EU Insight, 21 February 2020

DISAGREEMENTS ON EU LONG-TERM BUDGET CONTINUE AS EU LEADERS GATHER IN BRUSSELS

EU leaders are currently meeting in Brussels to try to reach an agreement on the next EU long-term budget. After a rather brief first round of negotiations yesterday afternoon, European Council President Charles Michel called in leaders for a series of bilateral meetings. During today’s second round of negotiations, a new draft of the budget proposal was on the table, though disagreements on the size and allocation thereof persists. Some of the politically sensitive issues on the agenda include proposals for new revenue streams, so-called own resources, including a proposal for a plastic tax. Discussions are expected to continue over the weekend.

COMMISSION PRESENTS STRATEGY FOR ‘SHAPING EUROPE’S DIGITAL FUTURE’

This week the European Commission presented its strategy for ‘shaping Europe’s digital future’. As a first step, the Commission unveiled its White Paper on Artificial Intelligence (AI), together with a Communication on the European Data Strategy. The former envisages a framework for trustworthy AI, which will aim to mobilise resources across the entire value chain and to facilitate the deployment of AI. As for the latter, the objective is to set up a European Data Space which will serve as a basis for a single market for data, allowing for free flow of information across different sectors. Both publications were accompanied by consultations that will close on 19 May.

COUNCIL ADDS CAYMAN ISLANDS, PALAU, PANAMA AND SEYCHELLES TO TAX BLACKLIST

The Economic and Monetary Affairs Council updated the EU’s list of non-cooperative tax jurisdictions (also known as the ‘tax blacklist’), an instrument that promotes the adoption of international tax standards. Cayman Islands, Palau, Panama and Seychelles were added to a list that already included American Samoa, Fiji, Guam, Samoa, Oman, Trinidad and Tobago, Vanuatu and US Virgin Islands. Conversely, over half of the countries covered by the 2019 listing exercise have been completely delisted, as they are now in line with all good governance standards on tax. The Council will revise the EU tax blacklist in October.

EU FINANCE MINISTERS CONTINUE DISCUSSIONS ON EUROZONE BUDGET

EU Finance Ministers continued progress towards the so-called Budgetary Instrument for Convergence and Competitiveness (BICC) or ‘eurozone budget’, adopting a report covering the need, content, modalities and size of a possible intergovernmental agreement (IGA). The IGA would allow Member States to transfer additional funds to said instrument. The Council also adopted a recommendation for the economic policies of the euro area, as well as conclusions on the EU’s sustainable growth strategy and Alert Mechanism Report. The Commission will follow up on the latter on 26 February, with the publication of country reports and in-depth reviews assessing Member States’ macroeconomic imbalances.

COMMISSION LAUNCHES CONSULTATION ON REVIEW OF MIFID II/R FRAMEWORK

The Commission published its public consultation on the review of the Markets in Financial Instruments Directive and Regulation (MiFID II/R). The 94-page long document notably addresses the possible introduction of an EU consolidated tape, an electronic system that collates real-time exchange listed data and disseminates it to investors. Another area of focus is investor protection, where the Commission asks for feedback on the creation of a semi-professional investor category, the potential review of the inducements/investment research rules and the comparability of investment products, inter alia. The consultation is open until 20 April, with a legislative proposal expected to follow in Q3/4 of this year.

COMING UP NEXT WEEK

• 25 February: General Affairs Council. On the agenda: Next steps in EU-UK relationship, new enlargement methodology, next multiannual financial framework.
• 27-28 February: Competitiveness Council. On the agenda: European Green Deal, better regulation, Single Market Performance Report, strategic innovation agenda.

Karl Isaksson, Managing Partner Brussels, Kreab