Table.Briefing: Europe

Metsola’s transparency proposals + Who will succeed Kaili? + Reactions to Supply Chain Act

  • Transparency in the EU Parliament: Metsola plans reform
  • German Supply Chain Act gets off to a tame start
  • Luxembourg socialist runs for EP vice-presidency
  • EU and Ukraine want hydrogen partnership
  • Russia sanctions: Malta and Greece bring up rear
  • SPD calls for EU investment offensive
  • Data processing: Federal Cartel Office issues warning to Google
  • Heads: Sabine Thillaye – French-German mediator
Dear reader,

A cooling-off period for ex-deputies and the end of unlimited access to Parliament with alumni cards: With these and other proposals, Parliament President Roberta Metsola wants to make the EP more transparent. It is an attempt to improve the image of the institution, which has suffered greatly in the wake of the corruption scandal surrounding Eva Kaili. Charlotte Wirth took a closer look at the proposals and discovered some loopholes.

Who will succeed Eva Kaili? According to the agreements between the groups, the vacant vice-president post belongs to the S&D group. By now, it is clear who the Socialists will nominate for the election. Read more in the News.

At the turn of the year, the new Supply Chain Act came into force in Germany. It places greater obligations on large companies to comply with human rights and environmental requirements. So far, the German business community has reacted quite calmly to the changes. Felix Lee and Charlotte Wirth analyze the law’s implementation to date as quite tame, while the corresponding EU proposal goes much further in some respects.

Your
Sarah Schaefer
Image of Sarah  Schaefer

Feature

Transparency in the EU Parliament: Metsola plans reform

The reform proposal that Roberta Metsola will present today comprises 14 points. Less than a month after the corruption scandal surrounding Vice President Eva Kaili came to light, the speaker of Parliament is working to improve the image of her institution. Organizations such as Transparency International have accused Parliament of having insufficient transparency rules, which allowed such a scandal to occur in the first place.

Metsola wants to significantly tighten rules

Metsola’s proposals include the following:

  • A cooling-off period for ex-MEPs. It applies for as long as MEPs receive a transitional salary. Compared to the cooling-off period of two years for former commissioners, however, this proposal falls short. This is because the transitional salary is subject to one month per year in office. In other words, anyone who has served one term as an MEP will receive the replacement salary for only five months. At present, there is no cooling-off period for MEPs, and former MEPs are required to inform Parliament if they take up lobbying activities after leaving office. However, hardly anyone complies: In the last mandate, of 459 non-re-elected MEPs, only one reported employment with a lobbying company.
  • Access to Parliament is to be made more difficult for former members of Parliament. Currently, they can go in and out of Parliament with an alumni ID card without further checks and even have visitors accredited. In the future, former MEPs will only be allowed access to Parliament for one day and will no longer be allowed to register visitors. Thus, MEPs who take up lobbying activities after their cooling-off period will also be forced to register in the transparency register.
  • So-called friendship groups with third countries or informal groupings whose activities coincide with those of Parliament are to be banned. In doing so, the Parliamentary President is responding in particular to criticism that third countries exert influence on parliamentary work through such groups, which are usually set up by embassies. When it comes to implementation, however, Metsola will have to rely on the personal responsibility of the members of Parliament. After all, these are informal groupings that not even Parliament itself keeps a list of.
  • In the future, not only rapporteurs or shadow rapporteurs are to publish meetings with third parties on these reports, but all members of Parliament as well as parliamentary assistants, employees of the parliamentary groups or the Parliament are to make their meetings on reports and resolutions public. However, this also means that meetings that do not relate to a specific report still do not have to be disclosed.
  • Other proposals include tightening the rules for the transparency register and more staff to check entries; a better overview of MEPs’ activities (bundling information on financial interests, travel, gifts, sanctions, etc. on a separate parliamentary page); and stricter requirements regarding MEPs possible conflicts of interest.

Transparency International welcomes the move

Transparency International has already reacted to the leaked proposal by Roberto Metsola. The proposed changes are “long overdue” and would make it much more difficult for third countries to exert undue influence on the work of EU parliamentarians.

In some respects, however, the proposal does not go far enough. For example, members of Parliament would still only be required to declare travel paid for by third parties. However, members of Parliament have their own travel allowance, which they do not have to account for – provided that they are invited by the respective country in writing “in their function as members of Parliament.”

Alumni access very popular

In particular, the new access rules for former MEPs are likely to be bitterly resented by some ex-parliamentarians. Using parliamentary access for lobbying purposes is a fairly common practice in the European Parliament. The best example: former EPP MEP and former Italian defense minister Mario Mauro. Mauro sat in Parliament until 2013, but since at least 2011 he has been running his own lobbying firm, Meseuro, which has been registered in the parliamentary lobby register since 2020. Since 2018, Mauro has also worked for the consulting firm Sec Newgate.

Among his clients is, for example, the Confédération Générale des Entreprises du Maroc (CGEM), as Sec Newgate confirms. In 2020, Mauro made his case in the European press in his capacity as a former minister, particularly for Morocco’s sovereignty over Western Sahara. Until yesterday, Mario Mauro did not have lobbying accreditation for any of the companies, as required by transparency rules, but used his alumni access to, for example, meet with Commission President von der Leyen on behalf of consultancy Sec Newgate. Such mixing of interests is likely to complicate Metsola’s 14 points in the future.

MEPs do not face severe sanctions

However, the Speaker’s proposals are not tied to stronger sanctions. MEPs still do not risk much by ignoring the code of conduct. UKIP and the Front National, for example, only had to repay the Parliament the sum of the embezzled funds in the last legislature for embezzling their expense allowances and employing bogus staff.

As a rule, the EU Parliament’s sanctions do not go beyond the suspension of daily allowances for a period of up to 30 days. This is hardly likely to serve as a deterrent. The best example: Luxembourg MEP Monica Semedo (Renew) was suspended for 15 days as recently as 2021 for bullying her staff. Barely a year later, she faces sanctions once more, again for bullying.

Sanctions like these are extremely rare. In the last legislative period, Parliament examined only 24 possible violations of the rules. In no case were sanctions imposed. Moreover, the decision on sanctions and their scope rests solely with the Speaker of Parliament.

Metsola does not comply with code

However, Roberta Metsola herself has some catching up to do when it comes to upholding the Code of Conduct. The President of Parliament has been a member of the steering committee of the European Parliamentary Financial Services Forum (EPFSF)*, an interest group that brings together leading players and lobby organizations in the financial industry (including the European Banking Federation, Allianz, JPMorgan and Blackrock) and MEPs and regularly invites them to policy briefs. Metsola has not noted this membership in her financial statement, although the Code of Conduct (Article 4 d) obliges her to do so. For representatives of the financial industry, membership costs €8,000 a year.

The secretariat of the interest group, which is registered as a non-profit association in Belgium, is provided by the consulting firm Kreab, which also represents the interests of the financial industry. Other members of the steering committee include Markus Ferber (CSU) and Stefan Berger (CDU). Ferber, who regularly takes the lead on reports that affect the financial industry, has indicated his membership in the EPFSF eventually.

Reform could be lengthy

There are a number of interest groups in Brussels, such as the EPFSF. They grant companies and associations formalized, privileged access to parliamentarians, even when they are working on dossiers that directly affect the industry. Since these meetings rarely take place in Parliament itself, they do not need to be recorded as lobby meetings under either the current rules or Metsola’s reform proposals.

It remains unclear how quickly the implementation of Metsola’s reform plans will proceed. Some proposals, such as the rules for former parliamentarians, are anchored in Parliament’s rules of procedure. In order to adapt them, the proposals must first be approved by the Committee on Constitutional Affairs (AFCO) and later by the plenum. Other proposals, such as advanced training on financial rules, are easier to push through. A task force comprising members of the Parliamentary Advisory Committee, the Secretariat and Metsola herself is to further elaborate the proposals.

*An earlier version of the article, citing the EPFSF website, had stated that Roberta Metsola was still a member of the Forum’s Steering Committee. Metsola’s spokesperson has since clarified that the Speaker of the Parliament has had no relations with the EPFSF during the current legislature. She had also not received any financial benefits from the organization. The EPFSF homepage has since been updated accordingly.

  • Corruption
  • European Parliament
  • European policy
  • Eva Kaili
  • Lobbying
  • Roberta Metsola

German Supply Chain Act gets off to a tame start

So far, the anger about the new Supply Chain Act has been limited and only one person in the German public is upset about the law: Wu Ken, the Chinese ambassador. China will not interfere in Germany’s legislation, he said in an interview with Handelsblatt. “But politicizing economic and trade issues distorts the principles of the market economy.”

The ambassador of the People’s Republic apparently sees the new law, which obliges companies in Germany to comply with human rights standards and requirements against environmental pollution in their supply chains, as a targeted attack on China. Some countries would use such a law “to make a fuss about the internal affairs of other states,” the ambassador raged. His country would take all necessary measures “to consistently protect the legitimate rights and interests of its companies,” the ambassador said, without, however, providing details.

There is probably a reason why the excitement – apart from that of the Chinese ambassador – has so far been limited: The Supply Chain Act is quite tame in its implementation.

No obligation to succeed – intervention only in case of indications

In essence, German companies, but also foreign companies with branches or subsidiaries in Germany, must take a closer look at their supply chains and document them using an electronic procedure. Those who accept child labor, immoral wages or environmental disasters at suppliers must expect fines in the millions. It could therefore make sense for large companies to hire a human rights officer. Volkswagen has already done so.

But there is only an obligation to make an effort, not an obligation to succeed. In the case of indirect suppliers, companies are also only required to take action if there is evidence of human rights violations such as poverty wages or child labor in the region where the supplier’s factory is located. If violations are proven, the companies in question are not punished immediately, but only if they do nothing about it.

While the Federal Office for Economic Affairs and Export Control (BAFA), which is responsible for ensuring compliance with the new law, emphasizes that it can

  • subpoena persons,
  • enter business premises
  • and inspect documents.
  • In addition, it can prescribe specific actions to remedy any shortcomings.
  • Furthermore, BAFA can impose fines of up to €50,000 for failure to provide evidence, and fines of up to €8 million or two percent of a company’s annual turnover, depending on the severity of the administrative offense. Companies can also be excluded from public tenders for up to three years.

However, the turnover-based fine framework only applies to companies with annual sales of more than €400 million. In addition, the new law will only come into force in stages. Starting this year, it will initially apply only to large companies with more than 3,000 employees – that’s around 600, and from 2024 to just under 3,000 companies with more than 1,000 employees.

The law does not provide for compensation of victims

Trade unions and non-governmental organizations have the possibility to sue in the event of indications of human rights violations if the victims also specifically agree to this. However, there is no corporate liability under civil law. This means that the victims have no prospect of compensation from the companies. However, BAFA can intervene with its demands for fines.

Most German companies do not yet see a problem for business in the current version of the Supply Chain Act. “For us, not so much has changed,” says Jan Philippi, who runs a design manufactory near Hamburg and sources many of the goods he offers from China. His company, he says, had already previously negotiated a code of conduct from its Chinese partners. He has also personally verified their statements during factory visits.

European law could go further

The situation could be different if the European law is voted for. This is because the EU proposal goes much further than German law in some respects. For example, companies with 500 or more employees and annual net sales of €150 million are already affected. In high-risk sectors, companies with 250 or more employees and sales of €40 million must also perform due diligence. The proposal applies to the entire value chain and not just to the first stage of the supply chain.

Furthermore, in contrast to German law, the Commission’s draft provides for civil liability and simplifies access to justice for victims of human rights violations and environmental damage. Liability also applies to damage caused outside the EU. However, companies are only liable if those affected can prove that they failed to meet their obligations.

The law is expected to enter the trilogue in the second half of the legislative session. Parliament will vote on its position in the JURI Committee in March and in plenary in May at the earliest. The Social Democrat Lara Wolters is in charge, and in her report she has considerably tightened up the Commission’s proposal. The Council, for its part, presented its General Approach in December. This is weaker than the Commission’s proposal and exempts the financial sector, in particular, almost entirely from the due diligence obligation.

Chamber sees minor problems with implementation

The German Chamber of Commerce in China generally views the Supply Chain Act as an “opportunity to improve the social and environmental situation worldwide.” Jens Hildebrandt, Executive Board Member in Beijing, does admit that the law “also poses challenges” for German companies in China. According to their latest business climate survey, only just under a third of companies have problems fully meeting the requirements of the Supply Chain Act.

In some cases, there are difficulties in communicating with suppliers on site or in inspecting production facilities, according to Hildebrandt. Despite these hurdles, however, few companies would consider reorganizing their suppliers. A full 86 percent of companies do not need to take any further action to restructure their supply chains, Hildebrandt emphasizes.

Xinjiang remains the sticking point

For large German companies that produce in Xinjiang, however, things are likely to become much more difficult. The United Nations Human Rights Office accuses the leadership in Beijing of arbitrarily detaining Uyghurs and other members of Muslim minorities in detention camps. For years, there have been accusations of forced labor in the factories, and the US government has even spoken of genocide. German companies that operate factories in Xinjiang, such as Volkswagen or BASF, have not been able to prove that forced labor takes place in their supply chains. But they are likely to come under greater scrutiny from non-governmental organizations and auditing authorities with the Supply Chain Act.

The BAFA, which is responsible for such cases, intends to significantly increase its staffing levels. At the turn of the year, around 50 people were already hired at the authority’s new branch office in Borna near Leipzig for the Supply Chain Act. By summer 2023, it is planned to double their number to around 100.

  • Climate & Environment
  • Supply Chain Act
  • Sustainability

Events

Jan. 17, 2023; 10 a.m., online
TÜV Rheinland, Seminar ISO/IEC 27001:2022 revision – Requirements for Information Security, Cybersecurity and Privacy Protection
The information security standard, ISO/IEC 27001, was revised in 2022. At this event, the main changes and benefits of this update will be explained. INFO & REGISTRATION

News

Luxembourg socialist runs for EP vice-presidency

The Socialists are sending Luxembourg MEP Marc Angel as their candidate in the election for the post of Vice President in the European Parliament. For the Greens, Gwendoline Delbos-Corfield from France prevailed. Angel is running for the post of Greek MEP Eva Kaili, who was removed as Vice President in the wake of the corruption scandal and has since been remanded in custody in Belgium.

There are 14 Vice Presidents in the EP. According to the agreements between the groups, the vacant position belongs to the S&D group. Therefore, Angel naturally has a better chance of being elected on Tuesday in the Strasbourg Parliament.

Maria Arena resignation

Angel prevailed over Victor Negrescu from Romania in the group, which consists of 145 MEPs, by 67 votes to 37 in a third-round fight vote. The Luxembourger is committed to LGBTQ rights, Negrescu has made a name for himself in Romania with the fight against corruption. As heard on the sidelines of the group meeting, the group has not yet agreed on the mandate for the commission to deal with the scandal internally.

As also became known yesterday, the corruption affair has further personnel consequences for the Socialists: According to media reports, the Belgian MEP Maria Arena has resigned from her office as chairwoman of the Subcommittee on Human Rights of the European Parliament. She had already suspended her office shortly after the corruption cases became known. At that time, the police had searched the office of her assistant. However, she herself had not been searched and she was not the focus of the judiciary, she stressed in the statement on her resignation. mgr/sas

  • Europäische Kommission
  • Europäisches Parlament
  • European Parliament
  • Eva Kaili

EU and Ukraine want hydrogen partnership

The EU and Ukraine want to be independent of natural gas imports more quickly and advance climate protection in the long term through a hydrogen partnership. “The Russian war of aggression against Ukraine and its people has increased the urgent need to diversify energy supplies and end dependence on energy imports from Russia,” reads an internal EU Commission draft agreement obtained by Europe.Table.

Exporting renewable gases from Ukraine to the EU could also ” support Ukraine’s economic and social recovery,” according to the memorandum of understanding on a “Strategic Partnership for Renewable Gases.” Under the agreement, the EU wants to promote investment in renewable energy and hydrogen pipelines and explore the possibility of using gas storage facilities in Ukraine for hydrogen.

The Strategic Partnership on Renewable Gases is the latest addition to an EU-Ukraine energy agreement dating back to 2005, with the latest addition dating back to 2016. Ukraine’s Prime Minister Denys Shmyhal mentioned the partnership on renewable energy on Monday during a visit to Kyiv by EU Commission Vice President Frans Timmermans without providing details. ber

  • Hydrogen
  • Industry
  • Natural gas
  • Renewable energies
  • Ukraine

Russia sanctions: Malta and Greece bring up rear

Malta and Greece are significantly behind other countries in the European Union in freezing Russian assets in the wake of sanctions over the war against Ukraine, according to an internal EU document. According to the document, Malta has so far frozen a total of €147,000. Greece is also well behind other countries with €212,000 frozen, according to the document obtained by the Reuters news agency.

In contrast, the other 27 member states together have frozen about €20.3 billion in assets. Germany, Italy, Ireland, France, Spain, Belgium, Austria and Luxembourg each reported having frozen more than €1 billion.

Representatives of Greece and Malta confirmed the comparatively low sums. An official of the Greek authorities said that the €212,000 exhausted all the assets Athens had identified on the basis of the EU sanctions list. “The investment environment in Greece does not favor the inflow of capital from Russia and from foreign companies.”

A spokesman for the Maltese Prime Minister said Malta has helped other European countries seize assets, such as yachts registered in Malta “Malta has put in a lot of work to support joint European efforts,” the spokesman said. A decrease in Maltese trade with Russia is further proof of Valletta’s commitment to implementing EU decisions, he said. rtr

  • European policy
  • Greece

SPD calls for EU investment offensive

In response to the US Inflation Reduction Act, the SPD parliamentary group is calling for a European investment offensive for future technologies. “To this end, unused funds from the EU reconstruction program ‘NextGenerationEU’ should be reallocated and, in particular, the energy investment program RePowerEU should be additionally strengthened,” reads a draft to be adopted at the upcoming parliamentary group retreat. In addition, the upcoming review of the Multiannual Financial Framework should be used to prioritize industrial policy projects for the future and investment projects.

The SPD parliamentary group is open to calls from France and the EU Commission, for example, for new EU financing instruments such as a “sovereignty fund,” as it has been to similar calls in the past. These are to be “constructively examined,” the paper says. However, Chancellor Olaf Scholz (SPD) recently reiterated that there were still “quite a few undistributed funds” that Europe could use. Therefore, there was currently no need for new pots. This position has not changed, according to government sources in Berlin.

The Social Democrats are also pushing for a reform of EU state aid rules. These should “focus more strongly on the needs of global competitiveness“. For this reason, the rules should “become significantly simpler and more transparent, create ex-ante planning certainty and provide incentives for major investments in transformation and future technologies and industrial innovations geared to them.” The EU Commission is expected to present its proposals on this as early as Feb. 1. tho

  • Climate & Environment
  • Climate Policy
  • Federal Government
  • Inflation Reduction Act
  • REPowerEU

Data processing: Federal Cartel Office issues warning to Google

According to the German Federal Cartel Office, Google Alphabet must give its users more choice in the processing of their data. The US company has been sent a “detailed warning”, the authority announced on Wednesday. The options offered so far are “too intransparent and sweeping”.

The competition regulators are specifically concerned about the way in which the group can collect data for a wide variety of purposes in services such as Google Search, YouTube, Google Play, Google Maps and Google Assistant and process it across services. Google can also collect data from numerous third-party websites and apps. This also applies to data from Google’s so-called background services, such as the Play Services, some of which regularly collect data from Android devices.

On the basis of the current conditions, users had no sufficient choice as to whether and to what extent they agreed to this far-reaching processing. The warning gives the company the opportunity to comment on the allegations and to present further justifications or proposals for solutions. The Federal Cartel Office expects a response from Google before the end of January.

In exchange with the EU Commission

It is disputed among experts whether the Antitrust Authority is responsible for these issues at all. In its communication, the authority conceded that the European Digital Markets Act (DMA) would apply to certain Google services in the future, the enforcement of which falls under the exclusive jurisdiction of the EU Commission. This would leave the German authority out in the cold. The Cartel Office stated that it was in contact with the Commission on this matter.

Authority President Andreas Mundt stressed that Google’s business model is fundamentally built on processing user data. “Google has a strategic advantage over other companies here due to its established access to relevant data from a very large number of different services,” he said. Google must be measured against the requirements of the new competition rules for digital groups, he said. “The company must give users sufficient choice regarding the processing of their data.”

The Cartel Office is basing its action on new regulations for digital groups in the Act against Restraints of Competition (GWB Digitization Act), which are intended to help safeguard competition in the Internet economy. Under these rules, the authority can more easily identify a dominant position of companies and intervene to prohibit certain types of behavior.

Google said the company’s goal is always to offer products that put users first and meet the requirements of regulators. “One of the ways we meet our responsibilities is by continuously adapting our services. We will continue to engage in constructive exchanges with the Federal Cartel Office and try to address concerns.” dpa

  • Antitrust Office
  • Data
  • Digital Markets Act
  • Digitization
  • Google

Heads

Sabine Thillaye – French-German mediator

Sabine Thillaye is a member of the French Defense Committee.

When things grate between German and French politicians, few people are better placed than Sabine Thillaye to explain why. Thillaye is a Remscheid-born French member of the National Assembly. She is a member of the Defense Committee, the European Affairs Committee and part of the Franco-German Parliamentary Assembly.

She discusses Franco-German misunderstandings, explains why problems arise when French and Germans talk about “concept” and mean different things, and why Germans feel differently about debt than the French. “I feel like the French see more of the future potential and the Germans more of the risk potential.”

For over 30 years in France

Thillaye can lecture on how language affects systems of thought. “A French person is less likely to clearly say ‘no’ in a conversation than a German, whose statement is already more precise, simply because the French language strings a lot of words together.”

At first, she didn’t want to go to France at all, preferring to go to Brussels and get involved in European politics, then she married a Frenchman. But she never let go of Europe as a project. She has lived in France for more than 30 years and acquired French citizenship in 2015. Macron’s emphasis on European issues was a reason for her, who was previously an entrepreneur, to enter politics. She started out in Macron’s En Marche movement and now sits in the National Assembly for the Democrats after a dispute with party colleagues.

‘There is heavy short-term thinking in Germany’

After the Franco-German Council of Ministers was canceled in October, a delegation from the French defense committee came to Berlin in December. Thillaye told a small group of journalists that German politicians sometimes had the feeling that they were talking to lobbyists because they mainly represented the interests of their constituencies. However, the meetings with her colleagues from the German defense committee were “very positive.”

Afterwards, Defense Minister Christine Lambrecht took an hour and a half to meet Thillaye. Not a matter of course for such a meeting. Lambrecht, as Thillaye describes it, asked for understanding for the purchase of the F-35 aircraft, saying that Germany had a responsibility to NATO for nuclear sharing. The fact that Germany has bought the American aircraft does not mean that it wants to abandon the Franco-German armament project FCAS.

The matter of the F-35s again has to do with cultural differences, Thillaye says. “In Germany, there is heavy short-term thinking, because they say: we want to show efficiency now, we need an immediate answer. There is a state of war at our borders, how do we get ahead in terms of capacity?” In France, people tend to think longer-term and say, “Yes, my God, we need our own aircraft or defense system.”

Clarify problems via instant messenger

Thillaye does not believe that FCAS could fail. At the end of the year, industry representatives signed the contract for Phase 1B, but politicians had to put pressure on them to do so. The ministers will meet again on Jan. 22. The governments will then be able to join in celebrating 60 years of the Élysée Treaty. A delegation from the German defense committee is also to come to France.

For the deputies who have “appropriate language skills,” a telegram or signal group is to be set up “so that it is possible to exchange information and react quickly and on short notice when such irritations arise.” If Thillaye is right with her problem diagnosis, that should help. Gabriel Bub

  • European policy
  • France
  • Germany

Europe.Table Editorial Office

EUROPE.TABLE EDITORS

Licenses:
    • Transparency in the EU Parliament: Metsola plans reform
    • German Supply Chain Act gets off to a tame start
    • Luxembourg socialist runs for EP vice-presidency
    • EU and Ukraine want hydrogen partnership
    • Russia sanctions: Malta and Greece bring up rear
    • SPD calls for EU investment offensive
    • Data processing: Federal Cartel Office issues warning to Google
    • Heads: Sabine Thillaye – French-German mediator
    Dear reader,

    A cooling-off period for ex-deputies and the end of unlimited access to Parliament with alumni cards: With these and other proposals, Parliament President Roberta Metsola wants to make the EP more transparent. It is an attempt to improve the image of the institution, which has suffered greatly in the wake of the corruption scandal surrounding Eva Kaili. Charlotte Wirth took a closer look at the proposals and discovered some loopholes.

    Who will succeed Eva Kaili? According to the agreements between the groups, the vacant vice-president post belongs to the S&D group. By now, it is clear who the Socialists will nominate for the election. Read more in the News.

    At the turn of the year, the new Supply Chain Act came into force in Germany. It places greater obligations on large companies to comply with human rights and environmental requirements. So far, the German business community has reacted quite calmly to the changes. Felix Lee and Charlotte Wirth analyze the law’s implementation to date as quite tame, while the corresponding EU proposal goes much further in some respects.

    Your
    Sarah Schaefer
    Image of Sarah  Schaefer

    Feature

    Transparency in the EU Parliament: Metsola plans reform

    The reform proposal that Roberta Metsola will present today comprises 14 points. Less than a month after the corruption scandal surrounding Vice President Eva Kaili came to light, the speaker of Parliament is working to improve the image of her institution. Organizations such as Transparency International have accused Parliament of having insufficient transparency rules, which allowed such a scandal to occur in the first place.

    Metsola wants to significantly tighten rules

    Metsola’s proposals include the following:

    • A cooling-off period for ex-MEPs. It applies for as long as MEPs receive a transitional salary. Compared to the cooling-off period of two years for former commissioners, however, this proposal falls short. This is because the transitional salary is subject to one month per year in office. In other words, anyone who has served one term as an MEP will receive the replacement salary for only five months. At present, there is no cooling-off period for MEPs, and former MEPs are required to inform Parliament if they take up lobbying activities after leaving office. However, hardly anyone complies: In the last mandate, of 459 non-re-elected MEPs, only one reported employment with a lobbying company.
    • Access to Parliament is to be made more difficult for former members of Parliament. Currently, they can go in and out of Parliament with an alumni ID card without further checks and even have visitors accredited. In the future, former MEPs will only be allowed access to Parliament for one day and will no longer be allowed to register visitors. Thus, MEPs who take up lobbying activities after their cooling-off period will also be forced to register in the transparency register.
    • So-called friendship groups with third countries or informal groupings whose activities coincide with those of Parliament are to be banned. In doing so, the Parliamentary President is responding in particular to criticism that third countries exert influence on parliamentary work through such groups, which are usually set up by embassies. When it comes to implementation, however, Metsola will have to rely on the personal responsibility of the members of Parliament. After all, these are informal groupings that not even Parliament itself keeps a list of.
    • In the future, not only rapporteurs or shadow rapporteurs are to publish meetings with third parties on these reports, but all members of Parliament as well as parliamentary assistants, employees of the parliamentary groups or the Parliament are to make their meetings on reports and resolutions public. However, this also means that meetings that do not relate to a specific report still do not have to be disclosed.
    • Other proposals include tightening the rules for the transparency register and more staff to check entries; a better overview of MEPs’ activities (bundling information on financial interests, travel, gifts, sanctions, etc. on a separate parliamentary page); and stricter requirements regarding MEPs possible conflicts of interest.

    Transparency International welcomes the move

    Transparency International has already reacted to the leaked proposal by Roberto Metsola. The proposed changes are “long overdue” and would make it much more difficult for third countries to exert undue influence on the work of EU parliamentarians.

    In some respects, however, the proposal does not go far enough. For example, members of Parliament would still only be required to declare travel paid for by third parties. However, members of Parliament have their own travel allowance, which they do not have to account for – provided that they are invited by the respective country in writing “in their function as members of Parliament.”

    Alumni access very popular

    In particular, the new access rules for former MEPs are likely to be bitterly resented by some ex-parliamentarians. Using parliamentary access for lobbying purposes is a fairly common practice in the European Parliament. The best example: former EPP MEP and former Italian defense minister Mario Mauro. Mauro sat in Parliament until 2013, but since at least 2011 he has been running his own lobbying firm, Meseuro, which has been registered in the parliamentary lobby register since 2020. Since 2018, Mauro has also worked for the consulting firm Sec Newgate.

    Among his clients is, for example, the Confédération Générale des Entreprises du Maroc (CGEM), as Sec Newgate confirms. In 2020, Mauro made his case in the European press in his capacity as a former minister, particularly for Morocco’s sovereignty over Western Sahara. Until yesterday, Mario Mauro did not have lobbying accreditation for any of the companies, as required by transparency rules, but used his alumni access to, for example, meet with Commission President von der Leyen on behalf of consultancy Sec Newgate. Such mixing of interests is likely to complicate Metsola’s 14 points in the future.

    MEPs do not face severe sanctions

    However, the Speaker’s proposals are not tied to stronger sanctions. MEPs still do not risk much by ignoring the code of conduct. UKIP and the Front National, for example, only had to repay the Parliament the sum of the embezzled funds in the last legislature for embezzling their expense allowances and employing bogus staff.

    As a rule, the EU Parliament’s sanctions do not go beyond the suspension of daily allowances for a period of up to 30 days. This is hardly likely to serve as a deterrent. The best example: Luxembourg MEP Monica Semedo (Renew) was suspended for 15 days as recently as 2021 for bullying her staff. Barely a year later, she faces sanctions once more, again for bullying.

    Sanctions like these are extremely rare. In the last legislative period, Parliament examined only 24 possible violations of the rules. In no case were sanctions imposed. Moreover, the decision on sanctions and their scope rests solely with the Speaker of Parliament.

    Metsola does not comply with code

    However, Roberta Metsola herself has some catching up to do when it comes to upholding the Code of Conduct. The President of Parliament has been a member of the steering committee of the European Parliamentary Financial Services Forum (EPFSF)*, an interest group that brings together leading players and lobby organizations in the financial industry (including the European Banking Federation, Allianz, JPMorgan and Blackrock) and MEPs and regularly invites them to policy briefs. Metsola has not noted this membership in her financial statement, although the Code of Conduct (Article 4 d) obliges her to do so. For representatives of the financial industry, membership costs €8,000 a year.

    The secretariat of the interest group, which is registered as a non-profit association in Belgium, is provided by the consulting firm Kreab, which also represents the interests of the financial industry. Other members of the steering committee include Markus Ferber (CSU) and Stefan Berger (CDU). Ferber, who regularly takes the lead on reports that affect the financial industry, has indicated his membership in the EPFSF eventually.

    Reform could be lengthy

    There are a number of interest groups in Brussels, such as the EPFSF. They grant companies and associations formalized, privileged access to parliamentarians, even when they are working on dossiers that directly affect the industry. Since these meetings rarely take place in Parliament itself, they do not need to be recorded as lobby meetings under either the current rules or Metsola’s reform proposals.

    It remains unclear how quickly the implementation of Metsola’s reform plans will proceed. Some proposals, such as the rules for former parliamentarians, are anchored in Parliament’s rules of procedure. In order to adapt them, the proposals must first be approved by the Committee on Constitutional Affairs (AFCO) and later by the plenum. Other proposals, such as advanced training on financial rules, are easier to push through. A task force comprising members of the Parliamentary Advisory Committee, the Secretariat and Metsola herself is to further elaborate the proposals.

    *An earlier version of the article, citing the EPFSF website, had stated that Roberta Metsola was still a member of the Forum’s Steering Committee. Metsola’s spokesperson has since clarified that the Speaker of the Parliament has had no relations with the EPFSF during the current legislature. She had also not received any financial benefits from the organization. The EPFSF homepage has since been updated accordingly.

    • Corruption
    • European Parliament
    • European policy
    • Eva Kaili
    • Lobbying
    • Roberta Metsola

    German Supply Chain Act gets off to a tame start

    So far, the anger about the new Supply Chain Act has been limited and only one person in the German public is upset about the law: Wu Ken, the Chinese ambassador. China will not interfere in Germany’s legislation, he said in an interview with Handelsblatt. “But politicizing economic and trade issues distorts the principles of the market economy.”

    The ambassador of the People’s Republic apparently sees the new law, which obliges companies in Germany to comply with human rights standards and requirements against environmental pollution in their supply chains, as a targeted attack on China. Some countries would use such a law “to make a fuss about the internal affairs of other states,” the ambassador raged. His country would take all necessary measures “to consistently protect the legitimate rights and interests of its companies,” the ambassador said, without, however, providing details.

    There is probably a reason why the excitement – apart from that of the Chinese ambassador – has so far been limited: The Supply Chain Act is quite tame in its implementation.

    No obligation to succeed – intervention only in case of indications

    In essence, German companies, but also foreign companies with branches or subsidiaries in Germany, must take a closer look at their supply chains and document them using an electronic procedure. Those who accept child labor, immoral wages or environmental disasters at suppliers must expect fines in the millions. It could therefore make sense for large companies to hire a human rights officer. Volkswagen has already done so.

    But there is only an obligation to make an effort, not an obligation to succeed. In the case of indirect suppliers, companies are also only required to take action if there is evidence of human rights violations such as poverty wages or child labor in the region where the supplier’s factory is located. If violations are proven, the companies in question are not punished immediately, but only if they do nothing about it.

    While the Federal Office for Economic Affairs and Export Control (BAFA), which is responsible for ensuring compliance with the new law, emphasizes that it can

    • subpoena persons,
    • enter business premises
    • and inspect documents.
    • In addition, it can prescribe specific actions to remedy any shortcomings.
    • Furthermore, BAFA can impose fines of up to €50,000 for failure to provide evidence, and fines of up to €8 million or two percent of a company’s annual turnover, depending on the severity of the administrative offense. Companies can also be excluded from public tenders for up to three years.

    However, the turnover-based fine framework only applies to companies with annual sales of more than €400 million. In addition, the new law will only come into force in stages. Starting this year, it will initially apply only to large companies with more than 3,000 employees – that’s around 600, and from 2024 to just under 3,000 companies with more than 1,000 employees.

    The law does not provide for compensation of victims

    Trade unions and non-governmental organizations have the possibility to sue in the event of indications of human rights violations if the victims also specifically agree to this. However, there is no corporate liability under civil law. This means that the victims have no prospect of compensation from the companies. However, BAFA can intervene with its demands for fines.

    Most German companies do not yet see a problem for business in the current version of the Supply Chain Act. “For us, not so much has changed,” says Jan Philippi, who runs a design manufactory near Hamburg and sources many of the goods he offers from China. His company, he says, had already previously negotiated a code of conduct from its Chinese partners. He has also personally verified their statements during factory visits.

    European law could go further

    The situation could be different if the European law is voted for. This is because the EU proposal goes much further than German law in some respects. For example, companies with 500 or more employees and annual net sales of €150 million are already affected. In high-risk sectors, companies with 250 or more employees and sales of €40 million must also perform due diligence. The proposal applies to the entire value chain and not just to the first stage of the supply chain.

    Furthermore, in contrast to German law, the Commission’s draft provides for civil liability and simplifies access to justice for victims of human rights violations and environmental damage. Liability also applies to damage caused outside the EU. However, companies are only liable if those affected can prove that they failed to meet their obligations.

    The law is expected to enter the trilogue in the second half of the legislative session. Parliament will vote on its position in the JURI Committee in March and in plenary in May at the earliest. The Social Democrat Lara Wolters is in charge, and in her report she has considerably tightened up the Commission’s proposal. The Council, for its part, presented its General Approach in December. This is weaker than the Commission’s proposal and exempts the financial sector, in particular, almost entirely from the due diligence obligation.

    Chamber sees minor problems with implementation

    The German Chamber of Commerce in China generally views the Supply Chain Act as an “opportunity to improve the social and environmental situation worldwide.” Jens Hildebrandt, Executive Board Member in Beijing, does admit that the law “also poses challenges” for German companies in China. According to their latest business climate survey, only just under a third of companies have problems fully meeting the requirements of the Supply Chain Act.

    In some cases, there are difficulties in communicating with suppliers on site or in inspecting production facilities, according to Hildebrandt. Despite these hurdles, however, few companies would consider reorganizing their suppliers. A full 86 percent of companies do not need to take any further action to restructure their supply chains, Hildebrandt emphasizes.

    Xinjiang remains the sticking point

    For large German companies that produce in Xinjiang, however, things are likely to become much more difficult. The United Nations Human Rights Office accuses the leadership in Beijing of arbitrarily detaining Uyghurs and other members of Muslim minorities in detention camps. For years, there have been accusations of forced labor in the factories, and the US government has even spoken of genocide. German companies that operate factories in Xinjiang, such as Volkswagen or BASF, have not been able to prove that forced labor takes place in their supply chains. But they are likely to come under greater scrutiny from non-governmental organizations and auditing authorities with the Supply Chain Act.

    The BAFA, which is responsible for such cases, intends to significantly increase its staffing levels. At the turn of the year, around 50 people were already hired at the authority’s new branch office in Borna near Leipzig for the Supply Chain Act. By summer 2023, it is planned to double their number to around 100.

    • Climate & Environment
    • Supply Chain Act
    • Sustainability

    Events

    Jan. 17, 2023; 10 a.m., online
    TÜV Rheinland, Seminar ISO/IEC 27001:2022 revision – Requirements for Information Security, Cybersecurity and Privacy Protection
    The information security standard, ISO/IEC 27001, was revised in 2022. At this event, the main changes and benefits of this update will be explained. INFO & REGISTRATION

    News

    Luxembourg socialist runs for EP vice-presidency

    The Socialists are sending Luxembourg MEP Marc Angel as their candidate in the election for the post of Vice President in the European Parliament. For the Greens, Gwendoline Delbos-Corfield from France prevailed. Angel is running for the post of Greek MEP Eva Kaili, who was removed as Vice President in the wake of the corruption scandal and has since been remanded in custody in Belgium.

    There are 14 Vice Presidents in the EP. According to the agreements between the groups, the vacant position belongs to the S&D group. Therefore, Angel naturally has a better chance of being elected on Tuesday in the Strasbourg Parliament.

    Maria Arena resignation

    Angel prevailed over Victor Negrescu from Romania in the group, which consists of 145 MEPs, by 67 votes to 37 in a third-round fight vote. The Luxembourger is committed to LGBTQ rights, Negrescu has made a name for himself in Romania with the fight against corruption. As heard on the sidelines of the group meeting, the group has not yet agreed on the mandate for the commission to deal with the scandal internally.

    As also became known yesterday, the corruption affair has further personnel consequences for the Socialists: According to media reports, the Belgian MEP Maria Arena has resigned from her office as chairwoman of the Subcommittee on Human Rights of the European Parliament. She had already suspended her office shortly after the corruption cases became known. At that time, the police had searched the office of her assistant. However, she herself had not been searched and she was not the focus of the judiciary, she stressed in the statement on her resignation. mgr/sas

    • Europäische Kommission
    • Europäisches Parlament
    • European Parliament
    • Eva Kaili

    EU and Ukraine want hydrogen partnership

    The EU and Ukraine want to be independent of natural gas imports more quickly and advance climate protection in the long term through a hydrogen partnership. “The Russian war of aggression against Ukraine and its people has increased the urgent need to diversify energy supplies and end dependence on energy imports from Russia,” reads an internal EU Commission draft agreement obtained by Europe.Table.

    Exporting renewable gases from Ukraine to the EU could also ” support Ukraine’s economic and social recovery,” according to the memorandum of understanding on a “Strategic Partnership for Renewable Gases.” Under the agreement, the EU wants to promote investment in renewable energy and hydrogen pipelines and explore the possibility of using gas storage facilities in Ukraine for hydrogen.

    The Strategic Partnership on Renewable Gases is the latest addition to an EU-Ukraine energy agreement dating back to 2005, with the latest addition dating back to 2016. Ukraine’s Prime Minister Denys Shmyhal mentioned the partnership on renewable energy on Monday during a visit to Kyiv by EU Commission Vice President Frans Timmermans without providing details. ber

    • Hydrogen
    • Industry
    • Natural gas
    • Renewable energies
    • Ukraine

    Russia sanctions: Malta and Greece bring up rear

    Malta and Greece are significantly behind other countries in the European Union in freezing Russian assets in the wake of sanctions over the war against Ukraine, according to an internal EU document. According to the document, Malta has so far frozen a total of €147,000. Greece is also well behind other countries with €212,000 frozen, according to the document obtained by the Reuters news agency.

    In contrast, the other 27 member states together have frozen about €20.3 billion in assets. Germany, Italy, Ireland, France, Spain, Belgium, Austria and Luxembourg each reported having frozen more than €1 billion.

    Representatives of Greece and Malta confirmed the comparatively low sums. An official of the Greek authorities said that the €212,000 exhausted all the assets Athens had identified on the basis of the EU sanctions list. “The investment environment in Greece does not favor the inflow of capital from Russia and from foreign companies.”

    A spokesman for the Maltese Prime Minister said Malta has helped other European countries seize assets, such as yachts registered in Malta “Malta has put in a lot of work to support joint European efforts,” the spokesman said. A decrease in Maltese trade with Russia is further proof of Valletta’s commitment to implementing EU decisions, he said. rtr

    • European policy
    • Greece

    SPD calls for EU investment offensive

    In response to the US Inflation Reduction Act, the SPD parliamentary group is calling for a European investment offensive for future technologies. “To this end, unused funds from the EU reconstruction program ‘NextGenerationEU’ should be reallocated and, in particular, the energy investment program RePowerEU should be additionally strengthened,” reads a draft to be adopted at the upcoming parliamentary group retreat. In addition, the upcoming review of the Multiannual Financial Framework should be used to prioritize industrial policy projects for the future and investment projects.

    The SPD parliamentary group is open to calls from France and the EU Commission, for example, for new EU financing instruments such as a “sovereignty fund,” as it has been to similar calls in the past. These are to be “constructively examined,” the paper says. However, Chancellor Olaf Scholz (SPD) recently reiterated that there were still “quite a few undistributed funds” that Europe could use. Therefore, there was currently no need for new pots. This position has not changed, according to government sources in Berlin.

    The Social Democrats are also pushing for a reform of EU state aid rules. These should “focus more strongly on the needs of global competitiveness“. For this reason, the rules should “become significantly simpler and more transparent, create ex-ante planning certainty and provide incentives for major investments in transformation and future technologies and industrial innovations geared to them.” The EU Commission is expected to present its proposals on this as early as Feb. 1. tho

    • Climate & Environment
    • Climate Policy
    • Federal Government
    • Inflation Reduction Act
    • REPowerEU

    Data processing: Federal Cartel Office issues warning to Google

    According to the German Federal Cartel Office, Google Alphabet must give its users more choice in the processing of their data. The US company has been sent a “detailed warning”, the authority announced on Wednesday. The options offered so far are “too intransparent and sweeping”.

    The competition regulators are specifically concerned about the way in which the group can collect data for a wide variety of purposes in services such as Google Search, YouTube, Google Play, Google Maps and Google Assistant and process it across services. Google can also collect data from numerous third-party websites and apps. This also applies to data from Google’s so-called background services, such as the Play Services, some of which regularly collect data from Android devices.

    On the basis of the current conditions, users had no sufficient choice as to whether and to what extent they agreed to this far-reaching processing. The warning gives the company the opportunity to comment on the allegations and to present further justifications or proposals for solutions. The Federal Cartel Office expects a response from Google before the end of January.

    In exchange with the EU Commission

    It is disputed among experts whether the Antitrust Authority is responsible for these issues at all. In its communication, the authority conceded that the European Digital Markets Act (DMA) would apply to certain Google services in the future, the enforcement of which falls under the exclusive jurisdiction of the EU Commission. This would leave the German authority out in the cold. The Cartel Office stated that it was in contact with the Commission on this matter.

    Authority President Andreas Mundt stressed that Google’s business model is fundamentally built on processing user data. “Google has a strategic advantage over other companies here due to its established access to relevant data from a very large number of different services,” he said. Google must be measured against the requirements of the new competition rules for digital groups, he said. “The company must give users sufficient choice regarding the processing of their data.”

    The Cartel Office is basing its action on new regulations for digital groups in the Act against Restraints of Competition (GWB Digitization Act), which are intended to help safeguard competition in the Internet economy. Under these rules, the authority can more easily identify a dominant position of companies and intervene to prohibit certain types of behavior.

    Google said the company’s goal is always to offer products that put users first and meet the requirements of regulators. “One of the ways we meet our responsibilities is by continuously adapting our services. We will continue to engage in constructive exchanges with the Federal Cartel Office and try to address concerns.” dpa

    • Antitrust Office
    • Data
    • Digital Markets Act
    • Digitization
    • Google

    Heads

    Sabine Thillaye – French-German mediator

    Sabine Thillaye is a member of the French Defense Committee.

    When things grate between German and French politicians, few people are better placed than Sabine Thillaye to explain why. Thillaye is a Remscheid-born French member of the National Assembly. She is a member of the Defense Committee, the European Affairs Committee and part of the Franco-German Parliamentary Assembly.

    She discusses Franco-German misunderstandings, explains why problems arise when French and Germans talk about “concept” and mean different things, and why Germans feel differently about debt than the French. “I feel like the French see more of the future potential and the Germans more of the risk potential.”

    For over 30 years in France

    Thillaye can lecture on how language affects systems of thought. “A French person is less likely to clearly say ‘no’ in a conversation than a German, whose statement is already more precise, simply because the French language strings a lot of words together.”

    At first, she didn’t want to go to France at all, preferring to go to Brussels and get involved in European politics, then she married a Frenchman. But she never let go of Europe as a project. She has lived in France for more than 30 years and acquired French citizenship in 2015. Macron’s emphasis on European issues was a reason for her, who was previously an entrepreneur, to enter politics. She started out in Macron’s En Marche movement and now sits in the National Assembly for the Democrats after a dispute with party colleagues.

    ‘There is heavy short-term thinking in Germany’

    After the Franco-German Council of Ministers was canceled in October, a delegation from the French defense committee came to Berlin in December. Thillaye told a small group of journalists that German politicians sometimes had the feeling that they were talking to lobbyists because they mainly represented the interests of their constituencies. However, the meetings with her colleagues from the German defense committee were “very positive.”

    Afterwards, Defense Minister Christine Lambrecht took an hour and a half to meet Thillaye. Not a matter of course for such a meeting. Lambrecht, as Thillaye describes it, asked for understanding for the purchase of the F-35 aircraft, saying that Germany had a responsibility to NATO for nuclear sharing. The fact that Germany has bought the American aircraft does not mean that it wants to abandon the Franco-German armament project FCAS.

    The matter of the F-35s again has to do with cultural differences, Thillaye says. “In Germany, there is heavy short-term thinking, because they say: we want to show efficiency now, we need an immediate answer. There is a state of war at our borders, how do we get ahead in terms of capacity?” In France, people tend to think longer-term and say, “Yes, my God, we need our own aircraft or defense system.”

    Clarify problems via instant messenger

    Thillaye does not believe that FCAS could fail. At the end of the year, industry representatives signed the contract for Phase 1B, but politicians had to put pressure on them to do so. The ministers will meet again on Jan. 22. The governments will then be able to join in celebrating 60 years of the Élysée Treaty. A delegation from the German defense committee is also to come to France.

    For the deputies who have “appropriate language skills,” a telegram or signal group is to be set up “so that it is possible to exchange information and react quickly and on short notice when such irritations arise.” If Thillaye is right with her problem diagnosis, that should help. Gabriel Bub

    • European policy
    • France
    • Germany

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