covid-19 - has the eu done enough? wednesday 3 …...2020/06/03 · covid-19 - has the eu done...
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COVID-19 - Has the EU done enough? Wednesday 3 June 2020 16.00-18.00 BST
This online seminar held in association with Wolters Kluwer focused on the impact of
COVID-19 on the following areas of EU Law
State Aid
Monetary Union (Financial Regulation)
Public Procurement
EU (& UK) Competition Law
Soft Law
The expert panel featured Professor Andrea Biondi, Co-Director, Centre of European Law,
Professor Takis Tridimas, Co- Director, Centre of European Law, Michael Bowsher QC,
Monckton Chambers and Visiting Professor, Kings College London Professor Renato
Nazzini, The Dickson Poon School of Law & Dr Oana Stefan, Reader, Centre of European
Law.
The seminar attempted to unpack the monumental changes to EU law following the COVID-
19 crisis. Since the start of the crisis the EU had produced over 300 statutory instruments
affecting most of the EU law areas most notably monetary and financial regulation, state aid,
competition and public procurement.
Over 90 people attendee the event and were able to table questions in advance and during the
event via the Q & A function.
Covid 19 -Has the EU done enough?Public Procurement in Crisis• Michael Bowsher QC
• Visiting Professor, King’s College London
• Barrister; London, Belfast & Dublin
The Limiting Foundations of EU Public Procurement Law
• Regime established as an internal market regime
• Developed by ECJ into a regime protecting equal treatment of tenderers and transparency
• Ambiguity of Transparency• Opening up competition• Clarity in tender documents• Consistency of process• Availability of remedies
• Further Goals and Principles bolted on post 2008• Sustainability• Innovation – with a lack of clarity as to whether this means
innovation of process or outcome
• Limited Remedies• Bidder driven remedies – limited cohort of challengers• Impact of challenges on health outcomes – Possible
reluctance of court to impede health-based outcomes
Insufficient attention paid to Integrity?
• Long treated as largely a problem for Italy, and a few other Member States
• Long history of tension between Italian counter mafia measures in public procurement and internal market principles
• For many Sustainability or Innovation should be the drivers
• But for others these “modern” Principles facilitate “dirty” Procurement
Covid-19 as Public Procurement Crisis
• Difficulties in Making up for Lack of Preparedness in a Compliant Procedure• Shortages• Other supply challenges, including surprising challenges to supply
chain resilience
• Value Challenges• Such as price gouging
• Delayed, Defective or Non-Existent Supplies
• Structural Failures of Procurement System based on Buyer seeking Offers and identifying Winners• Rush to find Any Available Seller, without Pre-Contract Checks etc• Not adapted to securing Quality and Value from diverse suppliers
with different solutions
• Buyer Behaviour• Competition and unscrupulous behaviour by public sector buyers • Failures and delays in attempted cooperation
• Are some of these problems reflected in an excessively top down approach from the Commission? See resignation letter of President of the European Research Council who felt that a top down approach needed to be matched by a bottom up approach to meet the needs of the crisis
Integrity Challenges
• Public Procurement is particularly at risk of fraud and corruption at times like this. By chance an up to the minute report on this topic was produced at the time of the Australian bush fire crisis by the International Public Sector Fraud Forum. It is full of procurement horror studies from conditions such as these
• https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/864310/Fraud_in_Emergency_Management_and_Recovery_10Feb.pdf
• Covid-19 creates the ideal conditions for spread of serious, organised crime
Jürgen Stock, secretary-general of Interpol
• Sale of counterfeit and/or substandard goods is booming in the pandemic economy; this affects all States
Pandemic Profiteering, how criminals exploit the Covid-19 crisis, Europol
• Two factors particularly aid growth in crime – Economist, 16 May 2020 • Waiving normal procurement controls
• Impossibility of arranging face to face meetings and on-site verification
• At the very least there is a need for good records for review, audit and possible future action
• The UK Notice PPN 01/20 does explicitly state:• “You should ensure you keep proper records of decisions and actions on individual contracts, as this could
mitigate against the risk of a successful legal challenge. If you make a direct award, you should publish a contract award notice (regulation 50) within 30 days of awarding the contract”
• When the dust settles we’ll find out how good the records are. What appetite will there then be for comprehensive investigation and enforcement?
What has the EU done?
• Joint Procurement
• Encourage Expedited Procurement in a permitted Exception from the usual legal norms
• Public Procurement as one of the steps forward
Joint Procurement
• Joint Procurement Agreement to procure Medical Countermeasures• Adopted pursuant to Article 5 of Decision 1082/2013 on serious cross-border threats to health
• Comes with Explanatory Note, Note entitled Considerations on the legal basis and the legal nature of the Joint Procurement Agreement and Note on Medical Countermeasures the could be procured in common under the Joint Procurement Agreement
• Most key documents can be reached here: https://ec.europa.eu/health/preparedness_response/joint_procurement_en
• Early Attempts to procure Ventilators and the like under this Arrangement seem to have had Mixed Success
• Premature to make any detailed assessment of procurement
• But plainly was not a significant help in meeting the first wave of the tsunami
• And it was clearly contemplated it would focus on higher tech procurement such as vaccines and antivirals. PPE and Ventilators are not mentioned, even though it was plainly clear all round that there could be serious supply issues for these (See in the UK context, the Public Health England Exercise Cygnus Report from 2016; was the European Centre for Disease Prevention and Control in any different position?)
• Not clear how this linked into Preparedness, eg the Performance of the European Centre for Disease Prevention and Control
• Innovative Procurement – Innovative Process or Procurement of Innovative Output?
• Monopsony or Diversity on the Buyer side: or is it Joint Procurement for its own sake?
Urgent Procurement I
• Commission Guidance on using the public procurement framework in the emergency situation related to the Covid-19 crisis
• For this guidance and other EU, UK and European materials see collection at https://publicprocurementinternational.com/resources-on-covid-19-and-public-procurement/
• Survey of National Approaches• See OECD Sigma Report, Application of public procurement rules during the
COVID-19 crisis from the perspective of the European Union’s Procurement Directives and the Government Procurement Agreement, 8 April 2020
• The interpretation of the law is problematic• For a part of that ongoing debate see
https://mostlyprocurement.typepad.com/my-blog/2020/05/covid-reshapes-procurement-law-with-ben-rayment-we-start-with-a-blog-on-a-topic-of-considerable-contemporary-relevance-ins.html
• Procurement without notice permissible• when extreme urgency arisen as a result of unforeseeable events which are
not attributable to contracting authority• Extreme urgency must render procurement in the legislative time limits
impossible• Causal link between the unforeseeable events and the extreme urgency
• Questionable Impact of Proportionality; for instance How long can the contract last
• Problems in Fact; such as Is the Pandemic or some Aspect of it Genuinely Unforeseeable
• What if the Procurement is very urgent but might need to take a little longer than the shortest time limits in the legislation (effectively 15 days)
• Does Urgency mean that there is no application for General Principles; is the Need for Competition automatically excluded. Why is there no space for super-accelerated competitive process?
Urgent Procurement II
• The question may often be whether this particular contract is necessitated by this emergency, or is it just cover for a convenient excuse to avoid competition?
• It would not be surprising if at least some “urgent procurements” had some relationship to the crisis but were not genuinely necessitated by it.
• This suppression of transparent competitive tender is problematic in practical and integrity terms; procurement is most exposed to corruption and fraud abuses in a crisis such as this and this affects all Member States
• https://www.occrp.org/en/coronavirus/in-europes-scramble-to-buy-COVID-19-supplies-anti-corruption-measures-fall-away
• Without a transparent process, such remedies as exist to address abuses are largely eliminated. We put speed above all else, but why set aside openness and transparency just when they might be most needed?
• And what is the correct model to achieve good economic outcomes in an economic environment few if any of these have encountered – economic and commercial relationships seem to be inverted
EU Proposals for the Future
• Communication from the Commission to EP, EC, EESC and CER, “Europe’s Moment: Repair and Prepare for the Next Generation” 27 May 2020
• “A collective and cohesive recovery that accelerates the twin green and digital transitions will only strengthen Europe’s competitiveness, resilience and position as a global player”
• There will be need for rigorous procurement law and integrity control. In total €1.85 trillion is to be engaged in the recovery plan. That will involve a lot of public procurement. Of course this will be EU money and will be subject to investigation by EU institutions such as OLAF
• The Repair and Prepare Agenda takes us back to • European Green Deal• A deeper and more digital single market, whatever that means. The
only reference to public procurement involves a lot of reference to e-signatures, national e-procurement systems and platforms. This seems to be recycling old material that should have been done by now
• This is not very impressive; contrast with OECD contribution in the Public Integrity Handbook published on 20 May 2020 at https://www.oecd-ilibrary.org/governance/oecd-public-integrity-handbook_ac8ed8e8-en
• What is missing in the EU response as regards Public Procurement?• No Reference to Values and a dated reference to Sustainability• No Reference to Health Outcomes; should we not now be procuring by
reference to measurable health outcomes (this has been a longtermshortcoming of the law – which we addressed at a seminar in 2018)
Key Challenges for Integrity, Investment and Improvement
• Plan for Retrospective Analysis of Fraud, Corruption, Performance Failures
• Remedies that address Issues other than Bidders’ Rights
• Some sensible Integration of existing Remedies, Audit and other Controls; a new Regulatory Function
• Linkage with systems for Exclusion of Bidders for Poor Behaviour or Poor Performance; Issues of Self-Cleaning
• Procurement by reference to Values and Health Outcomes
• And here’s the first reference to Brexit; it is increasingly clear that this is relevant to supply chain resilience in UK and EU
• The UK may amend its legal regime to address lessons learned; will EU do the same? Will there now be legislative competition?
I will return to these themes on my new blog at https://mostlyprocurement.typepad.com/
CEL 3 June 2020
State Aid in A Time Of Covid 19: Has the EU done Enough?
Andrea Biondi, Professor of EU Law, CEL, King’s College London ([email protected])
The EU law control system: snapshot
• The balance between formal prohibition and compatibility –Art 107(1) art 107 (2)(3):
Art 107 (1) – objective notion –Art 107 (2) de jure exceptionsArt 107 (3) discretionary exceptions:Is the aid aimed at a well-defined object of common interests?Is the aid a “well designed instrument”?
Art . 108 – Commission role- notification
• The GBER model - From ex ante to ex post control but mainly from‘bad’ to ‘good’ aid.
The Temporary (31.12) New Framework
• Temporary Framework 2020/C 164/03 (19 of March, 3 of April and 13 ofMay)
• Amendment on Short-term export credit insurance (known as STEC) for risks which are normally shouldered by private insurance companies, but which are now temporarily unavailable in the market due the Covid-19 pandemic. (State Insurance)
• Plus other instruments : SGEI and air transport, land transport, stateguarantees for travel vouchers.
• Measures notified and approved : 10 pages of measures (UK INCLUDED!)
1ST OPTION- NO AID/NO NOTIFICATION
• No aid – general measure for instance suspension of payments of corporateand value added taxes or wage subsidies for all undertakings (but Ifrestricted to certain sectors, regions or types of undertakings, they involve aid).
• Financial support from national funds granted to health services or otherpublic services to tackle the coronavirus situation falls outside the scope ofState aid control.
• GBER exempted – SME.
• De Minimis Regulation.
2nd OPTION - Art 107(2)(b):aid to make good the damage caused by natural disasters or exceptional occurrences
• COVID 19 exceptional occurrence - yes notification (not a natural disaster – see Art50 GBER)
• Checklist of 17 of March – based on Commission practice – VERIFICATION ONLY(sequence of events – casual link – quantification of damages )
• 12 Notifications : Flexibility under option 3 ?
• Covid 19 or extra help?
• No application of R & R Guidelines ‘one time last time’ principle : so MS may compensate the damages directly caused by the COVID-19 outbreak to undertakings that have received aid under the Rescue and Restructuring Guidelines.
• See SA 56867 €550 million loan to compensate Condor: 256 million to be used to completely refinance a bridging loan (Commission approved Germany's plans to grant a €380 million rescue loan to Condor in October 2019)
3rd OPTION: Art 107(3)(b) aid to remedy a serious disturbance in the economy of a Member State
• To undertaking not in difficulty on 31 Dec 2019 (definition ex Art 2 GBER not R&R guidelines) .
• Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs (in any form direct grants, selective tax advantages and advance payments)
• State guarantees for loans taken by companies from banks - Member States will be able to provide State guarantees to ensure credit access;
• Loans to companies - Member States will be able to grant loans with favorable interest rates to companies;
• RECAPITALIZATION:, equity (capital injections -new shares) and hybrid capital instruments (bonds) ]: long term viability?
• R& D and other Covid 19 testing-products measures.
3rd OPTION: Art 107(3)(b): too flexible?
Banks –bank must be only conduit to undertakings (if aid directed to banks –BRRD and SRM rules) Indirect aid OK?
• Minimum Requirements compensation for each type of measure (MOP criteria still relevant)
• No distorsions of competition ? Limits Covid-19 recapitalisation measures:if not fully or partially redeemed, no aggressive expansion –managementcaps – restrictions on large companies )/ exit strategy to be monitored byCommission / Over 250 millions : structural or behavioural measures.
• Enough to resist temptations? Partial/total re-nationalization?: Alitalia 3billions- Lufthansa 9.9 billions for 24 take off slots.
• What’s a Umbrella Scheme?
• Plans in line with EU policy objectives? Air France greenish package..
4th OPTION 107(3)(c) aid to facilitate the development of certain economic activities where such aid does not adversely affect trading
conditions to an extent contrary to the common interest
Still be possible for Member States to notify to the Commission of ‘aid schemesto meet acute liquidity needs and support undertakings facing financialdifficulties, also due to or aggravated by the COVID-19 outbreak’.
Is This Enough?
• Suspension v Application ?
• Flexibility, adaptability, speed v. national temptations (maybenicely wrapped up) : Maybe further rules (e.g., R& R ad hoc rules)?
• Rich v Poor ?
Andrea Biondi
Professor of EU law and Director of the Centre of European
Law
King's College London
@celkcl
EU Response to Covid-19:Do we need a “new” competition law?
Professor Renato Nazzini
King’s College London
© Professor Renato Nazzini, 2020 - all rights reserved
Competition law pillars
•Impact of Covid-19 pandemic on the three pillars of competition law oArticle 101oArticle 102oMerger control
•Key theme: do we need to change or reinvent or adapt the competition rules?
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© Professor Renato Nazzini, 2020 - all rights reserved
Article 101
• ECN joint statement on the application of competition law during the COVID-19 pandemic – 23 March•CMA Approach to Business Cooperation in Response to Covid-19 – 25 March 2020•European Commission Temporary Framework Communication – 8 April• ICN Steering Group Statement – 8 April
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© Professor Renato Nazzini, 2020 - all rights reserved
ECN Joint Statement
• Competition rules ensure a level playing field between companies and this objective remains relevant also in time of crisis
• Nevertheless, the ECN recognised that the current extraordinary situation may trigger the need for companies to cooperate in order to guarantee the supply and fair distribution of scarce products to all consumers. For example:oto ensure security of supply of certain
products companies might require cooperating with competitors through the exchange of commercially sensitive information regarding output, costs and stocks
oproducers of certain medical equipment might consider setting up joint logistics and distribution to maximize the supply of emergency equipment
© Professor Renato Nazzini, 2020 - all rights reserved 4
ECN Joint Statement
• The ECN reassured companies that it will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply. It further clarified that such measures are unlikely to be problematic, since they would either not amount to a restriction of competition under Article 101 TFEU (and 53 EEA) or generate efficiencies that would most likely outweigh any such restriction
• At the same time, the ECN highlighted the need to ensure that products considered essential to protect the health of consumers in this situation (e.g. face masks and sanitising gel) remain available at competitive prices. The ECN stressed that it will not hesitate to intervene against companies taking advantage of the present situation by cartelising or abusing their dominant position
© Professor Renato Nazzini, 2020 - all rights reserved 5
CMA Guidance
• CMA pointed out that it will not take action against coordination activities between competing businesses provided that such temporary measures of coordination:
• are appropriate and necessary to avoid a shortage, or ensure security, of supply
• are clearly in the public interest
• contribute to the benefit or wellbeing of consumers
• deal with critical issues that arise as a result of the COVID-19 pandemic; and
• last no longer than is necessary to deal with these critical issues
• Guidance on efficiencies
• At the same time, the CMA will not tolerate conduct which opportunistically seeks to exploit the crisis. Therefore, its guidance also explains when the CMA will take enforcement action to prevent consumer detriment
European Commission Temporary Framework
• High level guidance as to the circumstances in which cooperation unlikely to breach Article 101
o Coordinate joint transport for input materials
o Contribute to identifying those essential medicines for which, in view of forecasted production, there are risks of shortages
o Aggregate production and capacity information, without exchanging individual company information
o Work on a model to predict demand on a Member State level, and identifying supply gaps
o Share aggregate supply gap information, and request participating undertakings, on an individual basis and without sharing that information with competitors, to indicate whether they can fill the supply gap to meet demand (either through existing stocks or increase of production)
• Recognition that cooperation in the health sector may have to go further, e.g. “re-organisation” of supply
• Ad hoc comfort letters – stressing their exceptional and temporary nature
© Professor Renato Nazzini, 2020 - all rights reserved 7
Medicines for Europe comfort letter
• Association of pharmaceutical manufacturers application
o risk of shortages of Covid-19 hospital medicines
o cooperation needed to model EU demand, coordinate production capacity, arranging cross-supplies of APIs, rebalance over- and under-supply, coordinating production
© Professor Renato Nazzini, 2020 - all rights reserved 8
Medicines for Europe comfort letter
• European Commission – no concerns under strict conditions
o European Commission having a steering role
o objective is compatible with EU competition law: increasing production, better distribution etc.
o cooperation necessary
o open to all producers
o minutes of meetings
o copy of agreements to be shared with the European Commission
o information limited to what was strictly necessary and shared through controlled forum made available by the European Commission
o limited in time
© Professor Renato Nazzini, 2020 - all rights reserved 9
Mergers
• European Commission Notice – 13 March – only about pre-filing
oencouraging firms to delay requests for approval when possible
o encouraging electronic filing
• CMA Guidance – 22 April
o continues to deal with mergers as normal
o asked certain companies with not-yet-closed mergers to delay filing
o recognition that deadlines for responding to RFIs may be difficult to meet
o guidance on the failing firm defence
Article 102
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© Professor Renato Nazzini, 2020 - all rights reserved
Conclusion
"There's no question of heroism in all this. It's a matter of common decency. That's an idea which may make some people smile, but the only means of fighting a plague is —common decency” – A Camus, La Peste(1947)
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© Professor Renato Nazzini, 2020 - all rights reserved
A Research Agenda
Dr Oana Stefan, Reader in Law, KCL.
COVID-19 Soft Law: Voluminous,
Effective, Legitimate?
Pandemics soft law
• Soft law – rules of conduct that have no legally binding force but may have legal and practical effects; Art 288 (5) TFEU: recommendations and opinions.
• ‘Infinite variety’ of soft law instruments: a usual feature of the EU regulatory landscape, and a topic of one of the projects conducted by CEL
• Not the first time soft law used in times of crisis (financial crisis) or pandemics (A/H1N1): flexibility in catalyzing cooperation.
• Argument of the paper: the current crisis can be used as a springboard for the reform of soft law.
Case Study
‘Crisis’ measures:
• Communication from the Commission, Temporary Framework for State aid measures to support the economy in the current
COVID-19 outbreak
• Communication from the Commission, Temporary Framework for assessing antitrust issues related to business
cooperation in response to situations of urgency stemming from the current COVID-19 outbreak
Post-containment measures:
• Commission Recommendation (EU) 2020/518 of 8 April 2020 on a common Union toolbox for the use of technology and data
to combat and exit from the COVID-19 crisis, in particular concerning mobile applications and the use of anonymised
mobility data;
• Communication from the Commission of 16 April 2020, Guidance on Apps supporting the fight against COVID 19 pandemic in
relation to data protection ;
• eHealth Network, 15 April 2020, Mobile applications to support contact tracing in the EU’s fight against COVID-19 Common EU
Toolbox for Member States;
• European Data Protection Board, Guidelines 04/2020 of 21 April 2020 on the use of location data and contact tracing tools in
the context of the COVID-19 outbreak
Preliminary findings
Same old story: soft law is flexible but…
Rule of law issues:
- Legitimacy: lack of involvement of European Parliament.
- Transparency: the State aid example- not easy to see who was consulted and when
- Coherence? duplication & the contact tracing example; information exchange on the ECN
- Competences: difficult to say if soft law adds to hard law or fills up terrain which could not be regulated
through hard law according to Treaty procedures
- Lack of accountability: judicial review insufficient
Legal effects are blurred:
- Sectoral differences: State aid vs the rest
- Multi-level governance system and varying intensity of effects: the antitrust example
- Important practical effects, regardless what is recognized by Courts
Way forward?
Short term:
- Publish consultation proceedings
Long term:
- Streamline procedures for the adoption of soft law, ensuring involvement and transparency
- Clarify legal effects (‘guidance for guidance’, ‘comply or explain’, awareness campaigns at the national
level)
Research front:
- Abandon court centric approaches, though the institutional focus might need to stay
- Focus on effectiveness
- Focus on the national level
First thoughts forthcoming on the European Forum
Paper prepared for a special issue of the Journal of International and Comparative Law on the Future of EU Law.
More on soft law https://www.solar-network.eu/
© 2019 King’s College London. All rights reserved
Thank you!!
[email protected]://www.kcl.ac.uk/law/research/centres/european/index
EU reaction to covid-19: financial proposals and the EU
Hamilton momentTakis Tridimas
Professor, King’s College London
Introduction: General Reflections
• Covid-19 crisis: economic, political and legal challenges• This presentation focuses on the Commission’s proposed recovery plan but
its assessment needs to be carried out in the more general context of crisis management and its implications for the rule of law and European integration.
• The rule of law: risks, collateral damage, and direct challenges to fundamental rights
• The ‘intoxicating cry of emergency’ (Dellway Investments v NAMA [2011] 4 I.R. 1 at 289
• Crisis management and law reform• To date, the Commission has adopted 291 decisions and other acts since the
beginning of the crisis
• Some echoes of 2008
Roadmap
• 20 - 21 February 2020, Special meeting of the European Council intense negotiations on the EU’s long-term budget for 2021-2027
• 21 April 2020: roadmap for recovery presented by European Council President Charles Michel and prepared together with European Commission President von der Leyen, ahead of the leaders’ 23 April conference dedicated to the EU's response to the coronavirus pandemic.
• 23 April 2020 the European Council decided to work towards establishing a recovery fund to respond to COVID-19 crisis and tasked the Commission to draft proposal
• 27 May 2020, Commission issued its proposal on a Recovery Fund and the Multiannual Financial Framework.
• The intention is to discuss proposals in the European Council of 19 June and reach agreement before the summer break
Recovery Plan
• Commission Communication: Europe's moment: Repair and Prepare for the Next Generation 27.5.2020 COM(2020) 456 final
• Amended proposal for a Council Decision on the system of Own Resources of the European Union
• Amended proposal for a Council Regulation laying down the multiannual financial framework for the years 2021 to 2027
• Proposal for a Council Regulation establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 pandemic,
• Accompanied by a number of supporting communications and flanking initiatives, e.g. adjusted Commission Work Programme 2020
Rationale
• The restrictions imposed to contain the spread of the virus have a severe impact on economic life.
• The economic impact of the crisis expected to differ greatly across economic sectors, Member States and regions within Member States.
• First Commission estimates show that tourism, the social economy and the creative and cultural ecosystems could see a more than 70% drop in turnover in the second quarter of 2020
• GDP losses in 2020 are expected to be particularly large in Greece, Spain, Italy and Croatia, at around 9½% each, compared to recessions of between 6 % and 7½ % in most other Member States.
• EU economy is expected to shrink by more than 7% in 2020• If left to individual countries alone, the recovery would likely be
incomplete, uneven and unfair.
Overall objectives
• ‘to repair damage from the crisis and prepare a better future for the next generation’
• The response to the crisis must be ‘comprehensive, bold and sustained’
• the Commission proposes a new €750 billion recovery instrument, Next Generation EU, which will be embedded within the EU budget.
Raising the money
• The money will be raised by temporarily lifting the own resources ceiling to 2% of EU Gross National Income.
• This will allow the Commission to use its very strong credit rating to borrow €750 billion on the financial markets for Next Generation EU.
• The funds raised will need to be repaid through future EU budgets -not before 2028 and not after 2058.
• To do this, the Commission will propose a number of new own resources. These could include a new own resource based on the Emissions Trading Scheme, a Carbon Border Adjustment Mechanism and an own resource based on the operation of large companies.
• Amended proposal for a Council Decision on the system of Own Resources of the European Union
• the Commission will be authorized to borrow funds on behalf of the Union up to the amount of EUR 750 billion on the capital markets.
• The proceeds will be transferred to Union programmes in accordance with the European Union Recovery Instrument.
• The powers granted to the Commission to borrow are limited in size, duration and scope. This removes the possibility for the exceptional powers under this proposal to be used for any purpose other than tackling the direct economic and social consequences of the COVID 19 pandemic.
• The EU budget will start making the required repayments of the funds borrowed on capital markets from 2028 onwards. All liabilities of the Unions incurred by the proposed act will be fully repaid by 2058.
• Legal basis: Article 311 TFEU: unanimity in Council plus approval by Member States in accordance with the respective constitutional requirements
Investing the money
• The money raised will be channelled through EU programmes. This is intended to provide full transparency and democratic accountability for the European Parliament and Council.
• It will be invested across three pillars, through €500 billion in grants and €250 billion in loans to Member States.
• First pillar supporting Member States to provide for investment and reforms
• New Recovery and Resilience Facility with a budget of €560 billion –distributed in grants and loans. Member States will design their own tailored national recovery plans, based on the investment and reform priorities identified as part of the European Semester, in line with National Climate and Energy Plans, Just Transition Plans and Partnership Agreements and Operational Programmes under EU funds.
• New initiative, REACT-EU, to provide a top-up for cohesion support to Member States, with a budget of €55 billion.
second pillar: incentivizing private investment
• New Solvency Support Instrument to mobilise private resources to provide urgent support to otherwise healthy companies.
• Upgrade of InvestEU, the EU’s flagship investment programme.
• Create a Strategic Investment Facility within InvestEU.
Third pillar: learning the lessons of the crisis
• new standalone EU4Health programme, with a budget of €9.4 billion to invest in prevention, crisis preparedness, the procurement of vital medicines and equipment
• better support for global partners, the Neighbourhood, Development and International Cooperation Instrument and the Humanitarian Aid Instrument will be strengthened.
• Proposal for a Council Regulation establishing a European Union Recovery Instrument to support the recovery in the aftermath of the COVID-19 pandemic, based on Article 122 TFEU
Conclusions and reflections
• Commendable response within a very short period
• Will it survive Council negotiations?
• Will it be temporary?
• More powers of the Commission
• More powers to the EU on economic policy
• The perennial problem of legal bases