Agreement on DSA + HERA criticism + Pack • Table.Briefings

Dear reader,

The EU finally wants to effectively stand up to punitive tariffs from China and the US: Today, it is presenting its Anti-Coercion Instrument. The package of measures against unfair trade practices contains some potential for international conflict, according to Amelie Richter’s analysis. A cycle of retaliatory measures could begin. But criticism of the instrument can also be expected from EU member states.

Another of the Commission’s plans also drew critical looks from the 27 capitals yesterday: The new EU health authority HERA was the subject of discussion at the Council meeting of health ministers in Brussels. In principle, all member states support its mission, which is to better prepare the Union for health crises in the future. However, they are less satisfied with HERA’s high degree of autonomy, reports Eugenie Ankowitsch. There is also headwind from the European Parliament.

It’s been just under a month since whistleblower Frances Haugen gave MEPs a whole series of concrete recommendations on how they should tighten up the Digital Services Act. Meanwhile, rapporteurs in the European Parliament have agreed on a compromise text that will be voted on by the Internal Market Committee next week. From dark patterns to personalized advertising to the enforcement mechanism: Falk Steiner and I have the most important points ready for you.

Your
Jasmin Kohl

DSA: Details on the compromise in the European Parliament

Exactly one year ago, the Commission presented its proposal for the Digital Services Act. The law is intended to re-regulate the obligations of online providers, protect the fundamental rights of users and combat illegal online content. The “new digital basic law” is to follow the principles of the e-commerce directive of 2000. After the Council has determined its negotiating position on November 25th, all signs are now pointing to agreement in the European Parliament: In less than a week, on December 13th and 14th, the Internal Market Committee (IMCO) is due to vote on the Schaldemose report.

Conservatives push through trade secrets exemption

Whistleblower Frances Haugen had advised MEPs at her hearing less than a month ago to ensure “full transparency” and “not to include non-specific exceptions for trade secrets” in the DSA. The negotiators only partially followed these recommendations in the compromise text.

They have agreed on additional transparency obligations for the recommendation systems of online platforms (Article for 24 a) (Europe.Table reported): The main parameters of the recommendation systems, such as which role user behavior plays for the results of the recommendation systems, are to be listed in the general terms and conditions of the online platforms. However, if these main parameters include business secrets, these should be exempt from the transparency obligation.

According to negotiating circles, the EPP group, in particular, fought vehemently for this exception. “With the Conservatives’ addition on the protection of trade secrets, without defining what trade secrets are, a big loophole has been created,” says Martin Schirdewan, IMCO shadow rapporteur for the GUE/NGL group. Just like Haugen, he sees the danger that platforms like Facebook will exploit these loopholes to declare anything and everything classified.

Personalized advertising: weaker regulation than in the DMA

The regulation of personalized advertising in the DSA (Article 24) was one of the biggest points of contention in the European Parliament. The Social Democrats, the Left, and the Greens were unable to push through their demand for a complete ban in the compromise text. Instead, the controversial advertising practice is to be banned entirely for minors only. Their personal data shall “not be processed for commercial purposes related to direct marketing, profiling, and advertising based on analysis of surfing behavior”.

Personal data of adult users should also not be automatically processed by online platforms for the purpose of personalized advertising. With reference to the General Data Protection Regulation, the platforms should provide their users with “meaningful information“, including information on how their data is used to generate profits. This should allow them to give informed consent. This should not make it more difficult or time-consuming to opt-out of the processing of their personal data.

Thus, the position of the European Parliament on personalized advertising is somewhat weaker than in the Digital Markets Act (DMA). Here, MEPs advocate that online platforms should only be allowed to aggregate personal data for advertising purposes if users have given their “clear, explicit, repeated and informed consent”(Europe.Table reported). The DMA compromise text by rapporteur Andreas Schwab (CDU, EPP) also provides for strict limitations on processing personal data revealing political opinions, religious beliefs, or sexual orientation.

Dark Patterns: Fight against misleading user interfaces

The requirements in the compromise proposal on user interface design by providers are relatively new territory in regulatory terms. Known as Dark Patterns, providers are to be prohibited in the future from designing user interfaces that entice users to unconsciously give ostensible consent to data processing or terms and conditions (Art. 13a).

According to the compromise, the attempt to obtain consent through repeated queries, for example, via pop-up windows, should also be prohibited – although not completely. The more precise rules for this are to be issued by the EU Commission in a delegated act.

GTC short form should be human- and machine-readable

At the same time, it should be made much easier for users to terminate the contractual relationship with the provider: This should be as simple as concluding the contract. Overall, the rapporteur’s compromise proposal relies on a significant strengthening of information obligations for users: In addition to the legal version, contractual terms and conditions must also be summarized in human- and machine-readable language – a claim that would also do some EU legislation good.

Machine-readable summaries could facilitate review by utilities that can signal particularly problematic content to less legally sophisticated users. Changes to contractual terms and conditions should also be easily identifiable, especially if they concern content provided by users and the rights to use it. If providers are primarily targeting minors, they should also have to prepare their terms and conditions in age-appropriate language.

What remains complicated with the rapporteurs’ proposals is the structure between the supervisory bodies for the Digital Services Act. In principle, each member state will appoint a supervisory authority, the so-called Digital Services Coordinator (DSC), which will be responsible for enforcement vis-à-vis the providers based in the respective territory. For certain providers, especially large ones, the EU Commission is to carry out this supervision.

Building on the experience with the enforcement deficits of the GDPR, the DSA also sets out concrete cooperation mechanisms and provides for further rules on DSC requirements. However, as this affects member state law, the DSA contains rules that national states must implement. The Council had already held intensive debates on this topic when it was positioning itself.

The equipment of the respective DSCs is an important point here so that the ability to work is guaranteed. The concrete rights that DSCs must have in order to be able to effectively enforce the rules are also important: For example, the member states should create the necessary legal conditions so that the authorities can demand all relevant information from providers within three months in the event of an investigation.

The Digital Service Coordinators should cooperate as well as possible throughout the EU. For this purpose, among others, there is to be a joint committee that can also decide on disputes. The parliamentary compromise provides for the Commission to chair this committee – but without voting rights.

The DSCs should – depending on national law – also initiate penalties through the courts or pronounce them themselves if providers violate the DSA rules. In the case of particularly large providers, the Commission should enforce this directly. In order to remedy an acute instance of maladministration, DSCs and the Commission should also be allowed to take provisional measures. Whereas interim versions are still provided for a specific catalog, the vague requirement that the measures must be proportionate has now been retained.

Fines: Parliament compromise reduces severity

Part of the measures are also fines, the amount of which is to be quite sensitive. The compromise proposal provides for a maximum penalty of six percent of the previous year’s worldwide turnover for gross violations of the DSA, with a maximum of one percent for minor violations. For breaches of the duty to cooperate, the parliamentary rapporteurs propose periodic fines of a maximum of five percent of the average daily turnover of the previous year – after previous proposals first provided for ten, then six percent. These fines would remain in force until the obligations are fulfilled, i.e. they are intended to enforce cooperation.

Left-wing MP Schirdewan criticizes the changes in the level of the planned penalties: He deems the reduction incomprehensible, “as only harsh penalties will stop the arrogant rule-breakers of digital companies. The conservative forces in parliament must finally wake up and end their soft line approach regarding Big Tech.” Jasmin Kohl / Falk Steiner

Council and Parliament put the brakes on HERA

By

Eugenie Ankowitsch

After being ill-prepared at the start of the COVID pandemic, the EU and member states are now looking to prepare for future health crises with a series of measures. In addition to extending the mandates of the European Medicines Agency (EMA) and the European Centre for Disease Prevention and Control (ECDC), a new Health Emergency Preparedness and Response Authority (HERA) was launched in September 2021.

According to the EU Commission’s draft decision, the new agency is to ensure the “development, production, procurement, and distribution of medical products” in the event of a crisis. Outside of times of crisis, it is to analyze threats, develop countermeasures, launch a long-term strategy for the development of manufacturing capacities, eliminate bottlenecks in the supply chains, and increase stockpiling capacities. HERA is expected to be fully operational in 2022. €6 billion from EU budget will be available to the agency until 2027.

However, while the extensions of powers for the EMA and the ECDC were largely agreed upon and passed off quietly, HERA and the associated crisis regulation are now causing tensions between the EU Commission and the Council as well as the EU Parliament. This is because the new authority is not designed as an independent agency but as a Directorate-General within the EU Commission.

Germany demands more say

This provides HERA with a great deal of autonomy and wide-ranging powers, especially in times of crisis. If an epidemic situation is identified, a HERA crisis team is to coordinate and direct the countermeasures. This includes, for example, the procurement of medicines and raw materials as well as distribution. However, the crisis unit also has the power to transfer production capacities to the EU and to negotiate directly with manufacturers.

Last week it was already apparent that a political agreement between the EU Commission and the member states was receding into the distance. This was confirmed in yesterday’s Council meeting. Initially, the health ministers were supposed to approve the Commission’s draft decision. Instead, there was only a debate. It is true that all representatives of the member states supported the establishment of the authority in principle. However, many of the health ministers present, including the outgoing German Health Minister Jens Spahn, demanded a large say in HERA’s decisions.

“We need clear responsibilities and co-decision rights for the member states, both in the preparatory phase and in crisis mode,” Spahn said in his last appearance on the EU stage. An exclusively advisory role for the member states was not acceptable. He suggested that the governance should be modeled on the Vaccine Steering Board, the EU steering committee for the procurement of COVID vaccines. The board was a successful example of fast and reliable cooperation between member states and the Commission in a crisis.

The EU Health Commissioner Stella Kyriakides, who was present, first defended the design of HERA. She said that it was a global player and had to be empowered accordingly to be able to act quickly and efficiently in times of crisis. Given the objections from the member states, however, she promised to discuss the open questions, in particular regarding the design of the administrative structures.

European Parliament feels excluded

Agreement in the Council is unlikely in the short term. A political agreement on the HERA crisis regulation will, according to reports, only be finalized once the negotiations on the regulation on serious cross-border health threats have been concluded. However, these are not due to continue until next year under the French Presidency.

The EU Parliament has also come in for some harsh criticism. Many MEPs complain that they are excluded from the decision-making process. During a Health Committee (ENVI) meeting at the end of October, MEPs also expressed concerns that €2.8 billion of the €5.1 billion in the EU4Health program had been earmarked for HERA, leaving less funding available for other priorities.

Consequently, the European Parliament voted in favor of transparency and close cooperation in all measures in its mid-November 2021 session. The plenary also wanted the new EU body for health emergencies to be adapted to the future regulation on cross-border health threats.

In addition, a representative of the European Parliament should be an active member of HERA’s crisis unit. “We want to be actively involved in governance to guide the actions and decisions of this authority on behalf of the Parliament,” called for Véronique Trillet-Lenoir, rapporteur on the regulation on serious cross-border health threats. “We want to ensure coherence, transparency, coordination, and unity within our European health policy.”

EU gears up against economic coercion

By

Amelie Richter

For a few days, the state of Lithuania apparently no longer existed for China’s customs officials. A Lithuanian wood exporter reported on a news portal that 300 containers were stuck outside Chinese ports. This was quickly followed by other Lithuanian companies, who also reported that their goods were not cleared by customs. “It seems that such a country is non-existent on China’s custom system,” said Vidmantas Janulevičius, president of the Lithuanian Confederation of Industrialists.

The consequence: Shipments from Lithuania could no longer be unloaded in China, and conversely, no exports from China came to Lithuania – no trade whatsoever was possible. Until now, such a thing was unheard of. The drama also kept the EU Commission in Brussels on its toes. Then, on Tuesday, salvation arrived: The Baltic state was found on the computers of the Chinese customs officials, as Janulevičius confirmed to the South China Morning Post (SCMP). There was talk of a technical error.

A technical error or deliberate show of force – for Vilnius and Beijing, the incident is the latest act in the dispute over the “Taiwan office” in the Lithuanian capital. The dispute between the small EU state with a population of just over 2.8 million and gargantuan China is about more than mere wood shipments – China is not an important trading partner for Lithuania.

These events are more of a test of the rules of international trade order. Moreover, the question is how to react to economic coercion by the People’s Republic against a member state of the European Union. For Brussels, China’s actions provide just the perfect prime example of a new instrument against economic punitive measures, which is to be officially presented on Wednesday.

New measures against unfair trade practices

In a bid to stand up to China, but also to the US and its punitive tariffs, the EU will unveil its new countermeasure against unfair trade practices today: The so-called Anti-Coercion Instrument (ACI). The ACI targets countries that “interfere in the legitimate sovereign choices” of the EU or its member states “by applying or threatening to apply measures affecting trade or investment”, according to a draft proposal.

What does the proposal include:

Use only as a “last resort”: The EU should only take countermeasures if other means such as negotiations, mediation or rulings “do not lead to the immediate and effective cessation of economic coercion and reparation for the damage it has caused”. The primary effect, then, is deterrence, which at best should result in “no or limited use of the instrument.” The ACI should “not entail significant costs”.
Regarding countermeasures, however, the EU could reach into a large pot: The EU Commission’s proposal includes, among other things, additional tariffs, investment restrictions, market access restrictions or the exclusion of procurement programs. Proportionality would have to be taken into account: “Any measures imposed by the EU should be proportionate to the damage caused by the third countries’ coercive economic measures.”
The responsibility lies with Brussels: The ACI should be “effective, fast and efficient”. According to the draft, the EU Commission has sovereignty over implementation, not the member states.
Various assessment criteria: In deciding whether economic coercion has occurred, the Commission wants to assess “intensity, severity, frequency, duration, range, scale”. Whether the third country is following a “pattern” is also to play a role.
Negotiations precede countermeasures: After a “rapid” investigation into suspected coercion, the third country is to be requested to present its own views. At the same time, there should be calls to “cease economic coercion and, if necessary, to remedy the damage caused to the European Union or member states,” according to the draft. Direct negotiations as well as debates in international forums such as the WTO should follow immediately.

Experts warn against retaliation

The EU Commission’s proposal is to be officially presented by EU Commissioner for Trade Dombrovskis on Wednesday. The proposal will then be submitted to the European Parliament and the EU Council for evaluation. This means that changes may still be made.

Unlikely, analyzes Viking Bohman of the Swedish National China Centre in a report. First, Bohman argues, China’s aggressive diplomacy is unlikely to be deterred by a threat of punitive action. Thus, a cycle of retaliation would more likely ensue. If applied ineptly, the EU could thus harm itself. Second, the ACI cannot be used against coercive acts that are not made public by either the aggressor or the target, which could leave the EU Commission oblivious.

Better than retaliation is “absorption”, the China Center report states: Member states whose trade with China is blocked by coercive economic measures should be supported to develop other supply chains. Financial compensation through a solidarity fund could also cushion coercion.

Member states want to have their say

Bohman is critical of the proposal with the implementation competence resting with Brussels: “I seriously doubt that it will stay that way. EU member states will want to have a say in how it is used.” The resulting problems with China were “highly political in nature”. “Member countries would be the ones under attack, and their economies would have to bear the cost of both China’s actions and the EU’s countermeasures.”

Jonathan Hackenbroich, head of the task force of the think tank European Council on Foreign Relations (ECFR), which deals with the EU’s options against economic coercion and had provided important impulses in the ACI drafting process, takes a similar view. The say of the member states is now a big question – and whether the plan will be watered down during the negotiations. Hackenbroich sees a risk in this: “If it ends up becoming a ‘lowest common denominator’ instrument, that would be bad. A weak instrument would be the worst possible outcome.” Concerns that ACI could lead to protectionism are also a risk for the EU, according to Hackenbroich. The right balance would need to be struck here.

Hackenbroich also questions the effectiveness of the proposed measures. The US government under the Trump administration has also resorted to punitive tariffs, but this has hardly led to a change in China’s behavior.

Ecofin: new rules for VAT

The EU’s economy and finance ministers agreed on new VAT rates at their meeting on Tuesday. More flexible targets and new concessions are to help bring the tax system in line with the EU’s priorities on climate and health protection as well as digitalization.

For example, lower tax rates are to be possible for bicycles, environmentally-friendly heating systems, or solar installations. Existing reductions on fossil fuels and other climate-damaging goods, on the other hand, are to expire by 2030. For chemical fertilizers and pesticides, the lower taxes are to be maintained until January 1st, 2032, to give small farmers, in particular, more time to adjust.

The agreement will also allow EU states to apply reduced tax rates to goods and services that enable the digital transformation of the economy – including internet access and live streaming event offerings. Tax reductions will also be possible for health protection products such as medical masks.

For certain products, member states already use a reduced tax rate than the EU-wide minimum standard of 15 percent. This list has now been adjusted. “This is how we meet the challenges of the modern economy and society,” said Valdis Dombrovskis, Vice-President of the EU Commission. The Brussels authority had already made a proposal on reduced VAT rates four years ago. The existing system is about 30 years old. After an opinion by the European Parliament, the new tax rules are to come into force starting March 2022. til/rtr

Poland: likely to miss EU recovery funds this year

The EU Commission is unlikely to approve the disbursement of pandemic aid to Poland by the end of the year. “It’s unlikely that we can finalize this work still this year, but movement on the substance is what really determines the speed,” EU Vice President Valdis Dombrovskis told reporters in Brussels on Tuesday.

The background is the dispute over the judicial reforms of the PiS government in Warsaw. Commission President Ursula von der Leyen has laid out conditions for the release of the total of €36 billion Poland is entitled to from the EU pot. Without the green light by the end of the year, Warsaw will miss out on part of the sum.

German Chancellor-designate Olaf Scholz announced on Tuesday that he would make efforts to defuse the conflict. “I am very happy that Poland is part of the EU,” the SPD politician stressed. He said he had a good conversation with Polish Prime Minister Mateusz Morawiecki in Berlin. Scholz expressed understanding for Poland’s behavior in the dispute over refugees arriving at the EU’s external border via Belarus. He hoped that they would also come to a common understanding on the issue of the rule of law.

Vice-Chancellor-designate Robert Habeck said that calling Poland and Hungary a problem would be doing them an injustice. In Poland, in particular, there was a very lively civil society that wanted a different policy from the government in Warsaw. It was the task of the EU Commission to ensure respect for the rule of law as the basis of the EU, said the Green politician. Germany should support the Commission in this. The traffic light coalition agreement calls for a more decisive enforcement of the principles of the rule of law. tho/rtr

RWE and Novatek conclude hydrogen cooperation agreement

The energy company RWE has agreed on a cooperation with the Russian gas company Novatek for the trade with hydrogen. It is planned that Novatek will supply “blue” ammonia and hydrogen to RWE, the Essen-based company announced on Tuesday. The hydrogen is to be produced from natural gas by means of carbon capture and storage (CCS). RWE will then be able to supply it to its customers in Germany and the rest of Europe. The agreement in principle also provides for closer cooperation between the companies in the liquefied natural gas (LNG) business.

Climate-friendly hydrogen plays a key role in the energy transition, as it can replace climate-damaging carbon dioxide. The aim is to produce hydrogen from renewable energies, so-called green hydrogen. Since the required quantity will probably not be able to meet demand initially, blue hydrogen could be produced on a transitional basis. The CCS method ensures a reduction in CO2 emissions.

Backing up fluctuating green power generation could be gas-fired power plants that also rely on green hydrogen for production. “But until that happens, intermediate solutions such as gas, LNG, and blue hydrogen will be needed,” said the head of RWE Supply & Trading’s LNG business, Javier Moret. rtr

Nord Stream 2: agreement between USA and Germany

According to an insider, the US has reached an agreement with Germany not to allow the controversial Nord Stream 2 natural gas pipeline to go into operation in the event of a Russian invasion of Ukraine. This is what US government officials told members of parliament, the Reuters news agency learned from a congressional staffer on Tuesday.

Members of both major US parties have long been critical of the gas pipeline. They fear that it will make Europe too dependent on Russia. The government in Moscow rejects plans for an invasion in the Ukraine crisis. On Tuesday, US President Joe Biden and his Russian counterpart Vladimir Putin spoke about this issue, among other things, in a video summit, according to US sources.

On Tuesday, Chancellor-designate Olaf Scholz avoided giving a direct answer to whether Russia’s invasion of Ukraine would mean the end of the pipeline. But he said it must be “very, very clear” that a further threat to Ukraine was unacceptable. The principle of the inviolability of borders must be upheld. Green Party leader Robert Habeck, who will be responsible for energy policy in the future, stressed that the conflict could only be resolved diplomatically. He added that the operation of the Nord Stream 2 pipeline had not yet been approved.

On Monday, government spokesman Steffen Seibert had already stressed on behalf of outgoing German Chancellor Angela Merkel that the joint statement issued at the end of July set out “the shared convictions and goals of Germany and the Americans on the issue of support for Ukraine and European energy security with regard to Nord Stream 2″. But it was not up to the outgoing German government to draw the right conclusions from this. However, the responsible Federal Ministry of Economics and Technology was unable to say what legal options there are for refusing to commission the pipeline at all if the operating company continues to press ahead with the currently dormant approval process at the Federal Network Agency. with rtr

Twitter tests new reporting system

Twitter will overhaul its reporting options for potentially harmful tweets. The US company made the announcement on Tuesday. The goal is to simplify the reporting process.

As is customary with the short messaging platform, a small group of users gets to test the changes first. In the United States, Twitter’s plan comes at a time when technology companies such as Twitter, Facebook, and YouTube are facing intense criticism for doing too little to combat harmful or hateful content.

In the future, Twitter users will no longer be asked to specify which of the company’s terms of use have been violated. But, among other things, whether they felt affected by hate, insults, or intimidation. In addition, users should be able to describe in their own words why they reported a piece of content, Twitter said. The way of reporting according to the Network Enforcement Act, which exists specifically for users in the Federal Republic, does not exist in the USA.

With the new procedure, Twitter wants to collect more precise information on tweets that do not represent an obvious violation of the terms of use but are perceived as problematic or offending by other users. This should be taken into account in the further development of the house rules.

In the EU, the platform will, in all likelihood, also be subject to the regulations of the Digital Services Act in the future, which will go far beyond the measures required by law in the US with specific regulations on how operators deal with potentially problematic content. (fst/rtr)

How Germany wants to make its foreign policy more progressive

By Jana Puglierin, ECFR

Jana Puglierin heads the Berlin office of the European Council on Foreign Relations (ECFR).

It was only almost four years ago that a new German government set out a “new departure” for Europe.

Only in this way would Germany be able to guarantee peace, security, and prosperity for its citizens in the long term, it said on the first pages of the coalition agreement in 2018. After taking office, the aforementioned new beginning was quickly abandoned. Instead, the coalition preferred to administer the status quo – not only in terms of Europe policy but also in foreign policy.

Now the so-called traffic light coalition, which begins governing this week, wants to “dare more progress” and it all reads very well on paper. Although the coalition agreement’s section on Europe and foreign policy only starts on page 130, the strong commitment to Europe by the SPD, Greens, and FDP runs like a thread through the entire document.

The coalition partners want to work for a democratically consolidated, capable, and strategically sovereign EU, and have a service-oriented mindset when it comes to Germany’s role in the EU. They define German interests in relation to European interests. In addition to concrete proposals for the further development of Europe, they even dare to formulate visions – probably the clearest break with the Merkel era – and speak of the further development of the Union into a “federal European state.”

The coalition wants to Europeanize its foreign policy. No more going it alone, but rather more agreements with partners. The new German government is adopting a brisker tone towards autocracies – especially China, but relations with Russia have also cooled noticeably. In systemic competition with authoritarian regimes, German foreign policy is to be guided primarily by democratic values, not by economic profit.

In security and defense policy, progress consists above all in the fact that the SPD has overcome some of its long-standing blockades. With a yes to armed drones and a yes to the procurement of a successor system for the Tornado fighter aircraft – who would have thought after the last four years that the party would ever be able to bring itself to do this? For the moment, it all looks as if this new start for German European and foreign policy could succeed after all.

Three factors could stand in the way of progress:

First, Olaf Scholz did not just pretend in the election campaign that he embodied the continuity of the pragmatic and sober chancellor. Especially in foreign policy, he very often took the Merkel line in the past.

It is not for nothing that SPD Secretary-General and soon-to-be Party Chairman Lars Klingbeil stressed in September 2021 that Scholz’s China policy would be more like Merkel’s than US policy towards China. In its Russia policy, the SPD is behind the Nord Stream 2 pipeline more than any other party. The state-owned and Gazprom-financed environmental non-profit organization or foundation of the social democratic prime minister of Mecklenburg-Western Pomerania Manuela Schwesig, is even working diligently to complete the controversial gas pipeline despite US sanction threats.

Unlike the Greens and the FDP, the SPD wants a more pragmatic status quo in China and Russia policy – with a focus on economic interests – rather than progress guided by human rights values – and because China and Russia policy will continue to be made primarily in the Chancellor’s Office, conflicts are pre-programmed.

Secondly, there is also no unity among the coalition partners in crucial areas of European policy. While the coalition agreement was still able to generously cover questions such as making European debt rules more flexible, while leaving enough room for ambiguity, the next four years will show how much a Finance Minister Lindner shares the SPD’s and Greens’ idea of progress in the further development of EU fiscal policy rules.

Thirdly, Merkel did not just “drive-by sight” in European policy because it suited her nature. In view of the many centrifugal forces that were manifested in the rise of nationalist and EU-critical actors, it was Germany’s declared priority to keep the Union together. The EU member states are deeply divided on further integration steps. Even if more ambitious ideas come from Berlin in the future, this does not mean that they will meet eager European partners. It will continue to be in Germany’s interest to avoid a conflict of interest between partners in the north, south, east, and west of the EU. This is about hard and slow work of reform, rather than quick fixes.

Looking back at the past years of German European and foreign policy, it is striking that in the end, it was crises that determined German policy. When the Grand Coalition came into office in 2013 and shortly thereafter issued the maxim that Germany must engage internationally “earlier, more decisively and more substantially”, few expected Berlin to act differently in terms of defense policy than it had in the past.

Then Russia annexed Crimea and the Islamic State declared a caliphate in parts of Syria and Iraq. Some time later, Germany led a battalion in Lithuania and supported the Kurdish Peshmerga with weapons and ammunition. At the beginning of 2021, it was considered far-fetched that the Federal Republic would one day not only support but even significantly initiate the joint assumption of debt by the EU. It was the COVID-19 pandemic that made it possible.

Harold Macmillan, British prime minister from 1957 to 1963, was once asked what the most difficult problem of his time in office was. His answer: “Events, my dear boy, events.” In order to achieve more progress in German European and foreign policy, it is therefore not only important to have the right compass. This is what the traffic light parties have presented with the coalition agreement. Moreover, it is important to seize opportunities and use them to change the status quo when the chance arises.

The text is part of a cooperation between Europe.Table and the ECFR Annual Council Meeting.

After 20 years, the European Central Bank wants to revise the design of the euro banknotes. How exactly, that is currently still open. Until now, the banknotes have contained stylized European symbolism – and not, as is often the case in Europe, the likenesses of important people.

They should be designed so that Europeans can better identify with them, regardless of age or background, said ECB chief Christine Lagarde. To this end, citizens should now be able to submit proposals. But beware!

Unfortunately, undisputed pan-European heads are rare. For example, Marie Skłodowska-Curie or Fryderyk Franciszek Chopin, also known as Szopin, would foreseeably be the subject of a dispute over whether they represent Poland or France or even the entire Eurozone. Even more difficult: Only the French interpretation would be in the Eurozone – and Poland would once again be lost in its own perception.

But who or what represents the Baltic States, Portugal, the Netherlands, Ireland, and Greece at the same time and is also steeped in tradition?

We have three suggestions as to which symbols Europe’s citizens would most likely use to recognize their Eurozone on their banknotes:

The schematic representation of the processes of European legislation.
The CO2 balance sheet of the Eurogroup as a graphical representation.
A map of Europe at a sea level rise of one meter.

Admittedly: All fairly conservative suggestions.

A more modern way out of Lagarde’s dilemma would be to finally introduce a digital euro. One that adapts to its coordinates via the European satellite system Galileo and displays different symbols in each eurozone member state so that as many people as possible are satisfied. And as a by-product, this would also provide a reason to create better traceability of money transfers. Falk Steiner

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

The EU finally wants to effectively stand up to punitive tariffs from China and the US: Today, it is presenting its Anti-Coercion Instrument. The package of measures against unfair trade practices contains some potential for international conflict, according to Amelie Richter’s analysis. A cycle of retaliatory measures could begin. But criticism of the instrument can also be expected from EU member states.

Another of the Commission’s plans also drew critical looks from the 27 capitals yesterday: The new EU health authority HERA was the subject of discussion at the Council meeting of health ministers in Brussels. In principle, all member states support its mission, which is to better prepare the Union for health crises in the future. However, they are less satisfied with HERA’s high degree of autonomy, reports Eugenie Ankowitsch. There is also headwind from the European Parliament.

It’s been just under a month since whistleblower Frances Haugen gave MEPs a whole series of concrete recommendations on how they should tighten up the Digital Services Act. Meanwhile, rapporteurs in the European Parliament have agreed on a compromise text that will be voted on by the Internal Market Committee next week. From dark patterns to personalized advertising to the enforcement mechanism: Falk Steiner and I have the most important points ready for you.

Your
Jasmin Kohl

DSA: Details on the compromise in the European Parliament

Exactly one year ago, the Commission presented its proposal for the Digital Services Act. The law is intended to re-regulate the obligations of online providers, protect the fundamental rights of users and combat illegal online content. The “new digital basic law” is to follow the principles of the e-commerce directive of 2000. After the Council has determined its negotiating position on November 25th, all signs are now pointing to agreement in the European Parliament: In less than a week, on December 13th and 14th, the Internal Market Committee (IMCO) is due to vote on the Schaldemose report.

Conservatives push through trade secrets exemption

Whistleblower Frances Haugen had advised MEPs at her hearing less than a month ago to ensure “full transparency” and “not to include non-specific exceptions for trade secrets” in the DSA. The negotiators only partially followed these recommendations in the compromise text.

They have agreed on additional transparency obligations for the recommendation systems of online platforms (Article for 24 a) (Europe.Table reported): The main parameters of the recommendation systems, such as which role user behavior plays for the results of the recommendation systems, are to be listed in the general terms and conditions of the online platforms. However, if these main parameters include business secrets, these should be exempt from the transparency obligation.

According to negotiating circles, the EPP group, in particular, fought vehemently for this exception. “With the Conservatives’ addition on the protection of trade secrets, without defining what trade secrets are, a big loophole has been created,” says Martin Schirdewan, IMCO shadow rapporteur for the GUE/NGL group. Just like Haugen, he sees the danger that platforms like Facebook will exploit these loopholes to declare anything and everything classified.

Personalized advertising: weaker regulation than in the DMA

The regulation of personalized advertising in the DSA (Article 24) was one of the biggest points of contention in the European Parliament. The Social Democrats, the Left, and the Greens were unable to push through their demand for a complete ban in the compromise text. Instead, the controversial advertising practice is to be banned entirely for minors only. Their personal data shall “not be processed for commercial purposes related to direct marketing, profiling, and advertising based on analysis of surfing behavior”.

Personal data of adult users should also not be automatically processed by online platforms for the purpose of personalized advertising. With reference to the General Data Protection Regulation, the platforms should provide their users with “meaningful information“, including information on how their data is used to generate profits. This should allow them to give informed consent. This should not make it more difficult or time-consuming to opt-out of the processing of their personal data.

Thus, the position of the European Parliament on personalized advertising is somewhat weaker than in the Digital Markets Act (DMA). Here, MEPs advocate that online platforms should only be allowed to aggregate personal data for advertising purposes if users have given their “clear, explicit, repeated and informed consent”(Europe.Table reported). The DMA compromise text by rapporteur Andreas Schwab (CDU, EPP) also provides for strict limitations on processing personal data revealing political opinions, religious beliefs, or sexual orientation.

Dark Patterns: Fight against misleading user interfaces

The requirements in the compromise proposal on user interface design by providers are relatively new territory in regulatory terms. Known as Dark Patterns, providers are to be prohibited in the future from designing user interfaces that entice users to unconsciously give ostensible consent to data processing or terms and conditions (Art. 13a).

According to the compromise, the attempt to obtain consent through repeated queries, for example, via pop-up windows, should also be prohibited – although not completely. The more precise rules for this are to be issued by the EU Commission in a delegated act.

GTC short form should be human- and machine-readable

At the same time, it should be made much easier for users to terminate the contractual relationship with the provider: This should be as simple as concluding the contract. Overall, the rapporteur’s compromise proposal relies on a significant strengthening of information obligations for users: In addition to the legal version, contractual terms and conditions must also be summarized in human- and machine-readable language – a claim that would also do some EU legislation good.

Machine-readable summaries could facilitate review by utilities that can signal particularly problematic content to less legally sophisticated users. Changes to contractual terms and conditions should also be easily identifiable, especially if they concern content provided by users and the rights to use it. If providers are primarily targeting minors, they should also have to prepare their terms and conditions in age-appropriate language.

What remains complicated with the rapporteurs’ proposals is the structure between the supervisory bodies for the Digital Services Act. In principle, each member state will appoint a supervisory authority, the so-called Digital Services Coordinator (DSC), which will be responsible for enforcement vis-à-vis the providers based in the respective territory. For certain providers, especially large ones, the EU Commission is to carry out this supervision.

Building on the experience with the enforcement deficits of the GDPR, the DSA also sets out concrete cooperation mechanisms and provides for further rules on DSC requirements. However, as this affects member state law, the DSA contains rules that national states must implement. The Council had already held intensive debates on this topic when it was positioning itself.

The equipment of the respective DSCs is an important point here so that the ability to work is guaranteed. The concrete rights that DSCs must have in order to be able to effectively enforce the rules are also important: For example, the member states should create the necessary legal conditions so that the authorities can demand all relevant information from providers within three months in the event of an investigation.

The Digital Service Coordinators should cooperate as well as possible throughout the EU. For this purpose, among others, there is to be a joint committee that can also decide on disputes. The parliamentary compromise provides for the Commission to chair this committee – but without voting rights.

The DSCs should – depending on national law – also initiate penalties through the courts or pronounce them themselves if providers violate the DSA rules. In the case of particularly large providers, the Commission should enforce this directly. In order to remedy an acute instance of maladministration, DSCs and the Commission should also be allowed to take provisional measures. Whereas interim versions are still provided for a specific catalog, the vague requirement that the measures must be proportionate has now been retained.

Fines: Parliament compromise reduces severity

Part of the measures are also fines, the amount of which is to be quite sensitive. The compromise proposal provides for a maximum penalty of six percent of the previous year’s worldwide turnover for gross violations of the DSA, with a maximum of one percent for minor violations. For breaches of the duty to cooperate, the parliamentary rapporteurs propose periodic fines of a maximum of five percent of the average daily turnover of the previous year – after previous proposals first provided for ten, then six percent. These fines would remain in force until the obligations are fulfilled, i.e. they are intended to enforce cooperation.

Left-wing MP Schirdewan criticizes the changes in the level of the planned penalties: He deems the reduction incomprehensible, “as only harsh penalties will stop the arrogant rule-breakers of digital companies. The conservative forces in parliament must finally wake up and end their soft line approach regarding Big Tech.” Jasmin Kohl / Falk Steiner

Council and Parliament put the brakes on HERA

By

Eugenie Ankowitsch

After being ill-prepared at the start of the COVID pandemic, the EU and member states are now looking to prepare for future health crises with a series of measures. In addition to extending the mandates of the European Medicines Agency (EMA) and the European Centre for Disease Prevention and Control (ECDC), a new Health Emergency Preparedness and Response Authority (HERA) was launched in September 2021.

According to the EU Commission’s draft decision, the new agency is to ensure the “development, production, procurement, and distribution of medical products” in the event of a crisis. Outside of times of crisis, it is to analyze threats, develop countermeasures, launch a long-term strategy for the development of manufacturing capacities, eliminate bottlenecks in the supply chains, and increase stockpiling capacities. HERA is expected to be fully operational in 2022. €6 billion from EU budget will be available to the agency until 2027.

However, while the extensions of powers for the EMA and the ECDC were largely agreed upon and passed off quietly, HERA and the associated crisis regulation are now causing tensions between the EU Commission and the Council as well as the EU Parliament. This is because the new authority is not designed as an independent agency but as a Directorate-General within the EU Commission.

Germany demands more say

This provides HERA with a great deal of autonomy and wide-ranging powers, especially in times of crisis. If an epidemic situation is identified, a HERA crisis team is to coordinate and direct the countermeasures. This includes, for example, the procurement of medicines and raw materials as well as distribution. However, the crisis unit also has the power to transfer production capacities to the EU and to negotiate directly with manufacturers.

Last week it was already apparent that a political agreement between the EU Commission and the member states was receding into the distance. This was confirmed in yesterday’s Council meeting. Initially, the health ministers were supposed to approve the Commission’s draft decision. Instead, there was only a debate. It is true that all representatives of the member states supported the establishment of the authority in principle. However, many of the health ministers present, including the outgoing German Health Minister Jens Spahn, demanded a large say in HERA’s decisions.

“We need clear responsibilities and co-decision rights for the member states, both in the preparatory phase and in crisis mode,” Spahn said in his last appearance on the EU stage. An exclusively advisory role for the member states was not acceptable. He suggested that the governance should be modeled on the Vaccine Steering Board, the EU steering committee for the procurement of COVID vaccines. The board was a successful example of fast and reliable cooperation between member states and the Commission in a crisis.

The EU Health Commissioner Stella Kyriakides, who was present, first defended the design of HERA. She said that it was a global player and had to be empowered accordingly to be able to act quickly and efficiently in times of crisis. Given the objections from the member states, however, she promised to discuss the open questions, in particular regarding the design of the administrative structures.

European Parliament feels excluded

Agreement in the Council is unlikely in the short term. A political agreement on the HERA crisis regulation will, according to reports, only be finalized once the negotiations on the regulation on serious cross-border health threats have been concluded. However, these are not due to continue until next year under the French Presidency.

The EU Parliament has also come in for some harsh criticism. Many MEPs complain that they are excluded from the decision-making process. During a Health Committee (ENVI) meeting at the end of October, MEPs also expressed concerns that €2.8 billion of the €5.1 billion in the EU4Health program had been earmarked for HERA, leaving less funding available for other priorities.

Consequently, the European Parliament voted in favor of transparency and close cooperation in all measures in its mid-November 2021 session. The plenary also wanted the new EU body for health emergencies to be adapted to the future regulation on cross-border health threats.

In addition, a representative of the European Parliament should be an active member of HERA’s crisis unit. “We want to be actively involved in governance to guide the actions and decisions of this authority on behalf of the Parliament,” called for Véronique Trillet-Lenoir, rapporteur on the regulation on serious cross-border health threats. “We want to ensure coherence, transparency, coordination, and unity within our European health policy.”

EU gears up against economic coercion

By

Amelie Richter

For a few days, the state of Lithuania apparently no longer existed for China’s customs officials. A Lithuanian wood exporter reported on a news portal that 300 containers were stuck outside Chinese ports. This was quickly followed by other Lithuanian companies, who also reported that their goods were not cleared by customs. “It seems that such a country is non-existent on China’s custom system,” said Vidmantas Janulevičius, president of the Lithuanian Confederation of Industrialists.

The consequence: Shipments from Lithuania could no longer be unloaded in China, and conversely, no exports from China came to Lithuania – no trade whatsoever was possible. Until now, such a thing was unheard of. The drama also kept the EU Commission in Brussels on its toes. Then, on Tuesday, salvation arrived: The Baltic state was found on the computers of the Chinese customs officials, as Janulevičius confirmed to the South China Morning Post (SCMP). There was talk of a technical error.

A technical error or deliberate show of force – for Vilnius and Beijing, the incident is the latest act in the dispute over the “Taiwan office” in the Lithuanian capital. The dispute between the small EU state with a population of just over 2.8 million and gargantuan China is about more than mere wood shipments – China is not an important trading partner for Lithuania.

These events are more of a test of the rules of international trade order. Moreover, the question is how to react to economic coercion by the People’s Republic against a member state of the European Union. For Brussels, China’s actions provide just the perfect prime example of a new instrument against economic punitive measures, which is to be officially presented on Wednesday.

New measures against unfair trade practices

In a bid to stand up to China, but also to the US and its punitive tariffs, the EU will unveil its new countermeasure against unfair trade practices today: The so-called Anti-Coercion Instrument (ACI). The ACI targets countries that “interfere in the legitimate sovereign choices” of the EU or its member states “by applying or threatening to apply measures affecting trade or investment”, according to a draft proposal.

What does the proposal include:

Use only as a “last resort”: The EU should only take countermeasures if other means such as negotiations, mediation or rulings “do not lead to the immediate and effective cessation of economic coercion and reparation for the damage it has caused”. The primary effect, then, is deterrence, which at best should result in “no or limited use of the instrument.” The ACI should “not entail significant costs”.
Regarding countermeasures, however, the EU could reach into a large pot: The EU Commission’s proposal includes, among other things, additional tariffs, investment restrictions, market access restrictions or the exclusion of procurement programs. Proportionality would have to be taken into account: “Any measures imposed by the EU should be proportionate to the damage caused by the third countries’ coercive economic measures.”
The responsibility lies with Brussels: The ACI should be “effective, fast and efficient”. According to the draft, the EU Commission has sovereignty over implementation, not the member states.
Various assessment criteria: In deciding whether economic coercion has occurred, the Commission wants to assess “intensity, severity, frequency, duration, range, scale”. Whether the third country is following a “pattern” is also to play a role.
Negotiations precede countermeasures: After a “rapid” investigation into suspected coercion, the third country is to be requested to present its own views. At the same time, there should be calls to “cease economic coercion and, if necessary, to remedy the damage caused to the European Union or member states,” according to the draft. Direct negotiations as well as debates in international forums such as the WTO should follow immediately.