EU Insight, 2 December 2022

COMMISSION ISSUES NEGATIVE ASSESSMENT HUNGARY’S RULE OF LAW

The Commission presented its assessment of corruption and rule of law in Hungary under the conditionality procedure for the EU budget as a step to unlock Recovery and Resilience funds. However, the Commission found Hungary still needs to fulfil structural and horizontal measures to eliminate the risk to EU funds. The assessment states that Hungary failed to implement central aspects of the necessary 17 remedial measures previously agreed. Thus, the Commission recommends also to suspend 65% of the commitments for three operational programmes under cohesion policy, amounting to €7.5 billion. The Council have until 19 December to vote on the matter.

COUNCIL TACKLES DISTORTIVE FOREIGN SUBSIDIES ON THE INTERNAL MARKET

The Council gave its final approval to the Foreign Subsidies Regulation. The Regulation addresses distortions created by subsidies that are granted by non-EU countries to companies operating within the EU single market. It establishes a framework which allows the Commission to investigate foreign subsidies granted up to five years prior to the entry into force of the regulation. The regulation will be published in the Official Journal of the European Union and will enter into force on the 20^th day following its publication.

COMMISSION PRESENTS OPTIONS TO MAKE SURE THAT RUSSIA PAYS FOR ITS CRIMES

The European Commission proposed various measures to hold Russia accountable for the war in Ukraine such as a new structure to oversee the investment and management of frozen Russian assets, and to use the revenue towards aiding Ukraine. Moreover, the Commission proposed two alternatives to ensure Russia is held financially accountable for its attack on Ukraine; an independent international tribunal based on a multilateral treaty, and a court integrated in a national justice system with international judges. For both options, the Commission asks for backing from the United Nations. Both sets of measures will be discussed with Member States.

EUROPEAN GREEN DEAL: NEW PROPOSALS ON CARBON REMOVALS AND PACKAGING

The Commission presented a proposal on rules on packaging, aiming to address the growing source of waste and to increase reusing and recycling of packaging material. According to studies, packaging waste was set to increase by 19% by 2030, and waste from plastic packaging would see a rise by 46%. The new rules are designed to put a stop to these trends by introducing a requirement for all packaging to be recyclable by 2030. Additionally, the Commission proposed a voluntary framework to certify carbon removal. It aims at boosting innovative carbon removal technologies and sustainable carbon farming solutions which would contribute to the EU’s climate, environmental and zero-pollution goals.

COUNCIL ADOPTS POSITION ON CORPORATE DUE DILIGENCE RULES

The Council adopted its general approach on the Corporate Sustainability Due Diligence Directive which aims to protect the environment and human rights. Notably, the text de facto excludes the financial sector from the scope of the Directive, but allows Member States to expand the scope to financial undertakings. The Parliament is about to finalise its position paving the way for negotiations as of Q3 2023. The Council also adopted the Corporate Sustainability Reporting Directive. It introduces reporting requirements for companies to disclose information on environmental, social and governance matters. Members States will have 18 months to transpose the rules and companies will start reporting in 2025 on information from 2024.

COMING UP NEXT WEEK

• 5 December: Eurogroup. On the agenda: Euro area recommendations for 2023, EU economic governance framework, Election of the President of Eurogroup.
• 5 December: Transport, Telecommunications and Energy Council (Transport). On the agenda: Trans-European transport network, Inland water transport, Fit for 55 package.
• 6 December: Economic and Financial Affairs Council. On the agenda: European Semester, Rule of law in Hungary, New own resources, Financial support to Ukraine.
• 6 December: Transport, Telecommunications and Energy Council (Telecommunications). On the agenda: Artificial Intelligence Act, eID, Data Act.
• 6 December: EU-Western Balkans summit. On the agenda: Russian aggression against Ukraine, EU-Western Balkans political and policy engagement, migration management.
• 7 December: College of Commissioners. On the agenda: VAT in the Digital Age, Administrative cooperation in taxation, Strengthening capital markets package.
• 8 December: Employment, Social Policy, Health and Consumer Affairs Council (Employment and social policy). On the agenda: Care strategy, European Semester.
• 9 December: Employment, Social Policy, Health and Consumer Affairs Council (Health). On the agenda: The fight against cancer, Covid-19 vaccination, EU Health Data Space.
• 8-9 December: Justice and Home Affairs Council. On the agenda: Schengen area, Asylum and migration, Russia’s aggression against Ukraine, Child sexual abuse.

Karl Isaksson, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • Twitter: @KreabEU.