It already seems ages ago since Brussels enjoyed the summer holiday season. Although the enjoyment is relative, considering the sustained draught and high temperatures over several months. Nature is only slowly recovering in many parts of Europe.

Overall, it was a relatively quiet summer for the Brussels Bubble: no Greek drama, additional migration crisis or new financial markets meltdown. Even the Brexit experts on both sides kept calm and just carried on. The most important end-of-summer policy decision was the abolition of the schizophrenic "adjusting the clock" – the annoyance to move to summer time in March and back to winter time end October. In a public consultation, 84 percent of the respondents (4.6 million Europeans participated – the highest number in EU consultations ever) asked to abolish the summer-winter time divide. It is expected that the original time will become the standard again (winter time).

But beyond Brussels it was not all peace and quiet. In previous editions of our publication, we already highlighted the serious disruptions in international trade, following a set of unilateral protectionist measures initiated by the US Presidency. They were followed by counter-measures from e.g. the EU and China. At the moment, another round of tit-for-tat import duties between the US and China dominate the international trade landscape. Brussels and Washington are meanwhile discretely discussing trade. No major trade deal, but small steps and perhaps some early results are expected towards November, conveniently before the US midterm elections. Differences over cars and agriculture are – and remain – significant between the EU and the US. And the world will continue to differ with the United States on other fronts. The speech by the American President during the opening of the 73rd United Nations General Assembly on 25 September 2018 – with focus on sovereignty and self-interest - raised further concerns about international co-operation and the rules-based international order. French President Macron and other EU Heads of State emphasised the need for international co-operation and multilateralism to combat the world’s challenges. And with the US' isolationist trend, the world is primarily looking at the EU for leadership.

And then on 20 September, the European leaders convened in beautiful Salzburg – for an informal EU Summit hosted by the current EU Presidency: Austria. With migration (in net-terms) a smaller issue, there was significant time devoted to Brexit. The outcome of Salzburg was not encouraging for those that favour a negotiated, controlled Brexit. It demonstrated that the Chequers plan of Prime Minister May will not be embraced by the EU due to sincere incompatibilities with the EU legal/institutional structures as well as the EU’s negotiating guidelines. Back in the UK, discussion on a possible new referendum or even early elections are gaining more traction following decisions at e.g. the Labour Party Conference and this week with the Party Conference of the Conservative Party. The continent follows these developments with great interest. All stakeholders concerned realise that the clock is now ticking even louder, and the crucial EU General Affairs Council on 16 October 2018 is just around the corner. During that Council meeting, an agreement on Brexit between the EU and the UK should be reached, otherwise a hard Brexit becomes almost unavoidable, effective on 29 March 2019 at midnight CET and 11.00 PM UK time.

But there is more to do in Brussels, and the more mundane policy and legislative developments in this month's 'EU Impact' newsletter include the following:

  • Commission proposes a new 'Africa - Europe Alliance for Sustainable Investment and Jobs'
  • Commission presents proposals for the modernisation of the World Trade Organisation
  • European Parliament approves digital copyright rules
  • EU initiative to better connect Europe and Asia in various sectors
  • European Parliament plenary to discuss proposed legislation on single-use plastics

Trade

Commission proposes a new 'Africa - Europe Alliance for Sustainable Investment and Jobs'

In his final State of the Union address on 12 September 2018, European Commission President Jean-Claude Juncker advocated for a new 'Africa-Europe Alliance for Sustainable Investment and Jobs', which he highlighted as the EU's priority for the coming months. The initiative particularly aims to boost strategic investment and strengthen the role of the private sector in Africa, notably through increased de-risking of investment projects via the blending of grants and loans, and guarantees.

The proposal additionally covers the following areas:

  • Education and skills - investments to increase employability and match skills and jobs, including through scholarships and exchange programmes such as Erasmus+
  • Business environment and investment climate - encouraging investments by supporting African-driven reforms
  • Economic integration and trade - providing a long-term perspective for transposing existing bilateral EU-African trade agreements into a continent-to-continent free trade agreement
  • Mobilisation of financial resources - The Commission highlighted Africa as a priority region in the EU's next long-term external funding budget (2021-2027)

The initiative builds on the EU External Investment Plan (EIP) launched in 2016, the core of which is the European Fund For Strategic Investments (EFSI), which aims to mobilise private and public investment for projects in Africa and the EU's neighbourhood.

Before the end of 2018, the Commission will organise sectoral consultations with public, private and financial stakeholders as well as academia from both continents to reinforce strategic developments in critical economic fields including digital, energy, transport and agriculture.

Commission presents proposals for the modernisation of the World Trade Organisation

On 18 September 2018, the European Commission has put forward ideas to modernise the WTO and to adapt its international trade rules to the challenges of the global economy.

EU leaders had mandated the Commission to produce the concept note in an effort to increase the effectiveness of the WTO to address the current crisis facing the rules-based multilateral trading system. The proposal also constitutes a response to the isolationist activities of the US Administration. In particular, the EU sees a risk in the dispute settlement mechanism being paralysed and the appointment of new members to the Appellate Body being blocked.

To address these challenges, the Commission proposes three main initiatives:

  • Modernising the rules on international trade in line with economic, political and technological changes, e.g. to adequately capture market-distorting subsidies
  • Reinforcing the WTO's role in monitoring to increase transparency
  • Resolving the imminent deadlock on the WTO dispute settlement mechanism

The Commission proposes sanctions, albeit no economic ones, against countries breaching WTO rules.

Whereas the Commission's proposals have been consulted with the EU Member States, the note does not prejudge the EU's final stance on WTO reform. Aiming to provide concrete proposals to the WTO, the EU is engaged in discussions with the US and Japan, as well as with China and other WTO members, and it will enter additional talks in the coming weeks. The European Parliament and the Member States will remain engaged in the discussions.

ICT

European Parliament approved Digital Copyright

In its plenary session on 12 September 2018, the European Parliament voted in favour of a controversial EU copyright reform, in an effort to adapt existing legislation to increasing digitalisation, particularly in view of the growing role of online platforms in displaying protected content.

In September 2016, the European Commission put forward a proposal for a Directive on copyright in the Digital Single Market. In July 2018, Members of the European Parliament (MEPs) had rejected a draft position, based on two key concerns:

  • The fear that a 'link tax' would be introduced on the basis of Article 11, demanding online service providers to pay news organisations for the right to share their articles
  • The opposition to 'upload filters' required by Article 13, which internet companies would be asked to install to ensure the compliance of online content with copyright rules

Parliament's updated negotiating position adopted in September 2018 includes amended versions of Articles 11 and 13. While critics label these changes as cosmetic, continuing to criticize the draft Directive for alleged disrespect of online rights and for serving the interests of large media companies, authors, artists, and journalists, on the other hand, laud the proposed reform for rewarding rights holders and encouraging investment in professional content.

In the next step, Parliament will enter into negotiations with the Member States, aiming to agree on a common legislative text. The Directive will subsequently need to be implemented by the individual EU Member States, potentially resulting in significant differences in interpretation of the legislation.

Cross-sectoral initiatives

EU initiative to better connect Europe and Asia

On 19 September 2018, the European Commission and the EU's High Representative for Foreign Affairs, Federica Mogherini, presented the EU's vision for a new and comprehensive strategy for enhanced connectivity between Europe and Asia. The strategy includes elements related to the fields of transport, energy, digital, and the human dimension, with the objective of increasing prosperity, safety and resilience in Europe and Asia.

The Joint Communication comprises three key initiatives:

  • Establishing efficient cross-border transport links, energy and digital networks, and people-to-people contacts
  • Facilitating bilateral, regional and international connectivity partnerships with Asian countries, as well as with organisations, based on common rules and standards
  • Leveraging sustainable financing for investments by means of various financial instruments

Despite EU stakeholders' affirmations that the connectivity strategies of the EU and China must work well together, and that the EU will continue to engage with China on connectivity matters, it is evident that the EU's alternative connectivity approach at least somewhat competes with China's Belt and Road Initiative. The EU seeks to promote reliable regulatory frameworks, improved business conditions, sensible economic policies, and open markets policies, aiming for concrete deliverables including decarbonisation, digitalisation, fair competition, investment and innovation.

The proposals will next be discussed in the European Parliament and amongst Member States. The proposed initiatives will feed into discussions on connectivity at the upcoming Asia-Europe Meeting (ASEM) Summit on 18-19 October 2018 in Brussels, bringing together 51 Asian and European leaders.

European Parliament plenary to discuss legislation on single-use plastics

On 22 October 2018, the European Parliament will discuss a proposed Directive on the reduction of the impact of certain plastic products on the environment. The Commission published the legislative proposal in May 2018, aiming to introduce new EU-wide rules for single-use plastics to reduce marine litter.

The proposal includes:

  • Consumption reduction measures (eg national targets) - applying to food containers and cups
  • Plastic ban on certain products - covering cotton bud sticks, cutlery, plates, stirrers and straws, and sticks for balloons
  • Product design requirements - related to beverage containers and bottles, with caps and lids needing to remain attached
  • Labelling requirements (eg regarding waste disposal and environmental impact) - applying to balloons and sanitary towels
  • Producer obligations (eg requirement to help cover the costs of waste management) - for food containers, cups, balloons, packets, beverage containers, tobacco filters, fishing gear, etc.
  • Collection targets - 90 percent for beverage bottles
  • Awareness raising measures (eg obligating Member States to raise awareness about impact of littering) - covering food containers, cups, balloons, packets, tobacco filters, fishing gear, etc.

EU-wide rules for single-use plastics may provide European firms with a competitive edge globally, encouraging economies of scale in the field of sustainable products, and incentivising technological innovation.

Following the committee vote, Parliament's plenary will adopt its negotiating position (scheduled for 22 October). Parliament and Council will then enter into negotiations, aiming to agree on a common legislative text. The Commission urged Parliament and Council to deliver results before the European elections in May 2019.