Connect with us

EU Politics

Explainer: Next Generation EU – Legal Construction

Newsroom

Published

on

The proposed architecture of the exceptional financing is based on three pillars:

  • The Own Resources Decision authorises the full amount of the borrowing, to be used for exceptional expenditure and for loans to Member States. Those amounts are not entered into the Union budget. It also organises the repayment of the amounts used for expenditure under the future MFF. The repayment will be entered into the Union budget in the year it takes place (as of 2028, until 2058).
  • The Recovery Instrument based on Article 122 TFEU identifies recovery measures and allocates the borrowed funds to various Union programmes to that effect.
  • The Union programmes receive the resources and lay down the rules for their implementation.

The major innovation, the borrowing for spending, is compliant with the Treaties.

1)    Under the current circumstances, borrowing is a justified means to attain the Union’s objectives

  • The Union is allowed to provide itself with the means necessary to attain its objectives [Article 311, first paragraph TFEU]. A highly competitive social market economy, aiming at full employment, the promotion of economic, social and territorial cohesion and solidarity among Member States is an objective of the Union [Article 3(3) TEU].
  • The financial means of the Union come predominantly, but not exclusively, from own resources [Article 311, second paragraph TFEU]. Therefore, the Union enjoys some discretion as to the choice of the means necessary, as long as it respects the financial rules of the Treaty.
  • Borrowing constitutes such a means. Under the current circumstances, it is necessary. Tackling the exceptional consequences of the crisis requires large resources in short period of time, without increasing national debt in the short to medium term.
  • Borrowing creates a financial liability for the Union. However, financial operations involving liability of the Union are not extraordinary. The Treaties do not prohibit the Union from taking liabilities. The Union is already now taking liabilities e.g. from loans for financial assistance to Member States and third countries or budgetary guarantees, inclusive for market operations (e.g. European Fund for Strategic Investments). Borrowing used for crisis spending would simply be a new type of a liability operation.

2)    Borrowing must respect the principle of budgetary discipline. For that reason, provisions are needed in the Own Resources Decision

  • According to the principle of budgetary discipline [Article 310(4) TFEU], the Union’s actions can be financed within the limits of the multiannual financial framework (MFF) and own resources. The Treaty also obliges the Union institutions to ensure that the Union can satisfy its financial obligations towards third parties [Article 323 TFEU].
  • Therefore, liability from borrowing is only permissible if the Union is able to repay the debt including interest. This requires that the own resources ceiling be sufficiently high to ensure each year sufficient financial space for the full coverage of the Union’s liability. It also requires a mechanism ensuring availability of resources in all circumstances.
  • The proposed amendment to the proposal for the new Own Resources Decision makes sure that these pre-requisites of budgetary discipline are fulfilled:

o   A dedicated and temporary increase of the Own resources ceilings will create sufficient budgetary space. That space is available (i) for the contingent liabilities from loans to Member States and (ii) for the repayment of the debt from borrowed funds used for spending programmes in the future (2028 to 2058);

o   An additional rule will allow the Union to call on resources from the Member States where, on a given year, the authorised appropriations entered in the budget are not sufficient for the Union to comply with its obligations resulting from borrowing.

  • The Own Resources Decision will go one-step further. It will determine the maximum amount that may be borrowed and will set the parameters for its repayment, in particular the start date for repayment (2028) and the end date for repayment (2058). This can be done under the Own Resources decision for the following reasons:

o   Those provisions are a corollary of the dedicated increase of the own resources ceiling. The size and the modalities of the repayment delimit the maximum amounts of future own resources revenue, which will be needed for that purpose. They may, therefore, be considered as an integral part of the establishment of the system of own resources [Article 311, third paragraph TFEU].

o   When defining the amounts of the needed revenue in the own resources decision, it is normal for the legislator to take into account related expenditure. E.g. the UK rebates were calculated in function of the total allocated expenditure in favour of the UK.

o   Moreover, the Own Resources Decision is of quasi-constitutional nature. It only enters into force after approval by all Member States in accordance with their national constitutional requirements. The authorisation of the borrowing will need the approval of all Member States, and, depending on national procedures, of their national parliaments. This provides for the necessary democratic legitimacy of that innovative proposal necessary to fulfil the Union’s objectives.

o   At the same time, the approval by all Member States will constitute a clear commitment to bear the liability from the borrowing

3)    Allocation of the funds to Union spending programmes, Article 122 TFEU

Article 122 TFEU allows for targeted derogations from standard rules in exceptional crisis situations. On that basis, the Recovery Instrument will provide for the financing, by reference to the authorisation to borrow provided by the own resources decision, and will assign those funds to the various spending programmes, as so-called “external assigned revenues”, for the purposes of recovery and resilience. [Article 21(5), Financial Regulation]

The borrowed funds will remain additional to the annual budget. They will not be part of the MFF and of the annual budgetary procedure.

Such way to proceed for large amounts diverges from the standard practice for the establishment of the budget and financing of the Union [point 1, requirement of principal financing of Union policies from own resources]. It is justified as a temporary and exceptional solution in the context of the current crisis.

Q&A:

Is the mechanism compatible with the principle of budgetary balance?

The principle of budgetary balance [Article 310(1), 3rd sub-paragraph, TFEU] requires equilibrium between revenue and expenditure of the annual budget. The borrowed funds are exceptional and one-off amounts coming in addition to the annual budget as external assigned revenue (for the spending part), they do not form part neither of revenue nor of expenditure under the annual budget.

The borrowing does not mean that the Union engages in deficit spending in a manner comparable to a Member State. Budgetary deficit occurring in the Member States budgets relies on future income from revenue (taxes), which the Member State can impose as a sovereign.

The Union does not have that option. It has to rely on the own resources previously authorised in the own resources decision and can act only within such limits, in accordance with the principle of budgetary discipline. The borrowing will constitute an operation respecting those constraints because the Own Resources Decision will already guarantee the financial means needed for the repayment. In substance, the Member States agree to make financial resources available to the Union, but, having limited immediately available fiscal space, “defer” or “delay” the making available.The budgetary space thus created will allow the Union to engage into extraordinary and one-off borrowing operation, permitting the immediate adoption of the recovery measures.

Why do we need a Recovery Instrument based on Article 122 TFEU? Why could the resources not go directly from the own resources decision to the spending programmes?

  • The Recovery Instrument is based on Article 122 TFEU, which allows for extraordinary measures in situations of crisis as an expression of solidarity among Member States.
  • Recourse to that legal basis is necessary for derogating from standard Treaty rules, which would not allow the financing of such large amounts in addition to the Union’s budget and outside of the annual budgetary procedure. This is justified only in the circumstances of the current crisis.

Can the borrowed funds be considered “external assigned revenue” provided for by the Recovery Instrument in accordance with Article 122 TFEU, while the empowerment to borrow and the repayment of the borrowing are embedded in the own resources decision?

  • The borrowing and use of the funds involve three steps:

o   Empowerment to borrow, including the determination of the maximum amount;

o   Receipt of the borrowed funds and their assignment to particular items of expenditure;

o   Repayment of the borrowing in the future, including the determination of the end date.

  • The Own Resources Decision provides the legal basis for the first and third steps, whereas the Recovery Instrument constitutes the legal basis for the second step, in accordance with Article 21(5) of the Financial Regulation.
  • This architecture is the result of a policy choice, while respecting legal constraints.
  • It is legally possible to determine the maximum amount of liability in the Own Resources Decision. Article 311(3) TFEU has two functions, which are closely interlinked: it determines the revenue attributed to the Union and it contains the Member States’ commitment to provide such revenue. The determination of the overall amount of funds that may be borrowed and of the modalities of repayment provides legal certainty concerning the revenue needed by the Union in the future and the obligations of the Member States to provide for it.
  • However, the borrowed funds will not constitute own resources but a new category of ‘other revenue'[Article 311(2) TFEU]. Such revenue comes in addition to the Union’s budget and is intended to finance particular items of expenditure.
  • Concerning the second step mentioned above, Article 122 TFEU constitutes the appropriate legal basis for receiving the borrowed funds and attributing them to particular items of expenditure. The choice of the legal basis for a Union act must be based on objective factors which are amenable to judicial review and which include, in particular, the aim and content of the measure. In the present case, the content is the provision of additional financing by derogation to certain rules; the objective is the recovery and resilience of the Union in an unprecedented crisis situation.
  • To conclude, the three steps mentioned above are interlinked, but given the political and legal constraints, they may be regulated in two separate legal acts based on different legal bases.

The Own Resources Decision is an act establishing the revenue of the Union, the own resources. How can it constitute legal basis for expenditure (repayment of the borrowing)?

Article 310(3) TFEU provides that the “implementation of expenditure shown in the budget shall require the prior adoption of a legally binding Union act providing a legal basis for its action and for the implementation of the corresponding expenditure in accordance with the [financial] regulation”. The Own Resources Decision is a “legally binding Union act” as defined by Article 2(4) of the Financial Regulation. As long as it can validly authorise the borrowing and its repayment (see previous question), the necessary consequence is that it will constitute a basic act for the expenditure intrinsically linked to the borrowing, i.e. the instalments of the borrowing. Therefore, this aspect belongs to the ‘system of own resources of the Union’ [Article 311(3) TFEU].

Do the borrowed amounts constitute own resources?

No:

  • The amounts are one-off additional reinforcement of Union’s actions, as ‘other revenue’ expressly provided for by Article 311(2) TFEU. Own resources are regular income of the Union.
  • The amounts need to be repaid by the Union, while own resources are a final revenue that is not repaid.

The borrowing can be authorised based on the third paragraph of Article 311TFEU. The determination of the maximum Union’s liability and the modalities of repayment are intrinsically linked to the determination of the additional own resources ceilings.

Continue Reading
Comments

EU Politics

Explainer: Capital Markets Union Action Plan

Newsroom

Published

on

What is the Capital Markets Union (CMU) and why is it important?

The CMU is the EU’s plan to create a truly single market for capital across the EU. It aims to get investment and savings flowing to the companies and projects that need them across all Member States, benefitting citizens, investors and companies, regardless of where they are located. The CMU provides new sources of funding for businesses, helps increase options for savers and makes the economy more resilient.

Fully functioning and integrated capital markets will allow the EU’s economy to grow in a sustainable way and to be more competitive. An economically stronger Europe will better serve its citizens and help the EU play a stronger role on the global stage.

The CMU is essential for delivering on all of the EU’s key economic policy objectives: ensuring Europe’s recovery from the coronavirus crisis, an inclusive and resilient economy that works for all, the transition towards a digital and sustainable economy, and a strategically autonomous EU in an increasingly complex global economic context. Meeting these objectives requires massive investment that public money and traditional funding through bank lending alone cannot deliver. Only well-functioning, deep and integrated capital markets can provide the scale of support needed to recover from the crisis and power the transition. The CMU is not a goal in itself, but a fundamental policy to progress on key European priorities.

Completing the CMU requires support from the European Parliament and Member States at the highest level and from technical experts in public administration. It also requires that market participants make good use of the measures. The EU can offer tools and put in place supporting conditions, but it is for national authorities to implement them on the ground, and for private actors to take the initiative, seize business opportunities and innovate.

Work on the CMU was launched well before the coronavirus crisis. But the pandemic has injected real urgency into the CMU. Public support and bank loans have helped households and businesses stay afloat by addressing the short-term liquidity squeeze caused by lock-downs. In order to stay solvent in the medium and longer term, however, businesses need a more stable funding structure. The EU’s industry, including small and medium-sized businesses, needs more equity to recover from the economic shock and become more resilient.

What has been done so far?

Efforts to put in place a single market for capital started with the Treaty of Rome more than fifty years ago. The Maastricht Treaty of 1992 and the Financial Service Action Plan of 1999 sought to deliver on that vision, revealing however that the complexity and importance of European capital markets merited a further dedicated and targeted set of measures. The Commission therefore adopted the first dedicated CMU Action Plan in 2015. Responding to evolving challenges and priorities, this was further complemented with new actions in the CMU Mid-Term Review of 2017.

The Commission has delivered on all the individual actions announced in the 2015 CMU Action Plan and the 2017 Mid-term Review. The European Parliament and the Member States have agreed on 12 out of the 13 legislative proposals on the key CMU building blocks and on all three proposals on sustainable finance. While the EU has made significant progress, creating and deepening the CMU is complex and no single measure will complete it. Progress on some controversial issues has been slow and there are still significant barriers to a well-functioning CMU. There are difficulties in many areas, including supervision, taxation and insolvency laws. These barriers exist for a number of reasons, including the specific financial culture in any given Member States. These differences are deep-rooted, and will take time to tackle. The transition towards a Capital Markets Union remains a long-term EU-wide structural reform that requires time, effort, resources and – above all – unwavering political commitment. 

What are the benefits of a Capital Markets Union (CMU)?

The CMU will complement Europe’s strong tradition of bank financing and will help to:

Make funding more accessible for European companies: the CMU will mobilise capital in Europe and channel it to all companies, including SMEs, and infrastructure projects that need it to expand and create jobs.

Bring funding more effectively to investment projects across the EU: the CMU is a classic single market project that benefits all Member States. Those Member States with the smallest markets and high growth potential have a lot to gain from a better channelling of capital and investment into their projects. More developed market economies will benefit from greater cross-border investment and saving opportunities.

Give opportunities to individuals to save and invest long-term. The CMU is important to create a more inclusive and resilient society. It can also help address societal challenges such as the one posed by Europe’s ageing population by contributing to an adequate and sustainable income at old age.

Make the financial system more stable: by opening up a wider range of funding sources and more long-term investment, and reducing the vulnerability of EU citizens and companies to banking shocks, such as those they were exposed to during the financial crisis.

Deepen financial integration and increase competition: more cross-border risk-sharing, deeper and more-liquid markets and diversified sources of funding should deepen financial integration, lower costs and increase European competitiveness, therefore benefitting European consumers.

What does the new CMU Action Plan seek to achieve?

While significant progress has been made in the previous CMU Action Plan, some of the critical barriers to a single market remain. Therefore, it is time for complementary measures to be put forward, allowing the EU to also tackle the new challenges that the EU faces today with the coronavirus pandemic.

In today’s Action Plan, the Commission has set out a list of measures to make real progress on completing the Capital Markets Union. These measures build on detailed discussions with stakeholders as well as the recommendations of the High Level Forum on Capital Markets Union, which brought together high-calibre industry representatives, academics and representatives of civil societies. They also take into account and build on the Capital Markets Recovery Package announced by the Commission on 24 July and the Banking Package of 28 April, which both aim to facilitate bank lending to households and businesses and make it easier for capital markets to support European businesses to recover from the crisis.

The Commission has committed to 16 new measures to achieve three key objectives:

  • Ensuring that the EU’s economic recovery is green, digital, inclusive and resilient by making financing more accessible for European companies, in particular SMEs;
  • Making the EU an even safer place for individuals to save and invest long-term;
  • Integrating national capital markets into a genuine EU-wide single market for capital.

Individually, each measure represents one more piece of the puzzle: a step forward in areas where progress has been slow or where further work is necessary to achieve CMU. Taken together, they move the EU closer to the vision for CMU: a single market for capital across the EU that works for all Europeans, wherever they live and work.

How will CMU contribute to economic recovery?

The Commission has put forward “Next Generation EU” – an emergency temporary recovery package to help repair the immediate economic and social damage brought by the coronavirus pandemic, kick-start Europe’s recovery and prepare for a greener and more digital future. In parallel, the European Central Bank, Member States, and regional and local authorities have taken extraordinary measures and injected public funds on an unprecedented scale to support the recovery. Banks have so far broadly continued lending to businesses. However, this financing – despite being absolutely essential for Europe’s short-term recovery – will not be sufficient given the magnitude and expected duration of financing needs. Market financing will be the lifeblood that sustains the recovery and future growth over the long-term.

The strength and durability of the economic recovery will crucially depend on the availability of sufficient funding to EU companies. The use of market funding and especially of equity will therefore be paramount to support the economic rebound. Given the high level of domestic savings and openness of the EU financial system to global investors, there should not be a genuine shortage of funding. At the same time, savers must have the confidence to invest in a safe way, benefitting from the opportunities offered by the economic recovery.

What measures are being put forward to facilitate the financing of companies?

The ability of a company to access funding has a strategic importance in enabling it to grow, create jobs and innovate. As such, ensuring diverse availability of financing sources is crucial, as some types of funding would be more appropriate to some companies than to others. While bank financing is used by an overwhelming majority of SMEs, it might not be appropriate or too costly for some, especially small innovative companies without existing assets or regular revenues. Equity finance via capital markets can therefore often be more suitable for them and allow for more flexibility. In addition, diversifying sources of funding also contributes to economic and financial stability, by making sure that options remain for companies to fund themselves even when other channels are not available.

Bonds and private equity have increasingly played an important complementary role to bank lending in recent years. Access to some forms of funding, such as public equity, remains limited in most Member States. The new measures put forward by today’s Action Plan aim to further facilitate the use of market funding and to help companies employ all possible funding sources, tailoring to their business models and individual needs. As one of the measures, the Commission will assess the feasibility of setting up a scheme where banks would be required to redirect SMEs whose credit application they have turned down towards alternative finance providers.

Further to that, the Action Plan will seek to make companies more visible to cross-border investors and better integrate markets by setting up an EU-wide platform that provides investors with seamless access to comparable company information. It will also seek to simplify the listing rules for public markets and encourage more long-term investment by investment funds. It will seek to support the re-equitisation of the corporate sector by incentivising institutional investors and review the existing securitisation framework to enhance the provision of credit to EU companies, in particular SMEs.

What measures are being put forward to make capital markets more attractive for retail investors?

Europe has one of the highest individual savings rates in the world. However, the level of retail investor participation in capital markets remains very low compared to other economies. This fails to serve the interests of people whose savings generate low or even negative real interest rates. It also deprives EU companies, and the EU economy in general, of much needed long-term investment. The individual investors who invest in the EU capital markets should, in many cases, be able to receive higher returns than is currently the case. At present, retail investors do not benefit sufficiently from the investment opportunities offered by capital markets and cannot adequately address their retirement needs.

Encouraging capital market investments from European households and savers can help meet the individual challenges posed by population ageing and low interest rates. It would allow people to build or protect their wealth and to meet their financing needs related to health, education and retirement.

Availability of deep and efficient capital markets can also contribute to the development of funding sources alternative to bank credit, therefore funnelling money into other financial instruments that firms use to diversify their funding. This can help improve access to financing also for SMEs and benefit the real economy in general by enabling companies to invest and create jobs.

The new CMU Action Plan puts forward a number of measures that seek to enhance the financial literacy of retail investors in order to enable them to make better financial decisions and leverage the possibilities provided for by capital markets. It will assess and review the applicable rules in the area of inducements, meaning the practices that encourage individuals to buy a particular item, such as the promise of a price reduction. This will ensure that investors receive fair advice and comparable product information. It will seek to improve the level of professional qualifications of financial advisors as well as facilitate the monitoring of pension adequacy in Member States and seek to develop best practices in the area of pension systems.

Why does CMU seek to facilitate capital market integration? What measures are being put forward in that respect?

European capital markets today remain fragmented along national lines. This locks out people and businesses in smaller local markets from the benefits of integration, notably access to a large investor base. It is essential to have well-developed local capital markets across the EU that can serve the needs of companies and savers, while at the same time integrating those markets into one single market of capital. As the benefits of larger-scale markets remain underexploited, EU financial actors are disadvantaged compared to their global peers. The departure of the UK from the EU means that parts of the financial industry are relocating to the EU, which will contribute to its multi-centre financial architecture. Ensuring the optimal flow of information and capital across the EU is therefore essential.

Today’s Action Plan aims to tackle key remaining obstacles to market integration. Many of the measures set out in the previous CMU Action Plan have now been agreed and are being implemented. This is, however, not enough. Progress on some controversial issues has been slow. There are still significant barriers to a well-functioning CMU in many areas, including taxation, company and non-bank insolvency law. In these areas, the Commission will propose targeted measures, focusing on the most significant barriers that cause market fragmentation and deter cross-border investment.

For example, the stark divergence between national insolvency regimes is a long-standing structural barrier to cross-border investment. Harmonisation of certain targeted areas of national insolvency rules or their convergence could enhance legal certainty. To make the outcome of insolvency proceedings more predictable, the Commission will bring forward an initiative for minimum harmonisation or increased convergence in targeted areas of non-bank insolvency law. In addition, together with the European Banking Authority, the Commission will explore possibilities to enhance data reporting in order to allow for a regular assessment of the effectiveness of national loan enforcement regimes.

Another example is taxation. A significant burden in this area is caused by divergent, burdensome, lengthy and fraud-prone refund procedures for tax withheld in cases of cross-border investment. These procedures lead to considerable costs that dissuade cross-border investment where taxes on the return on investment need to be paid both in the Member States of the investment and of the investor, to be reimbursed only afterwards, after a lengthy and costly process. In order to lower costs for cross-border investors and prevent tax fraud, the Commission will propose a common, standardised, EU-wide system for withholding tax relief at source.

How will the CMU support the EU’s key policy objectives?

The Capital Markets Union is the project that seeks to improve the EU’s financial system so that it best contributes to addressing Europe’s immediate and long-term challenges. More diversified funding sources can mobilise trillions of euros of investments in the twin transition, green and digital. Moreover, capital markets need to function efficiently to be able to redirect large-scale investments and to make the economy more resilient.

Public funds will not be sufficient to meet these financing needs. An efficient single market for capital is needed to mobilise the necessary funds and to ensure that sustainability considerations are rigorously incorporated in financing decisions. Digitalisation will also continue to require significant private investment if the EU’s economy is to remain competitive globally.

As stated in the EU strategy on ‘shaping Europe’s digital future’, innovative companies need funding that only capital markets can provide. This is partly because many of these companies lack the physical collateral required for bank loans. This adds to the urgency of deepening the CMU. Mastering technological advancement is also critical for the EU’s financial sector to gain in efficiency, to improve access to capital and to be able to better serve Europe’s people, as well as to remain competitive globally. The CMU will also improve the opportunities for SMEs to access funding and therefore will contribute to meeting the objectives of the EU’s March 2020 SME strategy for a sustainable and digital Europe.

The strategies on CMU, sustainable finance, digital finance and SMEs, as well as the Recovery Plan and Next Generation EU are all mutually reinforcing. They are a joined-up package of measures to strengthen Europe’s economy and make it more competitive and sustainable, and to better serve its people and companies.

How will the Commission monitor progress towards CMU?

The Commission regularly reports on the progress of legislative proposals and other measures under the first CMU Action Plan and will continue to do so also for the second Action Plan. The Commission will complement this regular reporting of legislative progress with the monitoring of how EU capital markets evolve. It has for this purpose commissioned a study that reviewed available data and indicators, with a view to establish a tool for regular measuring of progress.

Continue Reading

EU Politics

A fresh start on migration: Striking a new balance between responsibility and solidarity

Newsroom

Published

on

Women and children at the the Turkey-Greece border at Pazarkule. © IOM/Uygar Emrah Özesen

European Commission is proposing a new Pact on Migration and Asylum, covering all of the different elements needed for a comprehensive European approach to migration. It sets out improved and faster procedures throughout the asylum and migration system. And it sets in balance the principles of fair sharing of responsibility and solidarity. This is crucial for rebuilding trust between Member States and confidence in the capacity of the European Union to manage migration.

Migration is a complex issue, with many facets that need to be weighed together. The safety of people who seek international protection or a better life, the concerns of countries at the EU’s external borders, which worry that migratory pressures will exceed their capacities and which need solidarity from others. Or the concerns of other EU Member States, which are concerned that, if procedures are not respected at the external borders, their own national systems for asylum, integration or return will not be able to cope in the event of large flows.

The current system no longer works. And for the past five years, the EU has not been able to fix it. The EU must overcome the current stalemate and rise up to the task. With the new Pact on Migration and Asylum, the Commission proposes common European solutions to a European challenge. The EU must move away from ad-hoc solutions and put in place a predictable and reliable migration management system.

Following extensive consultations and an honest and holistic assessment of the situation, the Commission proposes to improve the overall system. This includes looking at ways of improving cooperation with the countries of origin and transit, ensuring effective procedures, successful integration of refugees and return of those with no right to stay. No single solution on migration can satisfy all sides, on all aspects – but by working together, the EU can find a common solution.

European Commission President Ursula von der Leyen said: “We are proposing today a European solution, to rebuild trust between Member States and to restore citizens’ confidence in our capacity to manage migration as a Union. The EU has already proven in other areas that it can take extraordinary steps to reconcile diverging perspectives. We have created a complex internal market, a common currency and an unprecedented recovery plan to rebuild our economies. It is now time to rise to the challenge to manage migration jointly, with the right balance between solidarity and responsibility.”

Vice-President for Promoting our European Way of Life, Margaritis Schinas, said: “Moria is a stark reminder that the clock has run out on how long we can live in a house half-built. The time has come to rally around a common, European migration policy. The Pact provides the missing pieces of the puzzle for a comprehensive approach to migration. No one Member State experiences migration in the same way and the different and unique challenges faced by all deserve to be recognised, acknowledged and addressed.

Commissioner for Home Affairs, Ylva Johansson, said: “Migration has always been and always will be part of our societies. What we are proposing today will build a long-term migration policy that can translate European values into practical management.  This set of proposals will mean clear, fair and faster border procedures, so that people do not have to wait in limbo. It means enhanced cooperation with third countries for fast returns, more legal pathways and strong actions to fight human smugglers. Fundamentally it protects the right to seek asylum”.

Stronger trust fostered by better and more effective procedures

The first pillar of the Commission’s approach to building confidence consists of more efficient and faster procedures. In particular, the Commission is proposing to introduce an integrated border procedure, which for the first time includes a pre-entry screening covering identification of all people crossing the EU’s external borders without permission or having been disembarked after a search and rescue operation.

This will also entail a health and a security check, fingerprinting and registration in the Eurodac database. After the screening, individuals can be channeled to the right procedure, be it at the border for certain categories of applicants or in a normal asylum procedure. As part of this border procedure, swift decisions on asylum or return will be made, providing quick certainty for people whose cases can be examined rapidly.

At the same time, all other procedures will be improved and subject to stronger monitoring and operational support from EU agencies. The EU’s digital infrastructure for migration management will be modernised to mirror and support these procedures. 

Fair sharing of responsibility and solidarity

The second pillar at the core of the Pact is fair sharing of responsibility and solidarity. Member States will be bound to act responsibly and in solidarity with one another. Each Member State, without any exception, must contribute in solidarity in times of stress, to help stabilize the overall system, support Member States under pressure and ensure that the Union fulfils its humanitarian obligations.

In respect of the different situations of Member States and of fluctuating migratory pressures, the Commission proposes a system of flexible contributions from the Member States. These can range from relocation of asylum seekers from the country of first entry to taking over responsibility for returning individuals with no right to stay or various forms of operational support.

While the new system is based on cooperation and flexible forms of support starting off on a voluntary basis, more stringent contributions will be required at times of pressure on individual Member States, based on a safety net.

The solidarity mechanism will cover various situations – including disembarkation of persons following search and rescue operations, pressure, crisis situations or other specific circumstances.

A change of paradigm in cooperation with non-EU countries

The EU will seek to promote tailor-made and mutually beneficial partnerships with third countries. These will help address shared challenges such as migrant smuggling, will help develop legal pathways and will tackle the effective implementation of readmission agreements and arrangements. The EU and its Member States will act in unity using a wide range of tools to support cooperation with third countries on readmission.

A comprehensive approach

Today’s package will also seek to boost a common EU system for returns, to make EU migration rules more credible. This will include a more effective legal framework, a stronger role of the European Border and Coast Guard, and a newly appointed EU Return Coordinator with a network of national representatives to ensure consistency across the EU.

It will also propose a common governance for migration with better strategic planning to ensure that EU and national policies are aligned, and enhanced monitoring of migration management on the ground to enhance mutual trust.

The management of external borders will be improved. The European Border and Coast Guard standing corps, scheduled for deployment from 1 January 2021, will provide increased support wherever needed.

A credible legal migration and integration policy will benefit European societies and economies. The Commission will launch Talent Partnerships with key non-EU countries that will match labour and skills needs in the EU. The Pact will strengthen resettlement and promote other complementary pathways, seeking to develop a European model of community or private sponsorship. The Commission will also adopt a new comprehensive Action Plan on integration and inclusion for 2021-2024.

Next steps

It is now for the European Parliament and Council to examine and adopt the full set of legislation necessary to make a truly common EU asylum and migration policy a reality. Given the urgency of local situations in several Member States, the co-legislators are invited to reach a political agreement on the core principles of the Asylum and Migration Management Regulation and to adopt the Regulation on the EU Asylum Agency as well as the Regulation on Eurodac by the end of the year. The revised Reception Conditions Directive, Qualification Regulation and recast Return Directive should also be adopted quickly, building on the progress already made since 2016.

Background

Today’s proposals deliver on President von der Leyen’s commitment in her Political Guidelines to present a new Pact on Migration and Asylum. The Pact is based on in-depth consultations with the European Parliament, all Member States, civil society, social partners and business, and crafts a careful balance integrating their perspectives.

Continue Reading

EU Politics

Green Deal: €1 billion investment to boost the green and digital transition

Newsroom

Published

on

The European Commission has decided to launch a €1 billion call for research and innovation projects that respond to the climate crisis and help protect Europe’s unique ecosystems and biodiversity. The Horizon 2020-funded European Green Deal Call, which will open tomorrow for registration, will spur Europe’s recovery from the coronavirus crisis by turning green challenges into innovation opportunities.

Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth said: “The €1 billion European Green Deal call is the last and biggest call under Horizon 2020. With innovation at its heart, this investment will accelerate a just and sustainable transition to a climate-neutral Europe by 2050. As we do not want anyone left behind in this systemic transformation, we call for specific actions to engage with citizens in novel ways and improve societal relevance and impact.

This Green Deal Call differs in important aspects from previous Horizon 2020 calls. Given the urgency of the challenges it addresses, it aims for clear, discernible results in the short to medium-term, but with a perspective of long-term change. There are fewer, but more targeted, larger and visible actions, with a focus on rapid scalability, dissemination and uptake.

The projects funded under this call are expected to deliver results with tangible benefits in ten areas:

Eight thematic areas reflecting the key work streams of the European Green Deal:

  1. Increasing climate ambition
  2. Clean, affordable and secure energy
  3. Industry for a clean and circular economy
  4. Energy and resource efficient buildings
  5. Sustainable and smart mobility
  6. Farm to fork
  7. Biodiversity and ecosystems
  8. Zero-pollution, toxic-free environments

And two horizontal areasstrengthening knowledge and empowering citizens, which offer a longer-term perspective in achieving the transformations set out in the European Green Deal.

The €1 billion investment will continue building Europe’s knowledge systems and infrastructures. The call includes opportunities for international cooperation in addressing the needs of less-developed nations, particularly in Africa, in the context of the Paris Agreement as well as the Sustainable Development Goals (SDGs).

The deadline for submissions is 26 January 2021, with selected projects expected to start in autumn 2021.

A Horizon 2020 Green Deal Call Info Day & Brokerage event will take place as part of the virtual European Research & Innovation Days that will take place from 22-24 September 2020.

Background

The European Green Deal is the European Commission’s blueprint and roadmap to make Europe the first climate neutral continent by 2050, with a sustainable economy that leaves no one behind. 

To reach this 2050 goal, action will be required by all sectors of our economy, including:

  • investing in environmentally-friendly technologies;
  • supporting industry to innovate;
  • rolling out cleaner, cheaper and healthier forms of private and public transport;
  • decarbonising the energy sector;
  • ensuring buildings are more energy efficient;
  • working with international partners to improve global environmental standards.

Continue Reading

Publications

Latest

EU Politics9 mins ago

Explainer: Capital Markets Union Action Plan

What is the Capital Markets Union (CMU) and why is it important? The CMU is the EU’s plan to create...

Finance2 hours ago

Digital Finance Strategy, legislative proposals on crypto-assets and digital operational resilience

Why do we need a Digital Finance Strategy? As technology and business models develop, European consumers and businesses are increasingly...

Science & Technology5 hours ago

Modern-day threats to human rights in an era of global digitalization

Digital security is an overarching issue related to the development of information technology. More and more new opportunities are popping...

South Asia6 hours ago

Pakistan can maximize the benefits of CPEC by involving China experts

Mr. Yao Jing, who has been to Pakistan three times at various diplomatic postings – very junior, mid-career, and senior-most...

Middle East8 hours ago

Shaping Palestinian politics: The UAE has a leg up on Turkey

The United Arab Emirates may have the upper hand in its competition with Turkey in efforts to shape Palestinian politics....

South Asia10 hours ago

Interpreting Sheikh Hasina’s Foreign Policy

September 28, 2020 marks the 74th birthday of Sheikh Hasina, the Honourable Prime Minister of Bangladesh. On the occasion of...

Newsdesk12 hours ago

As Businesses Embrace Sustainability, a Pathway to Economic Reset Emerges

In the midst of a deep recession brought on by the COVID-19 pandemic, there is a growing consensus that the...

Trending