Article 29 Working Party Reacts to the EU-US Privacy Shield

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

Leave a Comment February 3, 2016

Safe Harbour: D-Day approaches – what to expect?

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 

Leave a Comment January 29, 2016

A rich agenda for transport in 2016

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.

Transport timeline 2016

By Laura Rozzo

 

 

2 Comments January 20, 2016

The Digital Single Market – are the Dutch up for the challenge?

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

1 Comment January 12, 2016

Brexit and Energy and Climate policy: same market, less power?

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

3 Comments January 11, 2016

A Don Quixote Quest for European taxation?

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

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?

 

  1. 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.

 

  1. 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

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

 

  1. 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.

 

  1. 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

3 Comments January 8, 2016

Will Front National be the new benchmark of French politics and the new flood mark for the EU?

2016 will be an intense year in Brussels, with a number of initiatives launched by the Juncker Commission embodied in legislative proposals.

One of the EU founding members however is under the influence of a different agenda: in less than 18 months, presidential and general elections will be held in France, and the results of the regional elections of last December show the growing success of the Front National (FN) among the French citizens. Could the Eurosceptic FN have a decisive influence on the EU agenda of the coming years, although not formally in power?

What’s happened: FN stumbling on the second round of the regional elections

Nouvelle_Carte_Régions_France_2016_elections_LOWER

In December 2015, France lived one of the defining moments of its contemporary political history. In the first round of the regional elections, under the helm of Marine le Pen, the Front National (FN) had attracted more voters than the two main ruling parties, Parti Socialiste (PS – centre left) and Les Republicains (LR – centre right). The results of the second round confirmed this trend, with more ballots cast for the Front National than ever before. No region was however conquered by FN; PS and LR, and their respective allies, will retain power in the majority of the regions.

In 2017, when the next elections come, the “all-against-Le-Pen” line might be outdated.

A French well-known political saying states that electors chose in the first round, but eliminate in the second round. To ensure elimination of FN, PS has kept its “Republican barrier” strategy, i.e. withdrawing its lists before the second round when the FN is likely to stay in front, and supporting the candidates of the centre-right. This was rejected by former President and now LR leader Nicolas Sarkozy, who has been advocating for a “ni-ni” (“neither-nor”) strategy since 2011.

On the one hand, these combined strategies have proven successful in keeping FN out of power. On the other hand, the FN seems to paradoxically benefit from being cast aside, stressing the FN narrative of being victimized by establishment, deeming PS and LR the two sides of the same coin, and presenting itself as the sole alternative. With an ever-growing number of votes going to FN, the “all-against-Le-Pen” line might be outdated when the presidential and general elections come in 2017.

Self-fulfilling prophecy: declining French influence in the EU

One indirect consequence of the rise of FN may well be a self-fulfilling prophecy: declining French influence in the EU. In the run-up to the 2017 elections, the French government will likely try to avoid antagonising more potential FN voters. Recent polls have shown that although President Hollande is seen as a powerful leader at international level by French voters (and has the COP21 success to show for it), this does not influence their electoral choice for 2017 – namely: …not Hollande. Being a champion in Brussels will not square the circle –the Commission’ ambitious program for 2016 may lack a strong support from France.

French support and implementation of EU projects might be reduced if actions in Brussels become stigmas in Paris.

First thorny issue: the Stability and Growth Pact. The path towards structural reforms is taken reluctantly, as they are unpopular among working-class voters who already massively went to FN. Similarly, attaining the target of 3% of budget deficit by 2017 might lead to cuts in public services and health-care expenses. Marine le Pen then would only have to play her favorite tune: every reform is a “diktat imposed by Brussels”. French credibility to its European counterparts is however decreasing each time it fails to respect promises taken by all 28 Member States.

Moreover, finding a consensus on a much needed European solution for the refugee crisis might prove more difficult without a strong French voice. France is indeed part of the “coalition of the willing” of nine EU member States moving faster on a sharing mechanism. More European integration on the matter is however opposed by FN supporters, ranking first in the sadly symbolic Calais region.

Similarly, France would be instrumental for a new impetus on European counter-terrorist intelligence cooperation. Drawing a dangerous parallel between the two questions high on the 2016 EU agenda, FN has called for the end of the Schengen agreements throughout the aftermaths of the Paris terrorist attacks. Should the French government be tempted to listen too much to rising anti-Schengen voices, 2016 could see one of the pillars of the EU single market, free movement of people, falter.

Finally, French support and implementation of EU projects launched by the Juncker Commission, such as the Capital Markets Union, the Digital Single Market or the Energy Union, might be reduced if actions in Brussels become stigmas in Paris. ‘Why does France do so much for Europeans when it does so little for its own people?’ would say Eurosceptic FN. Already weakened by timid growth and ever increasing unemployment rates, the French government is slowly losing its ability to be one of Europe’s driving forces in the coming year and a half.

Euroscepticism, first item in the 2016 EU agenda?

2016 will be a year for EU soul-searching, with referendums in the Netherlands and in the UK directly or indirectly linked to citizens’ sentiment towards the EU. PS & LR has not yet licked their wounds since the 2005 referendum on the Constitutional Treaty, when internal divisions between more liberal, federalist voices, and those attached to national sovereignty, were out in the open.

Increased support for FN may be partially explained of the unclear PS and LR position on EU. Left-wing voters, especially from the working class, are seemingly attracted by the FN stance that EU integration has caused more social harm than economic good. On the other side of the political spectrum, emphasis put on the erosion of national sovereignty within the Union is appealing to right-wing voters. Flanking its two main opponents from left and right, FN proposes to re-open the referendum Pandora Box, a fight that PS and LR are reluctant to pick up, as their 2005 coalition for a “yes” vote was seen as treason by many voters, including their own.

Front National’s euroscepticism is rapidly infusing into France’s position in the EU.

France’s position in the Brexit negotiations is therefore more than delicate. If the French is seen as too lenient towards the UK government, any concession would be advertised as another sign of weakness and loss of sovereignty. Should its stance be too tough, eventually alienating its negotiating partners, and paving the way to a Brexit, a precedent would have been set, on which FN would be playing. Counter to classic Clausewitz logic, having a weak France as opposing partner in the Brexit/BritIn negotiations will not be helpful to Mr Cameron’s ambitions; a French government imploding in national election mode, feeding the domestic agenda of a FN driven constituency will be at risk of not having any external flexibility to accommodate UK wants.

Flood_Gauger

This leaves us with a puzzling question: could it be that one of the most influential EU politicians in 2016 will be Marine le Pen, a marginalized MEP and Eurosceptic regional MP? FN is not in power; its euroscepticism is however rapidly infusing into France’s position in the EU. By this, the new benchmark of French politics could very well become the mark by which we measure the flood through EU as a whole.

 

By Martin Bresson & Clement Luzeau

4 Comments January 4, 2016

The rain in Spain stays mainly… uncontained

Since Sunday night, Spaniards in Brussels must feel a little bit more at home. Following the announcement of electoral results, Spain follows the “Belgian example” meaning entering a period of what appears to be complex coalition negotiations in order to form a government.

results Spain

Yesterday’s elections did not produce an outright winner. Rather, results highlighted the political impact of the European crisis. Prime Minister Rajoy’s People’s Party (PP) won just 29% of the vote or (123 seats out of the 176 needed to form a government) with the Socialists (PSOE) receiving 22% of votes (90 seats).

While traditional political powers (the Socialists scored their lowest percentage since 1989) lost part of their electorate, new parties capitalized on Spaniards’ austerity and unemployment fatigue. The radical left   Podemos, scored 21% or 69 seats with the liberal Ciudadanos at 14%, which amounts at 40 seats. As in many Southern European countries the political landscape is changing and two party systems are taking the biggest hit.

Similarly to SYRIZA’s successful strategy in Greece, Podemos and Ciudadanos campaigned against corruption and established societal mechanisms. In the backdrop of an economic situation slowly recovering and high levels of unemployment, political parties associated with the establishment gave space to new political powers.

Spain Holds General Elections...MADRID, SPAIN - NOVEMBER 20:  A Popular party supporter cellebrates after her party won the Spanish general elections on November 20, 2011 in Madrid, Spain. Spaniards went to the polls on November 20, 2011 to vote for Spain's new Prime Minister and 208 directly elected seats in the Senate, the Spanish Parliament's upper house.  (Photo by Denis Doyle/Getty Images)

So what comes next? Weeks of negotiations and potentially a new election in the next 3 months. Spain doesn’t have an imminent deadline (the King should appoint a candidate for Prime Minister on 13 January) in order to form a government; however no combination of parties seems to produce a viable solution at this point. What could initially be a minority government led by the People’s Party, could turn into a recipe for disaster facing opposition from the left on structural reform issues.

By contrast, a similar scenario to the Portuguese one in November could emerge. In spite of the conservatives’ winning first place, a coalition government would be formed with the Socialists and Podemos. However, being on the same side of the political spectrum does not equal automatic consensus. The Socialists and Podemos disagree on the contentious issue of Catalan independence, thus making difficult ensure their potential coalition’s stability; particularly considering they would need the support from the smaller regional parties to have a majority.

In these days following the vote, Rajoy would not be the only one scratching his head; Jean-Claude Juncker and his team at the European Commission must be waiting for the situation to unfold with caution, hoping that the Spanish rain would indeed stay mainly in the plains. A temporary political vacuum in Spain, would mean Rajoy remains as interim Prime Minister until a government is appointed yet has much less legitimacy to negotiate in Council and even if/when a “real” government would be formed, the difficulties of domestic alliance building would take precedence over active involvement in EU affairs, in areas such as state aid or agriculture.

With issues such as Brexit coming up in 2016, the benefits of having a stable government proactively working for the European agenda in one of Europe’s largest countries are undeniable; it would enable both for structural reforms to be carried out thus stabilizing the Spanish economy and giving fewer Eurosceptics the opportunity to capitalize on the South’s “lack of capacity” to reform.

In addition, depending on which coalition takes over the issue of Catalan independence could re-emerge. This is the last thing the Commission’s wants in a year where it will have to walk on eggshells in order to avoid the UK leaving the EU in the autumn of 2016.

In the year to come, what Brussels would like is for the EU to project an sunny image of unity over fragmentation. Seeing Spain’s election results, we’re not welcoming 2016 with the best of forecasts…. It looks like quite a bit of rain is coming our way…

Ilektra Tsakalidou & Martin Bresson

Leave a Comment December 22, 2015

COP21: It’s all about the signal

COP-21

The Paris COP21 climate conference was interesting in that it managed to produce a deal which was considered as historic to some and yet disappointing to others.

The latter will argue that the following make for a weak deal. The agreement does not make INDCs binding, the aggregated INDCs put the world on track to over 3°C temperature increase, and there isn’t nearly enough money in the pot to compensate poor countries or help them mitigate the effects of global warming.

Why is it considered historic then?

Because the risk for Paris was not so much to fail on climate as it was to fail on diplomacy. No one actually expected COP21 to result in a globally binding deal where country pledges would limit global warming to 2°C. Ironically, accepting this in the first place is why the conference was a success; any attempt to force such commitments on the Parties would have resulted in a Copenhagen 2.0. COP21 was a twelve-day fine-tuning session where all Parties already knew which lines could be crossed and which ones couldn’t.

Where politicians could not fail however was on the direction, on the vision that would come out of Paris. And when 195 countries manage to sit down and commit to pursuing their efforts to limit global warming to 1.5°C, you know something big happened that Saturday 12 December in Paris.

Although some consider it disappointing, the COP21 agreement’s impact on legislation should not be underestimated as its overall direction will give legitimacy for the institutions to push for more ambitious climate and energy policies. Green activists in Brussels will hold the 31-page agreement over policymakers’ heads to make sure whatever comes out of the Berlaymont is in line with what came out of Le Bourget. The long-term view to limiting global warming to 1.5°C immediately raised the question in Brussels of knowing if the EU needed to reconsider and raise the ambition of its targets for 2030, even before they had a chance of being translated into legislation.

While Commissioner Cañete’s latest declarations indicate that the Commission does not intend to push for raising the EU’s 40% GHG emission reduction target before the next Commission takes office, his successors will be under pressure to adjust the 2030 target upwards in order to reach full decarbonisation by the end of the century. The argument is likely to be used by the Commission however to try and raise the energy efficiency target from 27% to 30% for 2030, something it has clearly indicated it intended to do. Paris just gave it a reason. The European Parliament gathered this week in Strasbourg for the last Plenary of the year went even further, adopting a resolution calling for a binding and 40% energy efficiency target.

Expect a number of conferences on ‘COP21: Challenges and Opportunities’ to be held in the upcoming months. Paris gave the ‘long-term investment signal’ one part of industry was waiting for. The fact that other commentators actually had to reaffirm that ‘industry can be/is part of the solution’ is interesting in itself. It’s almost  like there are those who believe we can do this without industry. In reality, as a delegate from Mali reminded me at COP21, “industry is the solution!” The only thing left for it to do is let the others know.

Nareg Terzian

 

Leave a Comment December 18, 2015

Circular Economy 2.0: We’ve mapped all 54 actions for you

The new Circular Economy package includes no fewer than 54 legislative and non-legislative actions to be completed in the next years with a view to “close the loop” of product lifecycles and bring benefits for both the environment and the economy. To help you understand how the actions interact and their impact on business, we have mapped all of them for you.

Time will tell us whether the EU can actually deliver on Circular Economy and beyond, on Better Regulation. Let’s not forget indeed that this package is one of the most striking examples of the Commission’s efforts to make its services work together and turn the Better Regulation agenda into reality.

Are higher recycling targets more ambitious?

 The Circular Economy package’s legislative proposals mainly focus on reducing waste and establishing targets. Whilst the Action Plan has been generally positively welcomed by different groups, the lowering of some of the waste reduction, reuse and recycling  targets – compared to the 2014 withdrawn proposal – has already been criticized by some as being “not ambitious”. And indeed, what better way for the EU to show strong commitment towards reducing and recycling waste than higher targets?

Things may however be slightly more complex. Taking into account the significant differences that exist between Member States, one could also question whether setting higher targets would be realistic and, perhaps more importantly, the most effective way to actually reduce waste and improve waste management in Europe. With its new package, the Commission seems to have followed the latter reasoning. First, the waste proposals show that ambition can be served by more than higher targets. Improving EPR schemes and acknowledging that a few Member States may need more time to deliver are just a few examples. Second, it is not only about waste as most proposed actions support a long-term strategy that addresses the full product cycle.

Does it close the loop?

Whereas the previous Circular Economy proposal from 2014 was criticized for being too much “waste-focused”, ultimately leading to its withdrawal, the Commission has clearly taken a more holistic approach by working across a number of different policy areas. The Action Plan for the Circular Economy establishes a novel programme with measures covering the whole cycle: from production and consumption to waste management. No fewer than 54 legislative and non-legislative actions are foreseen to be completed in the next years with a view to “close the loop” of product lifecycles and bring benefits for both the environment and the economy.

On paper then, the Commission has delivered. Will these actions ever come to reality and more importantly will they contribute to building a new socio-economic model everyone seems to be calling for? Time will tell us whether the Commission will keep the same momentum and circular economy is more than another buzz word in the EU bubble.

First hints from the Parliament and the Council

As codecision is about to start on the waste proposals, the European Parliament and the Council already gave us a taste of how discussions could look like. In the Parliament, it looks like the EPP and the S&D will be able to work together. While we should of course expect disagreements of several specific points, both groups have stated that the package constitutes a good starting point.  The Greens however, and some voices in the ALDE group, have unsurprisingly expressed more disappointment. Meanwhile in the Council, Member States have welcomed the package. When reacting to Commissioner Vella’s presentation though, criticism appeared. The UK raised concerns about not only the role and ambition-level of the targets, but also over the differentiated targets. Sweden, on the other hand, questioned the ambitiousness of the package and stated that Substances of Very High Concern need to be phased-out and called for a landfill ban. Italy responded in a more technical manner and asked for clarification on the definition of waste and the methods for calculating urban waste and recycling targets.

 What’s next?

The ambitious programme of actions will now have to be executed in the next few years. The annex to the action plan sets out a timeline showing when we can expect the Commission to get started on each action. Clearly, timing is not as precise as it could (should) be. One thing is very clear though: 2016 is a critical milestone for Circular Economy. It is next year that a significant amount of the activities will be kicked off, covering all stages of the product lifecycle as well as various sectorial actions.

By Lara Visser, Pauline Tawil and Malte Helligsoe

2 Comments December 17, 2015

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