EU Insight, 15 May 2020

PARLIAMENT CALLS FOR €2 TRILLION RECOVERY FUND AHEAD OF COMMISSION PROPOSAL

Today the European Parliament adopted a resolution calling for a €2 trillion recovery and transformation fund to be primarily disbursed through grants, direct payments for investment and equity. The resolution aims to shape the European Commission’s proposal on the new MFF and the recovery strategy, which will be issued on 27 May. Although the details of the upcoming proposal remain unknown, President von der Leyen announced this week that the allocation of funds will be guided by a three-pillar structure: i) financing key public investment through a new recovery and resilience tool; ii) boosting investments in strategic sectors; and iii) increasing EU resilience for future crises.

USE OF CONTACT TRACING APPS TO FIGHT COVID-19 DISCUSSED IN PARLIAMENT PLENARY

The European Parliament held a debate on the use of contact tracing apps in the fight against COVID-19, with statements from the European Commission and the Council. MEPs were broadly supportive of the use of contact tracing apps as recommended by the Commission but stressed that apps can only be used as a complementary tool to other protective measures, such as social distancing, face masks, hygiene and testing. However, MEPs criticised the lack of leadership from the Council, arguing that the EU should lead by example in this crisis and show its ability to deploy digital technologies that is compliant with fundamental rights and freedoms.

STATE AID TEMPORARY FRAMEWORK EXPANDED AND EXTENDED FOR SECOND TIME

The Commission approved the second amendment to the temporary framework for state aid, by which it sets out criteria based on which Member States can provide recapitalisations to companies in need. According to the updated framework, recapitalisation aid should only be granted if no other appropriate solution is available and should not go beyond restoring the beneficiary’s capital structure to before the COVID-19 outbreak. With respect to governance conditions, the new framework sets limitations on the remuneration of the beneficiaries’ management, including a ban on bonus payments and share buybacks. The amended rules will be in place until the end of December.

NO PROGRESS AFTER ROUND THREE OF BREXIT AGREEMENT TALKS

This week, the EU and UK held the third round of negotiations on the future EU-UK relationship. During the concluding press conference, EU Chief Negotiator Michel Barnier noted that this “was a round of divergence, with no progress”. Barnier expressed his disappointment by the UK’s overall lack of ambition, including in several important areas such as the fight against money laundering. The next negotiating round will take place in the first week of June, just a few days ahead of the 1 July deadline by which any extension to the transition period beyond end-2020 would have to be agreed.

COMMISSION GIVES GUIDANCE TO EU COUNTRIES ON REOPENING TRANSPORT & TOURISM

The Commission presented a package of guidelines and recommendations to help Member States gradually lift travel restrictions and allow tourism businesses to reopen. The package includes: i) an overall strategy towards recovery in 2020 and beyond; ii) a common approach to restoring free movement and lifting restrictions at EU internal borders in a gradual and coordinated way; iii) a framework to support the gradual re-establishment of transport whilst ensuring the safety of passengers and personnel; iv) a recommendation to make travel vouchers an attractive alternative to cash reimbursement; and v) criteria for restoring tourism activities safely and for developing health protocols for hospitality establishments. No clear guidance to help people plan their summer holidays though.

COMING UP NEXT WEEK

• 18 May: Video conference of ministers of education. On the agenda: impact on education of the gradual lifting of the COVID-19 containment measures.
• 19 May: Video conference of economics and finance ministers. On the agenda: update on COVID-19 measures, anti-money laundering, European Semester 2020.
• 19 May: Video conference of ministers of culture. On the agenda: measures taken already to support the culture and media sectors in the context of the COVID-19 pandemic.
• 19 May: Video conference of ministers of youth. On the agenda: impact of COVID-19 on young people and the youth sector.

Karl Isaksson, Managing Partner Brussels, Kreab