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The German EU Council Presidency: 10 Key Policy Areas to Look Out For

Summary: The German Council Presidency, which starts on July 1st, will be dominated by the goal to agree on a rapid solution to the Corona pandemic. The expectations towards Germany as the economic powerhouse of Europe are high. The Brexit negotiations and the Multiannual Financial Framework are on the political agenda as well. But Germany wants to place further emphasis on areas like climate protection, mobility, and the digital transformation as well as strengthen European sovereignty, with a new wave of European legislation.

Today, the German government decided on its program for the Presidency of the Council of the European Union, which Germany will assume on July 1st for the first time since 2007. As Europe’s economically strongest nation, Germany is confident that it will be able to implement its plans for the future – and that the realization these plans will be continued by the pro-European trio-presidency partners, Portugal and Slovenia. The hope is to make further progress in cooperation with France, the other European heavyweight, whose presidency will follow directly after the trio in the first half of 2022. This could be the last opportunity to push through significant reform projects before elections are held in the two most populous member states at the end of 2021 and the beginning of 2022.

However, the most critical issue of the German Presidency will be to overcome the Corona pandemic and to oversee economic recovery. Angela Merkel described this crisis as “the worst that has affected the European Union so far” and announced that fighting this extraordinary event has absolute priority.

Two other topics that can’t be postponed and need to be dealt with in the second half of 2020 are the finalization of the ongoing Brexit negotiations and the completion of the Multiannual Financial Framework (MFF), which will also include the European economic recovery plan.

While other policy areas might not be as present in the media right now, the regular legislative work has not stopped. In some policy areas, such as health care, the Corona crisis has changed the agenda, but for most areas, the crisis resulted primarily in a time delay of existing discussion points. Most of the projects initially planned for the German presidency before the crisis hit haven’t changed a lot – they have just been assigned a lower priority. As for the proposals of the European Commission (EC) that will be discussed in the German-led Council, some of them faced a small delay during the Croatian Presidency and will now be pursued during the German one. Several policies, for example, in the field of sustainability or digitalization, which were already on the table, have indeed gained prominence in the fight against economic recession and the effort to modernize the EU’s economy.

Although the whole program is even more extensive, we will focus on these following 10 focal points, which are on the agenda of the German Presidency and carry significant importance to businesses across the continent:

  1. Climate policy and the implementation of the Green Deal

One of the first objectives is to conclude the discussions on the draft of the European climate law, which will make the climate neutrality of the European Union legally binding until 2050. In addition to that, it should be decided to what extent the EU can increase its national climate contribution (NDC) for the year 2030 compared to 1990. The basis for the implementation of concrete measures to achieve these goals will be the EC’s impact assessment. To find the right market design, different European approaches, in particular the extension of CO2 pricing to all sectors and the introduction of a minimum CO2 price within the framework of the European Emissions Trading System (EU ETS) will be discussed in the Council. During the German Presidency, the Council will strive for a conclusion on the European framework for the joint renewable energy projects of the member states, especially in the field of offshore wind energy, which has a key role to play in achieving the EU’s ambitious climate targets. Another goal is to ensure a secure and sustainable supply of CO2-neutral and preferably CO2-free gases – especially hydrogen from renewable energies – which at the same time opens up the potential for decarbonization. To his end, discussions on the necessary market design for the development of relevant markets and infrastructures will be held. Additionally, the revised Territorial Agenda 2030 will be discussed and the 2007 “Leipzig Charter on Sustainable European Cities” will be continued to promote a sustainable and balanced rural and urban development. The European state aid law should also be modernized during the presidency to support the implementation of the European Green Deal. Collaborations to create infrastructure such as mobile networks or to realize climate protection measures such as investments in energy infrastructure should be made possible under simplified conditions.

  1. Mobility

One of the major goals of the German Presidency is to make the mobility sector in the EU more climate-friendly and sustainable while also ensuring its competitiveness. To this end, the impact which the pandemic had on the transport infrastructure and its crisis resilience will be analyzed. Based on this analysis, measures will be discussed to strengthen efficient logistics chains and the European transport area, as well as to advance digitalization and the use of data in the mobility sector. While the Council will work on guidance for the Strategy on Sustainable and Smart Mobility announced by the EC, it will, at the same time, push forward the negotiations on legislative projects in individual transport sectors.

  1. Digital transformation

One of the key topics will be to implement a secure, trustworthy, and sovereign European data infrastructure – Gaia X is one example of such an infrastructure. For this reason, the rules and guidelines for the governance of common European data spaces, which have been initiated by the European Data Strategy, should be further advanced. To ensure that citizens can store data on their smartphones securely and free from third-party access, the German Presidency plans to create the legal conditions for secure storage options to be available in all smartphones. Another aspect is the strengthening of the digital single market by creating better liability and safety rules for platforms and digital services. Additionally, the potential of AI and quantum technology should be promoted trough economic recovery measures across all sectors.

  1. Trade

To strengthen the open and rule-based international trade system, Germany wants to promote both a modernization agenda for the World Trade Organization (WTO) and ambitious bilateral, regional and plurilateral agreements, for example in the area of digital trade. Improving the rules of international investment protection by establishing a Multilateral Investment Court is also a goal of the German Presidency. When it comes to trading with China, a more leveled playing field should be created and the investment agreement finally concluded in the second half of 2020. Another aim is to open up procurement markets in third countries further. Africa is viewed as a strategic trade partner, and the EU-African summit will be held in October to highlight its importance. The external economic policy instruments of the EU will be reviewed and modernized to further integrate the sustainable development (SDG) goals into European trade policy. As part of an ambitious EU climate diplomacy, one of the objectives of the presidency will be to internationally ensure fair competition (“level playing field”) in the avoidance of CO2 emissions and to prevent carbon leakage to third countries. The EU energy diplomacy action plan is also to be updated to attract new partners for green energy imports.

  1. Sovereignty of supply chains

The resilience and competitiveness of strategic European value chains need to be increased as the pandemic has revealed vulnerabilities in the global supply chains. The economic recovery of European companies is key to fighting the consequences of the crisis. One of the goals of the German Presidency is to strengthen European sovereignty, especially in strategic areas of industrial production. In addition, Germany will support the EU action plan to enhance corporate responsibility in global supply chains, which promotes human rights, social and environmental standards, and transparency and takes into account the experience and lessons learned from the COVID-19 crisis.

  1. Health

In the wake of the Corona crisis, the German Presidency will focus on further improving the supply of pharmaceuticals, medical devices, and personal protective gear within the EU and propose concrete measures to secure greater autonomy. Other aspects include ensuring the quality of pharmaceutical compounds, the diversification of supply chains, and reinforced European cooperation to expand the production of pharmaceutical compounds for critical medicinal products. It should also be examined whether the Joint Procurement Agreement (JPA) can be utilized as a preparation tool to react more quickly to supply bottlenecks. Another goal is to harness the power of AI in the medical sector and implement a transparent and legally secure European Health Data Space.

  1. Financial markets and taxation

The first aim is to deepen the capital market union to improve inter-European financing and to make the capital markets more internationally competitive. The second aim is the further development of the banking union to increase the stability of the financial system and strengthen the Common Market. The third aim is to remove existing barriers to cross-border digital financial services and create a single digital financial market within the framework of the EC’s Digital Finance Strategy and existing regulatory proposals, for example, on crypto-assets, in order to contribute to the sovereignty of the European financial market. Proposals to effectively solve the fiscal challenges of digitalization and introduce an effective global minimal tax (which the OECD is currently working on) are to be implemented in the EU once an agreement is reached. A EU exclusive digital tax is also on the table, should the negotiations fail. Germany also wants to advocate for the introduction of a financial transaction tax at the European level during its presidency. Due to the increasing mobility of citizens, businesses, and assets, member states’ tax authorities are required to work together. Therefore, the Mutual Assistance Directive should be revised in order to simplify taxation and effectively combat tax evasion.

  1. SMEs

Strengthening the competitiveness of small and medium-sized businesses is also high on the agenda. To this end, a suitable framework to promote sustainable innovation and to provide concrete measures concerning financing, substantial reduction of red tape, and SME-friendly legislation will be discussed. A SME conference will also be held in November, where cross-border approaches to strengthening entrepreneurship, digitalization, and innovation will be debated.

  1. Internal and external competition law

Merger control proceedings should take into account the global competitive situation and companies should be given greater legal certainty in cooperation agreements. The abuse control regarding competition law should also be further developed when it comes to platform markets. The EU should also better counteract distortions of competition by state-controlled and subsidized companies from third countries. In the context of the Corona crisis, this also refers to the protection of European companies that could be the target of takeovers. Furthermore, Germany wants to initiate a discussion on how the EU’s public procurement rules can be made even more sustainable and tailored to future emergencies and economic crises.

  1. Agriculture

The agricultural and food industry is a systemically important sector and the COVID-19 pandemic has shown the importance of regional supply security. That’s why the Council under the German Presidency wants to make a contribution to a more sustainable agriculture and fishing sector and the implementation of the SDG. The possibilities offered by digitalization and the joint use of data should also be integrated to strengthen and modernize farming.

It can be concluded that Germany has a lot on its agenda. The COVID-19 crisis has barely slowed down the extensive plans and even accelerated some proposals, which now seem essential to the economic recovery of Europe. It is now up to all member states and their willingness to find a compromise in key policy areas to bring this ambitious policy program to life.

Authors: Berthold Schilling & Björn Sackniess