1. EU Sets Guidelines to Restrict Harmful Chemicals to Essential Uses Only
The European Commission has established guiding criteria and principles to define “essential uses” for the most harmful chemicals. This decision aims to give industry and investors clear expectations regarding manufacturing products crucial for the EU’s green and digital transition, health, and defense sectors. It aligns with the Chemicals Strategy for Sustainability, which seeks to protect human health and the environment and advance towards a toxic-free future.
Essential Uses Concept
The “essential uses” concept evaluates when using the most harmful substances is justified from a societal perspective. If a substance is necessary for health or safety, or critical for society’s functioning, and no acceptable alternatives exist, its use may continue for a specific period. This approach ensures detailed provisions are included in EU legislation to effectively apply the essential use concept.
The goal is to enhance regulatory efficiency and predictability, facilitating a faster phase-out of non-essential harmful substances while allowing more time for essential uses. This framework will help the industry prioritize investments in innovative and sustainable chemicals. For essential societal uses, the concept provides companies with the certainty that critical applications, such as those for the green and digital transition and security and defense, can continue until alternatives are found.
Additionally, this concept encourages voluntary schemes like sustainable finance and research and innovation, promoting safer and more sustainable products and methods.
Transition to Safe and Sustainable Chemicals
On April 17, the European Environment Agency (EEA) and the European Chemicals Agency (ECHA) published an indicator framework to assess chemical pollution’s drivers and impacts. The report reveals progress in some areas but highlights the need for more work to reduce harmful substances’ impact on health and the environment, offering recommendations for future actions.
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2. Commission Launches Critical Medicines Alliance to Prevent Shortages
The European Commission’s Health Emergency Preparedness and Response Authority (HERA), in collaboration with the Belgian Presidency of the Council of the EU, has launched the Critical Medicines Alliance during the informal EPSCO Council meeting of health ministers. This initiative aims to build a robust European Health Union by addressing and preventing shortages of critical medicines.
The Alliance, first announced by the Commission in October 2023, unites national authorities, industry, healthcare organizations, civil society representatives, the Commission, and EU agencies. It focuses on industrial policy and complements the reform of the EU’s pharmaceutical legislation, responding to calls from over 23 Member States for greater strategic autonomy in the sector.
Following an open call for expression of interest on January 16, 2024, the Alliance now has approximately 250 registered members, including governmental agencies, industry representatives, and non-governmental organizations.
Key Strategic Actions of the Alliance
The Alliance, designed as an inclusive and transparent consultative mechanism, aims to:
Enhance supply security
Strengthen medicine availability
Reduce EU supply chain dependencies
These efforts will contribute to a more resilient and sustainable pharmaceutical industry in Europe and more secure medicine supplies for citizens. The Alliance will develop strategic recommendations to address shortages, focusing on over-dependence on a limited number of external suppliers, limited diversification, and production capacities. These recommendations will form a multi-year ‘Strategic Plan’ with specific milestones and deadlines.
Discussions within the Alliance will help the Commission identify innovative investment projects eligible for EU and national funding to strengthen EU manufacturing. The Alliance will also explore market incentives, such as capacity reservation contracts and joint procurement, to enhance supply security.
The Alliance is launched for five years, with initial recommendations expected by the end of the year. While the first call for expression of interest is closed, the Alliance remains open to new members throughout its operation.
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3. EU-New Zealand Trade Pact Unlocks New Opportunities for EU Exporters
EU businesses, producers, and farmers will benefit significantly from the new EU-New Zealand trade agreement, which took effect in April. The deal promises to cut €140 million in annual duties for EU companies, fostering a surge in export opportunities.
The agreement is projected to boost EU-New Zealand trade by up to 30% within a decade, with EU exports potentially increasing by €4.5 billion annually. EU investments in New Zealand could grow by up to 80%. This landmark deal also includes strong sustainability commitments, such as adherence to the Paris Climate Agreement and core labor rights.
EU farmers stand to gain from the elimination of tariffs on key exports like pig meat, wine, chocolate, and biscuits. The agreement also protects nearly 2,000 EU wine and spirit names, including Prosecco and Champagne, and 163 traditional EU products, such as Feta cheese and Lübecker Marzipan. Sensitive EU agricultural products, like beef and dairy, are safeguarded with carefully designed tariff rate quotas.
Key benefits for EU businesses include zero tariffs on exports to New Zealand, a more open services market, non-discriminatory treatment of EU investors, improved access to New Zealand government procurement contracts, and reduced compliance requirements. Small businesses will also find dedicated support for exports.
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4. Commission Launches AI Office to Boost EU Leadership in Trustworthy AI
The Commission has launched the AI Office to advance the development, deployment, and use of AI, aiming to foster societal and economic benefits while mitigating risks. This office will be crucial in implementing the AI Act, particularly for general-purpose AI models, and positioning the EU as a leader in trustworthy AI research and innovation.
AI Office Structure
The AI Office comprises several specialized units:
Regulation and Compliance Unit: Ensures uniform application and enforcement of the AI Act across the EU, investigates infringements, and administers sanctions.
AI Safety Unit: Identifies risks associated with general-purpose models and develops mitigation measures, evaluation, and testing approaches.
Excellence in AI and Robotics Unit: Supports and funds AI research and development, coordinates the GenAI4EU initiative, and integrates innovative applications.
AI for Societal Good Unit: Engages internationally in AI applications for public benefit, such as weather modeling and cancer diagnoses.
AI Innovation and Policy Coordination Unit: Oversees the EU AI strategy, monitors trends and investments, promotes AI adoption through European Digital Innovation Hubs and AI Factories, and supports regulatory sandboxes and real-world testing.
Leadership and Collaboration
Led by the Head of the AI Office, with guidance from a Lead Scientific Adviser and an Adviser for international affairs, the AI Office will employ over 140 staff, including technology specialists, lawyers, and economists. It will ensure coherent implementation of the AI Act, working closely with AI developers, the scientific community, and other stakeholders to develop codes of practice and enforce regulations.
Engagement and Promotion
The AI Office will collaborate with Member States and experts through dedicated forums and the European Artificial Intelligence Board. It will also engage with a Scientific Panel and an Advisory Forum representing industry, startups, academia, and civil society.
Innovation and International Strategy
The AI Office will promote a trustworthy AI ecosystem in the EU, providing access to AI sandboxes, real-world testing, and support structures like the Testing and Experimentation Facilities in AI. Initiatives like GenAI4EU will integrate AI models into novel applications, stimulating investment. The AI Office aims to establish a strategic and coherent European approach to AI on the international stage, becoming a global reference point.
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5. Commission Launches Pilot Mechanism to Boost Hydrogen Market
The Commission is advancing the European hydrogen market by launching a pilot mechanism under the newly adopted decarbonised gases and hydrogen package. This initiative aims to accelerate investments by providing a clear market overview for both off-takers and suppliers and facilitating their connections. The mechanism will operate for five years as part of the European Hydrogen Bank.
The hydrogen pilot mechanism will collect and share information on the demand and supply of renewable and low-carbon hydrogen and derivatives, allowing European buyers to match with suppliers both locally and internationally. It will also gather and analyze market data on hydrogen flows and prices. A procurement process has begun to find a service provider to develop an IT platform for the pilot mechanism, with the Commission planning to sign a contract by the end of this year to start operations by mid-2025.
Europe’s first large-scale electrolysers are already under construction, and initial off-take agreements have been signed. Improving demand visibility between suppliers and consumers will help accelerate final investment decisions and secure off-take agreements. Hydrogen is crucial for achieving the Green Deal targets, phasing out Russian fossil fuels, and supporting the decarbonisation and competitiveness of European industry.
This pilot mechanism is part of the Commission’s broader efforts to establish a European Multiproduct Platform for the joint purchase of strategic commodities, which may include strategic raw materials in the future.
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6. EU Signs Aviation Agreement with Bangladesh
The European Union and Bangladesh have signed a Horizontal Aviation Agreement, enabling any EU airline to operate flights between Bangladesh and any of the seven EU Member States whose bilateral air services agreements with Bangladesh previously restricted this. These bilateral agreements had only permitted airlines owned and controlled by the signatory Member State or its nationals to operate such routes.
This agreement grants all EU air carriers non-discriminatory access to routes connecting the EU and Bangladesh, fostering open and fair competition and enhancing connectivity. Both parties will benefit from the legal certainty provided by this agreement.
Background
The horizontal agreement between the EU and Bangladesh is part of the Commission’s Sustainable and Smart Mobility Strategy, aimed at generating growth for European businesses, fostering innovation, and providing passengers with safer, more sustainable, and affordable flights.
Next Steps
Both the European Union and Bangladesh will now proceed with their respective internal procedures to finalize the agreement.
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7. Commission Registers Citizens’ Initiative on Greenhouse Gas Taxation
The European Commission has registered a European Citizens’ Initiative (ECI) titled ‘Save the Planet by shifting taxation from labour to greenhouse gas emissions’.
The initiative’s organizers urge the Commission to enhance the Fit for 55 Package and the EU carbon pricing system by accelerating the phase-out of free allowances and allowing an uncapped carbon price to meet emission reduction targets. They also propose redistributing a significant portion of carbon pricing revenues to low-income households, bolstering the EU’s Social Climate Fund, and promoting the creation of a ‘Climate Club’ where member countries implement strong carbon pricing with revenue redistribution to low-income households.
The decision to register is legal and does not prejudge the final legal and political conclusions of the Commission on this initiative or the actions it may take if the initiative gains sufficient support.
As the European Citizens’ Initiative meets the formal conditions set by relevant legislation, the Commission deems it legally admissible. However, the Commission has not yet examined the substance of the proposals.
Next Steps
The organizers have six months to start collecting signatures. If an ECI garners one million statements of support within one year, with minimum numbers reached in at least seven different Member States, the Commission must respond. It will then decide whether to take action in response to the request and will explain its reasoning.