Weekend Edition Nº135

Introduction

Diane Fromage, Günter Herzig, Paul Weismann

e Way Forward in the EMU: Ination, Public Debt and Reforms for the Next Generation (II)

Carlos Martinez Mongay

Reforming the Stability and Growth Pact, some relevant issues

Menelaos Markakis

e Commission’s Orientations for Reforming the EU Economic Governance Framework: A Legal Analysis

Lucy Kinski and Ermela Gianna

e Role of the European Parliament in the Design of the Recovery and Resilience Facility: United and Inuential?

Week 13-17 March 2023

Highlights Insights, Analyses & Op-Eds

The Way Forward in the EMU: Inflation, Public Debt and Reforms for

the Next Generation

(II)

Diane Fromage, Günter Herzig, Paul Weismann

is is the second issue of what will become a series of three Weekend Editions presenting some of the most remarkable results of the conference ‘e Way Forward in the EMU: Ination, Public Debt and Reforms for the NextGeneration’whichwasheldinDecember2022attheUniversityofSalzburg.Whiletherstissuewasdedicated to the ECB’s role in combaing climate change and to new developments concerning the Banking Union, this issue is geared towards two further current developments of EMU, addressing questions on the planned reform of the Stability and Growth Pact (SGP) and to the ground-breaking Recovery and Resilience Facility (RRF) which serves to nance reforms and investments under the umbrella of Next Generation EU (NGEU). Carlos Martínez Mongay (formerly: European Commission) and Menelaos Markakis (Erasmus University Roerdam) critically analyse the SGP reform suggested by the Commission, with sobering conclusions both from an economic and from a legal point of view. Lucy Kinski and Ermela Gianna (both political scientists at the University of Salzburg) trace the legislative procedure which has lead to the creation of the RRF, thereby focusing on the European Parliament’s (and its members’) political preferences, the negotiation strategy applied and thenaloutcomeoftheprocedure.

1.DianeFromage,ProfessorofEuropeanLaw,UniversityofSalzburg,andAffiliatedResearcher,LawSchool,SciencesPo,Paris

2.GünterHerzig,AssociateProfessorofEuropeanLaw,UniversityofSalzburg.

3.PaulWeismann,AssociateProfessorofEuropeanLaw,UniversityofSalzburg.

Reforming the Stability and Growth Pact. Some Relevant Issues

Carlos Martinez Mongay

e Economic and Monetary Union (EMU) is a strange animal in which monetary policy is in the hands of a single, independent authority, – the EuropeanCentralBank(ECB)–,whilescalpolicyisimplementedby27sovereign national authorities. EMU was established in the Treaty of Maastricht, which enshrined the price stability mandate of the ECB and the principle of sustainability of public nances. Article 104 of the Treaty of Maastricht (126 TFEU) sets up the criteria to assess whether a public decit is excessive and the procedure to correct it, the so-called excessive decit procedure (EDP). e decit and debt thresholds above which a decit is considered excessive are established in Protocol 12 TFEU – 3% and 60%, respectively, expressedintermsofnominalGDP.

e Stability and Growth Pact (SGP), adopted in Amsterdam on 16-17 June 1997, has two arms, the corrective and the preventive e rst one aims at correcting excessive decits in a timely fashion once they appear, while the second one, by seing up an economic policy coordination procedure, aims at avoiding excessive decits. e original SGP consisted of a relatively simple set of scal rules that, with a view to solving implementation problems, have evolved over time towards a framework which is now too complex, difficult to apply and almost impossible to understand by non-experts

As part of the EU policy reaction to the pandemic, the escape clause of the SGP, which allows Member States to deviate from the budgetary requisites of the Pact, is activated since March 2020. It therefore seems the right moment to reinvigorate the debate on the reform of the SGP e aim of this paper is to discuss the main issues put forward in the most relevant reform proposals in the literature e Commission has recently adopted orien- (2) tationstoreformthePact .Althoughtheyareanalysedindetailelsewhere (3) inthisWeekendEdition,thisarticlewillrefertothemwhererelevant

1.FormerDirector,EuropeanCommission.

2.elistofreferencesonthereformofthePactwouldbetoolongtobeincludedinthisshortpiece Ano-exhaustivebibliographycanbefoundinE. Feás,C MartinezMongay,M.Otero-Iglesias,F SteinbergandJ Tamames: ,ElcanoPolicyPaper,December2021,ElcanoRoyalInstitute AproposaltoreformdeEUscalrules

3.SeeEuropeanCommission:Communication onorientationsforthereformoftheEUeconomicgovernanceframework, .COM(2022)583nal

While there have been proposals that involve prey radical and somewhat unrealistic reforms, this note only considers reform proposals at constant Treaty, which is the case of the Commission’s orientations. erefore, the question as whether EMU needs scal rules at all is positively answered by recalling that scal authorities must be constrained by rules consistent with the principle of ECB independence.

Wherethereformofthecorrectivearmisconcerned,amainissuerefers to the extent to which the thresholds established in Protocol 12 should be changed. Although the protocol can be amended by the Council by unanimity, without requiring a Treaty reform, one can wonder whether such a change is worth spending the political capital that unanimity would require In the end, although it is true that higher thresholds would give some temporary leeway to high-debt countries, the need of seing up decit and debt caps and the constraints they impose to scal policy would not be affected. e Commission’sorientationsdonotcontemplateamendingProtocol12

According to Article 126 TFEU the excessive decit is corrected when the nominal decit and/or debt fall below the thresholds. is has resulted in ‘nominalist’ strategies, where the correction of the excessive decit takes place thanks to the effects of growth on public nances, rather than by addressing underlying scal structural weaknesses. ere would be a case to advocate that the Council recommendation (Art. 126(7) TFEU) considersthe causesoftheexcessivedecit,and,ifneeded,addresstheminanexplicitway

e consensus is very broad, including the European Commission, on the need to derogate the debt rule introduced in 2011 (Six-Pack), according to which the difference between the actual debt-to-GDP ratio and the 60% must decline by 1/20 per year. e rule has never been applied and is procyclical. Ceteris paribus, the debt ratio declines passively in expansions, but its reduction requires tightening measures in the recessions.

While the correction of the excessive decit could require a more or less strong procyclical scal tightening in bad times, the probability of ending up with an excessive decit in a downturn is larger the closer to the threshold the initial decit is is is the reason why the preventive arm of the Pact aims at ensuring that Member States reach a budgetary balanced position over the medium-term, which would prevent the decitfrombreachingthe3%thresholdinnormalcyclicaluctuations.,

e question as whether EMU needs scal rules at all is positively answered by recalling that scal authorities must be constrained by rules consistent with the principle of ECB independence

While the correction of the excessive decit could require a more or less strong procyclical scal tightening in bad times, the probability of ending up with an excessive decit in a downturn is larger the closer to the threshold the initial decit is

In the preventive arm, the Council, based on a Commission recommendation, establishes the annual adjustment that Member States must implement in order to progress towards the balanced position Two indicators areused,thestructuralbalanceandtheexpenditurebenchmark.erstonemeasuresthechangeinthebudgetary balance net of cyclical effects and one-off measures e second indicator is a measure of the increase in expenditures excluding interest payments, main cyclical expenditures, and permanent changes in revenues. None of the two indicators is directly observable Both must be estimated and while they are equivalent ex ante, their outcomes can differ signicantly ex post. is requires complex analyses to assess compliance with the recommended adjustment. Moreover, in practice the adjustment is modulated in function of structural reforms and investment plans, as well as growth conditions, which lowers the risk of procyclicality at the cost of higher complexity.eresultisakindofFrankensteinmonsterfullofgoodintentionsbutlargelydysfunctional.

In the quest for simplicity, the reform proposals aim at substituting this panoply of indicators and procedures by a single, ideally simple, one Since the scal sustainability principle is enshrined in the Pact, a good candidate would be a debt sustainability indicator, such as those published annually by the European Commission (Debt Sustainability Analysis – DSA), or by other institutions e advantage of debt-sustainability indicators is that they are country specic. Yet, they are at least as opaque as the structural balance, and different indicators can lead to different conclusions Some proposals include a medium-term nominal debt target expressed in terms of the GDP, thus directly observable. Member States would establish an adjustment path to reach such a countryspecicdebttargetoverapre-establishedtimehorizon,fromwhichtheycoulddeviateinfunctionofthecyclical conditions to avoid procyclicality in bad times. In other reform proposals the target is the structural debt ratio (unobservable),whichnetsouttheeffectsofcyclicalchangesonpublicdebt

Several issues arise with respect to the use of debt indicators, whether observable or not e debt level is a stock thatismeasuredattheendoftheperiodofreference,andthecorrespondingowisthebudgetbalancethatreduces(surplus)ornourishes(decit)thestock erefore,xingadebttargettobereachedoveraperiodisequivalent to xing a budget balance adjustment path over that period. Another issue is the way we measure the adjustment indicator. For instance, one could consider the primary balance, thus excluding interest payments, which are not under the direct control of the scal authorities. Additionally, expenditures with a strong cyclical component such as unemployment benets could be excluded,which would reduce procyclical biases, and some categoriesofinvestmentscouldbeexcludedaswell.

Several issues arise with respect to the use of debt indicators, whether observable or not

ese ways of measuring the adjustment seem prey close to the expenditure benchmark, while if the debt target is dened in structural terms, we may easily end up with indicators close to the structural balance Furthermore, when assessing sustainability indicators, it should be borne in mind that governments may always nd arguments to postpone the adjustment In the end, it would not be difficult for a government to argue that its next year budget is sustainable in the long run, and that the necessary adjustment will ‘certainly’ come in the years ahead. e history of the Pact is plenty of cases in which the necessary adjustment is postponed to a near future thatnevercomes.

In the current scal framework, the adjustment path towards the balanced position is set up unilaterally by the national authorities in the stability programmes and is assessed by the Commission and endorsed by the Council. Unfortunately, the programmes have become a bureaucratic exercise rather than a serious aempt to set up a feasible and credible adjustment path. Some consider that an adjustment path agreed between the government and an independent scal authority would enhance ownership, although possible incentive systems are not alwaysspelledout.

e preventive arm of the Pact consists of sticks and no carrots, including the panoply of nes introduced in 2011. Inspired in the Next Generation EU (NGEU), numerous reform proposals include a central scal capacity (CFC), which would provide funds to the Member States during the adjustment process, thus avoiding possible procyclicality in bad times. e EU support should come with strong conditionality, linked to the rigorous implementation of the adjustment path and a package of structural reforms. e funds provided would nance public investments in, for instance, green, energy and digital projects. In some proposals, the CFC could also include a stabilisation fund providing cyclical support in downturns While the role to be played by a CFC in completing EMU is undisputable, one can wonder why some Member States should receive EU funds to do what others have done without any help.

According to some reform proposals, once the balanced scal position over the medium term were secured, no complex indicators would be needed to assess compliance with the sustainability principle. For instance, a euro-for-euro rule would make sure that permanent increases in primary current expenditures were duly matched by permanent revenues In this scenario, the debt to GDP ratio would naturally and progressively decrease or at least stabilise overthecycle,whileallowingautomaticstabiliserstooperatefully

e preventive arm of the Pact consists of sticks and no carrots, including the panoply of nes introduced in 2011

Reform proposals also refer to the institutional framework, in specic whether the roles of the Commission and the Council in the SGP should be complemented by or shared with other institutions. It has been suggested that the Commission would focus on dealing with gross errors (corrective arm –Art. 126), while national Independent Fiscal Institutions (IFIs), and/or the European Fiscal Board (EFB) should take care or at leastassisttheCommissionandtheCouncilinoverseeingtheimplementation of the preventive arm. Whereas the authority of the EFB to enforce the Pact remains untested, so far governments have not paid much more aention to their respective national IFIs than they have paid to the EU institutions. erefore, such reforms would require enhancing the legal powersofthecorrespondinginstitutionseitheratnationaloratEUlevel.

e Commission orientations on the reform of the preventive arm are articulated around debt sustainability. e process would start with the Commission identifying sustainability risks on the basis of the DSA, which involves complex analyses and hypotheses For Member States recording high sustainability risks, the Commission would agree with the authorities a four-year adjustment path expressed in terms of net primary expenditure (directly observable) so that by the end of the period debt would follow a plausible declining path, while the decit remains below the 3% threshold. e implementation of structural reform plans and investment programs would allow for an extension of the adjustment path from four to seven years. Noncompliance with the adjustment could triggertheopeningthedebt-basedEDP

ree nal comments on the Commission orientations First, the panoply of nes remains, but apparently, they would be smart and low While it is unclear what a smart ne means, one can wonder how low a ne can be, especially because so far nes have actually been zero Second, leaving aside the fact that the adjustment path is agreed with the Commission, the actual difference with the multiannual adjustment plans in the current stability programmes is far from obvious. Finally, the proposed preventive arm is still all sticks and no carrots. e Commission does not contemplate any EU supportduringtheadjustmentperiod,andthisdespitethefactthatamajority of respondents to a public consultation have advocated in favour of a CFC. On these bases, there is a risk that the orientations lead to a kind of Lampedusa reform where everything changes but nothingwouldactuallychange.

Leaving aside the fact that the adjustment path is agreed with the Commission, the actual difference with the multiannual adjustment plans in the current stability programmes is far from obvious

ere is a risk that the orientations lead to a kind of Lampedusa reform where everything changes but nothing would actually change

The Commission’s Orientations for Reforming the EU Economic Governance Framework: A Legal Analysis

On 9 November 2022, the European Commission published a communication seing out its orientations for a reform of the EU scal and economic governance framework . Taking into account the key concerns over the (2) current framework, which are broadly in line with the ndings of its economic governance review as well as other studies in the eld , these orientations aim to strengthen debt sustainability and promote sustainable and (3) inclusive growth through investments and reforms e Commission proposes revising the EU scal framework and the Macroeconomic Imbalances Procedure (MIP). ‘Improving national ownership, simplifying the framework and moving towards a greater medium-term focus, combined with stronger and more coherent enforcement,arekeyelementsintheCommission’sorientations’(p.1).

emainfeaturesoftheCommission’sorientations

e Commission proposes moving to a more risk-based surveillance amework that puts debt sustainability at its core and that differentiates more between countries by taking into account their public debt challenges, whilst adhering to a transparent and common EU framework e reference values on which the decit and debt criteria are based (the famous 3% and 60% rules) would remain unchanged, which would obviate the need to amend Protocol (No 12) on the excessive decit procedure e ‘debt reduction benchmark’ would be adapted to the country-specic debt ratio, while the requirement to maintain budget decits credibly below 3% of GDP would be preserved (p 7) It will be recalled that the ‘debt reduction benchmark’ determines whether the ratio of government debt to GDP shall be considered as sufficiently diminishing and approaching the reference value at a satisfactory pace in accordance with Article 126(2)(b) TFEU Various reform proposals have highlighted the need that this rule be adjusted. It is enshrined in Regulation 1467/97 (Article 2(1a)) and could be amended (4) on the basis of the second subparagraph of Article 126(14) TFEU, which requires that the Council of the EU act unanimously in accordance with a special legislative procedure and aer consulting the European Parliament andtheECB

National medium-term scal-structural plans that bring together the scal, reform and investment commitments ofeachMemberStatewithinacommonEUframeworkwouldformthecornerstoneoftheproposedframework (p 6) eseplanswouldmergethestability(forEuroareaMemberStates)andconvergence(fornon-Euroarea Member States) programmes, which contain the necessary information for the purposes of multilateral surveillance, with the national reform programmes (p 6 fn 7) is single holistic plan would integrate scal, reform and investment objectives, including those to address macroeconomic imbalances (where these exist). ‘is would ensure consistency and streamline processes and deliverables, while recognising that reforms and investmentscanhaveapositiveimpactonscalsustainability’(p.6).

Member States would have greater leeway in seing their scal adjustment path. More specically, the Commission would present a reference scal adjustment path, covering a period of four years, based on its debt sustainabilityanalysis methodology.erevisedEUscalframeworkwouldsettherequirementstoensurethatthedebt ratio is put on a downward path or stays at prudent levels and that the budget decit is maintained below 3% of GDP over the medium term . Member States would set out their country-specic scal trajectories and prio- (5) rity public investment and reform commitments In this connection, they would be required to address the priorities identied in country-specic recommendations and to put forward initiatives that are in line with strategic EU priorities During the lifetime of the Recovery and Resilience Facility, cross-references to the national recoveryandresilienceplanswouldbeneededtoensurepolicyconsistency(pp.6-7).

e Commission orientations form part of a ‘ new generation of reform proposals’, which rely on expenditure rules with a debt an- (6) chor. More specically, a single operational indicator (net primary expenditure), which would be dened so as to ensure debt sustainability, would serve as a basis for seing the scal adjustment path and carrying out scal surveillance . e use of this indicator would allow (7) for the operation of automatic stabilisers, including revenue and expenditure uctuations outside the direct control of government. is would ensure, it is hoped, a higher degree of macroeconomic stabilisation. e agreed multiannual net primary expenditure path should ensure that debt is put or kept on a downward path at the latest by the end of the adjustment period or stays at prudent levels, and that the budget decit is maintained below 3% of GDP over the medium term (p. 8). Nationally-nanced expenditure should stay within the agreed multiannual net primary expenditure path, with nodeviationpossibleduetocyclicalconditions(pp.15-16).

6.EuropeanFiscalBoard, ‘ ’,10November2021,p 76. AnnualReport2021

5. e structural primary balance creeps back into the framework, insofar as, for each Member State, the multiannual expenditure path would be translated into the corresponding level of the structural primary balance, which would also be used to assessthe plans(pp. 11-12). is is surprising, given that the orientations themselves speak of ‘ the difficulties associated with designing policy recommendations on the basis of unobservable indicators that are subject to frequent revisions(suchasthe“outputgap”andthe“structuralbalance”)’(p

4).

7. Net primary expenditure is dened as expenditure net of discretionary revenue measures and excluding interest expenditure and cyclical unemployment expenditure(p.8).

e Commission orientations form part of a ‘new generation of reform proposals’, which rely on expenditure rules with a debt anchor

e Commission would assess the Member States’ medium-term scal-structural plans against the revised common EU framework Member States could request an extensionoftheadjustmentperiodbyamaximumof3years,providedthatthescaladjustment path is underpinned by a set of reforms and investments that support sustainable growth and debt sustainability e common EU framework would also establish the criteria for assessing those reforms and investments. e plans would be adopted by the Council of the EU on the basis of the Commission assessments. e Council couldalsorecommendthataMemberStatesubmitamodiedplan(pp.9,14-15).

emonitoringoftheimplementationofthemedium-termscal-structuralplans would be undertaken by the Commission and Council under the European Semester. Member States would submit annual progress reports. e national plans should commit the annual national budgets for the whole adjustment period, with a possibility for Member States to revise them aer a minimum of four years (8). e plan could be revised earlier in case of objective circumstances making its implementation infeasible, in agreementwiththeEUinstitutions(pp.8-9,13).

FormajorshockstotheEuroareaortheEUasawhole,a wouldbegeneralescapeclause maintained to deal with a severe economic downturn, thereby allowing for a temporary deviation from the scal path Moreover, an exceptional circumstances clause wouldallowfortemporarydeviationsfromthescalpathinthecaseofexceptionalcircumstances outside the control of the government with a major impact on the public nances of an individual Member State (p 16) is is all familiar from the current StabilityandGrowthPact(SGP).

Whilemorescopewouldbegiven,pertheCommission’sorientations,toMemberStates for the design of their scal trajectories, would un- a more stringent EU enforcement derpinmultilateralsurveillance erewouldnolongerbeannualscalrecommendations for Member States that comply with their plans. e Commission/Council could issue recommendations with early warnings if they see strong risks of breaching the 3% rule or in case of deviations from the agreed scal path (p. 17). e excessive decit procedure (EDP) would remain unchanged for breaches of the decit criterion, and would be strengthened for breaches of the debt criterion For Member States with a public debt challenge, departures from the agreed scal path substantial would by default lead to the opening of an EDP (9) For Member States with a moderate public debt challenge, deviations could lead to the opening of an EDP, if they give riseto‘grosserrors’(pp 9and17)

While more scope would be given, per the Commission’s orientations, to Member States for the design of their scal trajectories, a more stringent EU enforcement would underpin multilateral surveillance

8. e minimum adjustmentperiod ‘could be lengthened to match the national legislature, if MemberStates so wish’ (p 8). But how about shorter periods, following a change of government?While Member States would remain free to undertake additional reforms or investments,new policy initiatives would not imply a reopeningoftheagreedmultiannualnetprimaryexpenditurepath(p 16).

9.Incasetheoriginalpathisnolongerfeasible,duetoobjectivecircumstances,theCommissioncouldproposetotheCouncilanamendedpath(p.17).

e Commission also proposes broadening the range of available It envisions an admixture of nan- sanctions cial sanctions, which, according to the argument, would be rendered more effective by lowering their amounts; reputational sanctions, such as requiring national ministers to present to the European Parliament their plans to comply with the EDP recommendations; and , i.e., EU nancing could also be sus- macroeconomic conditionality pended when Member States have not taken effective action to correct their excessive decit (p. 17). Furthermore, a new would ensure the implementation of reform and investment commitments We ha- enforcement tool ve seen that Member States could request a more gradual adjustment path by puing forward a specic set of priority reforms and investments In case those commitments were not implemented, the proposed tool would result in a more restrictive adjustment path, as well as nancial sanctions for Euro area Member States (pp. 9-10, 18) Arguably, one would expect a reference to the possible establishment of a central scal capacity (or, at (10) least, a reform support programme) at this juncture, perhaps even such an ‘enforcement tool’, but no in lieu of suchreferenceismade.isiswiththeexceptionofanannextotheorientations,outliningtheviewsofstakeholdersondifferentaspectsofEUscalandeconomicgovernance.

It is further proposed that a greater role be accorded to (IFIs) in the monitoring and independent scal institutions implementation of the scal rules. IFIs would play an important role in assessing the assumptions underlying the plans, and the adequacy of the plans with respect to debt sustainability and country-specic medium-term goals; and in monitoring compliance with the plans. is would entail improving the set-up and performance of IFIs It is hoped by the Commission that this would lead to greater debate at national level and thus a higher degree of political buy-in and ownership of the plans. e Commission will further reconsider the mandate and roleoftheEuropeanFiscalBoard(pp 10and16)(11)

10.eprecisemodalitiesandlegalbasisofthisinstrumentwillneedtobeelaborated(p 10fn11).

Last but denitely not least, various reform proposals focus on the relationship between the scal rules and the MIP. e Commission’s orientations are no exception to this, in that they seek to establish a more effective amework to detect and correct macroeconomic imbalances e Commission aspires to achieve beer implementationandgreaterownershipbytheMemberStatesthoughanenhanced dialogue, leading to a beer common understanding of the challenges identied under the MIP and the policies needed to address them. e preventive role of the MIP would be strengthened, in a macroeconomic environment characterised by new and evolving risks. Both the rst screening for imbalances in the Alert Mechanism Report and the assessment of whether imbalances exist in the in-depth reviews would be made more forward-looking with a view to detecting and addressing imbalances early on e reformed framework would place more weight on the evolution of risks and policy implementation, and highlight vulnerabilities that could possibly affect the EU and the Euro area as a whole. is would help internalise spillovers and feed into Euro area recommendations (pp.10-11,18-19).

e Commission’s orientations foresee a number of links between the MIP and scal surveillance. For Member States experiencing imbalances, their medium-term scal-structural plans should also include reforms and investments to correct those imbalances. In case of non-implementation of MIP-relevant reforms and investments underpinning a longer adjustment period, an Excessive Imbalances Procedure could be launched for countries with excessive imbalances. e Member State concerned would be asked to present a revised scal-structural plan, which would act as the corrective action plan currently provided for in Regulation 1176/2011, Article 8 (pp.10-11) .(12)

Furtherstepsandoutlookforthefuture

Atthetimeofwriting,itisunclearwhethertheEU’sscalandeconomicgovernanceframeworkwillbereformed, or what the reformed framework will look like. On the basis of these orientations and the ensuing discussion, the Commissionwillconsidertablinglegislativeproposals(p.21).Itisforcefullyarguedthataswiagreementonrevising the EU scal rules and other elements of the economic governance framework is a pressing priority at the current critical juncture for the EU economy Member States and the Commission should reach a consensus on the reformoftheexistingframeworkaheadoftheMemberStates’budgetaryprocessesfor2024(p.20) .(13)

12. of 16 November 2011 on the prevention and correction of macroeconomic imbalan- Regulation 1176/2011 of the European Parliamentand of the Council ces,OJ2011L306,p 25.

13. e Ministers exchanged views on the economic governance review at the ECOFIN Council of 14 February 2023. e Presidency concluded that further workwasneededinordertondanagreedwayforward. eMarchECOFIN Councilwillprovideanotheropportunitytomoveforward.

e Commission seeks to establish a more effective framework to detect and correct macroeconomic imbalances

It is rightly argued by the Commission that a thorough reform of the EU scal and economic governance framework would require legislative change. is ‘…would follow the ordinary legislative procedure, involving on most aspects the Council and the European Parliament on an equal footing’ (pp. 20-21). Whilst this is true for amendmentstothepreventivearmoftheSGP,aswellastoRegulation1176/2011onthepreventionandcorrectionofmacroeconomic imbalances (Article 121(6) TFEU), it is not true with respect to the corrective arm of the SGP (second subparagraph of Article 126(14) TFEU). Does this mean that no changes are envisaged to the corrective armoftheSGP?atsurelycannotbethecase,insofaraschangesareforeseenforthe‘debtreductionbenchmark’, which is enshrined in Regulation 1467/97. Furthermore, the Commissions argues that ‘[m]ost of the objectives of the proposed reform to the MIP could be pursued within the existing legal provisions’ (p. 21). ‘In particular, pursuing a more forward-looking approach to beer assess risks and the adjustment of the criteria followed to decide on the existence and classication of imbalances and their correction could be accommodated within the current legal framework’ (ibid). It is indeed true that the scoreboard of indicators, their indicative thresholds (where these exist) and the methodology used could be changed by the Commission, in close cooperation with the European Parliament and the Council (Regulation 1176/2011, Article 4(7) and recital 12), without the need to amendRegulation1176/2011,providedthatsuchchangeswouldnotcontradictitsprovisions(14).

One last point on transparency and accountability is warranted,since they are, again, given short shri According to the orientations, ‘[m]ultilateral discussions in the relevant commiees of the Council would ensure transparency and accountability, with the Council endorsing the adequacy of the plan. is model would strengthen national ownership. Based on a beer integration of therequirementsoftherevisedcommonEUframeworkindomesticpolicydebates, it would strengthen multilateral scal surveillance’ (p 9) is quote conrms what has been noted earlier in the relevant literature, namely that high-level reports on the reform of the Economic and Monetary Union only discuss accountability as an aerthought and that they oen conate different issues, such as accountability, transparency, national ownership, effective implementation, and so on (15). Some issues of transparency and accountability arehighlightedintheorientationswithrespecttopost-programmesurveillance (Regulation 472/2013, Article 14) (16), with reference to the work of the European Court of Auditors (pp. 19-20) (17). Given the ever-increasing signicanceofscalrulesforMemberStates,thedegreeofdiscretionthattheEU institutions concerned would still enjoy under the revamped framework, and the proposed stricter enforcement mechanisms, such limited references to accountabilityandtransparencyarehighlyunsatisfactory.

15.PaulCraigandMenelaosMarkakis,‘

16.

17.

14. Leo Flynn, ‘ ’ in Fabian Amtenbrink and Christoph Herrmann (Eds.), assisted by René Repasi, eEU Law of Eco- Non-Fiscal Surveillanceof theMember States nomicandMonetaryUnion,OUP,2020,p 859fn39.

’inibid, p 1447. EMUReform

of 21 May 2013 on the strengthening of economic andbudgetary surveillance of Mem- Regulation 472/2013 of the EuropeanParliamentandof the Council berStatesintheeuroareaexperiencingorthreatenedwithseriousdifficulties withrespecttotheirnancialstability,OJ2013L140,p.1.

EuropeanCourt of Auditors, ‘SpecialReport18/2021:Commission’sSurveillanceofMemberStatesExitingaMacroeconomicAdjustmentProgramme:AnAppropriateToolinNeedofStreamlining’,15September2021.

Given the proposed stricter enforcement mechanisms, such limited references to accountability and transparency are highly unsatisfactory

The Role of the European Parliament in the Design of the Recovery and Resilience Facility: United and Influential?

1

Lucy Kinski and Ermela Gianna

Introduction

At the heart of the EU’s pandemic recovery plan NextGenerationEU (NGEU) lies the Recovery and Resilience Facility (RRF), a temporary instrument that is – for the rst time – based on centralised borrowing, and nances recovery spending and reforms in the Member States. e aims of this initiative are to mitigate the economic and social impact of the COVID-19 crisis and to make Member State economies more resilient fostering the digital and green transition. While some have seen the RRF as the EU’s ‘Hamiltonian moment’ and others dismissed it as a ‘temporary x’, it does include important innovative elements (such as debtmutualisation).ItsestablishmentmaybeaturningpointinEuropeaneconomic governance and, therefore, a window of opportunity for the European Parliament (EP) to inuence the Union’s recovery efforts and its capacitytocopewithfuturecrises

eEuropeanpathtorecoveryaerthepandemic

Linked to the Union’s long-term budget, the Multiannual Financial Framework (MFF), and therefore aligned with European economic objectives such as the green and digital agenda, NGEU is nanced by European common debt, and distributed to EU Member States through grants and loans To receive support of the RRF, Member States have to submit nationalplans,so-calledrecoveryandresilienceplans,inwhichtheyoutline reforms and investments ese plans need to be in line with requirementsundertheEuropeanSemester,theUnion’sframeworkforthecoordination and surveillance of economic and social policies, and simultaneouslyfosterthegreenanddigitaltransitionoftheEU’seconomies.

1.PostdoctoralResearcheratSalzburgCentreofEuropeanUnionStudies(SCEUS),UniversitätSalzburg.

2.DoctoralResearcheratSalzburgCentreofEuropeanUnionStudies(SCEUS),UniversitätSalzburg.

At the heart of the EU’s pandemic recovery plan NextGenerationEU (NGEU) lies the Recovery and Resilience Facility (RRF), a temporary instrument that is – for the rst time – based on centralised borrowing, and nances recovery spending and reforms in the Member States

e legal basis, upon which NGEU and RRF were established, varies NGEU was created under Article 122 TFEU, which assigns no decision-making role to the EP (consultation). e RRF falls under the ordinary legislative procedure (Article 294 TFEU), which sets Council and Parliament on equal legal footing e new MFF, which is linked with NGEU and RRF, requires EP consent (Article 312(2) TFEU). In addition, the legislative dossier included an inter-institutional agreement on a new Own Resources Decision (ORD) and the Rule of (3) Law Conditionality Mechanism . Consequently, the EU institutions treated these les as a package. us, the (4) EP could make the outcome of one le dependent on the outcome of the other le is adds to the EP’s (5) bargainingstrengthbyprovidingtheinstitutionwithmoreleverage.

eEP’spreferences,bargainingpowerandtheoutcome

e extension of the co-decision procedure as the ordinary legislative procedure has positively contributed to EPempowerment,makingtheEUincreasinglyresembleabicameralsystem Givenitsuniqueinstitutionalposition vis-à-vis the other institutions, the EP must ensure that it nds internal agreement because internal divisions weaken the EP’s bargaining power to an extent that we do not see for internal divisions in the Council A (6) key aspect here is the EP’s capacity to form, present and maintain a united front throughout the negotiations .(7) Put differently, internal unity is an important condition for EP success in inter-institutional negotiations When the main political groups agree on a joint position, then the veto threat becomes more credible and the EP’s bargaining position is reinforced. is begs two questions: how united was the EP during the RRF negotiations and to whatextentwasitabletoshapetheoutcomeaccordingtoitspreferences?

A few weeks aer the presentation of the regulation proposal establishing the RRF at the extraordinary meeting of the European Council in July 2020, the Parliament started working intensively to rst reach a united position and then produce a dra report with amendments (more than 1,700) To that end, three rapporteurs from the largest political groups, Eider Gardiazabal (S&D), Dragoș Pîslaru (Renew Europe) and Siegfried Mureșan (EPP) were appointed. eir mandate to enter into negotiations with the Council received broad support (84 votes in favour, 11 against, 4 abstentions) in the respective Commiees (Budget and Economic and Monetary Affairs) Even the Le and the European Conservatives and Reformists (ECR) joined the coalition Despite ideological differences, the political groups were able to form a large majority that strengthened the EP’s bargainingpositionduringtrilogues

3. Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission of 13 April 2016 on BeerLaw-Making( ). OJL123,12.5.2016,p 1

4. Regulation (EU, Euratom) 2020/2092 of the European Parliamentand of the Council of 16 December2020 on a general regime of conditionality for the protection oftheUnionbudget:( ). OJL433I,22.12.2020,p 1–10

5.AdrienneHéritieretal.,EuropeanParliamentAscendant:ParliamentaryStrategiesofSelf-EmpowermentintheEU,Springer,2017,p.12.

6. Roy Costello and Robert omson, ‘e distribution of power among EU institutions: who wins under codecision and why?’ Journal of European Public Policy,2013,vol.20,no7,pp.1025-1039.

7.AriadnaRipollServent,eEuropeanParliament,Palgrave,2018,pp 35-47.

When assessing the EP’s inuence on the establishment of the RRF, the output suggests that it did affect a series of provisions regarding the scope of the facility (the so-called six pillars), its climate and environmental provisions (e.g., no-signicant-harm-principle) or the structure of the national plans (including specic milestones and targets) Further, the EP managed to integrate the EU pillar of Social Rights, and a gender impact assessment conductedbytheCommission .(8)

In terms of accountability and information rights, the EP also reinforced its institutional position. A Recovery andResilienceDialoguewasestablishedwiththeCommissioninchargeofdeliveringprogressreportsontheimplementation of the national plans. While the EP acquired information rights over the national plans, its main concern regarding its role in the governance of the RRF was not met. e Council approves the national plans with qualied majority aer a review by the Commission, thus leaving no room for ex-ante parliamentary scrutiny(9)

Assetoutabove,theRRFwaspartofabiggerlegislativepackage Duetothislinkage,weneedtoconsidertheoutcomesintheotherlestoproperlyassesstheEP’sinuenceontheFacility.

8. Carlos Closa Montero et al., ‘Pragmatism and the Limits to the European Parliament’s Strategies for Self-Empowerment’, Politics and Governance, 2021, vol. 9, no 3,pp 163-174.

9. Cristina Fasone, ‘Fighting back? e role of the European Parliament in the adoption of Next Generation EU’, e Journal of Legislative Studies, 2022, vol. 28, no 3,pp 368-384.

e RRF was part of a bigger legislative package. Due to this linkage, we need to consider the outcomes in the other les to properly asses the EP’s inuence on the Facility

Regarding the MFF, the EP was successful in maintaining the existing levels of commitment, and in channelling nancial supportintospecicpolicyareas.eEPobtaineda€16billiontopup for its agship programmes and a bigger role in the negotiations over the distribution of funds. In the case of the rule of law conditionality, the amendments that the EP included in the RRF regulation were largely integrated in the Regulation 2020/2092 on a General Regime of Conditionality for the Protection of the Union budget. However, the language was considerablysoer.OnthenewOwnResourcesDecision,theEPsucceeded in including a binding roadmap, which ensures that the repaymentoftheRRFwillnotnegativelyaffectthebudget .(10)

Finally, a Facility such as the RRF represents a long-standing aspiration of the EP During the Eurozone crisis, and particularly during the six-pack and two-pack negotiations, the EP had urged the Commission to move forward with the issue of Eurobonds and had simultaneously favoured a more exible and symmetric approach regarding macroeconomic decits and surpluses . Even though temporary in nature, the RRF is the rst impor- (11) tant step to scal risk-sharing in the EU and is, at least in principle, in line with the EP’s preferences is importantshibroughttheCouncilandtheEPpositionsignicantlycloser.

CoalitionformationanddebatedynamicsontheRRF

If unity is an important condition for EP empowerment, then we should also know how the EP gets there. is is especially important for understanding the role of the EP in the RRF negotiations and aer the establishment of the RRF because we can expect political conict to arise between party groups and member state coalitions. Some recent research has underlined the importance of political groups in this process, particularly when it comes tobuilding(winning)coalitions .(12)

When we look at the RRF debates in the European Parliament between 20 January 2021 and 15 December 2021, we see that they are quite consensual with no signicant paerns of disagreement (Figure 1). Most MEPs are in favour of the establishment of the RRF and convinced that the Facility is crucial for European recovery While so-Euroscepticgroupsfromboththeleandtheright, suchastheECRandtheLe, argueinfavouroftheRRF, thefar-rightIdentity&Democracy(ID)groupopposestheestablishmentoftheFacility InFigure1,thelinksbetween the party groups show the number of issues that they have in common: green links show agreement, red links disagreement, while the width of the link shows how oen they share points of agreement or disagreement respectively.esizeofthenodesreectsdebateparticipation.

72-89.

A Facility such as the RRF represents a long-standing aspiration of the EP

10. Diane Fromage and Menelaos Markakis, ‘e European Parliament in the Economic Monetary Union aer Covid-19: towards a slow empowerment?, e JournalofLegislativeStudies,2022,vol.28,no.3,pp.385-401.

11. EdoardoBressanelli andNicolaCheloi, ‘e EuropeanParliamentandeconomic governance: explaining a caseof limited inuence’, eJournalofLegislativeStudies,2018,vol.24,no.1,pp

12.PetraAhrensetal., EuropeanParliament’spoliticalgroupsinturbulenttime,Palgrave2022,pp 10-22.

e political groups of the former ‘grand coalition’, the EPP and the S&D,arenotonlycentraltothedebates,buttheyalsohavestrongties to one another Similarly, the other two mainstream groups (Renew and Greens) also share strong ties with the grand coalition and with each other Interestingly, there seems to be more common ground between the EPP and the Greens than between the Greens and the S&D. Furthermore, we see how, despite their size and (occasional) so-Eurosceptic positions, both the ECR and the Le also share signicant agreement with all the mainstream political groups. In short, the RRF debates do not involve strong ideological conicts or follow a clear le-right divide. We do see a clear opposition from the hardEuroscepticIDgroup,whichdisagreeswithmostotherpartygroups.

InFigure2,welookattheoverallissuesalienceinthefourdifferentstagesofthepolicycycle(agendaseing,establishment, scrutiny and implementation). At the agenda-seing stage, MEPs focus on the specic policy content of the recovery fund (68 0 percent of statements) ey use this early stage to make policy demands especially on the social (23.3 percent) and economic aspects (18.5 percent) of the RRF. e more we move along the policy cycle (that is, establishing and implementing the RRF), the more statements focus on its nature, structure and governance – reversing the ratio with 70.8 percent of statements on RRF implementation. Statements on the specic six pillars become comparatively rare with the policy focus now being on resilience and greening.

Figure 1: Consensus rather than conict on the RRF in the European Parliament

Source: Authors’ own.

ere seems to be more common ground between the EPP and the Greens than between the Greens and the S&D

Conclusion

e EP made an arduous effort to shape the outcome of the RRF negotiations. is was a difficult task given the many interlinked issues, its economic size, and the fact that all decisions were taken amidst a health crisis that quickly turned into an economic one. e debates show that MEPs were clearly under pressure to deliver rapid and effective responses. erefore, the effect of the crisis is a double-edged sword: while it increased the relevance and visibility of the debates, it also showed how constrained MEPs were in their capacity to shape further the policy content of the RRF. Nevertheless, the Facility is generally in line with the EP’s preferences over time and this is why the EP supported the proposal from the beginning and spoke mainly of ‘improvements’ and ‘ambitions’ To some extent, the Parliament managed to increase its own institutional prerogatives, thereby contributingtodemocraticaccountability.

Figure 2: Overall issue-salience in EP debates on the RRF (in percent) by stage of policy cycle

Source: Authors’ own.

e effect of the crisis is a double-edged sword: while it increased the relevance and visibility of the debates, it also showed how constrained MEPs were in their capacity to shape further the policy content of the RRF

News Highlights

13 To 17 March 2023

2023 Annual Union work programme for European standardisation publishedinOJ

Monday 13 March

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e European Commission released its annual work programme for European standardisation for 2023, outlining the EuropeanstandardsanddeliverablesthattheCommissionintends to request, along with specic objectives and policies to beimplementedinlinewithEUpolicies.

General Court to hear challenge to non-disclosureofcorrespondencesbetweenECBandCentralBankofIreland

Monday 13 March

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InFlynnvECB(T-675/22),theGeneralCourtwillhearanaction for annulment of a decision refusing full disclosure of correspondencesandexchangeofdocumentsbetweentheEuropeanCentralBankandtheCentralBankofIreland.

Council emphasizes role of civic space inprotectingfundamentalrights

Monday 13 March

e Council approved conclusions on the role of civic space in promoting and protecting fundamental rights in the EU, emphasizing the crucial role of freedom of association in maintaining a democratic and pluralistic society and calling on member states to safeguard an enabling environment for civil societyorganizationsandhumanrightsdefenders

Commission and High Representative present rst Joint Communication on a European Space Strategy for Security andDefence

Monday 13 March

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e Commission and the High Representative released their rst Joint Communication on the European Space Strategy for Security and Defence, identifying space as a strategic domain and is taking action to protect its space assets, defend its interests, deter hostile activities in space and strengthen its strategicpostureandautonomy.

Request for preliminary ruling concerning legislation on usability of food for humanconsumption

Monday 13 March

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Official publication was made of a request for preliminary ruling in R GmbH v Bürgermeister der Landeshauptstadt Innsbruck (C-790/22) concerning the compatibility of nationallegislationsclassifyingfoodasusableorunusablewithRegulationNo178/2002

Hearing Officer Report published in Hyundai/Daweoocase

Monday 13 March

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e Final Report of the Hearing Officer in the merger case M.9343 – Hyundai Heavy Industries Holdings / Daewoo Shipbuilding & Marine Engineering was published in the Official Journal, by which it was declared that the effective exercise of the procedural rights of the merging parties had been respectedduringtheproceedings.

Council extends restrictive measures againstRussiaforsixmonths

Monday 13 March

eCouncildecidedtoextenditsrestrictivemeasuresagainst Russiaforanothersixmonths,includingtravelrestrictions,asset freezing and a ban on making funds or economic resourcesavailabletothelistedindividualsandentities.

Commission released annual report on the Safety Gate, the European Rapid Alert System for dangerous non-food products

Monday 13 March

e European Commission released its annual report on the Safety Gate, the European Rapid Alert System for dangerous non-foodproducts,coveringalertsnotiedin2022andtheresponsesgivenbynationalauthorities.

ECtHR: Right to respect for private and family life infringed due to systematic publishing of tax debtors’ personaldatainHungary

Tuesday 14 March

In L.B. v. Hungary (application no. 36345/16), the European Court of Human Rights held that Article 8 (right to respect for private and family life and the home) of the ECHR has been violated as a result of the Hungarian legislative policy of publishingthepersonaldataoftaxpayerswhowereindebt.

CourtofJusticestreaminghearingincase concerning obligation to take ngerprintsandsavetheminidentitycards

Tuesday 14 March

e Court of Justice’s hearing in RL v Landeshauptstadt Wiesbaden (C-61/22) concerning requirements to take ngerprints and store them in identity cards according to EU Regulation2019/1157wasstreamedontheCourt’swebsite.

European Supervisory Authorities and European Central Bank call for improved disclosure on climate change for structurednanceproducts

Tuesday 14 March

e European Supervisory Authorities and the European Central Bank released a joint statement calling for improved disclosureonclimatechangeforstructurednanceproducts.

Commission proposes reforms to the electricity market design to accelerate renewable energy usage and phase out gas

Tuesday 14 March

e Commission proposed reforms to the electricity market design to accelerate renewable energy usage and phase out gas, whilst also making the industry cleaner and more competitive.

Council agrees on the orientations for a reform of the EU economic governance framework

Tuesday 14 March

eCouncilagreedontheorientationsforareformoftheEU economic governance framework, as it is crucial for effective economic policy coordination and surveillance across the EU

Court of Justice to rule on the obligation of suppliers of products relevant to energy labelling to indicate the energy efficiencyclassintheiradvertising

Wednesday 15 March

On 15 December 2022, the Landgericht Bochum (Germany) lodged a preliminary ruling request concerning the obligation of suppliers and dealers of products relevant to energy labelling to indicate the energy efficiency class and the range of energy efficiency classes in their advertising, in accordance withArticle6(1)(a)ofRegulation2017/1369.

Commission adopts new initiatives for migrationmanagement

Wednesday 15 March

e European Commission adopted new initiatives to strengthen European integrated border management and expedite returns e rst-ever multiannual strategic policy cycle on European integrated border management for the next ve years aims to provide a coordinated framework for nationalauthoritiesmanagingtheborder.

EDPD launches coordinated enforcement framework for data protection officers

Wednesday 15 March

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e European Data Protection Board launched its 2023 coordinated enforcement action focused on the role of data protection officers. roughout the year, 26 Data Protection AuthoritiesacrosstheEEAwillparticipateintheinitiative.

General Court dismisses action against Commission’s decision refusing to grant access to documents related to EU-fundedprojects

Wednesday 15 March

e General Court delivered its judgment in Basaglia v Commission (T-597/21) concerning a request for access to documents related to twelve EU-funded projects, in relation to which the applicant had been subject to criminal and accounting investigations and convictions in Italy due to illegal activities.

ECtHR: Court of Cassation’s failure to examine applicant’s request to seek a preliminary ruling from the Court of Justice constitutes a violation of the ECHR

Wednesday 15 March

In Georgiou v. Greece (application no. 57378/18 ), the European Court of Human Rights ruled that there has been a violation of Article 6 § 1 of the ECHR (Right to a fair trial) by the Court of Cassation’s failure to examine, without giving reasons, the applicant’s request to seek a preliminary ruling from theCourtofJustice.

2022 edition of the EU General Report publishedbytheCommission

Wednesday 15 March

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eEuropeanCommissionpublishedthe2022editionofthe EU General Report, which highlights the EU’s response to Russia’s war of aggression against Ukraine and its unwavering solidaritywithUkraine.

Negotiations for trade between the EU andailandrelaunched

ursday 16 March

e European Union and ailand have announced the relaunch of negotiations for a free trade agreement (FTA) that prioritizes sustainability e agreement will address issues such as market access for goods, services, investment, government procurement, and protection of intellectual property rights.

Court of Justice: Commission’s action for twofold failure to full obligations isinadmissible

ursday 16 March

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e Court of Justice rendered its judgment in Commission v Bulgaria (Twofold failure to full obligations – PM10 pollution) (C-174/21), ruling that the European Commission’s action for a twofold failure to full obligations in relation to air pollutionisinadmissible

Court of Justice concludes that concentrations that did not meet merger control thresholds can be assessed ex post underabuseofdominancerules

ursday 16 March

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eCourtofJusticeruledinTowercast(C-449/21)thataconcentration between undertakings which avoided ex ante assessment for not meeting merger control thresholds, may be assessedexpostonthebasisoftheprohibitionofabuseofadominantposition(Article102TFEU)

Court of Justice: EU law grants Member States discretion to x reimbursement rate for communication interceptionoperations

ursday 16 March

e Court of Justice delivered its judgment in Colt Technology Services and Others (C-339/21), ruling that telecommunications operators may be obliged to provide communication interception operations in return for a xed rate upon request fromajudicialauthority.

Appeal brought by American Airline concerningGrandfatheringrightsgrantedtoDeltaAirLinesforslotsatHeathrow Airport dismissed

by Court of Justice READ

ursday 16 March

e Court of Justice dismissed the appeal brought by American Airlines Inc. by which it asked the Court of Justice to set aside the judgment of the General Court in American Airlines v Commission (T-430/18), by which the General Court dismissed its action for annulment of Commission Decision C(2018)2788nalof30April2018grantingGrandfathering rights to Delta Air Lines: case American Airlines v Commission (C-127/21P).

Court of Justice claries disclosure and refundobligationsforunauthoriseddebit card payments under the Payment ServicesDirective

ursday 16 March

e Court of Justice ruled in ZG v Beobank SA (C-351/21) that Article 47(1)(of Payment Services Directive 2007/64 mustbeinterpretedasmeaningthatapayer ’ spaymentservice provider is required to provide the payer with information enabling him to identify the natural or legal person who has beneted from a payment transaction debited from that payer ’ saccount.

Court sets aside General Court judgment annuling EMA decision rejecting application for market authorisation on grounds of regulatory data protection

ursday 16 March

e Court of Justice rendered its judgment in Commission v Pharmaceutical Works Polpharma and EMA, Biogen Netherlands v Pharmaceutical Works Polpharma and EMA, and EMA v Pharmaceutical Works Polpharma (Joined cases C-438/21, C-439/21,andC-440/21)

Commission proposes actions aimed at ensuring the EU’s access to a secure, diversied, affordable, and sustainable supplyofcriticalrawmaterials

ursday 16 March

Court of Justice sets aside General Court’s judgment in case concerning the withdrawal of an undertaking’s acceptancefortwoexportingproducers

ursday 16 March

e Court of Justice delivered its judgment in Commission v Jiangsu Seraphim Solar System and Council v Jiangsu Seraphim Solar System and Commission (Joined cases C-439/20 and C441/20), concerning the application of denitive antidumping and countervailing duties in the case of the acceptance of an undertaking being withdrawn by the Commission becausetheundertakinghasbeenbreachedbytheexportingproducerthathasenteredintoit

AGPitruzzella:CourtshouldrejectRyanair’s grounds of appeal supporting action against Swedish State aid measures forairlines

ursday 16 March

Advocate General Giovanni Pitruzzella delivered his Opinion in Ryanair v Commission (C-209/21), concluding, in essence, that he is not convinced by Ryanair’s arguments, as pointed outinparagraph50ofhisOpinion.

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e European Commission proposed a set of actions aimed at ensuring the EU’s access to a secure, diversied, affordable, andsustainablesupplyofcriticalrawmaterials

InterpretationofArticles3to5ofCouncil Directive on unfair terms in consumer contracts claried by Court of Justice READ MORE

ursday 16 March

e Court of Justice rendered its judgment in Caixabank (Commission d’ouverture du prêt) (C-565/21) concerning the interpretation of Articles 3 to 5 of Council Directive on unfair termsinconsumercontracts

Commission proposes plan to secure long-term competitiveness of EU on 30thanniversaryofSingleMarket

Friday 17 March

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e European Commission released two Communications on the occasion of the 30th anniversary of the Single Market, whichaimtosecurethelong-termcompetitivenessoftheEU

Council adopts its negotiating position on a proposal to revise the industrial emissionsdirective

Friday 17 March

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e Council adopted a new negotiating position on a proposal to revise the industrial emissions directive. e directive regulates pollution from industrial installations and intensive livestock farms, seing limits for harmful emissions into the air, water,andthroughwastedischarges

ESApublishesreasonedopiniononIceland’srefusaltotransferpensionrights

Friday 17 March

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e EFTA Surveillance Authority sent a reasoned opinion to Iceland for its alleged failure to comply with EEA obligations concerning the transfer of occupational pensions accrued in IcelandtothepensionschemeoftheEUinstitutions

Commission proposes Net-Zero IndustryAct

Friday 17 March

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e European Commission proposed the Net-Zero Industry Act, which aims to increase the production of clean technologies within the EU to meet the Union’s strategic deployment needs.

Revised Guidelines for State aid in the shery and aquaculture sector adopted by theCommission

Friday 17 March

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e European Commission adopted revised Guidelines for State aid in the shery and aquaculture sector, which set out the conditions under which State aid granted by Member States to support these sectors may be considered compatible with the Single Market.

Insights, Analyses & Op-Eds

Y v. France : Does the ECHR really need arealsex?

by Edoardo Stoppioni

Op-Ed on the recent Y v. France case (no. 76888/17), in which an intersex applicant contested the refusal of French authorities to change the mention ‘ sex: male’ into ‘neutral’ or ‘intersexual’, as being a violation of Article 8 of the Convention and aer previous judgment relied on the principle of subsidiarity and concluded that it is the responsibility of nationaldecision-makerstoaddressgeneralpolicyissues.

Arrest

by Leandro Mancano

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Op-Ed on the case Puig Gordi (C-158/21), in which the Court of Justice delivered an important judgment concerning theoperationoftheEuropeanArrestWarrantFrameworkDecision. e question, raised by the Spanish Supreme Court, concerned the possibility to refuse the execution of an EAW in cases where the State that issued the warrant is not affected by systemic deciencies in its justice system, but doubts exist about the lack of jurisdiction of the relevant courts in that State.

by Emilia Korkea-aho

Analysis of the Eurocostruzioni Srl case (C-31/21) involving the Italian company Eurocostruzioni, which completed a construction project co-nanced by the EU's Structural Funds. However, the company did not receive the nal paymentfortheprojectastheRegionofCalabriaclaimeditfailed to produce the necessary documents in accordance with EU rules

by eodoros G. Iliopoulos

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Analysis of the judgment in Bursa Română de Mărfuri (C394/21) that is important for decoding the obligations and discretion of Member States in the organisation and operation of electricity markets in the current stage of the ongoing liberalisationprocessintheEU

Refusal of execution of an European

Warrant in the absence of systemic deciencies? e Court of Justice developstheexceptionalcircumstances doctrineinPuigGordi

e discretion of Member States in the organisation and operation of electricity markets in the current stage of liberalisation(CaseC-394/21)

Receipts or it didn’t happen! (C-31/21, EurocostruzioniSrl)

What purpose is le for purpose limitation as a guiding principle of the General Data Protection Regulation aer Case C-268/21, Norra Stockholm Bygg AB vPerNycanderAB?

by Laura Drechsler

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Op-Ed on the case Norra Stockholm Bygg AB v Per Nycander AB (C-268/21), where the Court of Justice was asked to rule on request of the Swedish Supreme Court on the question of whether it was permissible under the GDPR to re-use personaldataoriginallycollectedfortaxpurposesincivilcourtproceedings. e Court had to decide on how the GDPR applied to situations in civil court proceedings, where one party wanted to rely on evidence consisting of personal data held by the other party to solve a civil dispute, and what interests needed to be considered when applying the GDPR in such circumstances.

Discrimination Law for Short Contracts:CaseC-356/21,TP(Monteuraudiovisuelpourlatélévisionpublique)

by Uladzislau Belavusau

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Op-Ed on the Court of Justice’s judgment in the case of TP (Audiovisual editor for public television) (Case C-356/21), by which it concluded that sexual orientation cannot be a reason torefusetoconcludeacontractwithaself-employedworker.

Binding effect of A1 certicates and effect of a community license for transport ( Joined cases C-410/21 and C-661/21,DRVIntertrans)

by Nicolas Langlois

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Analysis of the Court of Justice’s judgment in DRV Intertrans (C-410/21 and C-661/21) in which it claried the effect of the suspension of A1 certicates and shed some light on the value of community license for road transport when determiningthesocialsecuritylegislationapplicable

Can the Council correct a mistake in a sanctions list through retroactive listing? General Court expands on res judicataandtheprincipleoflegitimateexpectations

by Celia Challet

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Op-Ed on the General Court’s judgment in Nizar Assaad v. Council (T-462/21), in which it annulled the applicant’s listingundertheEUrestrictivemeasuresagainstSyria.ejudgment provided a relevant reminder that the Council’s sanctions practice must comply with the fundamental principles oftheEUlegalorder.

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