Shield agreement could help improve the situation, but the devil is in the details. A recent statement outlines four essential guarantees for intelligence activities (which Mrs. Falque-Pierrotin during the press conference made a point that it applies to EU countries as well):

1. Processing should be based on clear, precise and accessible rules where people are reasonably informed should be able to foresee what might happen with her/his data where they are transferred;
2. Necessity and proportionality with regard to the legitimate objectives pursued need to be demonstrated: a balance needs to be found between the objective for which the data are collected and accessed (generally national security) and the rights of the individual;
3. An independent oversight mechanism should exist, that is both effective and impartial: this can either be a judge or another independent body, as long as it has sufficient ability to carry out the necessary checks;
4. Effective remedies need to be available to the individual: anyone should have the right to defend her/his rights before an independent body.

Why wait until April? What’s the delay?

The Article 29 Working Party has not yet received any documentation on the new Privacy Shield agreement from the Commission. They have received verbal statements from Commissioner Jourova this morning with a promise to receive the detailed texts by the end of February. Once the documents have been received, the Article 29 Working Party will need to review and meet again to make a final decision.

It is worth noting that there was a lot of optimism in the voice of the Article 29 Working Party’s President today, but much still needs to be reviewed.  Will the new measures announced by Commissioner Jourova yesterday be robust, enforceable and secure enough to pass the data protection authorities’ test?

 

Ray Pinto

Talk about the calm before the storm!  The silence is deafening as both Brussels and Washington DC holds its breath days before the February 1st deadline for an agreement on a new Safe Harbor framework.

At the moment both sides of the Atlantic continue to stare hard at each other waiting for the other side to blink. Senior level negotiations occurred behind closed doors during Davos but very little was revealed. The EU is standing firm as Commissioner Jourova said she is clear that ‘when a European’s personal data travels the equivalent protections also need to go with it’. While Penny Pritzker, U.S. Secretary of Commerce said they have a comprehensive offer being refined ‘…that creates what’s called ‘essential equivalents’ which is the standard that needs to be met in order for Safe Harbor to receive what’s called an adequacy determination’.

What we can assume by next Monday is that some sort of agreement will be announced notwithstanding a complete breakdown in negotiations. Which is a possibility.

What would such an agreement look like? Hard to say, but here are some areas that have been discussed. Clarity on the use of legal mechanisms recognized by the High Court in Europe to allow the transfer of data from the EU to the US. In particular, Standard Contractual Clauses (SCC) and Binding Corporate Rules (BCR). There has even been discussion on potentially introducing new ‘creative’ mechanisms such as Codes of Conduct and Certification. However, some Data Protection Authorities in Germany have said they will challenge SCCs and BCRs and any new mechanisms would take several years to be develop, accept, and implement.

But what if the negotiations fail? Where does that leave companies that are directly impacted by the absence of Safe Harbor (of which many are European, by the way)?

We would hope that, in absence of an agreement, the European Commission and Data Protection Authorities will provide clarity and specific ways for companies to transfer data overseas. Unfortunately this does not exclude investigations being started by the Data Protection Authorities.  We can hope these authorities will recognize the good faith companies have shown to date. Companies have repeated throughout the process that they do not have the competency to change how US laws are applied but have offered to make unilateral commitments such as providing transparency reports, developing compliance processes, implementing specific technical or organizational measures.

The real test will be that whatever is announced will need to stand up to European Data Protection Authorities. But it will also need to survive another challenge most likely to come from the High Court and the ‘Schrems’ of the world. A perfect acceptable solution will mean a seismic change in US domestic policy to halt its intelligence services and provide assurances that will need to be entrenched somehow in law. This is not likely in the current US political climate which is very sensitive in the run up to the Presidential elections. The current administration will not want to give Republicans more ammunition with an agreement that may be seen to appease the EU in exchange to sacrificing some of its national security. In addition, the EU would need to provide a credible message to the US explaining why it is ok for Member States, like France and the UK, to introduce new mass surveillance laws. The US will be less enthused to hear Brussels’ response that it does not have the competency to issue orders to Member States, especially not to the likes of the UK with Brexit on the horizon.

Unfortunately the only conclusion is that 1 February will not be the end of the painful discussions that will still be needed to ensure data can flow across the Atlantic. We can only hope cooler heads will prevail and factor in the benefits the free flow of trans-Atlantic data can have in bringing prosperity, jobs and important innovation. Maybe wishful thinking on my part.

Ray Pinto 

How better to start a year full of transport policy initiatives than with some Dutch pragmatism? Transport is a practical sector itself as it inevitably links to one of the most basic needs of the economy: moving goods and people. 2016 looks to be an important year for transport and we have two keywords: competitiveness and sustainability.

In certain people’s eyes, the focus on these two main driving forces, competitiveness and sustainability, risks creating a significant dilemma: Should the EU try to boost competitiveness through a modern, innovative transport system or push for sustainability through unprecedented environmental policies and ambitious targets?

The Commission has to a large extent addressed the dilemma by betting on the leadership of Europe in the fight against climate change and the fact that the rest of the World will eventually follow, ultimately providing a competitive advantage for Europe. While this has not always proven to be true in the past, the agreement reached at the last UN Conference of Parties on Climate Change (COP21) may mean a step towards Europe’s ambitions with countries like the U.S. and China, which have insofar played the ‘competitiveness first’ card, committing to global environmental objectives.

What can we expect in the next months to reconcile these contradictory forces?

Competitiveness

The Netherlands EU Presidency kicks-off with a high-level conference at Schiphol airport today on the just-released EU Aviation Strategy. Coincidentally, Schiphol airport is celebrating its 100th anniversary this year …

Discussions on aviation have so far focused on alleged unfair competition from the non-EU airlines Beyond this populist debate, which seems to ignore what’s really needed in the European aviation sector, a serious rethink of the management of Europe’s strategic airports, a final solution for the capacity crunch and the completion of the Single European Sky are all long overdue.

The Commission is also looking at the competitiveness of the road transport sector and, despite the fact that the three initiatives on the social dimensions of transport, cabotage and road charging will not be grouped into a single legislative package, the Commission is addressing them simultaneously.

Several other initiatives are expected in the first half of the year including the mid-term review of the White Paper on transport, which touches on the competitiveness and also sustainability of the EU transport system. No major changes are expected in terms of long term objectives, but more emphasis will be put on the means to achieve them. The review will also probably sound the death knell of the modal shift approach, adopted in the 2009 White Paper, in favour of the more comprehensive concept of co-modality, which recognizes the need to use all the means of transport and for each one to achieve its best and most sustainable performances.

Sustainability

Talking about sustainability, another Presidency meeting will follow in April, to discuss smart and green mobility. No surprise, this meeting will touch on cycling as well as other types of active mobility. The Dutch aim to adopt the ‘Amsterdam Chapter’ on green and smart mobility, as mentioned by the Minister during the last Environmental Council of 2015. The Informal Transport Council will then follow in June, at the end of the Presidency.

Decarbonising transport is an important part of the Energy Union strategy, and a Communication is expected in the second half of the year. The Communication should be preceded by a new proposal for the continuation of the Effort Sharing Decision post-2020, which currently sets binding national targets for GHG emissions coming from agriculture, building, waste and indeed transport (excluding aviation and international maritime shipping).

More will come our way on CO2 emissions targets for both Heavy-Duty Vehicles (HDVs) and Light-Duty Vehicles (LDVs), such as cars and vans. The Commission started tackling HDVs emissions for the first time two years ago and is working on a new instrument which will help the monitoring process and hopefully lead to more informed choices from operators. On the LDVs side, post-2020 CO2 targets will have to be discussed after the modalities to achieve the current ones where agreed only in 2014. This debate has started prematurely due to the ‘dieselgate’ scandal which opened a Pandora’s box for emissions measurements performed by carmakers and authorised by national authorities. Some countries are undertaking initiatives to move away from diesel but will the scandal be the trigger for revamping the debate on energy taxation and the removal of the taxation advantage towards diesel in Europe?

Whilst everyone in Brussels is busy trying to minimize the negative spill-over effects of ‘dieselgate’ and to re-establish consumers’ trust in the automotive sector, DG CLIMA has gone through a major internal reorganisation with the ‘Transport and Ozone’ unit, which to-date dealt with transport emissions, being split into three units to reflect the non-ETS sectors (buildings, agriculture and transport). This means that all those affected by legislation on transport emissions may wish to get acquainted with the new “Mr Transport Emissions” in DG CLIMA.

By Laura Rozzo

 

 

The Netherlands is facing Europe’s toughest stress test for Member States – the EU Presidency. The task of the Netherlands Presidency is to give Europe its mojo back, as the continent is faced with a refugee crisis, internal security issues, a looming Brexit, remnants of an economic crisis and an ongoing problem in Greece.

Generally speaking, EU presidencies are memorable when they manage to conclude difficult or valuable dossiers, to overcome barriers in advancing legislation, or to promote a transformation in the direction or spirit of the EU. The rotating Presidency has an influential position among the institutions, as its role is to chair Council meetings and set its work programme, but, most importantly, to lead negotiations on important legislative files with the European Parliament and the European Commission. The Netherlands Presidency is under significant pressure to be successful, since it is a highly respected country, with a strong reputation for efficient administration, focused on pragmatism and problem-solving. The country also enjoys a high degree of geopolitical strength, making it fit to play the role of an ‘honest broker’.

What is the Dutch Presidency’s focus?

It is usually the case that the Presidency’s work programme is closely aligned to the Commission’s work programme and the Dutch Presidency is no exception. The Netherlands Presidency has announced that it will focus on four major areas: migration and international security; making Europe stand out as an innovator and job creator; finance and the economy; climate and energy policy.

What about digital?

What is less straight-forward are the Dutch Presidency’s plans for the tech industry and the Digital Single Market (DSM). One of Commissioner Juncker’s flagship initiatives, the DSM is set to put the European Union on the digital map, but, if regulated too heavily, it can handicap its potential to be a technology leader. Thus, many hope that the Dutch will lead the agenda in the right direction, with their ‘no-nonsense’ approach to politics and pro-business attitude.

While the DSM has not been called out as one of the Netherlands Presidency’s top four priorities, it is included in almost each one of them, as it is one of the most far-reaching initiatives. The main reason for the lack of outspoken support for the DSM is that the process has already started, leaving the Dutch Presidency with the not-so-sexy job to put together the nuts and bolts to finally create a digital single market.

More specifically, there are still quite a few legislative proposals left for the Netherlands Presidency to finalise, and even though they might not be as controversial as the General Data Protection Regulation completed during the last days of 2015, there are still important consequence for citizens and businesses alike.

Perhaps one of the most burning issues at the moment for the technology industry, especially in light of the current internal security question, is encryption – a means through which privacy is protected by encoding private messages, emails and others, so that only authorised parties can read them. After the Paris attacks in November, concerns of national security in a digitalised world grew. As a consequence, national governments called for restricting encryption, as it can lead to back-doors which can be used for criminal purposes. The Dutch government has released its position recently, and it has taken a strong stance against weakening encryption programmes, saying that tech firms will not be forced to share encrypted communications with the Dutch security agencies. The position of the Dutch government provides an indication that there will be no EU-level plan on weakening encryption, at least not on their watch.

When it comes to the DSM, the Netherlands Presidency will mainly plan to:

• Remove barriers to e-commerce. During their term two proposals are planned, on platforms and geo-blocking. The Commission is trying to regulate online platforms, such as search engines, social media and app stores, which can affect the way businesses use them to sell their goods online. On geo-blocking, the Commission is reviewing the way businesses tailor their online services offerings based on the audience’s geographical location in order to offer better suited services. These are just two of the major issues facing any business using e-commerce.
• Review the fragmented telecoms regulatory framework, which includes issues affecting landlines, broadband and mobile, and harmonise the current legislation. On telecommunication, the Council is usually the institution where legislative proposals get stuck, because of the differing positions of Member States. Telecommunication companies used to be state-owned, and in past EU-level negotiations have been able to influence national governments. The Netherlands Presidency’s role is to handle the roadblocks and foster efficient communications at this level.
• Broadband spectrum is also an area of focus for the Presidency, and possibly one of the final pieces in the DSM telecommunications framework. 5G network, for instance, is of crucial importance for innovation in a wide variety of areas, such as connected cars. Member States usually try to block the harmonisation process because the current national system can be profitable to national governments. Consequently, the Dutch Presidency might face challenges when trying to push through major reform in this area.
• Modernise copyright rules. The current copyright framework is outdated and highly fragmented, with each national government having its own rules. The current system is also not fit for the digital world, where content is accessed more and more online. A proposal on copyright is expected to come out during their term.
• The same situation applies for the Audiovisual Media Services Directive. The Dutch will also advance the debate on reviewing the directive, with the aim to promote “the circulation of European audiovisual productions”.

Last but not least, the Dutch Presidency has also inherited Safe Harbour. The European Court of Justice ruled in October that the Safe Harbour data transfer agreement between the EU and the US is invalid, as it believed that EU citizens’ data was not properly safeguarded in the US.  Following the ruling, the European Commission is working to create a ‘safer’ Safe Harbour, and it will fall under the Dutch Presidency’s term to facilitate negotiations if a proposal from the Commission is presented during its term.

What are the engagement opportunities for businesses during the Netherlands Presidency?

The Dutch Parliament is set to have an influence, thus making engagement at a national level valuable. Furthermore, national delegations linked to the Dutch government can also play a very important role in the European Parliament and can prove to be influential during negotiations. However, at this time, engagement with the Council is low during the Netherlands Presidency, as it is vital for them to be seen as facilitating compromise and they cannot take a strong stance on any issue.

Even though most EU Presidencies come and go and are quickly forgotten, the Netherlands Presidency seems to meet the necessary criteria to make significant contributions during its six months term. As a business-focused Presidency, it is noticeable from their work programme that each priority area, including digital, is planned with a business-friendly approach in mind. As such, on critical issues such as geo-blocking, spectrum and data transfers, this type of approach might prove to be beneficial for the tech industry.

Andreea Ghita

For Brits with an interest in public policy and the UK’s place in the world, 2016 will inevitably be overshadowed by the forthcoming referendum on the UK’s membership of the EU. Whilst the political debate in the UK is currently dominated by issues of migration and benefits, it’s worth taking a step back and considering the potential impact of a ‘Brexit’ in specific industry and policy areas, beyond the wider issue of the UK’s access to the single European market.

EU and UK energy and climate policy are currently locked together

Energy and climate policy in particular poses some interesting questions in the case of a Brexit. Not least because of the domestic climate legislation that binds the UK to a similar emissions reductions trajectory to the EU, and the gas and electricity interconnectors that physically connect the UK to the EU single energy market. Considering the broad swathe of energy and climate policy that binds the UK to the EU, it is far from clear in the case of a Brexit which of these policies, or parts thereof, the UK would not continue to be heavily involved in.

Climate policy – domestic policy first and foremost?

Looking at climate policy, the real changes that leaving the EU would mean for the UK seem fairly limited. As noted above, the UK’s own Climate Change Act means that British governments are bound domestically to cut emissions in at least a similar trajectory to the EU’s 2020 and 2030 GHG targets. Even in the case of a Brexit, it’s difficult to see how the UK would not wish to utilise an emissions trading system (ETS) – whether it’s the EU ETS, or a separate UK system that would likely be linked to the EU one. Putting aside the impact on hard policy, there is of course the question of influence. A UK outside of the EU would conceivably have lower levels of influence on wider international climate negotiations.

Energy policy – an area that seems obvious for cross-border co-operation

Concerning energy policy, it is difficult to find areas where post-Brexit, the UK would not want to co-operate with its neighbours. Take the example of Gas security of supply. Following the 2009 gas crisis, the EU constructed a set of rules to govern emergency situations, by ensuring that countries work with their neighbours to develop emergency and preventative action plans. Presumably, this is an area that a British government outside of the EU would still wish to engage in with its neighbours in Ireland, Belgium, France and the Netherlands. Of course they could try to do so outside of the EU framework, but the plans they would seek to agree with their neighbours would still be constructed under the EU mechanisms, so in all likelihood – for ease of implementation – so would the UK’s.

The internal energy market

Perhaps the major issue of course is the internal energy market where the UK has been instrumental in pushing for an increasingly liberalised energy market, greater competition and cross-border trading. An increasing proportion of the UK’s electricity capacity will be reliant on the electricity interconnectors going under the Channel and North Sea. These interconnectors will at least partially be controlled by the EU’s Third Internal market package where they are located in an EU member state, and are likely to have an increasingly important contribution to the UK’s overall capacity and security of supply. Even if the UK left the EU completely (the WTO-only option), something like 10% of our overall electricity capacity by 2020 would effectively be under the control of EU market rules. In the short-term there might be a limited impact – the interconnectors and the market would continue to function – but over a longer-period, there would be nothing to prevent a divergence of policy between the UK and the EU, potentially impacting on the functioning and the commercial viability of the interconnectors. In this scenario, a UK outside of the EU would have no control over the outcome of such policy developments.

Bearing in mind the influence of the UK in developing the single energy market so far (plus the influence of actors such as Ofgem and National Grid at an EU-level), a future EU energy market without the UK could look very different to the one developing now. As Amber Rudd, the UK’s Secretary of State for energy and climate change noted in early January on the issue of Brexit and the possibility of the UK leaving the EU, “We are probably the largest influencer in terms of setting out the plan and delivering on the energy market. So we can’t help shape it – shape it in the best way for the UK consumer and UK businesses. That would be a loss because you would be going into an area of uncertainty.”

It would also remove the UK’s voice from discussions where historically it has been very strong – a good example of this being the 2012 Offshore Drilling Safety directive, proposed following the Macondo accident. The Commission originally proposed a directly applicable regulation which could have had significant impacts on the post-Piper Alpha North Sea safety standards – which were widely viewed as the global gold standard. The UK, working with allies in the Netherlands and Denmark, ensured that instead, a directive was agreed that would enable those Member States with an effective system already to continue on that basis, avoiding unnecessary costs and disruption in the North Sea.

Renewable energy targets

Of course, there is the question of renewable energy targets. It would be difficult to argue that technology specific targets are particularly popular with any British policymakers – but given the UK’s success in 2014 in working to move the 2030 target system away from any binding national targets for renewables and energy efficiency, the UK has already achieved its aim in changing the system to a much more flexible one, so would have little to gain from being outside the 2030 system.

Policymaker to policy taker?

Either way, when thinking about Brexit and energy and climate policy there are real questions to be answered – both in terms of what the UK would seek to leave, and where the benefits would be. In both a WTO-only situation or a Swiss/Norway style solution, the UK could move from being (one of the most important) policymakers to the policy taker. Other alternative models that would allow the UK to access and influence the internal energy market whilst not being in the EU, are yet to be elaborated upon and raise serious questions of viability.

 

Published by Matt Hinde

We offer you the 5 key challenges ahead for Director-General Stephan Quest, fighting windmills seems easy by comparison.

 

Since 1 January 2016, the last piece of the reshuffling of the senior positions of the European Commission, announced in June 2015, is in place, as Stephen Quest has become Director-General for Taxation and Customs Union (DG TAXUD).

Corporate taxation is likely to be the main focus of DG TAXUD in the coming years. International actions on Base Erosion and Profit Shifting (BEPS) outlined by the OECD in October 2015 will be implemented at EU level, with a high level of ambition to confirm the pioneer role of the EU. The dedicated package, expected in early 2016, will provide a roadmap for new initiatives, and bring a new impetus to on-going discussions, the most prominent being the Common Consolidated Corporate Tax Base (CCCTB).

Difficult work lies ahead, to transform political will into legislative actions.

We have identified five challenges that Mr Quest would have to tackle in his very first days at the helm of DG TAXUD.

 

1. Keep EU Member States on board

Not only is unanimity the rule on taxation issues, making progress in negotiations excruciatingly slow, but in 2016 with a UK referendum in sight national sovereignty and sensitivities surrounding this issue will be heightened. On the other hand, corporate taxation has become a key policy area for the Commission, where genuine European progress and deliveries would have to be demonstrated. Finding the balancing point must be at the fulcrum of Mr Quest’s considerations.

On a more granular point: To overcome the stalemate in the CCCTB negotiations, revised proposals are expected in 2016, initially focused on a Common Tax Base, and with the highly debated Consolidation feature added as a second step. Diplomatic skills will be crucial, as any step towards potential tax harmonisation at EU level is seen by many as a breach of State sovereignty. Moreover, some Member States might be tempted to pre-empt BEPS implementation at EU level. Could it be that presenting of the Commission’s anti-BEPS package in early 2016 is a move to keep Member States in line and avoid diverging national approaches to BEPS?

 

2. Manage expectations from the European Parliament

The agenda of fighting tax avoidance and aggressive tax planning has been made a political battlefield by the European Parliament, even more so in the aftermaths of the crisis and the LuxLeaks revelations. Although the Parliament enjoys no decision powers on corporate taxation issues, the temporary committee on Tax Rulings (TAXE) has been active in keeping the momentum on the issue alive in 2015, and its successor, TAXE 2, will continue to do so. A number of recommendations have been put forward, both by TAXE and by the Economic and Monetary Affairs Committee (ECON), to which the Commission would have to give a written answer by spring 2016. Balancing out requests from the Parliament and redlines from the Council is likely to be a complex task, especially for controversial ideas such as a public disclosure of certain corporate tax information on a country-by-country basis.

 

3. Make sure that all Commission services march to the same drumbeat

The above-mentioned public Country-by-Country Reporting (CBCR) provides a good example of an area where different Commission services have to work in cooperation. A dedicated consultation is placed under the remit of the Accounting and Financial Reporting Unit of the Financial Services Directorate General (DG FISMA), and public CBCR was even put forward by the Parliament during the discussion on the Shareholder Rights Directive, managed by the Directorate General on Justice and Consumers (DG JUST). Furthermore, considering that the BEPS implementation will have an impact on all EU operating companies, it is highly probable that Mr Quest will be a focal point for questions from all Commission services.

 

First day on the job: Mr Quest’s realistic optimism on tackling new challenges

 

4. Ensure public support beyond the Brussels-sphere

Sensitive by nature, taxation is only supported by tax payers when considered fair and appropriate. Conscious that a Common Corporate Tax Base without Consolidation might impair the well-being of EU-operating companies, the Commission has suggested the creation of an interim cross-border loss offset mechanism, which Mr Quest would have to flesh out. Taxation Commissioner Moscovici has stated on a number of occasions his conviction that businesses should support a CCCTB, which would simplify their EU operations. However, if key selling points for the EU initiative become too granular and technical and compromise in Council too muddled, the recently strengthened broader legitimacy of the Commission as to taxation will be in peril. In parallel, a sense of fiscal unfairness felt by EU citizens and reported by civil society organisations, would have to be managed by Mr Quest.

 

5. Connect ongoing initiatives with other overarching goals

Taxation is far from being a ‘silo’ policy. Improving tax fairness features in Commission President Juncker’s political guidelines alongside other initiatives in his general agenda towards Jobs and Growth in the EU. Devising a tax system that keeps all the opportunities of the Digital Single Market, the Capital Markets Union or the Energy Union alive will be at the core of Mr Quest’s mission. Thus, a range of almost unanswerable questions – the interaction between the Financial Transaction Tax and the Capital Markets Union being just one – must have already been lying on Mr Quests desk when he arrived in his new job 4th of January.

 

Written by Martin Bresson and Clement Luzeau