### 1. this directive shall apply to all undertakings governed by the law of a member state or established in the territory of the union. ### 1. this directive shall apply to all limited liability undertakings with more than 5 000 employees that are governed by the law of a member state or established in the territory of the union.


### 2. it shall also apply to limited liability undertakings governed by the law of a non-member state and not established in the territory of the union when they operate in the internal market selling goods or providing services. an undertaking governed by the law of a non-member state and not established in the territory of the union shall be considered in compliance with this directive if it fulfils the due diligence requirements established in this directive as transposed in the legislation of the member state in which it operates. ### 2. it shall also apply to limited liability undertakings governed by the law of a non-member state and not established in the territory of the union when they operate in the internal market selling goods or providing services , especially technology firms and online traders. an undertaking governed by the law of a non-member state and not established in the territory of the union shall be considered in compliance with this directive if it fulfils the due diligence requirements established in this directive as transposed in the legislation of the member state in which it operates. these undertakings may choose the national legal framework that suits them best provided that they operate in two or more eu member states.


### 3. member states may exempt micro-undertakings as defined in directive 2013/34/eu from the application of the obligations set up in this directive. ### 3. without prejudice to the prerogatives , exemptions and allowances that may be put in place at national level by the member states , under no circumstances will this directive apply to small and medium-sized undertakings , micro-undertakings or self-employed persons.


### - ‘due diligence’ means the process put in place by an undertaking aimed at identifying , ceasing , preventing , mitigating , monitoring , disclosing , accounting for , addressing , and remediating the risks posed to human rights , including social and labour rights , the environment , including through climate change , and to governance , both by its own operations and by those of its business relationships. ### - ‘due diligence’ means the process put in place by an undertaking aimed at identifying , ceasing , preventing , mitigating , monitoring , disclosing , accounting for , addressing , and remediating the risks posed to the fundamental rights enshrined in the charter of fundamental rights of the european union , especially the rights of the child and the prohibition of child labour.


### - ‘stakeholders’ means individuals and groups of individuals whose rights or interests may be affected by the human rights , environmental and good governance risks posed by an undertaking or its business relationships , as well as organisations whose statutory purpose is the defence of human rights , including social and labour rights , the environment and good governance , and includes but is not limited to workers and their representatives , local communities , indigenous peoples , citizens’ associations , trade unions , civil society organisations and the undertakings’ shareholders. ### - ‘stakeholders’ means individuals and groups of individuals whose rights or interests may be affected by the fundamental rights risks posed by an undertaking or its business relationships. the interest invoked by the stakeholder must be direct and legitimate , and stakeholders may include , in exceptional cases , trade union organisations.


### - ‘business relationships’ means the network of relationships of an undertaking with business partners and other entities along its entire value chain , and any other non-state or state entity directly linked to the undertaking’s business operations , products or services. ### - ‘direct contractual business relationships’ means the network of relationships of an undertaking with business partners in the first tier of its supply chain located outside the eu.


### - ‘business relationships’ means the network of relationships of an undertaking with business partners and other entities along its entire value chain , and any other non-state or state entity directly linked to the undertaking’s business operations , products or services. ### - ‘business relationships’ means the network of relationships of an undertaking with direct business partners and other entities , and any other non-state or state entity directly linked to the undertaking’s business operations , products or services.


### - ‘value chain’ means all activities , operations , business relationships and investment chains of an undertaking inside or outside the eu. value chain includes entities with which the undertaking has a direct or indirect business relationship , upstream and downstream , and which either (a) supply products or services that contribute to the undertaking’s own products or services , or (b) receive products or services from the undertaking. ### - ‘first tier of the supply chain outside the eu’ means an upstream network characterized by direct contractual business relationships between a company and its suppliers located outside the eu to produce and distribute a specific product to the final buyer


### - ‘value chain’ means all activities , operations , business relationships and investment chains of an undertaking inside or outside the eu. value chain includes entities with which the undertaking has a direct or indirect business relationship , upstream and downstream , and which either (a) supply products or services that contribute to the undertaking’s own products or services , or (b) receive products or services from the undertaking. ### - ‘value chain’ means all activities , operations , business relationships and investment chains of an undertaking inside or outside the eu. value chain includes entities with which the undertaking has a direct business relationship , upstream and downstream , and which supply products or services that contribute to the undertaking’s own products or services.


### - ‘risk’ means a potential or actual adverse impact on individuals , groups of individuals and other organisations in relation to human rights , including social and labour rights , the environment , and good governance; ### - ‘risk’ means a potential or actual adverse impact on individuals , groups of individuals and other organisations in relation to fundamental rights;


### - ‘human rights risk’ means any potential or actual adverse impact that may impair the full enjoyment of human rights by individuals or groups of individuals in relation to internationally recognized human rights , understood , at a minimum , as those expressed in the international bill of human rights , the united nations human rights instruments on the rights of persons belonging to particularly vulnerable groups or communities , and the principles concerning fundamental rights set out in the ilo declaration on fundamental principles and rights at work , as well as those recognised in the ilo convention on freedom of association and the effective recognition of the right to collective bargaining , the ilo convention on the elimination of all forms of forced or compulsory labour , the ilo convention on the effective abolition of child labour , and the ilo convention on the elimination of discrimination in respect of employment and occupation. they further include , but are not restricted to , adverse impacts in relation to other rights recognised in a number of ilo conventions , such as freedom of association , minimum age , occupational safety and health , and equal remuneration , and the rights recognised in the convention on the rights of the child , the african charter of human and peoples’ rights , the american convention on human rights , the european convention on human rights , the european social charter , the charter of fundamental rights of the european union , and national constitutions and laws recognising or implementing human rights. ### - ‘human rights risk’ means any potential or actual adverse impact that may impair the full enjoyment of human rights by individuals or groups of individuals in relation to the internationally recognized human rights , as expressed in the international bill of human rights , and the rights recognised in the convention on the rights of the child , the european convention on human rights , the european social charter , the charter of fundamental rights of the european union , and national constitutions and laws recognising or implementing human rights.


### - ‘environmental risk’ means any potential or actual adverse impact that may impair the right to a healthy environment , whether temporarily or permanently , and of whatever magnitude , duration or frequency. these include , but are not limited to , adverse impacts on the climate , the sustainable use of natural resources , and biodiversity and ecosystems. these risks include climate change , air and water pollution , deforestation , loss in biodiversity , and greenhouse emissions. ### deleted


### - ‘governance risk’ means any potential or actual adverse impact on the good governance of a country , region or territory. these include , but are not limited to , non-compliance with oecd guidelines for multinational enterprises , chapter vii on combating bribery , bribe solicitation and extortion and the principles of the oecd convention on combating bribery of foreign public officials in international business transactions and situations of corruption and bribery where an undertaking exercises undue influence on , or channels undue pecuniary advantages to , public officials to obtain privileges or unfair favourable treatment in breach of the law , and including situations in which an undertaking becomes improperly involved in local political activities , makes illegal campaign contributions or fails to comply with the applicable tax legislation. ### deleted


### 1. member states shall lay down rules to ensure that undertakings carry out due diligence with respect to human rights , environmental and governance risks in their operations and business relationships. ### 1. member states shall lay down rules to ensure that undertakings can carry out due diligence with respect to human rights risks.


### 2. undertakings shall in an ongoing manner identify and assess by means of an appropriate monitoring methodology whether their operations and business relationships cause or contribute to any human rights , environmental or governance risks. ### 2. undertakings shall , when they deem it appropriate , identify and assess , at regular intervals or when their situation changes significantly , whether their operations and business relationships cause or contribute to any fundamental rights risks.


### 3. if an undertaking concludes that it does not cause or contribute to risks , it shall publish a statement in that sense , including its risk assessment , which shall be reviewed in the event that new risks emerge or in the event of the undertaking entering into new business relationships that can pose risks. ### 3. if an undertaking concludes that it does not cause or contribute to risks , it may publish a statement in that sense , without any confidential or strategic information , and it may include its risk assessment , which may be reviewed in the event that new risks emerge or in the event of the undertaking entering into new business relationships that can pose risks.


### (ii) publicly disclose detailed , relevant and meaningful information about the undertaking’s value chain , including names , locations , and other relevant information concerning subsidiaries , suppliers and business partners in its value chain; ### deleted


### iv) set up a prioritisation policy for cases in which the undertaking is not in a position to deal with all the risks at the same time. undertakings shall consider the level of severity and urgency of the different risks present , the scope of the risks , their scale and how irremediable they might be , and if necessary , use the prioritisation policy in dealing with these; ### iv) set up a prioritisation policy for cases in which the undertaking is not in a position to deal with all the risks at the same time. if there is no knowledge of , or a lack of capacity for , prioritisation , undertakings shall be assessed by national authorities , who shall consider the level of severity and urgency of the different risks present , the scope of the risks , their scale and how irremediable they might be , and if necessary , may propose the introduction of a prioritisation policy to deal with these;


### 5. undertakings shall make all reasonable efforts to identify subcontractors and suppliers in their entire value chain. ### deleted


### 6. undertakings shall indicate how their due diligence strategy relates to and integrates with their business strategy , their policies , including purchase policies , and procedures. ### deleted


### 8. undertakings shall carry out value chain due diligence which is proportionate and commensurate to their specific circumstances , particularly their sector of activity , the size and length of their supply chain , the size of the undertaking , its capacity , resources and leverage. ### 8. undertakings shall carry out value chain due diligence which is proportionate and commensurate to their specific circumstances , particularly their sector of activity , the size of the undertaking , its capacity , resources and leverage.


### 9. undertakings shall ensure by means of contractual clauses and the adoption of codes of conduct that their business relationships put in place and carry out human rights , environmental and governance policies that are in line with their due diligence strategy. ### deleted


### 10. undertakings shall regularly verify that subcontractors and suppliers comply with their obligations under paragraph 9. ### 10. undertakings shall regularly strive to verify that subcontractors and suppliers comply with their legal obligations concerning fundamental rights.


### 4. consultations with indigenous peoples shall be undertaken in accordance with international human rights standards , including the standard of free , prior and informed consent and respecting indigenous peoples’ right to self-determination. ### deleted


### 6. member states shall ensure that where an undertaking refuses to carry out consultations with stakeholders , fails to involve trade unions in good faith , or does not adequately inform and consult workers or their representatives , stakeholders and trade unions may refer the matter to the competent national authority. ### deleted


### 1. member states shall ensure that undertakings make their due diligence strategy publicly available , accessible and free of charge , especially on the undertakings’ websites. ### 1. member states shall ensure that undertakings who so desire make their due diligence strategy publicly available , accessible and free of charge on public websites set up for that purpose.


### 19. notes that the human rights of groups at risk of vulnerability and marginalisation are disproportionately impacted by businesses’ activities; insists therefore that union mandatory due diligence legislation should refer to group-specific instruments in defining the scope of corporate human rights due diligence; stresses , in this regard , that all rights guaranteed to those most severely affected groups under local , national or international law must be covered , as enshrined in article 5 of the united nations declaration on the rights of indigenous peoples; ### 19. notes that the human rights of groups at risk of vulnerability and marginalisation are disproportionately impacted by businesses’ activities; stresses , in this regard , that all rights guaranteed to those most severely affected groups under local , national or international law must be covered , as enshrined in article 5 of the united nations declaration on the rights of indigenous peoples;


### 23. notes that some corporations unlawfully exploit natural resources , which not only constitutes a major sustainability and environmental challenge but also results in severe adverse impacts on the social , economic , cultural , civil and political rights of local communities; such business practices violate the fundamental right of peoples to self-determination and the principle of permanent sovereignty , access and control over their natural resources , enshrined in un general assembly resolution 1803 (xvii); recommends that the legislation requires member states to regulate businesses’ activity in compliance with their commitment to the principles enshrined in the charter of the united nations , including the fundamental principles of equality , non-discrimination and self-determination of peoples; ### 23. notes that some corporations unlawfully exploit natural resources , which not only constitutes a major sustainability and environmental challenge but also results in severe adverse impacts on the social , economic , cultural , civil and political rights of local communities; such business practices violate the fundamental right of peoples to self-determination and the principle of permanent sovereignty , access and control over their natural resources , enshrined in un general assembly resolution 1803 (xvii); recommends that the possible legislation requires member states to regulate businesses’ activity in compliance with their commitment to the principles enshrined in the charter of the united nations , including the fundamental principles of equality , non-discrimination and self-determination of peoples;


### 25. notes that some businesses are accused of profiting from or even complicity in war crimes and crimes against humanity due to their own activity or that of their business partners in conflict-affected areas or to their business relationships with state- or non-state actors involved in conflicts globally; recommends that , in order to prevent substantial risks of grave human rights abuses and serious breaches of international law , the scope of due diligence under union legislation be extended to breaches of international criminal law and international humanitarian law in which businesses may be implicated; ### 25. notes that some businesses are accused of profiting from or even complicity in war crimes and crimes against humanity due to their own activity or that of their business partners in conflict-affected areas or to their business relationships with state- or non-state actors involved in conflicts globally; recommends that the commission assess the impact of extending the scope of due diligence under union legislation to breaches of international criminal law and international humanitarian law;


### 26. recommends that , requirements for corporate mandatory human rights and environmental due diligence be grounded in the principle of corporate responsibility to respect human rights as articulated by the ungps; businesses should avoid infringing human rights and address adverse human rights impacts with which they are directly or indirectly connected , entailing in practice that they should have in place an embedded human rights policy , a human rights due diligence process and appropriate and adequate measures to facilitate access to effective remedies for business-related human rights abuses , including at company level , and other grievance mechanisms; ### 26. recommends that , requirements for a possible corporate human rights and environmental due diligence be grounded in the principle of corporate responsibility to respect human rights as articulated by the ungps; businesses should avoid infringing human rights and address adverse human rights impacts with which they are directly or indirectly connected , entailing in practice that they should have in place an embedded human rights policy , a human rights due diligence process and appropriate and adequate measures to facilitate access to effective remedies for business-related human rights abuses , including at company level , and other grievance mechanisms , where applicable;


### 28. stresses that human rights impacts can be specific to certain rights holders and vulnerable groups due to intersecting factors such as gender , ethnicity , social and employment status , migrant or refugee status , exposure to conflict or violence or other factors; this must be reflected in the due diligence processes , including the human rights impact assessment phase and remedy procedures; ### 28. stresses that human rights impacts can be specific to certain rights holders and vulnerable groups due; this must be reflected in the due diligence processes , including the human rights impact assessment phase and remedy procedures;


### 31. notes that in order to assess human rights risks , independent monitoring of human rights impacts and working conditions in supply chains is essential , in particular by means of monitoring , which has workers and affected communities at its core and fully involves relevant stakeholders; ### 31. notes that in order to assess human rights risks , independent monitoring of human rights impacts and working conditions in supply chains contributes greatly to the work of official oversight authorities;


### 33. stresses that transparency must be at the core and the overriding principle of the monitoring and assessment process and that external participation , oversight and verification are key elements for robust and meaningful corporate human rights due diligence and its evaluation; calls , accordingly , for union due diligence legislation to require the publication of lists of companies within its scope , the publication of due diligence reports via online public repositories , and the identification of companies that comply or have failed to comply with due diligence obligations; ### 33. stresses that transparency must be at the core and the overriding principle of the monitoring and assessment process and that external participation , oversight and verification are key elements for robust and meaningful corporate human rights due diligence and its evaluation;


### 34. is of the view that transparency should not be corporate led but based on the right to know of those who are impacted by commercial activities , including workers , communities and consumers; suggests that stakeholders have a right to know such information in a comprehensive , timely and honest manner; believes that enforcing the right to be informed allows for the clear establishment of duties and duty bearers and rights and right-holders; ### deleted


### 39. deplores that an increasing number of attacks are documented on human rights and environmental defenders and that 572 attacks occurred in 2019 alone; stresses that article 12 of the united nations declaration on human rights defenders imposes a duty on states to ensure the protection of everyone against violence , threats , retaliation , discrimination or any other arbitrary action as a consequence of his or her legitimate right to promote human rights; ### deleted


### 46. recommends that the legislation establishes guidance regarding the elements of an effective , fair and equitable operational grievance mechanism , with a view to defining appropriate measures to prevent harm , including providing adequate access to remedies; ### 46. recommends that future legislation establishes guidance regarding the elements of an effective , fair and equitable operational grievance mechanism , with a view to defining appropriate measures to prevent harm , including providing adequate access to remedies;


### 1. stresses that trade policy is an essential tool for implementing the circular economy and the eu’s sustainability agenda globally; underlines that increased recycling can reduce the eu’s reliance on imports of raw materials , and points to the need to decouple economic growth from resource use in order to ensure the long-term sustainability of global value chains; ### 1. stresses that trade policy is an essential tool for implementing the circular economy and the eu’s sustainability agenda globally; underlines that increased recycling can reduce the eu’s reliance on imports of raw materials and energy , and points to the need to decouple economic growth from resource use in order to ensure the long-term sustainability of global value chains;


### 1. considers that placing sustainable products on the internal market should be the norm and calls for a horizontal sustainable product framework directive setting mandatory minimum requirements for durability , interoperability , reparability , upgradability , reusability and recyclability for all products alongside further product-specific requirements; ### 1. considers that placing sustainable products on the internal market should be the norm and calls for a horizontal sustainable product framework directive setting minimum requirements for durability , reparability , upgradability , reusability and recyclability for products for which there is a technical justification for such requirements and which can significantly contribute to the objectives set out in the circular economy action plan; calls on the commission to work closely with member states and stakeholders to compile an open catalogue of such products;


### 1. highlights that the carbon and resource footprint of goods due to transport and packaging could be reduced through a circular economy approach; ### 1. highlights that the carbon and resource footprint due to mobility could be reduced through a circular economy approach in this area also;


### 1. welcomes the commission’s new circular economy action plan; highlights the fact that the circular economy is key to reducing the overall environmental footprint of european consumption and production , and to reaching the climate goals of the paris agreement; ### 1. welcomes the commission’s new circular economy action plan; highlights the fact that the circular economy is key to reducing the overall environmental footprint of european consumption and production , and to reaching the climate commitments under the paris agreement as well as the united nations sustainable development goals (un sdgs);


### 1. considers that the agriculture , food and forestry sectors and rural areas are essential components of the circular economy; ### 1. considers that the agriculture , food and forestry sectors and rural areas are relevant components of the circular economy;


### 2. regrets the lack of international and european standards on waste quality as this hinders a viable trade policy that is conducive to the circular economy; calls on the commission to present harmonised standards on waste quality and a legal definition of recyclable waste , and to include these in future ftas; ### 2. regrets the lack of international and european standards on waste quality as this hinders a viable trade policy that is conducive to the circular economy; calls on the commission to present harmonised standards on waste quality and a legal definition of recyclable waste , and to present new initiatives on proper infrastructures to insure high quality separate collection;


### 2. underlines that the circular economy can provide solutions to the new challenges caused and highlighted by the covid-19 crisis by reducing the vulnerability of value chains within the eu and globally; ### 2. underlines that the circular economy can provide solutions to the new challenges caused and highlighted by the covid-19 crisis by reducing the vulnerability of value chains within the eu and globally. the covid-19 pandemic has demonstrated the necessity for an enabling environment for the circular economy in particular on the collection and recovery of waste and its recycling for the production of products and substances including the packaging for the food and pharma sectors.


### 2. takes the view that the announcement of the action plan is a clarion call for profound change to reorient farm production models towards agro-ecology , given the degradation and scarcity both in natural resources and in the rest of the food chain; ### 2. takes the view that the primary purpose of agriculture is to produce food and feed , at affordable prices for both: the consumer as well as the farmer , as this constitutes his/her living. any policy in place should refrain from incentivising and/or forcing the farmer to unnecessarily degrade natural resources;


### 3. notes that in the transition to a circular economy particular attention must be given to key supply chains where the eu’s environmental footprint is significant; ### 3. notes that in the transition to a circular economy particular attention must be given to key supply chains where the environmental footprint is significant;


### 3. urges the commission to internalise the external costs of transport and to establish greenhouse gas certification schemes; ### 3. urges the commission to examine the various ways of internalising the external costs of transport;


### 3. believes that a circular economy is the way for the eu and european companies to remain competitive in a global market; therefore urges the commission and the member states to direct investments in order to scale up circular economy initiatives; considers that the eu’s economic recovery plan (next generation eu) should be used to put in place circular economy initiatives and infrastructure; ### 3. believes that a circular economy is the way for the eu and especially for european companies to remain competitive; therefore urges the commission and the member states to direct investments in order to scale up circular economy initiatives; considers that the eu’s economic recovery plan (next generation eu) should be used to put in place circular economy initiatives and infrastructure;


### 4. calls on the commission to propose an eu target for a reduction in the use of primary raw materials; ### 4. calls on the commission to propose an eu target for a reduction in the use of primary raw materials that does not slow industrial development;


### 4. calls on the commission to propose an eu target for a reduction in the use of primary raw materials; ### 4. calls on the commission to encourage eu industry initiatives to increasingly use recycled materials;


### 4. calls for the implementation of a european protein plan advocating consumption of legumes , as crops that need no nitrogen-based fertilisers; ### 4. considers the possibility of recommendations to the member states for protein plan advocating consumption of pulse crops , as crops that need no nitrogen-based fertilisers;


### 5. urges the commission to ensure that ftas reflect the objectives of the circular economy by including strong , binding and enforceable sustainable development chapters; suggests that the circular economy should be addressed in a cross-cutting manner in all relevant fta chapters; ### 5. urges the commission to ensure that ftas reflect the objectives of the circular economy by including strong , binding and enforceable sustainable development chapters; suggests that the circular economy should be addressed in a cross-cutting manner in all relevant fta chapters , without increasing additional administrative or financial burden to our companies , especially smes;


### 5. urges the commission to ensure that ftas reflect the objectives of the circular economy by including strong , binding and enforceable sustainable development chapters; suggests that the circular economy should be addressed in a cross-cutting manner in all relevant fta chapters; ### 5. urges the commission to ensure that ftas reflect the objectives of the circular economy by including strong , binding and enforceable sustainable development chapters; suggests that the circular economy should be addressed effectively in all fta chapters;


### 5. notes that shared mobility services save resources in production; ### 5. stresses that , in addition to innovative technologies , new circular business models offering sustainable services are also crucial; notes that the use of shared mobility services , such as public transport and car sharing , save resources in production provided that they form part of a broader circular and multi-modal strategy;


### 6. encourages the commission to engage with the eu’s trading partners to further support the objectives of the circular economy; stresses that particular attention must be given to how less developed partner countries can benefit from the circular economy; calls for an assessment of the impact of increased intra-eu recycling rates on countries strongly relying on waste imports. ### 6. encourages the commission to engage with the eu’s trading partners to adopt the objectives of the circular economy at international level with commitments matching those of the eu; stresses that particular attention must be given to how less developed partner countries can benefit from the circular economy; calls for an assessment of the impact of increased intra-eu recycling rates on countries strongly relying on waste imports.


### 6. notes that the environmental impacts caused by the extraction and processing of raw materials for vehicles can be reduced through material efficiency and improved recycling; ### 6. notes that the environmental impacts caused by the extraction and processing of raw materials for vehicles can be reduced through material efficiency , reuse and improved recycling and that innovative technologies are therefore an essential component of a circular mobility policy;


### 6. underlines the need to create economic incentives for innovation in circular solutions and calls for support for this in the new industrial strategy for europe and the sme strategy; emphasises the specific role that smes (small and medium-sized enterprises) and start-ups are playing in the transition to a circular economy; ### 6. underlines the need to create economic incentives for innovation in circular solutions and calls for support for this in the new industrial strategy for europe , the chemicals strategy for sustainability and the sme strategy; emphasises the specific role that smes (small and medium-sized enterprises) and start-ups are playing in the transition to a circular economy , particularly in rural areas ,;


### a. whereas the transport sector has a high potential for improved resource efficiency and an increasing share of the transported goods are packaged in single-use materials; ### a. whereas the transport sector has a high potential for improved resource efficiency , first and foremost through optimisation of the logistical chain;


### 7. urges the commission to introduce longer guarantee periods and a right to repair for vehicles; ### 7. urges the commission to introduce guarantee periods and a right to repair for vehicles , particularly those using new technologies;


### 7. underlines that sustainable products should become the norm in the eu market , and that a reduction in resource use , the retention of value in the economy , waste prevention , the ‘design out of waste’ and consumer benefits should guide the new sustainable product policy framework; ### 7. underlines that sustainable products should become the norm in the eu market , and that a reduction in resource use , the retention of value in the economy , waste prevention , the ‘design out of waste’ and consumer benefits should guide the new sustainable product policy framework; in this regard , notes the importance of having product sustainability principles that take full account of the energy , resource , and functionality characteristics of products;


### 7. underlines that sustainable products should become the norm in the eu market , and that a reduction in resource use , the retention of value in the economy , waste prevention , the ‘design out of waste’ and consumer benefits should guide the new sustainable product policy framework; ### 7. underlines that sustainable products should become the norm in the eu market , and that a reduction in resource use and in imports of strategic raw materials , the retention of value in the economy , waste prevention , the ‘design out of waste’ and consumer benefits should guide the new sustainable product policy framework;


### 7. underlines that sustainable products should become the norm in the eu market , and that a reduction in resource use , the retention of value in the economy , waste prevention , the ‘design out of waste’ and consumer benefits should guide the new sustainable product policy framework; ### 7. underlines that sustainable materials and products should become the norm in the eu market , and that a reduction in use of fossil resources , the retention of value in the economy , waste prevention , the ‘design out of waste’ and consumer benefits should guide the new sustainable product policy framework;


### 7. supports the commission in its efforts to better inform consumers on nutritional and ecological claims , and calls for labelling of residues present in food; ### 7. supports the commission in its efforts to better implement already existing legislation on food labelling7a;


### 8. calls on the commission to phase out non-rechargeable batteries and to define an increasing share of recycled content in batteries; stresses the relevance of charging patterns for battery electric vehicles for the integration of the sector; ### 8. stresses the relevance of charging patterns for battery electric vehicles in the interests of integrated grid management; calls on the commission to consider the circular management of the material flow of electric vehicle batteries and to ensure maximum reuse;


### 9. calls on the commission to restrict exports of waste to third countries , as they increase the life–cycle emissions of products; ### 9. calls on the commission and the member states to strictly monitor the entire life cycle of vehicles and to limit the export of end-of-life and second-hand vehicles to third countries in order to prevent (critical) raw materials seeping away from the european economy; draws attention to laudable projects such as carloop to bring scrap vehicles from third countries back to the eu for recycling;


### 9. urges the use of bio-sourced and biodegradable materials in agricultural plastics; ### 9. considers that agricultural land is primarily destined for food and feed production. bio-sourced and biodegradable materials in agricultural plastics should be primarily produced from agricultural or other waste material;


### 10. urges the commission to make reusable packaging and containers for transport compulsory; calls for an eu-wide take-back scheme for standard industrial packaging; ### 10. urges the member states to make it compulsory to take back standard industrial packaging also for reuse and recycling purposes;


### a. whereas the coronavirus pandemic has exacerbated the growing problem of medicine shortages across the eu; whereas the ensuing disruption of the global supply chain has highlighted the eu’s dependency on third countries for medicines and active pharmaceutical ingredients; ### a. whereas the coronavirus pandemic has exacerbated the growing problem of medicine shortages across the eu; whereas the ensuing disruption of the global supply chain has highlighted the eu’s dependency on third countries for medicines and active pharmaceutical ingredients; whereas the limited access to active pharmaceutical ingredients (apis) required for the production of generic medicines poses a particular challenge with around 70% of apis used in europe being imported from third countries;


### 2. calls on the commission to consider proposing requirements for the pharmaceutical industry to ensure that its supply chain is diversified and put in place a medicine shortage risk mitigation plan to manage any vulnerabilities in and risks to the supply chain; ### 2. calls on the commission to consider proposing requirements for the pharmaceutical industry to ensure that its supply chain is diversified and put in place a medicine shortage risk mitigation plan to manage any vulnerabilities in and risks to the supply chain; notes the importance for the industry to have the capacity of increasing its production to be able to meet with the sudden surge in the demand due to critical situations;


### 4. encourages the commission to propose measures , including financial incentives , to promote green manufacturing , within the eu , of strategically important chemicals used in medicine production; urges the commission to also propose measures to incentivise the greater inclusion of eu small and medium-sized enterprises in the medicine supply chain given their key role in research and innovation and inherent ability to quickly adapt their production focus , with a view to coping better with unexpected shocks; ### 4. encourages the commission to propose measures , including financial incentives and targeted guidelines on public procurements , to promote green manufacturing , within the eu , of strategically important chemicals used in medicine production , particularly apis and intermediates; urges the commission to also propose measures to incentivise the greater inclusion of eu small and medium-sized enterprises in the medicine supply chain given their key role in research and innovation and inherent ability to quickly adapt their production focus , with a view to coping better with unexpected shocks; notes that currently smes suffer , in particular , from disproportionate costs stemming from inefficient mechanisms of implementation of regulations;


### 4. encourages the commission to propose measures , including financial incentives , to promote green manufacturing , within the eu , of strategically important chemicals used in medicine production; urges the commission to also propose measures to incentivise the greater inclusion of eu small and medium-sized enterprises in the medicine supply chain given their key role in research and innovation and inherent ability to quickly adapt their production focus , with a view to coping better with unexpected shocks; ### 4. encourages the commission to propose measures , including financial incentives , to promote investments in manufacturing , within the eu , of strategically important chemicals used in medicine production; urges the commission to also propose measures to incentivise the greater inclusion of eu small and medium-sized enterprises in the medicine supply chain given their key role in research and innovation and inherent ability to quickly adapt their production focus , with a view to coping better with unexpected shocks;


### 2. welcomes and acknowledges the fact that , while it remains unclear whether any compensation has been foreseen , other wto members that export beef to the eu agreed to support this agreement by accepting that the vast majority of the quota would be allocated to the us; ### 2. welcomes and acknowledges the fact that australia and other wto members that export beef to the eu agreed to support this agreement by accepting that the vast majority of the quota would be allocated to the us;


### the committee on foreign affairs calls on the committee on international trade , as the committee responsible , to recommend approval of the draft council decision on the conclusion , on behalf of the union , of the investment protection agreement between the european union and its member states , of the one part , and the socialist republic of viet nam , of the other part. ### the committee on foreign affairs calls on the committee on international trade , as the committee responsible , to recommend rejection of the draft council decision on the conclusion , on behalf of the union , of the investment protection agreement between the european union and its member states , of the one part , and the socialist republic of viet nam , of the other part.


### the committee on foreign affairs calls on the committee on international trade , as the committee responsible , to recommend approval of the draft council decision on the conclusion of the free trade agreement between the european union and the socialist republic of viet nam. ### the committee on foreign affairs calls on the committee on international trade , as the committee responsible , to recommend rejection of the draft council decision on the conclusion of the free trade agreement between the european union and the socialist republic of viet nam.


### a. whereas article 42 of the treaty on the functioning of the european union grants special status to the sector in respect of competition law; ### a. whereas article 42 of the treaty on the functioning of the european union grants special status to the sector in respect of competition law , outlining that the provisions relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the european parliament and the council within the framework of article 43(2);


### b. whereas competition policy must be tailored to tackle digital , ecological , industrial and social challenges , in line with the objectives of the paris agreement; ### deleted


### 1. this regulation applies to craft and industrial products listed under the combined nomenclature set out in annex i to council regulation (eec) no 2658/8724.. ### 1. this regulation applies to non-agricultural products listed under the combined nomenclature set out in annex i to council regulation (eec) no 2658/8724 with the exception of agri-food products protected by regulations (eu) nos 2019/787 , 1308/2013 and 1151/2012 of the european parliament and of the council.


### 2. this regulation does not apply to spirit drinks as referred in regulation (eu) 2019/787 of the european parliament and of the council25 , wines as defined in regulation (eu) no 1308/2013 of the european parliament and of the council26 , nor to agricultural products and foodstuffs as protected by regulation (eu) no 1151/2012 of the european parliament and of the council27. ### deleted


### ‘craft products’ means products produced either totally by hand or with the aid of manual tools or by mechanical means , whenever the direct manual contribution is the most important component of the finished product; ### ‘craft products’ means products produced either by hand or with the aid of manual tools or by mechanical or digital means , or with the aid of digital and other design tools under the direct supervision of the business owner (from the project to the manufacturing stage);


### ‘craft products’ means products produced either totally by hand or with the aid of manual tools or by mechanical means , whenever the direct manual contribution is the most important component of the finished product; ### ‘non-agricultural products’ means all products other than those listed in annex i to the treaty on the functioning of the european union and in annex i to regulation (eu) no 1151/2012 of the european parliament and of the council and , in general , any product intended for human consumption;


### ‘industrial products’ means products produced in a standardised way , typically on mass scale and through the use of machines; ### deleted


### ‘producer group’ means any association , irrespective of its legal form , mainly composed of producers or processors working with the same product; ### ‘producer group’ means any association , irrespective of its legal form , mainly composed of producers , manufacturers , processors or any other operator working with the same product;


### ‘production step’ means any stage of production , processing or preparation , up to the point , where the product is in a form to be placed on the internal market; ### ‘production step’ means any stage of production , processing or preparation , as set out in the gi product specification , up to the point , where the product is in a form to be placed on the internal market;


### ‘traditional’ and 'tradition' , when associated with a product originating in a geographical area , means proven historical usage by producers in a community for a period that allows transmission between generations; ### ‘traditional’ and 'tradition' , when associated with a product originating in a geographical area , means proven historical usage by producers associated with a given cultural community; historical usage means usage for a period that allows transmission between generations;


### 'producer' means an operator engaged in any production step of a product the name of which is protected as a geographical indication , including processing activities , covered by the product specification; ### ‘producer' means an operator engaged in any production step of a product the name of which is protected as a geographical indication , including processing or design activities , covered by the product specification;


### ‘product certification body’ means a legal person which certifies that products designated by geographical indications comply with the product specification , whether in performance of a delegated official control task or any other mandate; ### ‘product certification body’ means a body accredited by the national authorities to certify that products designated by geographical indications comply with the product specification , whether in performance of a delegated official control task or any other mandate;


### ‘self-declaration’ means a document in which a producer , or an authorised representative , indicates on his or her sole responsibility that the product is compliant with the corresponding product specification and that all necessary controls and checks for the proper determination of conformity have been carried out in order to demonstrate the lawful use of the geographical indication to the competent authorities of member states. ### ‘self-declaration’ means a document whose content is set out on a specific (predetermined and standardised) form in which a producer , or an authorised representative , indicates on his or her sole responsibility that the product is compliant with the corresponding product specification and that all necessary controls and checks for the proper determination of conformity have been carried out in order to demonstrate the lawful use of the geographical indication to the competent authorities of member states.


### at least one of the production steps of the product takes place in the defined geographical area. ### at least one of the qualifying production steps of the product takes place in the defined geographical area. the qualifying stage , as defined under the product specification , means that at which the specific characteristics establishing a link between the quality , reputation or other characteristic of the product and the geographical origin referred to in article 5(b) come into being;


### 1. article 35 is without prejudice to the use of a geographical indication by producers in conformity with article 43 to indicate that a manufactured product contains , as a part or component , a product designated by that geographical indication provided that such use is made in accordance with honest commercial practices and does not weaken , dilute , or is not detrimental to , the reputation of the geographical indication. ### 1. article 35 is without prejudice to the use of a geographical indication by producers in conformity with article 43 to indicate that a manufactured product contains , as a part or component , a product designated by that geographical indication provided that such use does not undermine the protection provided under article 35.


### article 37 ### deleted


### article 39 ### deleted


### 4. without prejudice to paragraph 2 of this article , a trade mark the use of which contravenes article 35 , which has been applied for , registered , or established by use in good faith within the territory of the union , if that possibility is provided for by the legislation concerned , before the date on which the application for registration of the geographical indication is submitted to the office , may continue to be used and renewed notwithstanding the registration of a geographical indication , provided that no grounds for invalidity or revocation of the trade mark exist under directive (eu) 2015/243632 of the european parliament and of the council or regulation (eu) 2017/1001. in such cases , the use of the geographical indication and that of the relevant trade mark shall be permitted. ### deleted


### 4. without prejudice to paragraph 2 of this article , a trade mark the use of which contravenes article 35 , which has been applied for , registered , or established by use in good faith within the territory of the union , if that possibility is provided for by the legislation concerned , before the date on which the application for registration of the geographical indication is submitted to the office , may continue to be used and renewed notwithstanding the registration of a geographical indication , provided that no grounds for invalidity or revocation of the trade mark exist under directive (eu) 2015/243632of the european parliament and of the council or regulation (eu) 2017/1001. in such cases , the use of the geographical indication and that of the relevant trade mark shall be permitted. ### deleted


### monitoring of the use of geographical indications in the marketplace. ### monitoring of the use of geographical indications in the marketplace , with a particular view to combating unfair trading practices including online transactions.


### monitoring of the use of geographical indications in the marketplace. ### monitoring of the use of geographical indications in the marketplace , with a view , in particular , to combating unfair commercial practices , including electronic commerce.


### 6. the costs of verification of compliance with the product specification may be borne by the producers , which are subject to those controls. member states may also contribute to those costs. ### 6. the costs of verification of compliance with the product specification may be borne by the producers , which are subject to those controls. member states may also contribute to those costs. any charges by a member state shall be reasonable , encourage competitiveness on the part of producers using the geographical indications and factor in the situation of micro , small and medium-sized enterprises.


### 5. member states may collect fees or charges to cover the costs of official controls in the marketplace. ### 5. member states may collect fees or charges to cover the costs of official controls in the marketplace. any fee or commission charged by a member state shall be reasonable , encourage competitiveness on the part of producers using geographical indications and factor in the situation of micro , small and medium-sized enterprises.


### (1) ‘deforestation’ means the conversion of forest to agricultural use , whether human-induced or not; ### (1) ‘deforestation’ means the deliberate human-induced conversion of forest to agricultural use;


### (4) ‘plantation forest’ means a planted forest that is intensively managed and meets , at planting and stand maturity , all the following criteria: one or two species , even age class , and regular spacing. it includes short rotation plantations for wood , fibre and energy , and excludes forests planted for protection or ecosystem restoration , as well as forests established through planting or seeding which at stand maturity resemble or will resemble naturally regenerating forests; ### (4) ‘plantation forest’ means an artificially planted forest that is intensively managed and meets all the following criteria:


### (6) ‘forest degradation’ means harvesting operations that are not sustainable and cause a reduction or loss of the biological or economic productivity and complexity of forest ecosystems , resulting in the long-term reduction of the overall supply of benefits from forest , which includes wood , biodiversity and other products or services; ### (6) ‘forest degradation’ means harvesting operations that are not sustainable and cause a long-term reduction or loss of the biological or economic productivity and complexity of forest ecosystems , resulting in the reduction of the overall supply of benefits from forest , which includes wood , biodiversity and other products or services;


### 2. however , if the operator obtains or is made aware of any information that would point to a risk that the relevant commodities and products may not fulfil the requirements of this regulation , all obligations of article 9 and 10 have to be fulfilled. ### 2. however , if the operator obtains or is made aware of substantiated information that would point to a risk that the relevant commodities and products may not fulfil the requirements of this regulation , all obligations of article 9 and 10 have to be fulfilled.


### 9. each member state shall ensure that the annual checks carried out by their competent authorities cover at least 5% of the operators placing , making available on or exporting from the union market each of the relevant commodities on their market as well as 5% of the quantity of each of the relevant commodities placed or made available on or exported from their market. ### 9. each member state shall ensure that the annual checks carried out by their competent authorities on the operators placing , making available on or exporting from the union market are based on assessment of the commodities posing the most considerable risks relevant to this regulation.


### 3. country of production and all plots of land of production , including geo-localisation coordinates , latitude and longitude. where a product or commodity contains materials , ingredients or components produced in different plots of land , the geo-location coordinates of all different plots of land shall be included; ### 3. country of production and all plots of land of production , including general production area coordinates , latitude and longitude. where a product or commodity contains materials , ingredients or components produced in different plots of land , the general production area coordinates of all different plots of land shall be included;


### 7. the suspensions referred to in paragraph 6 shall end within 3 working days unless the competent authorities , based on the result of the checks conducted within that period , conclude that they require additional time to establish whether the relevant commodities and products comply with the requirements of this regulation. in such case , the competent authorities shall extend the period of suspension by means of additional interim measures taken under article 21 or , in the case of relevant commodities or products entering or leaving the union market , by notifying the customs authorities of the need to maintain the suspension under article 24(6). ### 7. the suspensions referred to in paragraph 6 shall end within 7 working days unless the competent authorities , based on the result of the checks conducted within that period , conclude that they require additional time to establish whether the relevant commodities and products comply with the requirements of this regulation. in such case , the competent authorities shall extend the period of suspension by means of additional interim measures taken under article 21 or , in the case of relevant commodities or products entering or leaving the union market , by notifying the customs authorities of the need to maintain the suspension under article 24(6).


### (1) since 1971 , the community has granted trade preferences to developing countries under its generalised scheme of preferences (‘gsp’). ### (1) since 1971 , the community has granted trade preferences to developing countries under its generalised scheme of preferences (‘gsp’) , which is one of the union’s key trade instruments.


### 16. where the commission considers that there is sufficient evidence to justify temporary withdrawal for the reason set out in paragraph 1 , point (a) and the exceptional gravity of the violations calls for a rapid response in view of the specific circumstances in the beneficiary country , it shall initiate the procedure for temporary withdrawal in accordance with paragraphs (3) to (15). however , the period referred to in paragraph 4 , point (b) is reduced to 2 months and the deadline referred to in paragraph 8 is reduced to 5 months. ### 16. where the commission considers that there is sufficient evidence to justify temporary withdrawal for the reason set out in paragraph 1 , point (a) and the exceptional gravity of the violations calls for a rapid response in view of the specific circumstances in the beneficiary country , it shall initiate the procedure for temporary withdrawal under the rapid response mechanism in accordance with paragraphs (3) to (15). however , the period referred to in paragraph 4 , point (b) is reduced to 2 months and the deadline referred to in paragraph 8 is reduced to 5 months.


### (2) at the same time , undertakings might receive subsidies from third countries , that provide public funds which are then used , for instance , to finance economic activities in the internal market in any sector of the economy , such as participation in public procurement tenders , or acquisitions of undertakings , including those with strategic assets such as critical infrastructure and innovative technologies. such subsidies are currently not subject to union state aid rules. ### (2) at the same time , undertakings might receive subsidies from third countries , that provide public funds which are then used , for instance , to finance economic activities in the internal market in any sector of the economy , such as participation in public procurement tenders , or acquisitions of undertakings , including those with strategic assets such as critical infrastructure and innovative technologies. such subsidies , including monetary financing of an economy to artificially lower the production costs , are currently not subject to union state aid rules.


### (5) it is therefore necessary to complement existing union instruments with a new tool to effectively deal with distortions in the internal market caused by foreign subsidies and ensure a level playing field. in particular , the new tool complements union state aid rules which deal with distortions in the internal market caused by member state subsidies. ### (5) it could therefore be useful to complement existing union instruments with a new tool to effectively deal with distortions in the internal market caused by foreign subsidies and ensure a level playing field. in particular , the new tool complements union state aid rules which deal with distortions in the internal market caused by member state subsidies.


### (6) rules and procedures to investigate foreign subsidies that actually or potentially distort the internal market should be laid down and , where relevant , those distortions should be redressed. foreign subsidies could distort the internal market if the undertaking benefitting from the foreign subsidy engages in an economic activity in the union. this regulation should therefore establish rules for all undertakings engaging in an economic activity in the union. given the significance of the economic activities pursued by smes , and their contribution to the fulfilment of the union’s key policy goals , special attention is given to the impact of this regulation on them. ### (6) rules and procedures to investigate foreign subsidies that actually or potentially distort the internal market should be laid down and , where relevant , those distortions should be redressed. foreign subsidies benefitting a certain economic activity of an undertaking could distort the internal market if the undertaking benefitting from the foreign subsidy engages in that subsidized economic activity in the union. this regulation should therefore establish rules for all undertakings engaging in an economic activity in the union. given the significance of the economic activities pursued by smes , and their contribution to the fulfilment of the union’s key policy goals , special attention is given to the impact of this regulation on them.


### (7) to ensure a level playing field throughout the internal market and consistency in the application of this regulation , the commission should be the sole authority competent to apply this regulation. the commission should have the power to examine any foreign subsidy to the extent it is in the scope of this regulation in any sector of the economy on its own initiative relying on information from all available sources. to ensure effective control , in the specific case of large concentrations (mergers and acquisitions) and public procurement procedures above certain thresholds , the commission should have the power to review foreign subsidies based on a prior notification by the undertaking to the commission. ### (7) to ensure a level playing field throughout the internal market and consistency in the application of this regulation , the commission should have the power to examine any foreign subsidy to the extent it is in the scope of this regulation in any sector of the economy on its own initiative relying on information from all available sources. to ensure effective control , in the specific case of large concentrations (mergers and acquisitions) and public procurement procedures above certain thresholds , the commission should have the power to review foreign subsidies based on a prior notification by the undertaking to the commission.


### (9) there should be a financial contribution provided , directly or indirectly , by the public authorities of a third country. the financial contribution may be granted through public or private entities. whether a public entity provides a financial contribution should be determined on a case-by-case basis with due regard to elements such as the characteristics of the relevant entity and the legal and economic environment prevailing in the country in which the entity operates including the government’s role in the economy. financial contributions may also be granted through a private entity if its actions can be attributed to the third country. ### (9) there should be a financial contribution provided , directly or indirectly , by the public authorities of a third country. the financial contribution may be granted through public or private entities. whether a public entity provides a financial contribution should be determined on a case-by-case basis with due regard to elements such as the characteristics of the relevant entity and the legal and economic environment prevailing in the country in which the entity operates including the government’s role in the economy. financial contributions may also be granted through a private entity if its actions can be attributed to the third country. corporate bonds bought by a foreign central bank should also be considered as financial contributions.


### (10) such a financial contribution should confer a benefit to an undertaking engaging in an economic activity in the internal market. a financial contribution that benefits an entity engaging in non-economic activities does not constitute a foreign subsidy. the existence of a benefit should be determined on the basis of comparative benchmarks , such as the investment practice of private investors , rates for financing obtainable on the market , a comparable tax treatment , or the adequate remuneration for a given good or service.. if no directly comparable benchmarks are available , existing benchmarks could be adjusted or alternative benchmarks could be established based on generally accepted assessment methods. ### (10) such a financial contribution should confer a benefit to an undertaking engaging in an economic activity in the internal market. the existence of a benefit should be determined on the basis of comparative benchmarks , such as the investment practice of private investors , rates for financing obtainable on the market , a comparable tax treatment , tailored lending conditions , or the adequate remuneration for a given good or service. if no directly comparable benchmarks are available , existing benchmarks could be adjusted or alternative benchmarks could be established based on generally accepted assessment methods.


### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market are less likely to have more positive than negative effects. ### (16) the commission should take into account the positive effects of the foreign subsidy on the development of the relevant subsidised economic activity. the commission should weigh these positive effects against the negative effects of a foreign subsidy in terms of distortion on the internal market in order to determine , if applicable , the appropriate redressive measure or to accept commitments. the balancing may also lead to the conclusion that no redressive measures should be imposed. categories of foreign subsidies that are deemed most likely to distort the internal market can be predicted to have overwhelmingly negative rather than positive effects.


### (2) this regulation addresses foreign subsidies granted to an undertaking engaging in an economic activity in the internal market. an undertaking acquiring control or merging with an undertaking established in the union or an undertaking participating in a public procurement procedure is considered to be engaging in an economic activity in the internal market. ### (2) this regulation addresses foreign subsidies conferring an advantage to an undertaking engaging in any economic activity in the internal market. such advantage is deemed to exist from the moment it can cause distortions , including prior to the actual receipt of , or entitlement to , the subsidy by the beneficiary. among others , an undertaking acquiring control or merging with an undertaking established in the union or an undertaking participating in a public procurement procedure is considered to be engaging in an economic activity in the internal market.


### (2) this regulation addresses foreign subsidies granted to an undertaking engaging in an economic activity in the internal market. an undertaking acquiring control or merging with an undertaking established in the union or an undertaking participating in a public procurement procedure is considered to be engaging in an economic activity in the internal market. ### (2) this regulation addresses foreign subsidies benefitting a certain economic activity of an undertaking engaging in that subsidized economic activity in the internal market. an undertaking acquiring control or merging with an undertaking established in the union or an undertaking participating in a public procurement procedure is considered to be engaging in an economic activity in the internal market.


### the transfer of funds or liabilities , such as capital injections , grants , loans , loan guarantees , fiscal incentives , setting off of operating losses , compensation for financial burdens imposed by public authorities , debt forgiveness , debt to equity swaps or rescheduling; ### the transfer of funds or liabilities , such as capital injections , grants , loans , loan guarantees , tailored lending conditions , fiscal incentives , setting off of operating losses , compensation for financial burdens imposed by public authorities , debt forgiveness , debt to equity swaps or rescheduling , corporate bond buying programmes;


### (ii) foreign public entities , whose actions can be attributed to the third country , taking into account elements such as the characteristics of the entity , the legal and economic environment prevailing in the state in which the entity operates including the government’s role in the economy; or ### (ii) foreign public entities , whose actions can be attributed to the third country , taking into account elements such as the characteristics of the entity , the legal and economic environment prevailing in the state in which the entity operates including the government’s role in the economy , such as central banks or public investment banks; or


### the level of economic activity of the undertaking concerned on the internal market; ### the level and evolution of economic activity of the undertaking concerned on the internal market;


### (2) a foreign subsidy is unlikely to distort the internal market if its total amount is below eur 5 million over any consecutive period of three fiscal years. ### (2) a foreign subsidy is unlikely to distort the internal market if:


### the undertakings concerned received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 50 million. ### the undertakings concerned received aggregate foreign subsidies in the three calendar years prior to notification of more than eur 50 million.


### the joint venture itself and its parent undertakings received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 50 million. ### the joint venture received from third countries an aggregate subsidy in the three calendar years prior to notification of more than eur 50 million.


### (1) a financial contribution notified in the context of a concentration under article 19 may be relevant and assessed again in relation to another economic activity. ### (1) a subsidy notified in the context of a concentration under article 19 may be relevant and assessed again under this regulation in relation to another economic activity.


### (1) a distortion on the internal market shall be deemed to exist where a foreign subsidy is liable to improve the competitive position of the undertaking concerned in the internal market and where , in doing so , it actually or potentially negatively affects competition on the internal market. whether there is a distortion on the internal market shall be determined on the basis of indicators , which may include the following: ### (1) a distortion on the internal market shall be deemed to exist where a foreign subsidy is liable to improve the competitive position of the undertaking concerned in the internal market and where , in doing so , it actually or potentially negatively affects competition on the internal market. whether there is a distortion on the internal market shall be determined on the basis of indicators , which may include , inter alia , the following:


### in a concentration , the assessment whether there is a distortion on the internal market within the meaning of articles 3 or 4 shall be limited to the concentration at stake. only foreign subsidies granted in the three calendar years prior to the conclusion of the agreement , the announcement of the public bid , or the acquisition of a controlling interest shall be considered in the assessment. ### in a concentration , the assessment whether there is a distortion on the internal market within the meaning of articles 3 or 4 shall be limited to the concentration at stake. only foreign subsidies granted in the three calendar years prior to the conclusion of the agreement , the announcement of the public bid , or the acquisition of a controlling interest or known future subsidies that have been decided and will become effective within one year following the concentration , shall be considered in the assessment.


### (5) the commission may request the prior notification of any concentration which is not a notifiable concentration within the meaning of article 18 at any time prior to its implementation where the commission suspects that the undertakings concerned may have benefitted from foreign subsidies in the three years prior to the concentration. that concentration shall be deemed to be a notifiable concentration for the purposes of this regulation. ### (5) the commission may request the prior notification of any concentration which is not a notifiable concentration within the meaning of article 18 at any time prior to its implementation where the commission suspects that the undertakings concerned may have benefitted from foreign subsidies in the three years prior to the concentration or where there are reasonable grounds to suspect that an undertaking will benefit from foreign subsidies in the year following the concentration. that concentration shall be deemed to be a notifiable concentration for the purposes of this regulation.


### the aggregate financial contribution to an undertaking concerned shall be calculated by adding together the respective financial contributions received from third countries by all undertakings referred to in article 21(4) , points (a) to (e). ### the aggregate foreign subsidies to an undertaking concerned shall be calculated by adding together the respective foreign subsidies received from third countries by all undertakings referred to in article 21(4) , points (a) to (e).


### (2) in addition , the commission may impose by decision on undertakings concerned fines not exceeding 1 % of their aggregate turnover in the preceding business year where they , intentionally or negligently , supply incorrect or misleading information in a notification pursuant to article 19 or supplement thereto. ### (2) in addition , the commission may impose fines by decision on undertakings that benefit from a foreign subsidy referred to in article 2 and article 19(3). fines will not exceed 1 % of the undertakings' aggregate turnover in the preceding business year where they , intentionally or negligently , supply incorrect or misleading information in a notification pursuant to article 19 or supplement thereto.


### within five years after the entry into force of this regulation at the latest , the commission shall present a report to the european parliament and the council on the application of this regulation , accompanied , where the commission considers it appropriate , by relevant legislative proposals. ### by … [three years from the entry into force of this regulation] , and every two years thereafter , the commission shall review the functioning and effectiveness of this regulation and present a report to the european parliament and the council on the application of this regulation , accompanied , where the commission considers it appropriate , by relevant legislative proposals.


### having regard to the treaty on the functioning of the european union , and in particular article 192(1) thereof , ### having regard to the treaty on the functioning of the european union , and in particular article 192(2)(a) thereof ,


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. there are concerns , however , that cbam would promote the substitution of eu sales in third markets by non-eu output , thereby not only damaging union's economy , but also fostering another form of “carbon leakage” , since european producers emit substantially less carbon per unit of production than producers elsewhere do , which in particular applies to commodities.


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) as long as a significant number of the union's international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally. thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. is however concerned that cbam will promote the substitution of eu sales in third markets by non-eu output , thereby not only damaging eus economy , but also fostering another form of "carbon leakage" , since european producers emit substantially less carbon per unit of production than producers elsewhere do , which in particular applies lo commodities;


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. however , cbam might be more costly for eu economies , which are more integrated with the rest of the world. in addition , there are concerns about the combination of ets , including the gradual deletion of free allowances , and cbam , which is likely to make eu businesses lose competitiveness and decrease global sales due to replacement by production elsewhere in the world. as a consequence , global production of cbam goods might move to countries with lower carbon costs and where carbon intensity in production is higher.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. underlines that cbam will be more costly for the eu economies , which are more integrated with the rest of the world. is concerned about the combination of eu ets (including the gradual deletion of free allowances) and cbam , which is likely to make eu businesses lose competitiveness and decrease global sales due to replacement by production elsewhere in the world. is particularly worried that global production of cbam goods might move to countries with lower carbon costs and higher carbon intensity in the production;


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### deleted


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. free allocation under the eu ets remains a valid instrument within the union and the inclusion of these allowances in the cbam calculation would help contain price increases , especially in sectors such as agriculture.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam is supposed to be complementary to the current mechanisms. it should be phased in , while the potential withdrawal of free allowances in sectors covered by the cbam should be considered no earlier than upon completion of the pilot phase of the cbam and after carrying out a thorough analysis of the real impact of the new mechanism on the stability of the internal market and the competitiveness of union production.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to complement these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products and by ensuring that eu products exported in the global market are not replaced by more carbon intensive products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam could be progressively phased in while free allowances in sectors covered by the cbam were potentially phased out after a test phase and a due assessment by the commission that proves the effectiveness of the cbam regulation in term of protection from the risk of carbon leakage both for imports and exports. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) cbam is unlikely to provide a profound incentive for other countries to introduce their own systems of carbon pricing , once they realise that the global economy is gradually shifting away from the union towards emerging and middle-income countries and that such a system would damage their total export and domestic consumption.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) emphasises that it is doubtful that cbam will provide a profound incentive to other countries to introduce their own systems of carbon pricing , once they realize that the global economy is gradually shifting away from the eu towards emerging and middle-income countries and that it would damage their total export and domestic consumption;


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. nevertheless , it is difficult to find a consensus whether a cbam-like system would be compatible with wto rules or not. however , the absence of a fully functional wto dispute settlement mechanism might increase the incentive for third countries to respond to cbam directly without going to the wto first , thereby increasing harmful and unexpected trade retaliation dynamics. so it would be necessary to have a realistic and profound assessment of trade implications before continuing the political process of cbam.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. it also seeks to maintain the export competitiveness of eu industry.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. regrets that there is no consensus about the question if a cbam-like system would be compatible with wto rules or not. however highlights that the absence of a fully functional wto dispute settlement mechanism , will increase the incentive for third countries to respond to cbam directly without going to the wto first , thereby increasing harmful and unexpected trade retaliation dynamics; calls therefore for a realistic and profound assessment of trade implications , before continuing the political process of cbam;


### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the competent authorities responsible for the application of this regulation in carrying out their obligations. ### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the competent authorities responsible for the application of this regulation in carrying out their obligations as well as ensure that member states’ administrations are reimbursed for additional costs incurred as a result of implementing this regulation.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular assess as accurately as possible the real effect of the cbam mechanism on climate and environmental protection , the competitiveness and profitability of the union economy , especially in relation to smes , as well as the structure and volume of imports into the eu. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47. ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on the real consequences that the cbam would have on the climate , carrying out an impact study for the agricultural sector in particular. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods 47 .