Weekend Edition Nº23 by eulawlive

JUNE 23

2020

Nº23

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Armin Steinbach

THE NEXT GENERATION EU – ARE WE HAVING A HAMILTONIAN MOMENT? Stefano Dorigo

THE CORONAVIRUS EMERGENCY AND SOLIDARITY IN EUROPE: IS IT TIME FOR A EU TAX?

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The Next Generation EU – Are We Having a Hamiltonian Moment? 1

Armin Steinbach

Next Generation EU is a massive reconstruction tool targeting those sectors and Member States most affected by the crisis and cutting across a number of new and existing EU programmes

The joint proposal by Angela Merkel and Emmanuel Macron in May has electried the phantasy of those frustrated by Germany’s dovish German stance towards European integration in recent years. Some regard the Merkel-Macron initiative as paving the way to a federalised EU and have boldly suggested that Alexander Hamilton – one of the Founding Fathers of the United States and a staunch supporter of federalism – be seen as a role model. Soon after the joint proposal was announced, the EU Commission introduced the recovery plan Next Generation EU, which seems eager to exploit the new momentum. The plan contains a € 750 billion stimulus package for Corona-hit EU, well beyond that envisioned by the unprecedented Merkel-Macron proposal.

1. Supporting the recovery of Member States. More than 80% of the nancial resources from Next Generation EU are intended to be used to fund investment and support reforms in the Member States, with a focus on sectors where the need for resilience appears greatest (i.e., employment, education, research, innovation, health, environment and nance). In the current draft of the package, the European Union Recovery Instrument (ERI) – with a budget of €560 billion in grants and loans – makes up the instrument’s core.

Next Generation EU is a massive reconstruction tool targeting those sectors and Member States most affected by the crisis and cutting across a number of new and existing EU programmes. Specically, the Next Generation EU aims at temporarily boosting the nancial repower of the EU budget, channelling resources through a wide eld of policy areas and instruments to address nancial, economic and health needs. The EU Next Generation package builds on three pillars:

2. Creating incentives for private investment and providing support for struggling companies. This pillar provides measures to boost private investment and support ailing businesses. With the private sector under heavy strain due to lockdowns and the impact of the pandemic, the instrument is a forceful response to companies’ liquidity

1. The author is Gwilym Gibbon Fellow at Oxford University (Nufeld College) and research associate at the Max-Planck Institute for Research on Collective Goods in Bonn (Germany).

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ERI resembles a Matryoshka doll containing other programs built on different legal foundations. The clever design avoids the hurdle imposed by the Treaty’s prohibition on EU debt, unless for specied purposes such as the exceptions under Article 122 (2) TFEU. Typically, debt instruments for those exceptions receive guarantees from the Member States in order not to burden the Union’s own resources. This was established practice already under SURE and the European Financial Stability Facility (EFSF) during the sovereign debt crisis. The ERI also invokes Article 122 (2) TFEU, which specically names natural disasters and other exceptional events that seem tailor-made for the Corona pandemic.

and solvency needs. The Commission plans to create a solvency support instrument ensuring capital supply, particularly in Member States that are less able to intervene through state aid. This programme adds to the multiple state-level efforts that provide relief to companies. Over the past few months, the Commission has repeatedly relaxed its state aid rules to ensure exibility while maintaining a level playing eld for fair competition. 3. Ensuring the reinforcement of key EU programs. By pooling established and new programs for health security, civil protection, and innovation, the EU Commission wants to address imminent crises and launch long-term transformative projects. For example, the new initiative EU4Health aims to support health care systems, promote cross-border collaboration in health and boost investments in critical health infrastructure. The Commission has also set aside €94 billion for Horizon Europe, which supports health and climate-related research and innovation.

Unlike SURE and predecessors, the debt issued under the ERI will be guaranteed by the EU budget itself, not by Member States. For the EU budget to have this power, the Own Resources Decision pursuant to Article 311 TFEU is essential. The Commission has decided to channel the borrowing activities of the ERI through the new Own Resources Decision. To that end, the Commission applies an accounting trick that allows the Commission both to strengthen the EU budget and minimize the burden on Member States’ budgets. Based on the Own Resources Decision the Commission acquires nancial claims vis-à-vis Member States, which lift the credit rating of the EU budget to give it the necessary borrowing capacity. At the same time, Member States are not actually obliged to pay the debt and therefore do not have to burden their current national budget. Concerning the future repayment of the EU debt, the Member States are in principle liable through their future contributions to the EU

The legal basis of the ERI – a Matryoshka doll? The ERI is a one-off emergency mechanism totalling €560 billion, with grants of up to €310 billion and loans of up to €250 billion. The instrument would provide the EU budget with additional resources necessary to respond to the urgent challenges posed by the pandemic. A closer look reveals that the Commission’s initiative is an example of creative legal engineering. With its umbrella program and various sub-instruments, the

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European Semester, the reform agenda developed under the auspices of the Commission will align with the Commission’s overall long-term growth strategy. Additional intersections with the EU Structural Fund (especially in the areas of digitization, infrastructure, and climate policies) are further indications that the new facility offers much continuity while boosting its nancial leverage.

budget, yet the Commission does not want to rely on Member States alone; rather, it plans to pay off the debt with new scal sources such as Emissions Trading System, a carbon border adjustment mechanism or a digital tax. (It should be noted, however, that there is no EU consensus on which of these measures is best.) While the ERI umbrella blends both Article 122 TFEU and the Own Resources Decision to justify nancial assistance and take on debt, the Recovery and Resilience Facility – one of the Matryoshka dolls within the ERI – builds on Article 175 TFEU, a norm giving substantial leeway for establishing funding mechanisms. A number of existing funds have previously been built on that basis – e.g. the European Union Solidarity Fund (EUSF) or the European Globalization Adjustment Fund – albeit on much lower nancial scale. Importantly, this legal basis aims at overall economic and social cohesion in the EU. The ample policy leeway granted under Article 175 TFEU allows the Commission to pursue an agenda beyond the pandemic crisis metric. The emphasis of the Recovery and Resilience Facility on green and digital transitions underscores the Commission’s objective to pursue a broad agenda by linking the facility to the objectives identied in the European Semester.

What about conditionality? Throughout the sovereign debt crisis, conditionality was a pivotal requirement that had to be met for crisis-ridden countries to receive nancial aid. With Article 125 TFEU at its core, nancial assistance was conceptualized as a strict quid pro quo. The current context differs from the sovereign debt context in at least two ways. First, the support envisaged under the ERI does not primarily aim at avoiding a country’s immediate insolvency or possible risks to the currency union as a whole. While scal relief from the crisis remains an important objective in current initiatives, the main goal is to counterbalance the asymmetry in negative effects resulting form COVID-19, which has hit some Member States harder than others. Second, Article 125 TFEU primarily aims at maintaining market pressure on Member States to promote budgetary discipline. But the current Corona-induced economic decline is not the result of scal laxity. There is no doubt that the current context falls under the ambit of Article 122 (2) TFEU.

In order to receive funding under the Recovery and Resilience Facility, Member States will be asked to submit national Recovery and Resilience plans as part of their annual National Reform Programmes, in which the Member States respond annually to the Commission’s country-specic recommendations. As an integral part of the process of the

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But while conditionality has successfully been avoided due to its potential political explosiveness, the Recovery and Resilience Fa-

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Access to funding is not meant to be a free lunch for Member States

ce and Competitiveness (BICC). Under BICC, Member States would have to submit proposals for reforms and investments linked to their National Reform Programmes and compatible with the national budgetary process. Not surprisingly, BICC will be replaced by the new recovery facility (a fact that might cause some euro countries to feel resentful). Drawing on the country-specic recommendations in the European Semester, Member States will have to identify reforms for which they receive grants or loans. The main difference between the facility and BICC lies in the former’s stronger element of scal transfer. While the BICC allocated 80% of the funds based on population and the inverse of GDP per capita (and required national co-nancing), the ERI also relies on

cility does stipulate a de facto form of conditionality, albeit in softer and more subtle ways. Legally, Article 122 ties nancial assistance to “certain conditions”. Meeting these will be key to achieving the political consensus needed for the new Own Resources Decision pursuant to Article 311 TFEU. Indeed, access to funding is not meant to be a free lunch for Member States. First, Member States have to commit to pursuing a set of objectives established by the Recovery and Resilience Facility Regulation. With its logic of tying nancial aid to the implementation of a project-based recovery plan, the facility aligns with the small-scale euro scal budget that emerged several years ago – the socalled Budgetary Instrument for Convergen-

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unemployment to target the economically weaker countries and does not require conancing. Second, the draft Regulation establishing the Recovery and Resilience Facility allows the Council, at the behest of the Commission, to suspend payments in the event of signicant non-compliance with the obligations laid down in the Stability and Growth Pact, the Macroeconomic Imbalance Procedure, or an macroeconomic adjustment programme. Thus, while the Recovery and Resilience Facility does not fall within the conditionality doctrine established by Pringle, where the Court neatly tied compatibility of nancial assistance with Article 125 TFEU to macroeconomic conditionality, the Commission nevertheless retains a great deal of leverage to push Member States to align their policies with its overall policy agenda. This widens the overall policy space on the expenditure side. By providing both loans and grant, Article 122 TFEU removes any hurdles that could stand in the way. In addition, connecting the Recovery and Resilience Facility with the European Semester signicantly enhances the Commission’s capacity to exercise policy formulation, supervision and guidance on key economic and social policies. One may expect that the practice of Member States reporting to Brussels in the European Semester – a tedious exercise in the eyes of the Member States due to the lack of binding force – will soon gain visibility and relevance.

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The Commission retains a great deal of leverage to push Member States to align their policies with its overall policy agenda

Connecting the Recovery and Resilience Facility with the European Semester signiﬁcantly enhances the Commission’s capacity to exercise policy formulation, supervision and guidance on key economic and social policies

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Throughout the past nancial crisis, Germany’s Bundesverfassungsgericht turned out to be the most sceptical actor in the process of creating expansive scal and monetary powers at the EU level. In reference to the European Stability Mechanism (EMS), the BVerfG stressed on various occasions that the “German Bundestag may not transfer its budgetary responsibility to other actors by means of imprecise budgetary authorisations”, particularly when it comes to me-

Conclusion While unprecedented in scope and dimension, the ERI on closer inspection shows a pattern of bureaucratic policy-making that has become increasingly common: the full utilisation of existing structures and mechanisms whenever possible. EU Next Generation deepens the logic enshrined in the Structural Funds and the BICC by refashioning the European Semester into a source of re-

EU Next Generation deepens the logic enshrined in the Structural Funds and the BICC by refashioning the European Semester into a source of reform and resilience plans

Certain elements of the proposal indicate a long-term ramping up of the EU budget well beyond the pandemic crisis

chanisms that “may result in incalculable burdens with budget relevance without prior mandatory consent”. This raises the question whether the German Bundestag and other national parliaments will insist on approving the massive nancial dispersions prior to their release. While experience with the Structural Fund suggests that a one-time approval by the Bundestag will sufce, the ESM process hints that it might be more complicated, with a vote taking place for each nancial aid package.

form and resilience plans. Its innovation is that it nancially multiplies existing schemes and advances the distributive effect of the EU budget. While many have stressed its emergency character, certain elements of the proposal indicate a long-term ramping up of the EU budget well beyond the pandemic crisis. An interesting political question will be how Member State’s parliaments respond in light of their national constitutional boundaries.

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The coronavirus emergency and solidarity in Europe: Is it time for a EU tax? Stefano Dorigo

ber States due to the voting rules requiring The world and Europe are -hopefully- leaunanimity. Hence, the initial stage of the criving behind the covid-19 pandemic. Howesis emphasized the difculties of afrming ver, its effects will last longer. The health crian effective continental solidarity, even in the sis has disrupted in only a few weeks the life face of the disastrous effects of an unpreceand activities of most of the inhabitants of the dented crisis. Therefore, it is not surprising planet, breaking into a context that seemed to that precisely in that dramatic moment the be dominated by unshakable condence in PSPP Decision of the progress, well-being German Constitutional and the capacity of the A different vision could then Court created a severe current social an econoconict with the EU lemic balance -although emerge, based on the principle gal system (and in parwith several open isof solidarity and the need that ticular the Court of Jussues, like the environtice of the EU), reafrmental one – to adequa- the EU is equipped with adequate ming the idea that Memtely meet the needs of ciown resources to meet the ber States are and retizens and companies. challenges of a globalized world main the masters of the Treaties (2). As it has As for the legal aspects, been noted (3) , this the crisis has highlighcould raise uncertainty with regard to the outted once again that the action by the EU come of the any effort made by the EU instimostly depends on the will of its Member Statutions to mutualise the economic effects of tes. It has been clear for long that, at the prethe crisis. sent time, the EU lacks sufcient nancial resources of its own, i.e. resources that are reHowever, the current historical moment leased from the control and strictures of the could open the way to unexpected developMember States. The ongoing debate about ments. The crisis has dramatically demonsthe use of EU funds to meet the urgent necestrated the inequalities that still characterise sities of some (highly indebted) Member Stathe EU common space. A different vision tes shows that the action by EU institutions is could then emerge, based on the principle of still inuenced by the will of one or few Mem1. Associate Professor of Tax law at the University of Florence. 2. Judgment of 5 May 2020, 2 BvR 859/15, 2 BvR 980/16, 2 BvR 2006/15, 2 BvR 1651/15. 3. Maduro, “Some Preliminary Remarks on the PSPP Decision of the German Constitutional Court”, in Verfassungblog.

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which, at a rst glance, might appear to be a scal own resource based on the taxation, at EU level, of the income of companies that thrive on the fundamental freedoms made possible under European Union law. This proposal deserves attention, as it would appear to recognize for the rst time a link between the enjoyment of European public goods and the payment of a contribution, in a context in which direct taxation has always been conceived as the reserved domain of the Member States.

solidarity and the need that the EU is equipped with adequate own resources to meet the challenges of a globalized world. 1. The Commission’s proposal on own resources The EU Commission's recent proposals for the reform of the own resources system seem to move in that direction. Having in mind the aim to “repair damage from the crisis and prepare a better future for the next generation” (4), the Commission has recognised that the recovery should be driven by “solidarity, cohesion and convergence”. Therefore, the Commission has proposed a package of EU programmes to support recovery, the Next Generation EU, which should be nanced through the introduction of a basket of new own resources. These include two green own resources, an Emissions Trading System-based own resource and a carbon border adjustment mechanism; a digital tax applied on companies with a turnover above EUR 750 million, based on the work of the OECD and the G20 on the taxation of the digital economy; and an own resource “based on the operations of enterprises (...) that draw huge benets from the EU single market and will survive the crisis, also thanks to direct and indirect EU and national support” (5).

The Communication does not offer any details on how this own resource should be built. However, in its previous Proposal of a Council Decision on the System of Own Resources of the European Union COM(2018) 325 nal, the Commission had already addressed in some detail the projected own resource based on the revenues of companies. There, it referred to the introduction of a common consolidated corporate tax base (CCCTB), which would then be apportioned among Member States. A call rate between 1% and 6% would be applied to the tax base apportioned to each Member State in order to calculate the amount of the own resource to be then transferred to the EU budget. It is clear that the own resource based on the operations of enterprises cannot be conceived as a real scal resource: its amount does not depend on the company's ability to pay and the collection is still be made by Member States. Therefore, a screen is still kept bet-

It is not my intention to describe in detail all the proposed new resources. Rather, I would like to focus on the third and last option

4. COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTE AND THE COMMITTEE OF THE REGIONS. Europe's moment: Repair and Prepare for the Next Generation, 27 May 2020, COM(2020) 456 nal. 5. COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS. The EU budget powering the recovery plan for Europe, 27 May 2020, COM(2020) 442 nal.

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ween the taxpayer and the European budget. Furthermore, the Commission qualies all the proposed new own resources as temporary measures, which are only intended to operate in the most acute context of the crisis, and will disappear once the emergency has been overcome. Hence, the proposal is still too conservative. Solidarity, which is frequently recalled as the foundation of the whole new system of nancing the EU budget, comes to the fore only on the investment side, i.e. as the justication of the various recovery measures. However, there is apparently no room for solidarity on the nancing side. Those who provide the resources for the recovery programmes are thus destined to remain in the dark as to their effective use. This is not new. Every day, individuals and companies take advantage of the freedoms, goods and services made available by the EU legal system, without directly contributing to their cost. In 2017, a document on the future of the EU budget emphasised that “for the price of less than one cup of coffee per day” European citizens have the opportunity of enjoying the huge benets stemming from the EU policies (6). This nice formula reveals the underlying problem. As European citizens, we all enjoy the effects of European policies, but we don’t directly contribute to it. That euro per day corresponding to our morning coffee does not go directly to the European institutions: it is part of the taxes that everyone pays to their State of residence. It is the Member State, then, which makes nancial transfers to the EU budget. No European citizen knows how much of his or her own contributions to the State goes to the EU funds; and no one knows how these resources are spent by the EU in his or her State or elsewhere. 6. “EU Budget for the Future”

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In sum, the EU system of nancing continues to pass over the heads of its citizens, who are full of rights but have no duties to contribute to the cost of the latter. Hence, they are unable to perceive the European added value they enjoy on a daily basis. And since there are no duties, the principle of solidarity remains outside our daily lives and is shaped, with the yardstick of conditionality and the cold and inexible rules of austerity, once again by Governments.

2. An incomplete Union At the beginning of this year, together with several colleagues from the University of Florence, I concluded a multiannual research project aimed at studying the possibility of providing the European Union, without amending the Treaties, with a scal own resource. The title of the project was “I pay, therefore I am (European citizen)”. Rethinking the Cartesian motto highlights the fact that an EU tax is only a means of tackling broader issues: the meaning of EU citizenship and the potential transnational implementation of the value of solidarity.

It is no surprise, then, that populism and a sense of suspicion towards the EU are taking hold in many Member States. The EU -the argument goes- does not solve our problems: it is not able to tax the enormous prots of digital MNEs, to manage immigration at the borders and now to help States shaken by the effects of the health crisis. However, the EU keeps claiming from Member States to transfer part of their revenues to the EU budget. This is a question of ignorance, of course: ignorance of what we gain on a daily basis from the EU and of what we would miss in case the EU would not exist (it is important not to forget the dramatic and still unresolved experience of Brexit). But the problem cannot be solved, as some say, only with more information.

The research project was inspired by the observation of the difculties in which the EU has been struggling for some time: the traditional vulgate of the EU as a den of technocrats, enslaved by the logic of international lobbies and far from the needs of the citizens of the Member States - if not in contrast with them - has evolved over time into more rened forms of ideological elaboration, which describe the evils of the EU integration as risks to the freedom and well-being of national polities. Yet this seemed to us, as legal scholars, rather surprising: the European Communities, before, and the European Union, today, have granted the continent decades of peace, prosperity and economic growth. EU law, in particular due to the four fundamental freedoms, has granted individuals and companies the right to move freely in the European space for the most varied purposes: working, studying, making business, or simply to search for better conditions of life. The fundamental freedoms, through the case law of the Court of Justice,

An apparently unpopular paradox could point the way. It suggests the option of equipping the EU with a real own tax, i.e. a tax introduced and managed by the EU, directly paid by the individuals and companies and destined to nance the functions of common interest that the EU is growingly called to full.

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have experienced unprecedented growth, making the EU an area of freedom and justice for all.

cal return, but which in fact prevents most people from really perceiving the huge benets that the EU brings.

Then why populism? Why the criticism of Europe's inefciency and remoteness from the "real" problems of civil societies? Why the nationalist thrusts, which culminated in Brexit? The reection that we made on the genesis of these disruptive trends led us to highlight a series of critical points that now are again in the spotlight during and after the

What is missing, in short, is the direct relationship between citizens and the European Union. Genuine participation in the community of Europe requires that, alongside rights, there are also duties. But at present, no EU citizen has a direct duty towards the EU institutions.

The EU is still an unﬁnished construction and this incompleteness, preserved by the Member States with the purpose of protecting their sovereignty, must be urgently overcome

What is missing, in short, is the direct relationship between citizens and the European Union

pandemic crisis. These points highlight that the EU is still an unnished construction and this incompleteness, preserved by the Member States with the purpose of protecting their sovereignty, must be urgently overcome.

3. Towards a genuine EU tax At this point, the importance of a EU tax can be envisaged. From a philosophical point of view, the tax is at the crossroads of all those features that are too weakly designed in the current EU system: solidarity, a sense of belonging and social rights. Then, if an own tax would be attributed to the EU, a multitude of objectives could be pursued at once: granting the EU sufcient resources to respond to the current crisis avoiding vetoes by the Member States; allowing citizens to "feel" their responsible participation to a supranational community; making nally clear that the economic sacrice is imposed not for gai-

Let it be clear that this incompleteness is not the result of the actions of the EU. As noted before, the quantity and quality of the 'European public goods' that the EU makes available every day to Member States, citizens and companies cannot be seriously questioned. The real problem lies, in our view, in the screen that the States have placed between Europe and its citizens: a screen justied for obvious electoral reasons and internal politi-

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While the tax is usually perceived in national systems as a negative element, in the European context it could act as a driver for greater integration and thus as a tool for cohesion between citizens. The duty to pay taxes affects those who are part of a certain community and is aimed at nancing the activities and services that its governing bodies aspire to provide to their afliates. A tax established by the European Union and intended to nance its functions can therefore give rise to a virtuous process, centered on the identication of a 'European public interest', in which taxpayers, precisely because they are directly called upon to nance services from which they benet (or may benet), are able to assess the quality of the performance of these functions and develop a European sense of civic responsibility according to the 'I pay, I see, I vote' formula - which must be adapted to the supranational context.

ning some personal benet, but to nance the EU policies to the advantage of the weakest persons, whichever Member State they belong to. The EU is increasingly called upon to implement active policies to ensure well-being in the common area. Therefore, just as States need resources and therefore a scal policy to pursue their own objectives, the EU must also be given adequate funding powers to ensure that its policies can be adequately pursued. Hence, the time is ripe for the introduction of a genuine European tax, i.e. a tax which applies to situations of advantage made possible by the participation in the EU and whose revenue serves to full functions of common interest to all Member States and their citizens.

The time is ripe for the introduction of a genuine European tax

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What seems relevant is, in fact, the spread of a new awareness that the debate on the reform of the EU budget is highlighting: the awareness that a tax, conceived and carried out at a supranational level, can be the appropriate instrument to achieve social objectives and therefore to generate an awareness of belonging which, in turn, constitutes an embankment against market-driven and speculative drifts. Europe is at a crossroads, and in order to ensure its survival all of us - no longer just as law scholars but as true European citizens - must keep alive the perception of the huge benets that European integration has brought and still brings to us all. Keeping in mind that those benets have a cost that has to be nanced irrespective of their actual or potential enjoyment.

Apart from the technical features of the EU own tax, here it is worth noting that the tax could serve for the achievement of more farreaching goals, which ultimately revolve around the recognition of a European solidarity that binds together not only the EU and its Member States (vertical solidarity), but predominantly the EU and its citizens and the latter among themselves (horizontal solidarity). In short, a EU own scal resource could impact deeply on the way European citizenship is perceived. A citizenship nally comprised of duties, which ceases to be a mere slogan, being dependent on the citizenship of a Member State, and becomes an autonomous concept which symbolizes the belonging to an organised and solidarity-based community. Recalling an inspired expression of prof. Miguel Maduro, here lies the “miracle” of European citizenship: “access to European citizenship is gained through nationality of a Member State, which is regulated by national law, but, like any form of citizenship, it forms the basis of a new political area from which rights and duties emerge, which are laid down by Community law and do not depend on the State”.

Once Europe is built, now we have to build Europeans. And to achieve this we need duties, especially scal duties, which are the true hallmark of a community of solidarity.

It is still doubtful if the debate that is taking place in Europe will actually lead to the expected results. The uncertainty of unanimity which, even if Article 311 TFEU were to be taken as the appropriate legal basis, is still necessary for the introduction of an EU 'own' tax suggests caution in this respect. At the end of the day, a political decision is needed, and everyone is aware of how difcult this could be. However, it does not seem that the actual implementation of the desired outcome can discriminate between the success or the failure of the whole project. Rather, the issue remains secondary.

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News Highlights Week 22-26 June 2020

Commission Position Paper: Modernising trade rules under the EU-Chile Association Agreement Monday 22 June

Commission issues Opinion on the application of ﬁnancial sanctions Monday 22 June

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In the context of the EU and Chile’s mutual agreement to modernise the Free Trade Agreement (2003) which is part of the EU-Chile Association Agreement (2002) – as several developments on both sides have occurred since it was concluded – the Commission published a position paper on a sustainability impact assessment (SIA) of 7 May 2019 that it commissioned, and which was carried out by an independent consultancy.

The Commission issued an Opinion that claries how existing nancial sanctions should be interpreted in particular as regards the freezing of assets. The Opinion concerns the sanctions imposed by means of Council Regulation (EU) No 269/2014 in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. It was requested by EU national competent authorities, which are responsible for implementing EU sanctions.

Amendments to EU rules on migration statistics ofﬁcially published

Regulation 2020/852 on sustainable investments ofﬁcially published

Monday 22 June

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Ofcial publication was made of Regulation 2020/851 amending Regulation 862/2007 on Community statistics on migration and international protection. Regulation 2020/851, adopted by the European Parliament and the Council on 18 June 2020, revises and completes the existing common rules for the collection and compilation of European statistics on migration and international protection. It sets out, inter alia, that data collection shall take place on a sub-annual basis. It also details the conditions applicable to pilot studies.

European Commission signs agreement with Japan on aviation safety Monday 22 June

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The European Commission and Japan signed a bilateral civil aviation safety Agreement (BASA) to ease trade in aircraft and related products. The BASA will remove duplications of evaluation and testing activities for aeronautical products and promote cooperation between the Civil Aviation Authorities of the EU and Japan.

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Ofcial publication was made of Regulation 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment and amending Regulation 2019/2088. The new Regulation, adopted on 18 June 2020, establishes the criteria for determining whether an economic activity qualies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable

European Commission seeks views on the EU’s accession to the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters Monday 22 June

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The Commission launched a public consultation to gather views on the EU’s accession to the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. According to the Commission, EU accession will facilitate trade and investment by improving legal certainty as well as by reducing costs in international trade and international dispute resolution.

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Parliament and Council reach political agreement on ﬁrst EU-wide rules on collective redress for consumers Tuesday 23 June

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Negotiators from the European Parliament and the Council agreed on the future Representative Action Directive, a part of the New Deal for Consumers launched in April 2018 by the European Commission to ensure stronger consumer protection in the EU. These rules introduce a harmonised model for representative action in all Member States that guarantees consumers are well protected against mass harm and ensures appropriate safeguards from abusive lawsuits.

Blocking of websites in Russia breached freedom of expression Tuesday 23 June

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The European Court of Human Rights gave its judgments in Vladimir Kharitonov v. Russia, OOO Flavus and Others v. Russia, Bulgakov v. Russia, and Engels v. Russia, nding that Russian measures blocking access to websites amounted to interference with the applicants’ right to impart information and the public’s right to receive it.

Pending case on the applicability of EU Ryanair seeks annulment of Commislaw to disputes concerning applica- sion Decision approving Swedish tions for nationality of a Member State COVID-19 aid scheme for airlines where applicants renounce to their pre- Tuesday 23 June READ MORE ON EU LAW LIVE vious nationality Ofcial publication was made of an action for annulTuesday 23 June

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Ofcial publication was made of a request for a preliminary ruling (C-118/20) from the Supreme Administrative Court of Austria (Verwaltungsgerichtshof) concerning the applicability of EU law, and the requirements stemming from it, in respect of disputes on the withdrawal by a Member State of a guarantee of grant of the nationality applied for persons who renounce their only nationality of another Member State, and thus their citizenship of the EU.

Court of Justice to rule meaning and validity of EU rules on accreditation bodies under Regulation 765/2008 Tuesday 23 June

ment (T-238/20) brought by Ryanair against the Commission’s decision to approve a Swedish loan scheme for airlines which hold a Swedish commercial aviation licence. According to Ryanair, the scheme violates the prohibition of discrimination based on nationality and free movement of services. The applicant claims that the Commission ignores the role of pan-European lowcost airlines in the connectivity of EU Member States by allowing Sweden to reserve aid only to those EU airlines to which Sweden has issued EU operating licenses.

Commission opens in-depth investigation into the ﬁnancing of Czech Post’s universal service obligation

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Tuesday 23 June

Ofcial publication was made of a request for a preliminary ruling (C-142/20) from the Council of Administrative Justice for Sicily, Italy. The case concerns the interpretation of Regulation 765/2008 on accreditation and market surveillance of products, as well as its conformity with the freedom of services in Article 56 TFEU and with the principle of non-discrimination in Articles 20 and 21 of the Charter.

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The European Commission announced that it has launched an in-depth investigation to assess the compatibility with EU State aid rules of the compensation granted by the Czech Republic to Czech Post, the main postal operator in the country, to full its public service obligations.

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Court of Justice to clarify EU rules on withdrawal of driving licences Wednesday 24 June

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Ofcial publication was made of a preliminary ruling request from the Administrative Court of BadenWürttemberg (C-56/20), asking whether Directive 2006/126 on driving licences precludes provisions of national law under which, where a decision refusing to recognise the validity of a driving licence is adopted, the foreign EC card driving licence must be submitted to the decision-making national authority without delay so that the latter can record in the driving licence that that person does not have a right to drive in national territory (usually by afxing a red ‘D’, crossed out by a diagonal line).

Fundamental Rights Agency publishes Report ‘What do rights mean for people in the EU?’ Wednesday 24 June

The Report shows that most people in the EU trust in human rights to create fairer societies, but that stark divides exist across society in Europe. It highlights the need for governments to reconnect Europeans with their human rights to ensure that everyone benets equally from them.

European Commission publishes its ﬁrst strategy on victims’ rights Wednesday 24 June

Council Presidency and European Parliament reach political agreement to make clearing houses safer Wednesday 24 June

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The Presidency of the Council and the European Parliament agreed on a common set of rules for central counterparties (CCPs) and their authorities to prepare for and deal with nancial difculties. The proposed rules purport to provide national authorities with adequate tools to manage crises and to handle situations involving failures of key nancial market infrastructures.

GDPR evaluation report published today by European Commission Wednesday 24 June

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The European Commission presented its rst EU Strategy on victims’ rights. The aim of the initiative is to ensure that all victims of crime can fully rely on their rights, no matter where in the EU the crime took place. The Strategy sets a number of actions for the next ve years, focusing on two objectives: rst, to empower victims to report crime, claim compensation and ultimately recover from consequences of crime; second, to work together with all relevant actors for victims’ rights.

Court of Justice to review General Court judgment granting compensation for non-material damage to relatives of a deceased ofﬁcial Wednesday 24 June

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Ofcial publication was made of an appeal (C-54/20 P) brought by the European Commission against the judgment of the General Court of 20 November 2019 in Stefano Missir Mamachi di Lusignano and Others v Commission (T-502/16), by which the General Court ordered the Commission to pay compensation for the nonmaterial harm suffered by Ms Maria Letizia Missir and Mr Stefano Missir following the death of their brother, Mr Alessandro Missir.

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Just over two years after its entry into application, the European Commission published an evaluation report on the General Data Protection Regulation (GDPR). The report argues the GDPR has met most of its objectives, in particular by offering citizens a set of enforceable rights and by creating a new European system of governance and enforcement.

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Anti-dumping and anti-subsidy announcements in respect of India and Saudi Arabia

Daniel Calleja Crespo appointed as European Commission’s new DirectorGeneral for its Legal Service

Wednesday 24 June

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Ofcial publication was made of three Commission notices in respect of procedures relating to the implementation of the Common Commercial Policy. These include (i) the forthcoming expiry of certain measures concerning imports of tubes and pipes of ductile cast iron originating in India, and (ii) the initiation of the EU examination procedure on obstacles to trade within the meaning of Regulation 2015/1843 applied by the Kingdom of Saudi Arabia consisting of measures affecting the import of ceramic tiles.

The European Commission appointed Daniel Calleja Crespo as Director-General of its Legal Service, succeeding Luis Romero Requena, who will retire on 30 June. Mr. Calleja Crespo, a Spanish national, is currently Director-General of the DG for Environment, a position he has been occupying since 2015.

Austrian Supreme Court asks for clariﬁcation on how to apply the ‘ne bis in idem’ principle in competition law cases

Council adopts exceptional rules to facilitate bank lending in the EU in the wake of Covid-19

Thursday 25 June

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Court of Justice: European Parliament may exercise some of its budgetary powers in additional plenary sessions in Brussels READ MORE ON EU LAW LIVE

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Council agrees on the postponement of certain tax provisions as a result of Covid-19 Thursday 25 June

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To address the severe disruptions created by the COVID-19 pandemic, the Council agreed on several amendments to the EU tax rule-book that will grant companies more time to comply with rules on cross-border information reporting and exchanges and VAT for ecommerce.

The Court of Justice handed down its judgment in France v Parliament (C-92/18), a dispute concerning the adoption of the EU budget in 2018 at second reading in Brussels and the possibility for the European Parliament to exercise its budgetary powers during additional plenary sessions held in that city.

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The newly enacted banking package provides targeted and exceptional legislative changes to the capital requirements regulation (CRR 2), in order to allow credit institutions to play their role in managing the economic shock that stems from the COVID-19 pandemic by fostering credit ows.

Ofcial publication was made of a request for a preliminary ruling (C-151/20) from the Supreme Court of Austria in the case Bundeswettbewerbsbehörde v Nordzucker AG and Others. The request concerns the interpretation of the principle of ne bis in idem to competition cases.

Thursday 25 June

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Court of Justice extends the concept of authorities enabled to receive applications for international protection under the Asylum Procedures Directive Thursday 25 June

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The Court of Justice has just given its judgment in Ministerio Fiscal (Autorité susceptible de recevoir une demande de protection internationale) (C-36/20 PPU), a case concerning the interpretation of Article 6(1) and Article 26 of the Asylum Procedures Directive 2013/32 and of Article 17(1) and (2) and Article 8(3) of Directive 2013/33 on standards for the reception of applicants for international protection.

Council agrees partial negotiating position on the Just Transition Fund Thursday 25 June

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AG Pikamäe’s Opinion: Hungarian regime on asylum and return contrary to EU law

Council reaches provisional agreement on modernisation of taxation rules for alcohol

Thursday 25 June

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Advocate General Pikamäe delivered his Opinion in Commission v Hungary (Accueil des demandeurs de protection internationale) (C-808/18), supporting the Commission’s view that a substantial part of the national legislation of that Member State on the right to asylum and on the return of illegally staying third-country nationals is contrary to EU law and more specically the Procedures Directive 2013/32, the Reception Directive 2013/33, and the Return Directive 2008/115.

ECtHR: deprivation of French nationality on account of acts of terrorism did not breach right to respect for private life Thursday 25 June

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The European Court of Human Rights handed down its judgment in Ghoumid and Others v. France, nding that French authorities acted in line with the right to respect for private life when they deprived the applicants of their French nationality after their conviction for participation in a criminal conspiracy to commit an act of terrorism.

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Member states’ ambassadors to the EU endorsed, subject to further conrmation by the Council, the update of excise duty rules on alcohol within the EU. The new rules will be formally adopted by the Council after the legal and linguistic nalisation of the Directive and national legislation transposing this Directive will apply from 1 January 2022.

Council agrees position on the upcoming Conference on the Future of Europe Thursday 25 June

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Member States agreed on the Council’s position on the arrangements for the Conference on the Future of Europe, paving the way for the opening of discussions with the Commission and the European Parliament. The Council takes the view that the conference should focus on how to develop EU policies over the medium and long term in order to tackle more effectively the challenges facing Europe, including the economic repercussions of the COVID-19 pandemic and lessons learned from the crisis.

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Commission proposes draft EU budget for 2021 Thursday 25 June

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Commission approves German aid for the recapitalisation of Deutsche Lufthansa AG Friday 26 June

The European Commission released yesterday its proposed EU budget for 2021, which would amount to 166.7 billion euros and would be complemented by approximately 211 billion euros in grants and 133 billion euros in loans under Next Generation EU, the temporary recovery instrument designed to face the economic consequences of the COVID-19 pandemic. Despite there being no agreement yet on the EU’s long-term budget for the 2021-2027 period or Multiannual Financial Framework (MFF), the Commission is under a duty to submit every year by June 30 a draft budget for the following year.

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The European Commission approved a German measure to contribute 6 billion euros to the recapitalisation of Deutsche Lufthansa AG (DLH), the parent company of Lufthansa Group. This is part of a larger support package that also includes a state guarantee on a 3 billion euros loan that Germany plans to grant to DLH under the German scheme approved by the Commission on 22 March 2020.

Council adopts conclusions on COVID19 response in energy sector

EU signs aviation agreement with the Republic of Korea

Friday 26 June

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The EU and the Republic of Korea signed a Horizontal Aviation Agreement, an international agreement negotiated by the Commission on behalf of Member States in order to bring all existing 22 bilateral air services agreements between EU Member States and the Republic of Korea in line with EU law.

The Council of the EU adopted conclusions (by written procedure) on the response to the COVID-19 pandemic in the energy sector. This follows an energy ministerial meeting held last week on the recovery package and the European Green Deal. The Council welcomed the resilience of the European energy system, which has avoided any supply disruption during the ongoing crisis.

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Analyses & Op-Eds New categories in the requirement of reasoning? Commission v Di Bernardo

The unexpected resurgence of the Schengen area

By Julian Currall

By Daniel Thym

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Editorial Opinion on the recent judgment of the Court of Justice in Commission v Di Bernardo (C-114/19 P), a case concerning the procedural obligation of reasoning in recruitment procedures. Julian Currall explains how the case law on the duty to provide reasons has evolved and the relevance of this judgment and, more generally, of staff-related cases for the evolution of this procedural requirement.

Editorial Opinion on the functioning of the Schengen area during and after the COVID-19 pandemic. Daniel Thym highlights three lessons that experts of EU law and policy should draw from the near-death experience of the Schengen area and the unexpectedly swift resurgence of border-free travel.

A Delphic oracle?’ What does the recent EU Commission’s trade policy review

ECtHR’s advisory jurisdiction on the move: Bioethics Committee requests ﬁrstever advisory opinion

By Luca Rubini

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By Dolores Utrilla

Editorial Opinion on the Commission’s initiative ‘A renewed trade policy for a stronger Europe’, a major review of its trade policy. Luca Rubini explains the meaning of this initiative in the context of the multiple crises and challenges that trade policy is currently called on to face.

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Editorial Opinion on the advisory opinion mechanism set up by the 1997 Convention on Human Rights and Biomedicine (the Oviedo Convention) and its main differences from other existing advisory tools of the ECtHR. On the ocassion of the rst-ever opinion request under the Oviedo Convention, the author explains why this this pending request, together with certain recent procedural developments, suggest an acceleration of the process of ‘constitutionalization’ of the ECtHR’s role.

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