News | 2020

I. EU’s Green Deal

In December 2019, the new European Commission presented the European Green Deal. The ultimate goal of the European Green Deal is to make the European Union the first climate neutral continent by 2050. To meet this objective, the European Commission will embark on a comprehensive review of existing and ongoing legislative measures and consider rolling out new detailed rules. Aside from the obvious focus on climate neutrality, bold action will be taken in other areas, including energy transition, agriculture, circular economy and sustainable transport. The European Green Deal is not only a political commitment, but a concrete new agenda that will shape European policy for the years to come. In that sense, the European Green Deal will affect all businesses and investors.

More concretely, the European Green Deal will affect all businesses that are working in the coal market. There will be a rapid shift towards renewable resources and a quick phase out on coal. When it comes to agriculture, there will be a large focus on land use as well as nutrients, chemicals and water. In relation to transport, there will be interruptions and opportunities for cars, ships and planes industries and service providers. Plastic producers will also face revamped rules that would demand higher standards on re-use and recyclability.

In sum, the European Green Deal will mark a shift in European policy. All businesses, whether leaders in the above-mentioned sectors or simply challenged by the new policies, must develop a government affairs strategy to avoid disruptions.

II. EU to Regulate Artificial Intelligence

In February 2020, the European Commission issued the White Paper on Artificial Intelligence. This document will be the basis for a number of new EU rules and legislations on the technology sector, in particular what the European Union considers high risk Artificial Intelligence applications. Most impacted sectors will be healthcare, financial institutions, transport and energy. The new rules and regulations will have global effects, not only for those companies that serve European consumers. As with the GDPR, the Artificial Intelligence regulation will shape future policy in other jurisdictions across the world.

In more concrete terms, the new EU rules are expected to introduce specific obligations for high risk Artificial Intelligence applications such as robustness and accuracy, training data and record-keeping and human oversight. Another important component is the fine line on what is high risk and low risk for certain applications. All businesses are currently invited to share their views on the White Paper by May 19, 2020. By June 2020, the European Commission will issue an assessment of the requirement identified above. A concrete legislative proposal might follow in the last quarter of 2020.

In conclusion, the process to regulate Artificial Intelligence in Europe has already started. Technology companies, but also companies that rely on Artificial Intelligence enabled products will be heavily affected. Therefore, all businesses most likely to be affected, should start now thinking of engaging with the EU institutions, starting with the ongoing consultation process.

III. EU’s Data Regulation

At the start of the year, the European Commission published a European strategy on data. The strategy covers data economy, data protection and standardized data sharing. It envisages also the creation of an EU Data Law in 2021. There will be strict rules that other countries might replicate in the future.

In more detail, the strategy foresees measures for data access and use including a legislative framework for the governance of common European data spaces that will be presented in the fourth quarter of 2020. In addition, the European Commission will invest in strengthening the EU’s capabilities and infrastructures for data processing and interoperability. In fact, the European Commission intends to set-up a cloud service marketplace in the fourth quarter of 2022. Moreover, the European Commission intends to empower individuals with respect to their data and build capacity for small and medium enterprises. Last, the European Commission will promote common European data spaces in strategic sectors such as energy, finance, health and agriculture.

The European Commission has initiated a consultation process on the European strategy on data, which will last until May 19, 2020. European and non-European industries, especially those that are heavily data driven, need to raise their voice in Brussels and in key capitals like Paris and Berlin now that the debate has started.

IV. EU Rules on Food Safety

On 2 March 2020, the European Commission commenced a consultation process with all stakeholders aimed at reviewing the existing legal framework on food irradiation. The goal of the European Commission is two-fold. On one hand, the European Commission wants to assess whether the free movement of irradiated foodstuff within the internal market still works. On the other hand, the European Commission wants to assess whether the current rules ensure a high degree of protection of human health and the environment.

Currently, EU rules on food irradiation date back to 1991. The legislation focuses above all on defining the process of irradiation. They also specify the limits to the irradiation process while providing the grounds when irradiation may be authorized. In fact, there is an EU list of food and food ingredients for irradiation that includes a wide variety of products. In addition, EU law imposes labeling requirements when food and food ingredients have undergone irradiation. Last, it stipulates that EU countries must have uniform standards to detect irradiated food. The latter created by the European Committee for Standardization.

The start of the consultation signals the beginning of the process to assess whether EU legislation on food irradiation is fit for purpose. All views must be received by May 25, 2020. The process is especially important for food business operators in general and suppliers of services to irradiation facilities and manufacturers of irradiation equipment and materials in particular.

V. New EU Rules for Investment Firms

In February, the European Commission started a public consultation with a focus on reviewing the regulatory framework for investment firms and market operators. Through this process, the European Commission is looking to collect stakeholders’ views, in particular market participants, on a possible review of the Market in Financial Instruments Directive (MiFID II) and the Market in Financial Instruments Regulation (MiFIR).

As background, MiFID II and MiFIR constitute the EU legislative framework aimed at creating a single market for investment services across the European Union, by seeking to improve competitiveness and providing high-level protection for investors. More concretely, they set out organisation requirements for investment firms as well as impose transparency obligations for shares and reporting to avoid market abuse. MiFID II and MiFIR stipulate the rules on the admission of financial instruments to trading and impose authorization requirements.

The European Commission is now seeking to carry out an assessment of the overall regime. The input received will be included in the report that the European Commission will present the European Parliament and the Council. The report may well be accompanied with a concrete proposal to reform the current framework. Therefore, EU businesses, investment firms, asset managers, FinTech and trading venues should participate in this process to protect the current rules or suggest amendments.

VI. EU Trade with Third Countries

On 11 March 2020, the European Commission launched a consultation to collect views from business, third countries, NGOs and associations over a possible revision of the EU’s Generalized Scheme of Preferences (GSP). The EU’s Generalized Scheme of Preferences provides one-way tariff preferences to developing countries. More concretely, the scheme allows developing countries to export their products into the EU with fewer duties, and in some cases, even duty free. The received feedback will be used by the European Commission to carry out an impact assessment on possible policy options to amend the existing rules.

To this end, the public consultation provides an opportunity for countries benefiting from the scheme, as well as those that wish to be included, to make their voice heard and shape the new rules. Low and lower middle-income countries have an opportunity to make contributions both in terms of coverage and benefits, across the three offerings of the scheme, namely: Standard GSP, GSP+ and Everything But Arms. In addition, there is also a chance to shape the conditions to be granted access to the scheme. Last, countries will also be able to take a position on the monitoring mechanisms of the EU.

While the existing Generalized Scheme of Preferences is not set to expire until 2023, the public consultation means that the process to determine its content for the future is already in full motion. In fact, all interested parties are encouraged to submit their feedback by June 3, 2020. Aside from the European Commission, other stakeholders will be involved, in particular the European Parliament and the Council’s Working Party for GSP.