A&G Newsletter Q4 2024

I. European AI Act Comes into Effect

The European Artificial Intelligence Act (AI Act), the first comprehensive AI regulation worldwide, is now in force. This law guarantees that AI development and usage in the EU is safe and protects fundamental rights, while also encouraging innovation and investment.

The AI Act classifies AI systems by risk levels:

Minimal Risk: AI systems like spam filters face no obligations. Companies may voluntarily adopt guidelines.

Specific Transparency Risk: Systems like chatbots must disclose their AI nature. AI-generated content, such as deepfakes, must be labeled. Synthetic media should be marked in a detectable format.

High Risk: High-risk AI, such as systems used in recruitment or financial decisions, must meet strict requirements like human oversight, risk mitigation, and cybersecurity. Regulatory sandboxes will support innovation.

Unacceptable Risk: AI systems threatening human rights are banned. This includes tools for social scoring or predictive policing, as well as some uses of biometric identification.

The law also applies to general-purpose AI models used for multiple tasks, ensuring transparency and addressing potential risks.

EU countries have until August 2025 to appoint national authorities to enforce these rules. The European Commission’s AI Office will handle EU-wide implementation, supported by advisory bodies.

Non-compliance could lead to fines up to 7% of global revenue for banned applications.

Most of the AI Act’s rules will take effect in August 2026, though some bans start earlier. The Commission is also encouraging companies to adopt the rules voluntarily through the AI Pact.

The EU continues to refine its AI regulations, inviting stakeholders to shape future guidelines and codes of practice.

Our team enjoys long-lasting relationships and understands the complexities to help shape decisions.

II. EU Restricts PFHxA Chemicals to Protect Health and Environment

The European Commission has introduced new regulations under the REACH legislation to limit the use of undecafluorohexanoic acid (PFHxA) and related substances, part of the broader PFAS family. These chemicals are highly persistent in water and pose significant risks to both human health and the environment.

The new restriction targets areas where risks are not well-controlled, safer alternatives are available, and the economic impact is manageable. The ban includes the use of PFHxA in products like:

Consumer textiles (e.g., rain jackets)
Food packaging (e.g., pizza boxes)
Waterproofing sprays
Cosmetics
Some firefighting foams

However, PFHxA will still be permitted in applications like semiconductors, batteries, and fuel cells, which are vital for green hydrogen technologies.

This move builds on previous efforts to reduce PFAS emissions, as PFHxA often replaces another banned substance, PFOA. The restriction is based on scientific evaluations by the European Chemicals Agency (ECHA) and has been approved by both the European Parliament and the Council.

The new rule will be enforced 20 days after publication in the Official Journal, with transitional periods ranging from 18 months to five years, depending on the specific use.

PFAS chemicals, often called “forever chemicals,” do not break down naturally and have contaminated soil and water, including drinking supplies. The EU has been taking action to address PFAS pollution for the past two decades, as part of its broader strategy to promote sustainability and protect human health.

The new PFHxA restrictions are part of the EU’s ongoing efforts to tackle PFAS risks, separate from a broader PFAS ban currently under review by ECHA.

III. EU and Singapore Finalize Digital Trade Agreement

The European Union and Singapore have completed negotiations for a Digital Trade Agreement (DTA), marking the EU’s first deal focused on digital trade. This agreement positions the EU as a global leader in setting standards for digital trade and cross-border data flow rules.

The DTA builds on the 2019 EU-Singapore Free Trade Agreement, enhancing economic ties between the two regions. It aims to boost digital trade by providing clear rules for businesses, increasing consumer trust, and eliminating barriers to online commerce. The agreement also promises new economic opportunities while maintaining a safe and secure digital environment.

Key benefits of the agreement include:

Facilitating digital trade in goods and services
Allowing cross-border data flows without unnecessary restrictions
Strengthening consumer trust through strict rules, including anti-spam measures

This deal solidifies the EU and Singapore’s role in shaping global digital policies while ensuring that digital economies remain open and fair. It also aligns with the EU’s approach to protecting individual rights in digital and data governance.

With negotiations concluded, the EU and Singapore will begin their respective approval processes for the formal signing of the agreement.

The DTA complements the 2019 EU-Singapore Free Trade Agreement, advancing the relationship to a new level. It reflects the EU’s commitment to establishing modern digital trade rules with global partners, as seen in recent agreements with the UK, Chile, New Zealand, and Japan.

In 2022, over half of the trade between the EU and Singapore was digitally delivered, amounting to €43 billion. The new DTA is expected to further increase this trade and create more growth opportunities.

IV. EU Registers Two New Citizens’ Initiatives on Animal Farming and Food Labelling

The European Commission has registered two new European Citizens’ Initiatives: “Stop Cruelty Stop Slaughter” and “Stop Fake Food: Origin on Label.”

The “Stop Cruelty Stop Slaughter” initiative calls for the EU to promote plant-based proteins, such as plant-based milk and egg substitutes, and cultivated meat. The organizers also aim to reduce the number of farm animals and progressively close all animal farms.

The “Stop Fake Food: Origin on Label” initiative seeks transparent food labeling for consumers, providing clear information on the origin of food products. The initiative also emphasizes consistent environmental, health, and labor standards across the EU’s internal market.

Both initiatives meet the legal requirements under EU law, and the Commission has deemed them legally admissible. However, at this stage, the Commission has not assessed the substance of the proposals.

Organizers have six months to begin collecting signatures. If an initiative gathers at least one million signatures within one year, with support from at least seven EU countries, the Commission will be required to respond. It will then decide whether to take action and explain its decision.

V. EU Proposes Digital Travel Application for Faster and Safer Border Crossings

The European Commission has put forward two proposals to digitalize passports and identity cards, known as the “EU Digital Travel application,” to streamline travel to and from the Schengen area.

Currently, both EU and non-EU citizens undergo physical checks at external borders. With nearly 600 million crossings recorded in 2023, there is a need to speed up these checks while maintaining a high level of security. The proposed digital travel credentials aim to make border control faster and more efficient.

Key Features of the Digital Travel Credentials:

Digital Version of Travel Documents: The new digital passports and ID cards will contain the same data stored on traditional documents, including a facial image, but not fingerprints. Travellers can store these credentials on their mobile phones. Use of digital credentials will be voluntary and free of charge.

Faster Border Crossings: Travellers, both EU and non-EU, can submit their digital documents in advance for quicker border checks when traveling to or from the Schengen area.

Enhanced Freedom of Movement: Digital identity cards may be used for registration and identification when moving between EU countries, reducing administrative burdens for EU citizens.

Improved Border Efficiency: By conducting advance checks through digital travel credentials, border authorities can focus more on detecting cross-border crime and migrant smuggling.

Increased Security: Digital credentials will improve document verification, reducing the risk of fraud and making it harder for fake documents to go unnoticed.

The EU Digital Travel Application

The Commission, supported by eu-LISA, will develop the EU Digital Travel application. Available to all citizens with biometric passports or EU identity cards, this app will allow users to:

Create digital travel credentials.
Submit travel plans and documents in advance.
Ensure data protection, with user consent required before processing personal information.

The application will be fully operational by 2030 and integrated with the European Digital Identity wallet.

The proposals now await approval by the Council and the European Parliament. Once adopted, development of the digital travel application and technical standards will begin.

VI. EU Pushes for Stronger Smoke-Free Measures to Protect Public Health

The European Commission has recommended stronger smoke-free environment policies to better protect people, particularly children and young people, from second-hand smoke and aerosols. This initiative aims to revise the current Council Recommendation on smoke-free environments.

The new guidelines suggest that EU Member States expand smoke-free areas to outdoor spaces where children are likely to be present, such as playgrounds, amusement parks, swimming pools, and areas near healthcare and educational facilities, public buildings, and transportation stops.

Additionally, the Commission recommends extending these policies to include emerging products like heated tobacco products (HTPs) and electronic cigarettes. The World Health Organization (WHO) has highlighted the harmful effects of second-hand emissions from these products, which can cause respiratory and cardiovascular issues, particularly in younger users.

To support these measures, the Commission encourages Member States to share best practices and strengthen international cooperation. The EU will provide financial backing, including a €16 million grant from the EU4Health program and €80 million from the Horizon Programme to strengthen tobacco control and addiction prevention. The Commission will also develop a prevention toolkit aimed at protecting children and young people.

While these recommendations are addressed to Member States, health policy remains under national jurisdiction. Therefore, countries are invited to implement these measures based on their own circumstances and needs.

VII. EU Updates Guidelines on Air Passenger Rights for Better Clarity

The European Commission has released updated guidelines on air passenger rights to improve compliance and ensure consistent enforcement across the EU. These revisions clarify key regulations and address recent rulings by the Court of Justice, enhancing protection for travelers. A new section on managing large-scale travel disruptions has also been added.

The guidelines also include revised rules for passengers with disabilities and reduced mobility, ensuring clearer rights and improved support during air travel.

EU-level passenger rights are enforced by national bodies, but inconsistent practices have caused confusion for travelers, particularly when crossing borders. These updated guidelines aim to harmonize enforcement and help passengers understand their rights more easily. They complement ongoing efforts by the Commission to raise awareness, including through online campaigns, the Your Europe website, and a mobile app for passenger rights.

Survey Results on Passenger Awareness

A new Eurobarometer survey reveals that while awareness of passenger rights has grown, many Europeans still feel underinformed. The survey found that:

33% of respondents felt informed about rail travel rights, followed by 30% for air travel.
84% of passengers with disabilities or reduced mobility were satisfied with assistance.
35% of travelers had seen information on passenger rights, a 13% increase since 2019.

Satisfaction with how major disruptions were handled was highest for flights (66%), followed by ships/ferries (53%), rail (52%), and coaches (50%).

The revised guidelines are now available for use by transport operators and enforcement bodies. The survey results and updated guidelines will also inform discussions on future legislation concerning passenger rights, including multimodal journeys.

A&G Newsletter Q3 2024

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.

Our team enjoys long-lasting relationships and understands the complexities to help shape decisions.

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.

Alber & Geiger can help organizations voice their interests and concerns to EU policymakers.

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.

Alber & Geiger can help organizations voice their interests and concerns to EU policymakers.

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.

Alber & Geiger can help organizations voice their interests and concerns to EU policymakers.

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.

Alber & Geiger can help organizations voice their interests and concerns to EU policymakers.

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.


EU presents its new Industrial Strategy

On March 10, the Commission presented its Industrial Policy Strategy. This plan sets out a broad work programme: from the implementation of a digital industrial strategy to the revision of competition rules. This strategy plans for a strengthening of the fight against barriers to trade within the internal market, development plans for key sectors and a strengthened partnership with industry in policy making. In addition, the Commission plans to internationalise its standards, in particular through WTO negotiations. Therefore, all companies, even those that do not trade directly with the EU, are concerned by this action plan.

More concretely, the plan provides for the modernisation of the Internal Market. The Commission plans to set up a Single Market Enforcement Task Force, a review of intellectual property rules and a recasting of the competition and anti-trust rules. In addition, the Commission will, in the coming months, present its strategies sector by sector. This concerns in particular the chemical sector and the mobility sector. The Commission will build its strategies and priorities through co-decision via the Industrial Forum and by fostering public-private partnerships.

In conclusion, the internal market will be strengthened, and structuring rules will be reviewed in the coming months. In addition, sector-by-sector industrial strategies will have an impact on product design and on research and innovation through funding programmes and industrial alliances supported by public actors. As the Commission has announced that these regulations will be co-designed in consultation with industry representatives, it is crucial for industry to strengthen its presence in the European decision-making process.

EU carbon border tax

The European Green Deal, proposed by President von der Leyen to be delivered in the initial 100 days in office, will include the first European Climate Law enshrining the 2050 climate-neutrality target into legislation. The Green Deal will include a more inclusive Emissions Trading System (ETS), as well as a Carbon Border Tax to mitigate ETS’s effects on the market.

An extension of the ETS in the airlines sector will be translated to increased costs for the industry and additional taxes. The adjustment tax is yet to be formally proposed, but it aims to prevent businesses from relocating to laxer jurisdictions, creating ‘carbon leakage’, and to protect them from non-EU competitors.

The additional tax-burdens are met with criticism due to their incompatibility to WTO rules and the distortion of the level-playing field. If not applied unanimously with European unilateral backing, the tax adjustment risks high costs for businesses and consumers. Additionally, sectors with a high degree of cross-border division of labour or a global supply chain will be most heavily affected. Ramifications of the supposed tax were also felt in wider sectors outside the energy industry, as the levy is feared to worsen trade relations with the US, causing increased tariffs on EU products.

EU to enforce rules on online payments

The European Payments Service Directive II (PSD2), in force since January 2018, is currently stirring debate among Member States regarding the process of its implementation. The Directive is designed to harmonize and simplify money transfers inside the EU, decrease fraud in online payments, and inform consumers about the rights and obligations.

The revised PSD2 extends several obligations concerning data protection and information to and from international payments. It mandates stronger security requirements for online transactions and obliges providers to request customer authentication and demands they register. While the PSD2 compliance date was set for September 2019, the European Banking Authority unconditionally extended the implementation period in order to allow for full application of the new requirements. Nevertheless, a fixed common EU-wide transition period, agreed upon by Member States, is anticipated by the European Commission in order to ensure state-wide compliance.

Enforcement of PSD2 will allow consumers and merchants to increasingly benefit from the internal market and e-commerce. Its efficient integration will increase competitiveness and cost-efficiency for consumers and service providers. PSD2 will allow companies, other than banks, to offer new financial services to the public with consumers’ consent.

EU restrictions on electrical and electronic materials

European legislation restricting the use of hazardous substances (RoHS) in electrical and electronic equipment was approved in 2003 and has since been reviewed in 2011 and 2017. The European Commission initiated in September a consultation to collect public and business’ opinions in order to assess the performance of the restriction of hazardous elements, the management of chemical waste and the impact of these materials on human and environmental health. Currently the use of lead, mercury, cadmium, hexavalent chromium, PBB and PBDE in electrical and electronic equipment is restricted. Four phthalates were recently added to this list in July 2019.

The evaluation will assess the effectiveness, efficiency, relevance and coherence of the current RoHS. The consultation will evaluate the functioning of the Internal Market, ensuring that the current legislation avoids distortion of competition that arises from differing product requirements among Member States. Input from the consultation will shape the Commission’s decision on policy options for the future. Amendments to the directive will affect a wide scope of manufacturers, as any product, which requires electric currents, is within scope. It has potential to affect the circular economy, restrict chemicals, and increase the standards of chemical waste management.

EU to regulate voice call termination rates

The European Commission has launched a public consultation to gather stakeholder and the public’s opinion on the scope and application of the future EU harmonized rules on voice call termination services. A termination rate is one component in the cost calculation for providing telephone service and is subject to most variation in the EU.

Commission is expected to adopt a Delegated Act in the field of voice call termination rates in Member States by 31 December 2020. The current differences have distorted cross-border competition and fragmented telecom markets. Therefore, the regulation is intended to standardise rates by establishing a pan-European maximum termination rate for fixed and mobile calls. This consultation will determine the services that fall under voice call termination. Telecommunication operators and consumers will benefit, as mitigating the risks of excessive pricing will increase consumption.

EU to review European Financial Benchmarks

As a result of the manipulation of two prominent benchmarks – the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) – the EU adopted the Benchmark Regulation (BMR) on indices used in financial instruments and contracts or to measure the performance of investment funds in January 2018. The European Commission has initiated a consultation on the review of the BMR, two years after its entry into force to collect stakeholders’ opinions on benchmarks’ efficiency.

The European Commission will review the regime for critical benchmarks and the effectiveness of the mechanism for authorisation and registration of administrators. It will equally evaluate the categorisation of benchmarks and the rules for third countries. The review of the EU Benchmark Regulation will reinforce the accuracy and integrity of indices, which will determine the strength of market confidence. The review of the BMR may introduce new compliance requirements for benchmark administrators, contributors and users with regard to interest rate, foreign exchange, and commodity.

EU guidelines on International Procurement Instrument

The European Commission released a new communication, guiding the participation of third country bidders and goods in the EU procurement market. The document aims to foment competition in public tenders and provide information to public buyers in Member States. The document advises on quality standards, how to assess abnormally low-priced offers and compliance with social and environmental obligations.

The EU’s open procurement market is the largest in the world, with an estimated value of €2 trillion yearly. However, many EU trading partners apply restrictive practices in their markets against EU companies; with more than half of the worldwide procurement market (totalling €8 trillion), closed to European businesses. These restrictions affect competitive EU sectors such as construction, transport, medical devices and pharmaceuticals. The Commission’s recent communication coupled with the sustained asymmetric market access has reignited the call for the adoption of the International Procurement Instrument (IPI) before the end of 2019.

The Commission is expected to call on the Parliament and Council to approve the IPI by 2020. The IPI will promote reciprocity, tackle protectionism and open up procurement opportunities for EU companies in third countries.

EU moves on Artificial Intelligence

In April this year, the European Commission put forward an EU approach to artificial intelligence and robotics. The EU’s plans include funding to encourage the uptake between public and private sectors. Moreover, the EU’s approach foresees support to education and labour to prepare for the deployment of AI. Last, while the EU is determined to stay at the front of this technological development, it will also work on ensuring a proper legal and ethical framework.

More recently, the European Union followed on the above Communication with a plan for AI made in Europe. The plan will foresee concrete measures that will be put forward by the European Commission and the Member States in 2019 and 2020. These will include AI ethics guidelines and a guidance on the Product Liability Directive. In addition, the regulatory framework on Digital Single Market will have to be completed to make AI a success. Completion of legislative proposals in the area of cybersecurity, open data and upcoming EU budgets, will be important to secure the legal framework and the funding opportunities for investment, research and innovation.

For the abovementioned reasons, all potential users, including small and medium-sized enterprises, companies from non-tech sectors and public administrations should engage in the process to shape the rules in order to take advantage of the opportunities.