# Official Journal C 75/28 F

| | ISSN 1977-091X |
| --- | --- |
| Official Journal
  of the European Union | C 75 |
| | |
| English edition | Information and Notices | Volume 6628 February 2023 |

ISSN 1977-091X

Official Journal

of the European Union

C 75

English edition

Information and Notices

Volume 6628 February 2023

---

| Contents | page |
| --- | --- |
| | I   Resolutions, recommendations and opinions |
| | RESOLUTIONS |
| | European Economic and Social Committee |
| | 573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022 |
| 2023/C 75/01 | Resolution of the European Economic and Social Committee on Jointly tackling an existential threat: social partners and civil society for implementation of ambitious climate action | 1 |
| | OPINIONS |
| | European Economic and Social Committee |
| | 573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022 |
| 2023/C 75/02 | Opinion of the European Economic and Social Committee on Digital Sovereignty: a crucial pillar for EU’s digitalisation and growth (own-initiative opinion) | 8 |
| 2023/C 75/03 | Opinion of the European Economic and Social Committee on Emergency preparedness (own-initiative opinion) | 13 |
| 2023/C 75/04 | Opinion of the European Economic and Social Committee on A Digital Euro (own-initiative opinion) | 22 |
| 2023/C 75/05 | Opinion of the European Economic and Social Committee on Recapitalising EU companies — An innovative way towards sustained and inclusive recovery (own-initiative opinion) | 28 |
| 2023/C 75/06 | Opinion of the European Economic and Social Committee — Additional considerations on Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Survey 2022 (COM(2021) 740 final) (own-initiative opinion) | 35 |
| 2023/C 75/07 | Opinion of the European Economic and Social Committee — Additional considerations on Recommendation for a Council recommendation on the economic policy of the euro area (COM(2021) 742 final) (own-initiative opinion) | 43 |
| 2023/C 75/08 | Opinion of the European Economic and Social Committee on Enhancing labour mobility to support economic recovery (own-initiative opinion) | 50 |
| 2023/C 75/09 | Opinion of the European Economic and Social Committee on Improving equality in the EU (own-initiative opinion) | 56 |
| 2023/C 75/10 | Opinion of the European Economic and Social Committee on Ensuring strong European solidarity for rare disease patients (own initiative opinion) | 67 |
| 2023/C 75/11 | Opinion of the European Economic and Social Committee on The role of family members caring for people with disabilities and older persons: the explosion of the phenomenon during the pandemic (own-initiative opinion) | 75 |
| 2023/C 75/12 | Opinion of the European Economic and Social Committee on Digital Innovation Hubs and SMEs (own-initiative opinion) | 82 |
| 2023/C 75/13 | Opinion of the European Economic and Social Committee on Towards a sustainable plant protein and plant oil strategy for the EU (own-initiative opinion) | 88 |
| 2023/C 75/14 | Opinion of the European Economic and Social Committee on Towards a sustainable food labelling framework to empower consumers to make sustainable food choices (own-initiative opinion) | 97 |
| 2023/C 75/15 | Opinion of the European Economic and Social Committee on A strategic vision on energy transition to enable the EU’s strategic autonomy (own-initiative opinion) | 102 |
| 2023/C 75/16 | Opinion of the European Economic and Social Committee on The importance of public transport for Europe’s green recovery (own-initiative opinion) | 115 |
| 2023/C 75/17 | Opinion of the European Economic and Social Committee on Cultural diplomacy as a vector of EU external relations – new partnerships and role of CSOs (own-initiative opinion) | 122 |
| 2023/C 75/18 | Opinion of the European Economic and Social Committee on Multilateral investor-State arbitration court: assessment of the UNCITRAL process and its achievements in light of civil society recommendations (own-initiative opinion) | 130 |

Contents

page

I   Resolutions, recommendations and opinions

RESOLUTIONS

European Economic and Social Committee

573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022

2023/C 75/01

Resolution of the European Economic and Social Committee on Jointly tackling an existential threat: social partners and civil society for implementation of ambitious climate action

1

OPINIONS

European Economic and Social Committee

573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022

2023/C 75/02

Opinion of the European Economic and Social Committee on Digital Sovereignty: a crucial pillar for EU’s digitalisation and growth (own-initiative opinion)

8

2023/C 75/03

Opinion of the European Economic and Social Committee on Emergency preparedness (own-initiative opinion)

13

2023/C 75/04

Opinion of the European Economic and Social Committee on A Digital Euro (own-initiative opinion)

22

2023/C 75/05

Opinion of the European Economic and Social Committee on Recapitalising EU companies — An innovative way towards sustained and inclusive recovery (own-initiative opinion)

28

2023/C 75/06

Opinion of the European Economic and Social Committee — Additional considerations on Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Survey 2022 (COM(2021) 740 final) (own-initiative opinion)

(COM(2021) 740 final)

35

2023/C 75/07

Opinion of the European Economic and Social Committee — Additional considerations on Recommendation for a Council recommendation on the economic policy of the euro area (COM(2021) 742 final) (own-initiative opinion)

(COM(2021) 742 final)

43

2023/C 75/08

Opinion of the European Economic and Social Committee on Enhancing labour mobility to support economic recovery (own-initiative opinion)

50

2023/C 75/09

Opinion of the European Economic and Social Committee on Improving equality in the EU (own-initiative opinion)

56

2023/C 75/10

Opinion of the European Economic and Social Committee on Ensuring strong European solidarity for rare disease patients (own initiative opinion)

67

2023/C 75/11

Opinion of the European Economic and Social Committee on The role of family members caring for people with disabilities and older persons: the explosion of the phenomenon during the pandemic (own-initiative opinion)

75

2023/C 75/12

Opinion of the European Economic and Social Committee on Digital Innovation Hubs and SMEs (own-initiative opinion)

82

2023/C 75/13

Opinion of the European Economic and Social Committee on Towards a sustainable plant protein and plant oil strategy for the EU (own-initiative opinion)

88

2023/C 75/14

Opinion of the European Economic and Social Committee on Towards a sustainable food labelling framework to empower consumers to make sustainable food choices (own-initiative opinion)

97

2023/C 75/15

Opinion of the European Economic and Social Committee on A strategic vision on energy transition to enable the EU’s strategic autonomy (own-initiative opinion)

102

2023/C 75/16

Opinion of the European Economic and Social Committee on The importance of public transport for Europe’s green recovery (own-initiative opinion)

115

2023/C 75/17

Opinion of the European Economic and Social Committee on Cultural diplomacy as a vector of EU external relations – new partnerships and role of CSOs (own-initiative opinion)

122

2023/C 75/18

Opinion of the European Economic and Social Committee on Multilateral investor-State arbitration court: assessment of the UNCITRAL process and its achievements in light of civil society recommendations (own-initiative opinion)

130

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| | III   Preparatory acts |
| --- | --- |
| | European Economic and Social Committee |
| | 573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022 |
| 2023/C 75/19 | Opinion of the European Economic and Social Committee on Proposal for a directive of the European Parliament and of the Council concerning the status of third-country nationals who are long-term residents (COM(2022) 650 – final) — Proposal for a directive of the European Parliament and of the Council on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State (COM(2022) 655 – final) — Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Attracting skills and talent to the EU (COM(2022) 657 – final) | 136 |
| 2023/C 75/20 | Opinion of the European Economic and Social Committee on Proposal for a Directive of the European Parliament and of the Council on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (Strategic lawsuits against public participation)(COM(2022) 177 final – 2022/0117 COD) | 143 |
| 2023/C 75/21 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EC) No 767/2008, (EC) No 810/2009 and (EU) 2017/2226 of the European Parliament and of the Council, Council Regulations (EC) No 1683/95, (EC) No 333/2002, (EC) No 693/2003 and (EC) No 694/2003 and Convention implementing the Schengen Agreement, as regards the digitalisation of the visa procedure(COM(2022) 658 final) | 150 |
| 2023/C 75/22 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on standards of quality and safety for substances of human origin intended for human application and repealing Directives 2002/98/EC and 2004/23/EC (COM(2022) 338 – 2022/0216 (COD)) | 154 |
| 2023/C 75/23 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council laying down harmonised conditions for the marketing of construction products, amending Regulation (EU) 2019/1020 and repealing Regulation (EU) No 305/2011 (COM(2022) 144 final) | 159 |
| 2023/C 75/24 | Opinion of the European Economic and Social Committee on Conversion to a Farm Sustainability Data Network (FSDN) (COM(2022) 296 final – 2022/0192 (COD)) | 164 |
| 2023/C 75/25 | Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – An action plan for EU-Ukraine Solidarity Lanes to facilitate Ukraine’s agricultural export and bilateral trade with the EU (COM(2022) 217 final) | 171 |
| 2023/C 75/26 | Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — EU Solar Energy Strategy (COM(2022) 221 final) and Commission recommendation on speeding up permit-granting procedures for renewable energy projects and facilitating Power Purchase Agreements (C(2022) 3219 final) | 178 |
| 2023/C 75/27 | Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Short-Term Energy Market Interventions and Long-Term Improvement to the Electricity Market Design — a course for action (COM(2022) 236 final) | 185 |
| 2023/C 75/28 | Opinion of the European Economic and Social Committee on Amended proposal for a Regulation of the European Parliament and of the Council on Union guidelines for the development of the trans-European transport network, amending Regulation (EU) 2021/1153 and Regulation (EU) No 913/2010 and repealing Regulation (EU) No 1315/2013 (COM(2022) 384 final/2 — 2021/0420 (COD)) | 190 |
| 2023/C 75/29 | Opinion of the European Economic and Social Committee on Specific provisions for the 2014-2020 cooperation programmes supported by the European Neighbourhood Instrument and under the European territorial cooperation goal, following programme implementation disruption (COM(2022) 362 — 2022/0227 (COD)) | 195 |
| 2023/C 75/30 | Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council repealing Council Directive 89/629/EEC (COM(2022)465 final – 2022/0282(COD)) | 198 |
| 2023/C 75/31 | Opinion of the European Economic and Social Committee on Proposal for a Council Directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes (COM(2022) 216 final – 2022/0154 (CNS)) | 199 |
| 2023/C 75/32 | Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on repealing Regulation (EEC) No 1108/70 of the Council introducing an accounting system for expenditure on infrastructure in respect of transport by rail, road and inland waterway, and Commission Regulation (EC) No 851/2006 specifying the items to be included under the various headings in the forms of accounts shown in Annex I to Council Regulation (EEC) No 1108/70 (COM (2022) 381 final) | 204 |

III   Preparatory acts

European Economic and Social Committee

573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022

2023/C 75/19

Opinion of the European Economic and Social Committee on Proposal for a directive of the European Parliament and of the Council concerning the status of third-country nationals who are long-term residents (COM(2022) 650 – final) — Proposal for a directive of the European Parliament and of the Council on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State (COM(2022) 655 – final) — Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Attracting skills and talent to the EU (COM(2022) 657 – final)

(COM(2022) 650 – final)

(COM(2022) 655 – final)

(COM(2022) 657 – final)

136

2023/C 75/20

Opinion of the European Economic and Social Committee on Proposal for a Directive of the European Parliament and of the Council on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (Strategic lawsuits against public participation)(COM(2022) 177 final – 2022/0117 COD)

(COM(2022) 177 final – 2022/0117 COD)

143

2023/C 75/21

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EC) No 767/2008, (EC) No 810/2009 and (EU) 2017/2226 of the European Parliament and of the Council, Council Regulations (EC) No 1683/95, (EC) No 333/2002, (EC) No 693/2003 and (EC) No 694/2003 and Convention implementing the Schengen Agreement, as regards the digitalisation of the visa procedure(COM(2022) 658 final)

(COM(2022) 658 final)

150

2023/C 75/22

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on standards of quality and safety for substances of human origin intended for human application and repealing Directives 2002/98/EC and 2004/23/EC (COM(2022) 338 – 2022/0216 (COD))

(COM(2022) 338 – 2022/0216 (COD))

154

2023/C 75/23

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council laying down harmonised conditions for the marketing of construction products, amending Regulation (EU) 2019/1020 and repealing Regulation (EU) No 305/2011 (COM(2022) 144 final)

(COM(2022) 144 final)

159

2023/C 75/24

Opinion of the European Economic and Social Committee on Conversion to a Farm Sustainability Data Network (FSDN) (COM(2022) 296 final – 2022/0192 (COD))

(COM(2022) 296 final – 2022/0192 (COD))

164

2023/C 75/25

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – An action plan for EU-Ukraine Solidarity Lanes to facilitate Ukraine’s agricultural export and bilateral trade with the EU (COM(2022) 217 final)

(COM(2022) 217 final)

171

2023/C 75/26

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — EU Solar Energy Strategy (COM(2022) 221 final) and Commission recommendation on speeding up permit-granting procedures for renewable energy projects and facilitating Power Purchase Agreements (C(2022) 3219 final)

(COM(2022) 221 final)

(C(2022) 3219 final)

178

2023/C 75/27

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Short-Term Energy Market Interventions and Long-Term Improvement to the Electricity Market Design — a course for action (COM(2022) 236 final)

(COM(2022) 236 final)

185

2023/C 75/28

Opinion of the European Economic and Social Committee on Amended proposal for a Regulation of the European Parliament and of the Council on Union guidelines for the development of the trans-European transport network, amending Regulation (EU) 2021/1153 and Regulation (EU) No 913/2010 and repealing Regulation (EU) No 1315/2013 (COM(2022) 384 final/2 — 2021/0420 (COD))

(COM(2022) 384 final/2 — 2021/0420 (COD))

190

2023/C 75/29

Opinion of the European Economic and Social Committee on Specific provisions for the 2014-2020 cooperation programmes supported by the European Neighbourhood Instrument and under the European territorial cooperation goal, following programme implementation disruption (COM(2022) 362 — 2022/0227 (COD))

(COM(2022) 362 — 2022/0227 (COD))

195

2023/C 75/30

Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council repealing Council Directive 89/629/EEC (COM(2022)465 final – 2022/0282(COD))

(COM(2022)465 final – 2022/0282(COD))

198

2023/C 75/31

Opinion of the European Economic and Social Committee on Proposal for a Council Directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes (COM(2022) 216 final – 2022/0154 (CNS))

(COM(2022) 216 final – 2022/0154 (CNS))

199

2023/C 75/32

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on repealing Regulation (EEC) No 1108/70 of the Council introducing an accounting system for expenditure on infrastructure in respect of transport by rail, road and inland waterway, and Commission Regulation (EC) No 851/2006 specifying the items to be included under the various headings in the forms of accounts shown in Annex I to Council Regulation (EEC) No 1108/70 (COM (2022) 381 final)

(COM (2022) 381 final)

204

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| EN | |
| --- | --- |

EN

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I Resolutions, recommendations and opinions

RESOLUTIONS

European Economic and Social Committee

573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022

| 28.2.2023 | EN | Official Journal of the European Union | C 75/1 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/1

---

Resolution of the European Economic and Social Committee on Jointly tackling an existential threat: social partners and civil society for implementation of ambitious climate action

(2023/C 75/01)

| Rapporteurs: | Peter SCHMIDT


  Isabel CAÑO AGUILAR


  Sandra PARTHIE


  Josep PUXEU ROCAMORA


  Neža REPANŠEK


  Lutz RIBBE |
| --- | --- |

Rapporteurs:

Peter SCHMIDT

Isabel CAÑO AGUILAR

Sandra PARTHIE

Josep PUXEU ROCAMORA

Neža REPANŠEK

Lutz RIBBE

| Legal basis | Rule 50 of the Rules of Procedure
  Resolution |
| --- | --- |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 104/1/0 |

Legal basis

Rule 50 of the Rules of Procedure

Resolution

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

104/1/0

The annual meeting of the United Nations Framework Convention on Climate Change (COP27) will take place in Sharm El-Sheikh, Egypt, from 6 to 18 November.

In line with the EESC Bureau memo of 22 February 2022, the EESC established an Ad Hoc Group on the Conference of the Parties of the United Nations Framework Convention on Climate Change to prepare the EESC’s COP resolution, aligned with the next COP’s priorities and UNFCCC negotiation processes, and to make the Committee as a whole more familiar with the UNFCCC process and involve it in the climate change negotiations.

The AHG has six members from the NAT section, plus a youth representative who participates regularly, following the own-initiative opinion Towards structured youth engagement on climate and sustainability in the EU decision-making process (1). In the last few months, the AHG met with relevant organisations and institutions, such as the European Commission, the Committee of the Regions, the High-Level Climate Champions office and Climate Action Tracker, as well as representatives from the civil society constituencies — young people, business, farmers, trade unions and environmental NGOs — to exchange information and look for synergies. The climate emergency was stressed in all these conversations.

2022 is becoming a year in which climate change is driving extreme weather events more acutely than ever. From scorching heatwaves and fires in Europe and parts of South Asia to disastrous flooding in Pakistan and Bangladesh, and prolonged drought in East Africa, with thousands of people killed, and millions more displaced or on the brink of famine.

In this regard, the recent report of the Intergovernmental Panel on Climate Change (2) states that, to limit global warming to 1,5 oC, greenhouse gas emissions must peak ‘at the latest before 2025’, that emissions need to halve by 2030, and that deep and immediate emissions reductions across all sectors are imperative in order for this to happen. However, policies presently in place are projected to result in about 2,7 oC and the current country commitments — Nationally Determined Contributions — will limit warming to 2,4 oC (3).

Russia’s invasion of Ukraine has dramatically added complexity to an already economically and socially difficult situation. Yet the climate urgency cannot be put on hold. Any special measure adopted must be exceptional and time-limited, and the European Union needs to accelerate the reshaping of its energy and climate policy to address short term shocks while advancing towards the inescapable decarbonisation of societies. Europe has to be the leader on climate action, closing the gaps between ambition and policy measures.

The resolution prepared by the AHG members calls on the EU institutions and governments to step up climate ambition, in line with science and scientific information, and places a particular focus on the role of organised civil society in accelerating climate action. Social resilience can only be strengthened with an empowered civil society, social actors and grassroots movements.

We are the last generation that can stop climate change, and the EESC, as the voice of European civil society, ought to play a leading role in promoting these transformations towards carbon-neutral, inclusive and socially fair societies.

Policy recommendations of the European Economic and Social Committee

Stepping up climate ambition to address the climate emergency and enhancing the EU’s climate action

As the voice of organised civil society in Europe, acting in its capacity as an advisory body to the European Parliament, the Council and the Commission, and as part of the global civil society community,

| 1. | the European Economic and Social Committee (EESC) points out that the United Nations Framework Convention on Climate Change (UNFCCC) was adopted 30 years ago with the ultimate objective of achieving ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system’ (Article 2), and that this objective has not been achieved; |
| --- | --- |

1.

| 2. | points out that the Paris Agreement in 2015 moved us all from the qualitative objective of the Climate Convention — to prevent interference with the climate — to a quantitative target: ‘holding the increase in the global average temperature to well below 2 oC above pre-industrial levels and pursuing efforts to limit the temperature increase to 1,5 oC above pre-industrial levels’ (4); |
| --- | --- |

2.

| 3. | stresses that the 1,5 oC goal will not be sufficient to avoid the dramatic consequences of climate change. As evidence shows, climate change is already altering every region across the globe. Floods, droughts, storms, fires and heatwaves are increasing exponentially, with devastating social effects and an economic impact of billions every year (5); |
| --- | --- |

3.

| 4. | stresses that we are living through a climate emergency and that we should not give up on Article 2 of the Convention despite the UNFCCC currently falling short in its ability to deliver; |
| --- | --- |

4.

| 5. | is deeply convinced that policy decisions need to respond to science and scientific information, and points out that the IPCC has set clear benchmarks: emissions must peak ‘at the latest before 2025’ (6) and the world needs to cut emissions by 45 % below 2010 levels by 2030 to keep the possibility of 1,5 oC alive; |
| --- | --- |

5.

| 6. | acknowledges that Russia’s invasion of Ukraine has added to an already difficult situation characterised by inflation, high energy and food prices and possible energy shortages, having a harsh impact on citizens’ lives, and creating severe social and economic challenges, at least in the short term. The EESC believes that the current situation raises the urgency of European climate action even further, and that the new geopolitical situation reinforces the need for the EU to accelerate the reshaping of its energy and climate policy; |
| --- | --- |

6.

| 7. | is convinced that the European Green Deal needs to be strengthened to achieve the objective of decarbonisation of the economy, further reduce external dependencies, ensure resilience and enhance a just transition, and that exceptional derogations to agreed targets can only be granted for a limited time (7); and believes that the development of open strategic autonomy should ensure reduced dependencies in energy, critical raw materials and food; |
| --- | --- |

7.

| 8. | urges the EU to take a leadership role and calls on the European Commission and the EU Member States to update the nationally determined contribution (NDC) following the Glasgow Climate Pact; calls for a global fair distribution grounded in equity, historical responsibility and capability; |
| --- | --- |

8.

| 9. | welcomes the European Parliament’s decisions on the ETS (8) and carbon sinks (9), resulting in a slight increase in the EU emissions reduction target, which, though insufficient, constitutes a call to have the EU NDCs increased; |
| --- | --- |

9.

| 10. | expresses concern at the fact that many countries have announced long-term plans aimed at achieving climate neutrality by 2050 or 2060 which are not backed up with commensurate short- and medium-term plans, and therefore calls on the European Commission to intensify EU diplomacy efforts on promoting the adoption of European Green Deal-like policy frameworks by the international community, and stands ready to support this endeavour by working with civil society organisations worldwide, taking the Agenda 2030 and the sustainable development goals as the compass for the decisive years to come; |
| --- | --- |

10.

| 11. | asks the EU to further develop sectoral approaches for tailor-made measures or ‘climate clubs’ that could be developed amongst countries with the most ambitious climate action programmes to encourage faster action on the part of other nations — the implementation of the Carbon Border Adjustment Mechanism (CBAM) could be a tool for this; |
| --- | --- |

11.

| 12. | considers that decisive and clearly defined action is necessary to make Article 6 of the Paris Agreement operational and complete the Paris rulebook, which establishes a framework for voluntary international cooperation for countries to reduce emissions to meet their pledges, avoiding some of the pitfalls concerning double counting or the risk of fake emissions reduction credits; |
| --- | --- |

12.

Reviewing our current economic model to effectively address mitigation and adaptation, and ensuring adequate access to climate finance

| 13. | emphasises that, to accelerate the transition towards a climate-neutral society, we need to review our current economic model to re-think the way in which we consume and produce and the way we value sufficiency, and calls on the EU to propose a new vision of prosperity for people and the planet based on the principles of environmental sustainability, the right to a decent life and the protection of social values (10); |
| --- | --- |

13.

| 14. | proposes a new governance framework to develop these transformational changes, and encourages governments and regional authorities to create Just Transition Commissions to allow the social partners and civil society organisations, including youth organisations, to provide recommendations and to negotiate and develop national and regional just transition plans (11); considers that existing initiatives to address the social challenges of the green transformation have remained fragmented (12); |
| --- | --- |

14.

| 15. | believes that the rapid shift towards a decarbonised economy will entail massive challenges for citizens, workers, companies and regions, especially those that are the most reliant on carbon-intensive sectors and industries (13), and that the NDCs should include undertaking a granular mapping and analysis of the impacts the transition will have on employment and skills in the country, sub-regions and sectors, including on subcontractors and downstream value chains, accompanied by national job plans and just transition strategies (14), based on the ILO principle of just transition; therefore endorses the proposal from the Conference on the Future of Europe (15) to ensure a just transition, which protects workers and jobs through proper funding for transition and further research; |
| --- | --- |

15.

| 16. | underlines that the private sector’s responsibility for achieving the decarbonisation goal will require the rapid transformation of systems on an unprecedented scale, and points out that the private sector has a crucial role to play in the process; |
| --- | --- |

16.

| 17. | acknowledges the many and varied efforts made by companies and entrepreneurs across the EU to develop business solutions to mitigate and adapt to climate-change related challenges, and believes that innovative and responsible business models should tackle climate change by focusing on measurable sustainability targets, including the reduced use of water, energy or chemicals; |
| --- | --- |

17.

| 18. | is concerned that the reduction of greenhouse gas (GHG) emissions in the EU is coming with an increase in emissions abroad to satisfy EU consumption, generating GHG spill-over effects (16), and considers that the EU’s GHG inventory approach needs to incorporate the GHG emissions associated with imported products, that decoupling socioeconomic progress from negative domestic and imported impacts on climate and biodiversity has to become a priority, and that CBAM is a supportive measure to achieve this goal; |
| --- | --- |

18.

| 19. | notes that biodiversity loss and climate change mutually reinforce each other, as stressed by the scientific community, calls for a holistic approach to environmental action addressing the linkages between biodiversity loss and climate change, and proposes reviewing and increasing the size of protected areas and the efforts to protect remaining natural resources under the EU Biodiversity Strategy for 2030 (17); |
| --- | --- |

19.

| 20. | is concerned by the fact that the impact of climate change is disproportionately affecting the most vulnerable people and that the communities that are least responsible for global emissions are facing the worst impacts and do not always have the resources to cope; |
| --- | --- |

20.

| 21. | points out that adaptation action is becoming more and more critical as abnormal climate events multiply and that it is essential to better anticipate the impacts of climate change, highlights that the Paris Agreement underscores the importance of national-level adaptation planning processes by committing all countries to report on progress made, and urges that inclusivity be streamlined to avoid reinforcing existing inequalities; |
| --- | --- |

21.

| 22. | calls for an increase in total climate finance contributions by developed countries, with ‘equal emphasis’ on financing mitigation and adaptation, as, without additional adaptation finance, adaptation planning and implementation will be limited, particularly in developing countries; calls for further steps to ensure that this principle is upheld, given that mitigation safeguards against deepening the climate crisis for future generations, while adaptation safeguards current and future generations from the extreme weather events caused by already existing climate change (18), and recalls that climate change adaptation funding currently accounts for only 25 % of global climate finance and that prior commitments that adaptation finance will increase to 40 % by 2025 are not being met (19); |
| --- | --- |

22.

| 23. | welcomes the EUR 100 million Commission contribution to the Adaptation Fund, while urging EU Member States to double adaptation finance from 2019 levels by 2025, and calls for additional efforts to meet the USD 100 billion-goal Delivery Plan; highlights the fact that there is currently no global financing facility to support recovery from the loss and damage these people endure and urges the EU Member States and the Commission to commit to the ‘loss and damage facility’ in order to repair the consequences of climate change; |
| --- | --- |

23.

| 24. | believes that, as part of climate justice action, EU governments and institutions must develop a forward-looking and comprehensive European migration and asylum policy that provides protection for climate-displaced persons, starting with the formal recognition of climate refugees; |
| --- | --- |

24.

Boosting effective sectoral action to achieve climate neutrality

| 25. | highlights that the circular economy and bioeconomy are enablers for developing a new vision of prosperity for people, and need to be further accelerated (20), pointing out that circular economy strategies implemented across sectors and nations have the potential to slash global GHG emissions by 39 % (21); expresses concern that the EU is only around 12 % circular despite the major legislative upgrading process launched in 2015 via the first EU Action Plan on circular economy, and believes that further progress can only be achieved by engaging with all civil society components, notably to overcome remaining political, cultural, infrastructural, governance-related, and financial barriers (22); |
| --- | --- |

25.

| 26. | calls for transition strategies for putting in place sustainable food systems to be duly integrated in NDCs and acknowledges that, while many countries mention the mitigation and adaptation potential of agriculture in their NDCs, very few set targets in relation to other stages of the food system (23), leaving opportunities largely untapped (24); reiterates its recommendations to adopt comprehensive food policies, such as the Farm to Fork Strategy, including climate measures, and to ensure structured engagement of stakeholders across the food supply chain (25) and across all levels of governance, particularly placing producers at the heart of agricultural strategies and involving them in policy-making; |
| --- | --- |

26.

| 27. | is concerned about the situation of Africa, which has contributed less than 4 % of global emissions but stands out disproportionately as one of the most vulnerable regions in the world and, given that COP27 is taking place in Africa, makes a clear plea to the EU to prioritise financial, technical and capacity-building resources for Africa to support the continent’s commitment at the Paris COP21, and to take account of the fact that most of the African Nationally Determined Contributions (NDCs) contain mitigation and adaptation targets that are conditional on receiving appropriate international support, bringing into question the protection of high-value conservation ecosystems such as forests or savannahs, and fossil fuel extraction; |
| --- | --- |

27.

| 28. | calls for an immediate halt to fossil fuel subsidies, welcomes the communication on REPowerEU, as it presents solutions in line with the objectives of the Green Deal and the European Energy Union (26) (27), and believes that governments need to provide a framework for investment in breakthrough technologies in areas such as energy efficiency and renewable energy production, through support for research, innovation and development, and that regulation should be designed to enable and empower the development and market uptake of new technologies, including demand-side measures to create lead markets and incentivise consumption of low-carbon products (28); |
| --- | --- |

28.

| 29. | welcomes digital solutions enabling environmental protection and sustainability transformation in transport, energy systems, buildings, agriculture and other sectors, but also notes that overall digitalisation has so far not contributed to a reduction in energy demand and carbon emissions, and therefore stresses the need for supportive policies to mitigate rebound and induction effects (29); |
| --- | --- |

29.

| 30. | underlines that climate change also has serious repercussions for companies, in particular SMEs, such as interruption of supply chains and damage to production sites due to extreme weather phenomena, and forces them to make sometimes costly changes to their business and operation models, as well as investments to cope with regulatory or other requirements; considers that early adopters of new sustainable business models should be supported to ensure that their innovation does not lead to a competitive disadvantage; |
| --- | --- |

30.

| 31. | emphasises that support to the private sector must respect the principles of equitable access to SME finance tools and should be based solely on climate objectives (30), and that extensive work across value chains and cross-sector collaboration will be required; |
| --- | --- |

31.

| 32. | considers that harmonisation and standardisation are key to achieving industry-wide scalability of solutions through technology, skills enhancement and regulation that should be supported by EU governments at international level, and that it will be key for SMEs in particular to get accompanying instruments and capacity building to meet new requirements and increase market access in the EU; |
| --- | --- |

32.

Empowering civil society to accelerate climate action and calling for a new governance framework

| 33. | highlights that the scale of action needed requires integrated, multilevel policies and cross-sectoral solutions with a genuine engagement of civil society, and therefore proposes a new governance framework to develop these transformational changes; |
| --- | --- |

33.

| 34. | considers that, at workplace level, this new governance framework should guarantee social dialogue by ensuring workers’ rights and participation and strengthening collective agreements; |
| --- | --- |

34.

| 35. | considers that broader dialogue should also be strengthened, with the input of the regions, rural actors and cities, social partners, cooperatives and civil society, to ensure social justice and credibility, and to give specific meaning to the commitment that no one should be left behind (31). For instance, facilitating prosumer approaches can speed up the transition to a cleaner energy system, create new economic models, and help to protect the most vulnerable groups in our societies from being, for example, cut off from heat, light and information technology; |
| --- | --- |

35.

| 36. | is firmly convinced that bottom-up and grassroots initiatives need to be truly supported and encouraged to accelerate climate change mitigation and adaptation and strengthen social resilience, thus unleashing the potential of a culture of cooperation and bottom-up solutions; and believes that there is an equal and essential need to invest more in social innovation to mainstream the cultural and societal changes required to embed climate protection into the daily lives of businesses, public authorities and households; |
| --- | --- |

36.

| 37. | believes that gender should not be addressed as a separate and siloed issue but should be considered fundamental, in order to avoid gender-blind measures and policies. Climate change does not have the same impact on all sections of the population, and climate change policies, if not designed correctly, can perpetuate these injustices and unbalances. For example, women’s unequal participation in decision-making processes and labour markets compounds inequalities and often prevents women from fully contributing to climate-related planning, policy-making and implementation (32); |
| --- | --- |

37.

| 38. | is convinced that stronger youth engagement in decision-making processes, from the drafting of legislative proposals and initiatives through to implementation, monitoring and follow-up, will best take on board the intergenerational dimension of these shifts (33). This is why, since 2021, the EESC has started to include a youth delegate in the official EU delegation to UNFCCC COP meetings, and has committed to amplifying the voices of young people and youth organisations within the Committee’s work; the EESC strongly recommends that parties and other stakeholders adopt a similar approach; |
| --- | --- |

38.

| 39. | acknowledges the role of indigenous people on the frontlines of climate change — indigenous people steward over 80 % of the planet’s remaining biodiversity (34); welcomes the increasing engagement of indigenous peoples in climate policy and urges parties to actively involve them in implementing climate action; |
| --- | --- |

39.

| 40. | the EESC commits to undertaking actions to implement the aforementioned policy recommendations. |
| --- | --- |

40.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 429, 11.12.2020, p. 44.

1

(2)  https://www.ipcc.ch/2022/04/04/ipcc-ar6-wgiii-pressrelease/.

2

(3)  https://climateactiontracker.org/global/temperatures/.

3

(4)  The Paris Agreement.

4

(5)  Based on: ‘Economic losses from weather and climate-related extremes in Europe reached around half a trillion euros over past 40 years’ — European Environment Agency; ‘New report: World counts the cost of a year of climate breakdown’ — UK charity fighting global poverty — Christian Aid — Media Centre; ‘The Costs of Extreme Weather Events Caused by Climate Change’ — CMCC; ‘Billion-Dollar Weather and Climate Disasters’ — National Centers for Environmental Information (NCEI).

5

(6)  Climate Change 2022: Mitigation of Climate Change — IPCC.

6

(7)  EESC resolution on the War in Ukraine and its economic, social and environmental impact (OJ C 290, 29.7.2022, p. 1).

7

(8)  Climate change: Parliament pushes for faster EU action and energy independence.

8

(9)  Fit for 55: Parliament agrees to higher EU carbon sink ambitions by 2030.

9

(10)  EESC opinion on The sustainable economy we need (OJ C 106, 31.3.2020, p. 1).

10

The sustainable economy we need

(11)  EESC opinion on ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

11

‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality

(12)  EESC opinion on Social dialogue within the green transition (OJ C 486, 21.12.2022, p. 95).

12

Social dialogue within the green transition

(13)  EESC opinion on ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

13

‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality

(14)  EESC opinion on ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

14

‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality

(15)  Conference on the Future of Europe — Recommendations adopted by the European Citizens’ Panel.

15

(16)  2021 Europe Sustainable Development Report — SDSN Europe.

16

(17)  Ongoing EESC opinion (NAT/841) on Nature restoration targets under EU biodiversity strategy.

17

Nature restoration targets under EU biodiversity strategy

(18)  EESC opinion on New EU strategy on adaptation to climate change (OJ C 374, 16.9.2021, p. 84).

18

New EU strategy on adaptation to climate change

(19)  António Guterres: ‘50% of All Climate Finance Needed for Adaptation’.

19

(20)  EESC opinion on Developing synergies across different circular economy roadmaps (OJ C 14, 15.1.2020, p. 29).

20

Developing synergies across different circular economy roadmaps

(21)  Circularity Gap Report 2021 ‘Climate Change Mitigation through the Circular Economy’.

21

(22)  EESC opinion on New EU strategy on adaptation to climate change (OJ C 374, 16.9.2021, p. 84).

22

New EU strategy on adaptation to climate change

(23)  Enhancing NDCs For Food Systems — recommendations for decision-makers — NDC Action Project.

23

(24)  EESC opinion on Food security and sustainable food systems (OJ C 194, 12.5.2022, p. 72).

24

Food security and sustainable food systems

(25)  EESC opinion on ‘From farm to fork’: a sustainable food strategy (OJ C 429, 11.12.2020, p. 268).

25

‘From farm to fork’: a sustainable food strategy

(26)  EESC opinion on Climate justice (OJ C 81, 2.3.2018, p. 22) and on New EU strategy on adaptation to climate change (OJ C 374, 16.9.2021, p. 84).

26

Climate justice

New EU strategy on adaptation to climate change

(27)  EESC opinion on REPowerEU: Joint European Action for more affordable, secure and sustainable energy (OJ C 323, 26.8.2022, p. 123).

27

REPowerEU: Joint European Action for more affordable, secure and sustainable energy

(28)  EESC opinion on ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

28

‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality

(29)  EESC opinion on Digitalisation and Sustainability — status quo and need for action in civil society perspective (OJ C 429, 11.12.2020, p. 187).

29

Digitalisation and Sustainability — status quo and need for action in civil society perspective

(30)  EESC opinion on ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

30

‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality

(31)  EESC opinion on ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

31

‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality

(32)  2020 Pocket Guide to Gender Equality under the UNFCCC — WEDO.

32

(33)  EESC opinion on Towards structured youth engagement on climate and sustainability in the EU decision-making process (OJ C 429, 11.12.2020, p. 44).

33

Towards structured youth engagement on climate and sustainability in the EU decision-making process

(34)  ‘Indigenous peoples defend Earth’s biodiversity — but they’re in danger’.

34

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OPINIONS

European Economic and Social Committee

573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022

| 28.2.2023 | EN | Official Journal of the European Union | C 75/8 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/8

---

Opinion of the European Economic and Social Committee on Digital Sovereignty: a crucial pillar for EU’s digitalisation and growth

(own-initiative opinion)

(2023/C 75/02)

| Rapporteur: | Philip VON BROCKDORFF |
| --- | --- |

Rapporteur:

Philip VON BROCKDORFF

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Single Market, Production and Consumption |
| Adopted in section | 7.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 185/0/3 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Single Market, Production and Consumption

Adopted in section

7.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

185/0/3

1.   Conclusions and recommendations

| 1.1. | Despite significant progress to enhance the EU’s digital sovereignty, there is still heavy reliance on non-EU-based tech companies. This is limiting the EU’s leadership and strategic autonomy in the digital world, and in turn limiting the EU’s economic growth potential. |
| --- | --- |

1.1.

| 1.2. | In an online environment still dominated by non-EU tech companies, the question arises as to the degree of control EU citizens, businesses and governments may have over their digital data. This may not appear to be a priority in the current crisis, but the need to address the digital sovereignty imbalance cannot downplayed. |
| --- | --- |

1.2.

| 1.3. | Against this background, the EESC is of the view that the EU needs to reduce its dependency on non-EU tech giants by doubling its efforts to develop a secure, inclusive and values-based digital economy capable of competing with non-EU tech giants and placing emphasis on reliable connectivity, data security and artificial intelligence (AI). |
| --- | --- |

1.3.

| 1.4. | The EESC, therefore, calls for investment in the digital sector to be directed to a significant extent towards an open strategic autonomy in the digital economy. This should include investing in digital capacities, education and vocational training, infrastructure and technologies. The EESC also calls for a level playing field in the digital transformation where workers’ rights are protected and where businesses of all sizes can co-exist and thrive without over-regulation. |
| --- | --- |

1.4.

| 1.5. | The EESC notes that innovations such as cloud computing and AI have become important strategic assets within the EU, contributing positively to the potential growth of the EU economy. However, the EU is losing ground in the global race to develop new technologies in the digital world, and for some technologies EU private investment is lagging behind similar investment in the US and China. |
| --- | --- |

1.5.

| 1.6. | The EESC calls for renewed efforts for public-private partnerships in digital technologies to be set up and for large-scale EU research in the field of new technologies to be supported with the specific aim of keeping pace with US and Chinese research capabilities. |
| --- | --- |

1.6.

| 1.7. | The EESC argues that the existing imbalances in digital sovereignty are partly due to national barriers that continue to impede the achievement of a genuine Single Market. As things stand, the Single Market is essentially a compound of multiple smaller national markets, without the scale needed for any single EU-based company to compete with the digital giants of this world. In addition, there are different levels of digital development, infrastructures and capacities across the EU. |
| --- | --- |

1.7.

| 1.8. | The EESC calls on the Commission to move ahead with its digital regulatory framework aimed at protecting EU citizens from the excesses of the digital world whilst at the same time providing a framework for a more human-centric and ethical environment. |
| --- | --- |

1.8.

| 1.9. | Equally important is making online platforms, ecosystems and online activities more open, fair and predictable with rules covering algorithm transparency and neutrality, and data-sharing and interoperability being considered. |
| --- | --- |

1.9.

| 1.10. | The EESC supports calls for the EU to develop a cloud and data infrastructure to build its digital sovereignty and address the huge imbalance of the cloud and data storage market being almost totally dominated by non-EU companies. |
| --- | --- |

1.10.

| 1.11. | The EESC also recognises the potential for the EU to become a global leader in data collection and processing, which is the backbone of the digital economy. An EU data framework for data collection and sharing has huge potential in strategic sectors such as health, the labour market and transport. |
| --- | --- |

1.11.

| 1.12. | The EESC calls for competition and consumer protection policies in the Single Market to be updated. This should also focus on distortive practices of non-EU tech companies as well as the growing influence of Chinese digital companies in the EU. In this connection, the EESC welcomes regulatory developments such the Digital Markets Act and the proposed European Chips Act. |
| --- | --- |

1.12.

| 1.13. | The EESC acknowledges the key role played by small and medium sized enterprises (SMEs) in shaping the EU’s digital sovereignty, especially through their interactions with large EU tech companies. |
| --- | --- |

1.13.

| 1.14. | Finally, the EESC highlights the importance of education at all levels (be it vocational or academic) in developing the EU’s digital sovereignty. |
| --- | --- |

1.14.

2.   Background

| 2.1. | Digital sovereignty can be tentatively described as the autonomy by which governments and businesses manage and set up their own data, hardware and software. For far too long, concern has been expressed about the heavy reliance of the EU on a small number of large tech companies operating outside the EU. |
| --- | --- |

2.1.

| 2.2. | Evidence of the EU’s heavy reliance on non-EU tech companies is that an estimated 92 % of all the data in the Western world is stored on US-owned servers. That includes online data, data retrieved from social media and data administered by national governments (1). |
| --- | --- |

2.2.

| 2.3. | Not surprisingly, this state of affairs has led to growing concern that EU businesses and national governments may not have complete control of data and remain heavily reliant on large non-EU tech companies, making it difficult for EU-based tech companies to rival counterparts in the US. Another concern is that the EU is slowly but surely losing its capacity to enforce legislation effectively in the digital environment. |
| --- | --- |

2.3.

| 2.4. | Worryingly, this heavy reliance on US-based tech companies is limiting the EU’s leadership and strategic autonomy in the digital world, which could in turn limit the EU’s economic growth potential. The economic influence of non-EU based tech companies cannot be downplayed. The same can be said of their influence on EU citizens and their consumption patterns, but also how they shape the way they interact with fellow citizens in the EU and outside. |
| --- | --- |

2.4.

| 2.5. | Today, non-EU large tech companies know more about us than perhaps our closest family members and friends do, and the lack of privacy is of concern. In effect, we do not control our own data online: large tech companies do, and the web remains largely unregulated. Efforts such as the EU’s General Data Protection Regulation (GDPR) (2) have attempted to define new rules of the road. The problem is that tech companies move faster than the EU in addressing this problem. Large tech companies often operate in spaces where they have a significant information advantage over regulators and by and large remain free to track online movements by citizens, gathering information in the process, and exploiting those insights for profit. |
| --- | --- |

2.5.

| 2.6. | Against this backdrop, the Commission President had identified digital policy as one of the main priorities for her 2019-2024 term in office, pledging technological sovereignty. We are still some way from achieving that, however, and the Commission itself has expressed concern about non-EU large tech companies flouting EU rules and core values. In recent years, the internet economy has consolidated around these tech giants, who use cookies to control data and maintain oligopolistic market power. For its part, the European Parliament has expressed concerns about the security threats connected with growing Chinese technological presence in the EU and, in particular, has called for action at EU level to reduce China’s increasing influence in 5G infrastructure. |
| --- | --- |

2.6.

| 2.7. | Worryingly, entire sectors of the EU economy remain heavily dependent on large, non-EU based online platforms. This deprives Member States of their digital sovereignty in key areas such as copyright, data protection, and taxation. This concern has also been extended to other areas such as e-commerce and online disinformation. |
| --- | --- |

2.7.

| 2.8. | In an online environment that is dominated by non-EU tech companies, the question arises as to whether EU citizens can recover control of their digital data and whether the EU can address the digital sovereignty imbalance effectively and within a reasonable time frame. Insights into these questions are contained in sections 3 and 4. |
| --- | --- |

2.8.

3.   General comments

| 3.1. | In the first instance, the EU needs to reduce its dependency on non-EU tech giants by doubling its efforts to develop a secure, inclusive and values-based digital economy capable of competing with non-EU tech giants and placing emphasis on reliable connectivity, data security and artificial intelligence (AI). The EESC considers the values-based aspect of particular importance and places emphasis on the social and ethical dimension as well as the rights of workers in a digital economy. |
| --- | --- |

3.1.

| 3.2. | The Commission responded to the developments in the digital economy by drafting a Digital Compass for the EU’s digital decade in 2021 focusing on infrastructures, government, businesses, and skills. This compass set targets at EU and national level, proposed a robust joint governance framework to monitor progress and address insufficiencies and further proposed multi-country projects combining investments from the EU, Member States and the private sector. This was supplemented by the Digital Markets Act, a legislative framework that is aimed at providing a higher degree of competition in the European Digital Markets by preventing large companies from abusing their market power and by allowing new players to enter the market. More recently, the proposed European Chips Act aims to increase microchip production across the EU in response to rising demand and to reduce dependency on suppliers from outside Europe. This would counteract the dominance of China especially in the production of semi-conductor chips. |
| --- | --- |

3.2.

| 3.3. | As the EU economy rebounds after the pandemic, and in the face of rising prices, the EESC calls for the successful implementation of the Digital Compass and for EU governments to provide incentives for businesses to further invest in digital capacities and human resources. This investment would help boost strategic autonomy in the digital transformation of the EU economy. Investment by EU governments in improving digital capacities, infrastructure and technologies is also considered vital. |
| --- | --- |

3.3.

| 3.4. | The EESC notes that innovations such as cloud computing and AI have become important strategic assets within the EU, contributing positively to the potential growth of the EU economy. However, the EU is still losing ground in the global race to develop new technologies in the digital world. In AI, for example, EU private investment is lagging behind similar investment in the US and China. The same applies in the case of data collection and data access technologies and quantum computing, with the EU’s investment in blockchain technologies and the internet of Things also lagging behind similar investment in the US and China. |
| --- | --- |

3.4.

| 3.5. | The EESC also notes the various financial instruments in place to narrow the gap with US and Chinese investment in digital technologies. These instruments could certainly support research and innovation in digital technologies but, as pointed out in point 3.3, further investment is required, and the EESC calls for renewed efforts for public-private partnerships in digital technologies to be set up and for large-scale EU research in the field of new technologies to be supported with the specific aim of keeping pace with US and Chinese research capabilities. |
| --- | --- |

3.5.

| 3.6. | The EESC believes that digital sovereignty is not simply a matter of the EU regaining lost ground or being ahead of the digital curve. Neither is it a question of whether digital sovereignty is about the EU being protectionist in nature. It is about creating a level playing field for EU-based tech companies with a view, as indicated in the title of this own-initiative opinion, to enhancing the EU’s economic growth potential and thus benefitting EU society at large. |
| --- | --- |

3.6.

| 3.7. | There are valid reasons to why EU-based tech companies may need to be treated more favourably than non-EU based companies if they are to be among the top global digital leaders. However, the EESC argues that the existing imbalances in digital sovereignty are partly due to national barriers that continue to impede the achievement of a genuine Single Market. As things stand, the Single Market is essentially a compound of multiple smaller national markets, without the scale needed for any single EU-based company to compete with the Microsofts of this world. There are also different levels of development and infrastructures across the EU. It is not surprising, therefore, that the digital market continues to be dominated by non-EU companies. |
| --- | --- |

3.7.

| 3.8. | The EESC also believes that addressing digital sovereignty will help address concerns regarding privacy and personal data, taxation, data and government procurement. This will not happen overnight despite a more robust regulatory framework. Taxation, in particular, has emerged as an area of controversy because US-based tech companies may derive revenue through interactions with clients in the EU, raising the question of physical presence, which usually triggers taxability. |
| --- | --- |

3.8.

| 3.9. | Finally, the EESC has, in a previous opinion (3), already stressed the importance of digital sovereignty as a key pillar of Europe’s economic, social and environmental development and has also stressed that this sovereignty must be based on global competitiveness and on strong cooperation between Member States. This is an essential precondition for the EU to become a global leader on the international scene, especially with regard to the reliability of digital technologies. |
| --- | --- |

3.9.

4.   Specific comments

| 4.1. | The EESC calls on Member States to effectively implement the digital regulatory framework aimed at protecting EU citizens from the excesses of the digital world whilst at the same time providing a framework for a more human-centric and ethical environment. The EESC is of the view that the regulatory framework should help manage the EU digital sector more effectively. Also, the protection of workers and the right to collective bargaining should facilitate the transition towards digitalisation. At the same time, EU tech companies should be allowed sufficient space to innovate and step up compared with non-EU tech companies, with international partnerships being encouraged when possible. |
| --- | --- |

4.1.

| 4.2. | Setting rules for EU data will help make the EU more sovereign in the nominal sense but will not be sufficient for EU tech companies to match the global reach of non-EU based companies. That can only be achieved with political direction, investment in research and innovation, and addressing the existing shortcomings of the Single Market. |
| --- | --- |

4.2.

| 4.3. | This implies a more forward-looking approach to the regulatory framework that will shape the digital economy in the years to come. Equally as important is making online platforms, eco-systems and online activities more open, fair and predictable with rules covering algorithm transparency and neutrality, and data-sharing and interoperability being considered. |
| --- | --- |

4.3.

| 4.4. | In building the EU’s digital sovereignty the EESC calls for increased coordination between national jurisdictions and, in particular, the regulators in this field. A re-think of the existing governance structures is required in order both to strengthen interaction across Member States and to facilitate joint decision-taking related to the digital field. In the EESC’s view, this will be critical to support efforts to achieve some form of digital sovereignty. At the same time, the EESC cautions against overregulation, which could impair potential economic growth. |
| --- | --- |

4.4.

| 4.5. | The EESC supports calls for the EU to develop a cloud and data infrastructure to build its digital sovereignty and address the huge imbalance of the cloud and data storage market being almost totally dominated by non-EU companies. This would also help reduce the security risks for EU citizens. In this connection, the EESC reiterates its support for the EU Gaia-X project initiative, which seeks to provide a secure environment for managing data for citizens, businesses and governments. |
| --- | --- |

4.5.

| 4.6. | The EESC also recognises the potential for the EU to become a global leader in data collection and processing, which is the backbone of the digital economy. An EU data framework for data collection and sharing has huge potential in strategic sectors such as health, the labour market and transport. This would allow citizens and businesses access to EU-wide data (in line with privacy and data protections rules) and would enhance efficiency in the Single Market. |
| --- | --- |

4.6.

| 4.7. | In this connection, the EESC calls for competition policy in the Single Market to be updated and the existing imbalances to be addressed. This should also focus on distortive practices of non-EU tech companies as well as the growing influence of Chinese digital companies in the EU. |
| --- | --- |

4.7.

| 4.8. | The EESC acknowledges that achieving digital sovereignty will depend on (i) how EU-based tech companies adapt to the legislative framework, (ii) measures to address the shortcomings of the Single Market, and (iii) EU-based research and innovation in the digital field, and investment opportunities. At the same, the EESC cannot ignore the role SMEs could play in shaping the EU’s digital sovereignty. SMEs may not have the financial resources to shape the digital economy directly, but they can certainly contribute through interactions with large EU tech companies. |
| --- | --- |

4.8.

| 4.9. | Finally, the EESC highlights the importance of education at all levels (be it vocational or academic) in developing the EU’s digital sovereignty: education institutions must invest in relevant research and innovation and a framework of qualified personnel must be created that is capable of supporting the EU’s digital strategy. A coordinated approach across education institutions in the EU is also recommended. |
| --- | --- |

4.9.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  https://www.weforum.org/agenda/2021/03/europe-digital-sovereignty/.

1

(2)  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

2

(3)  OJ C 365, 23.9.2022, p. 13.

3

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/13 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/13

---

Opinion of the European Economic and Social Committee on Emergency preparedness

(own-initiative opinion)

(2023/C 75/03)

| Rapporteur: | Paul RÜBIG |
| --- | --- |

Rapporteur:

Paul RÜBIG

| Plenary Assembly decision | 24.2.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Single Market, Production and Consumption |
| Adopted in section | 7.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 184/8/9 |

Plenary Assembly decision

24.2.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Single Market, Production and Consumption

Adopted in section

7.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

184/8/9

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) asks the European Commission and Member States to urgently develop a plan to substantially increase the EU’s single market autonomy/sovereignty regarding energy generation facilities, food and water production and the mining of the necessary raw materials, including sovereignty/autonomy for the technologies needed. This EU autonomy/sovereignty must consist of the respective R & D, material processing, design, manufacturing, installation, start-up and maintenance of the facilities within the EU single market so as to avoid energy poverty and unemployment among EU citizens and consumers. The most efficient preparedness for emergencies is based on resilience, be it technical or social. Continuous improvements in the resilience of energy systems towards natural, political or any other threats should be integrated into all energy policies. |
| --- | --- |

1.1.

| 1.2. | The EESC recommends that the EU define short-term measures for building energy production facilities within the EU single market as a matter of urgency with a view to achieving the EU’s goal of autonomy/sovereignty. |
| --- | --- |

1.2.

| 1.3. | The EESC estimates that widespread and long-lasting European energy shortages can be prevented by taking the following actions:






  — | technology openness (regarding energy production and usage applications); |
| --- | --- | --- |

1.3.

—

technology openness (regarding energy production and usage applications);

| — | strengthening and developing the European energy single market; |
| --- | --- |

—

strengthening and developing the European energy single market;

| — | enhancing cooperation and coordination with like-minded partners, as well as closer cooperation with neighbouring and non-EU States; |
| --- | --- |

—

enhancing cooperation and coordination with like-minded partners, as well as closer cooperation with neighbouring and non-EU States;

| — | pursuing an ambitious trade policy and the diversification of supply; |
| --- | --- |

—

pursuing an ambitious trade policy and the diversification of supply;

| — | tackling labour market mismatches; |
| --- | --- |

—

tackling labour market mismatches;

| — | improving communication and raising awareness; |
| --- | --- |

—

improving communication and raising awareness;

| — | accelerating innovation and digitalisation; |
| --- | --- |

—

accelerating innovation and digitalisation;

| — | facilitating access to finance; |
| --- | --- |

—

facilitating access to finance;

| — | ensuring sufficient investments (to facilitate the green transition, etc.); |
| --- | --- |

—

ensuring sufficient investments (to facilitate the green transition, etc.);

| — | ensuring that policies are realistic. For example, in the field of energy and climate we must reassess the Fit for 55 package in order to strike a balance between delivering on the goals for 2030 and 2050 and finding a pathway through this transition that is economically and socially bearable. Emissions’ trading profits should be used to finance a price cap on gas on the basis of the US Henry Hub and investment in new energy production facilities within the EU. |
| --- | --- |

—

ensuring that policies are realistic. For example, in the field of energy and climate we must reassess the Fit for 55 package in order to strike a balance between delivering on the goals for 2030 and 2050 and finding a pathway through this transition that is economically and socially bearable. Emissions’ trading profits should be used to finance a price cap on gas on the basis of the US Henry Hub and investment in new energy production facilities within the EU.

| 1.4. | To avoid having to reconsider the timelines for the Green Deal and to implement realistic energy policies the options, impact and risk assessment procedures for the EU’s Green Deal and energy policy should include not only the impact of the measures on the climate, but also the impact on the purchasing power of EU consumers and the impact on the competitiveness of the EU economy, thus safeguarding jobs in the EU. |
| --- | --- |

1.4.

| 1.5. | Considering the severity of the crisis, the EESC is of the opinion that no measures should be ruled out in the response to this crisis. |
| --- | --- |

1.5.

| 1.6. | Within the set of measures to be taken, part of the response should, according to the EESC, be to implement the EU SET plan (
  S
  trategic Energy Technology) and the REPowerEU plan, in particular:






  — | improving energy efficiency and promoting circularity; |
| --- | --- | --- |

1.6.

—

improving energy efficiency and promoting circularity;

| — | implementing the REPowerEU plan to end the EU’s dependence on Russian fossil fuels; |
| --- | --- |

—

implementing the REPowerEU plan to end the EU’s dependence on Russian fossil fuels;

| — | increasing gas storage and coordinated refilling operations; monitoring and optimising electricity markets; channelling investments towards energy systems and enhancing connectivity in the immediate neighbourhood through ACER (1), BEREC, ENTSO-G (2), ENTSO-E (3) and the European Institute of Innovation and Technology’s knowledge and innovation communities (KICs) on InnoEnergy, Raw materials and Manufacturing considering developments in the European Hydrogen Backbone, H2 and CO2 Storage. |
| --- | --- |

—

increasing gas storage and coordinated refilling operations; monitoring and optimising electricity markets; channelling investments towards energy systems and enhancing connectivity in the immediate neighbourhood through ACER (1), BEREC, ENTSO-G (2), ENTSO-E (3) and the European Institute of Innovation and Technology’s knowledge and innovation communities (KICs) on InnoEnergy, Raw materials and Manufacturing considering developments in the European Hydrogen Backbone, H2 and CO2 Storage.

| — | Let us create 1 000 EU energy production plants with a 14-day authorisation procedure and start investment immediately with 50 % EU financial support from emissions’ trading revenues. |
| --- | --- |

—

Let us create 1 000 EU energy production plants with a 14-day authorisation procedure and start investment immediately with 50 % EU financial support from emissions’ trading revenues.

| 1.7. | The EESC recommends that consumers be encouraged and supported to invest in their own energy production and efficiency. This will require information campaigns and tax incentives. |
| --- | --- |

1.7.

| 1.8. | Furthermore, the EESC estimates that the EU should build new transport infrastructure for the transmission of energy and energy resources (pipeline from North Africa to Spain) and for renewable energy sources like hydrogen, biomethane and ammonia (Campfire). |
| --- | --- |

1.8.

| 1.9. | As a response to the crisis, the EESC recommends a series of short-term measures:






  — | safeguarding other sources, especially oil, coal, gas, uranium, water, food and animal feed; |
| --- | --- | --- |

1.9.

—

safeguarding other sources, especially oil, coal, gas, uranium, water, food and animal feed;

| — | developing plans and concepts for saving and rationing energy in all 27 EU Member States:






  — | rationing should have clear priorities, e.g. negotiating plans for rationing energy for energy-intensive industries, and negotiating new WTO trade agreements with new priorities for food, feed, water and sanitation; |
| --- | --- | --- |

—

developing plans and concepts for saving and rationing energy in all 27 EU Member States:

—

rationing should have clear priorities, e.g. negotiating plans for rationing energy for energy-intensive industries, and negotiating new WTO trade agreements with new priorities for food, feed, water and sanitation;

| — | prioritising electricity and gas storage and supply for hospitals, medical care, emergency services and care for older and vulnerable people; |
| --- | --- |

—

prioritising electricity and gas storage and supply for hospitals, medical care, emergency services and care for older and vulnerable people;

| — | issuing rules for safeguarding sufficient oil and gas reserve levels; |
| --- | --- |

—

issuing rules for safeguarding sufficient oil and gas reserve levels;

| — | promoting energy savings and new sources of energy; |
| --- | --- |

—

promoting energy savings and new sources of energy;

| — | stepping up EU R & D on energy research, especially alternative energies, fusion energy, energy storage, hydrogen and ammonia technologies, energy efficiency of energy-intensive industrial processes and consumer appliances; |
| --- | --- |

—

stepping up EU R & D on energy research, especially alternative energies, fusion energy, energy storage, hydrogen and ammonia technologies, energy efficiency of energy-intensive industrial processes and consumer appliances;

| — | accelerating public approval procedures for new projects that provide additional energy in the short and medium term, such as hydrogen unloading stations in EU harbours, pipelines and harbour facilities for re-gasification of liquefied gas (LNG); |
| --- | --- |

—

accelerating public approval procedures for new projects that provide additional energy in the short and medium term, such as hydrogen unloading stations in EU harbours, pipelines and harbour facilities for re-gasification of liquefied gas (LNG);

| — | asking all firms in the EU that produce or provide products and services needed in emergency situations to secure their emergency electricity supply, update their emergency plans and organise periodic emergency training, etc. (for instance, companies involved in telecommunications and broadcasting, emergency services, public IT servers and electricity providers). |
| --- | --- |

—

asking all firms in the EU that produce or provide products and services needed in emergency situations to secure their emergency electricity supply, update their emergency plans and organise periodic emergency training, etc. (for instance, companies involved in telecommunications and broadcasting, emergency services, public IT servers and electricity providers).

| 1.10. | Beyond the short-term measures, the EESC also recommends a series of medium- and long-term measures: |
| --- | --- |

1.10.

| 1.10.1. | The EESC asks the European Commission to develop plans and to undertake the following EU-wide coordinated measures and actions:






  — | implement methane splitting by electrolysis/pyrolysis and steam methane to produce hydrogen and solid carbon; |
| --- | --- | --- |

1.10.1.

—

implement methane splitting by electrolysis/pyrolysis and steam methane to produce hydrogen and solid carbon;

| — | use the diversified and long-lasting methane reserves as a raw material for hydrogen (energy carrier), and carbon, and fully explore their benefits as soil improvers for agriculture to increase yields and improve food security; |
| --- | --- |

—

use the diversified and long-lasting methane reserves as a raw material for hydrogen (energy carrier), and carbon, and fully explore their benefits as soil improvers for agriculture to increase yields and improve food security;

| — | massively speed-up the procurement of critical energy infrastructure, i.e. simplify and streamline EU regulations that slow down the procurement of critical energy infrastructure; |
| --- | --- |

—

massively speed-up the procurement of critical energy infrastructure, i.e. simplify and streamline EU regulations that slow down the procurement of critical energy infrastructure;

| — | the new EU Water Framework Directive. Priority must be given to securing a quick energy supply; |
| --- | --- |

—

the new EU Water Framework Directive. Priority must be given to securing a quick energy supply;

| — | the EU’s new supply chain regulation has to be simplified. The focus should be on securing a sustainable supply of critical raw materials and goods to the EU, negotiated in bilateral trade-agreements; |
| --- | --- |

—

the EU’s new supply chain regulation has to be simplified. The focus should be on securing a sustainable supply of critical raw materials and goods to the EU, negotiated in bilateral trade-agreements;

| — | reinforce production chains and transport systems to offset possible future disruption to the availability of critical raw materials for EU firms (industry and trade); |
| --- | --- |

—

reinforce production chains and transport systems to offset possible future disruption to the availability of critical raw materials for EU firms (industry and trade);

| — | reduce dependence on imports of critical materials and prefabricated products; |
| --- | --- |

—

reduce dependence on imports of critical materials and prefabricated products;

| — | focus on the EU’s technological sovereignty/autonomy; |
| --- | --- |

—

focus on the EU’s technological sovereignty/autonomy;

| — | develop a cross-border power network infrastructure (380 kV or higher); |
| --- | --- |

—

develop a cross-border power network infrastructure (380 kV or higher);

| — | secure the production of transformers for electricity voltage change (high/low, AC/DC); |
| --- | --- |

—

secure the production of transformers for electricity voltage change (high/low, AC/DC);

| — | restart the thousands of energy production projects (hydropower, geothermal, hydro storage, etc.) that have been sidelined for years either because they had a bad pay-back ratio (due to cheap gas from Russia) or due to bureaucratic barriers; |
| --- | --- |

—

restart the thousands of energy production projects (hydropower, geothermal, hydro storage, etc.) that have been sidelined for years either because they had a bad pay-back ratio (due to cheap gas from Russia) or due to bureaucratic barriers;

| — | explore new exploitation technologies. There are several regions within the EU with substantial natural gas reservoirs which can be extracted using new technologies recently developed by European universities. In light of the EU’s target for energy sovereignty/autonomy, the EU should seriously look into these new technologies and encourage the regions to try them; |
| --- | --- |

—

explore new exploitation technologies. There are several regions within the EU with substantial natural gas reservoirs which can be extracted using new technologies recently developed by European universities. In light of the EU’s target for energy sovereignty/autonomy, the EU should seriously look into these new technologies and encourage the regions to try them;

| — | reconsider local gas/oil, and e-fuel production where possible and needed or ramp up existing production as a short-term measure. |
| --- | --- |

—

reconsider local gas/oil, and e-fuel production where possible and needed or ramp up existing production as a short-term measure.

| 1.10.2. | Step up vocational training and skills for electricians and farmers and create jobs in water stewardship. |
| --- | --- |

1.10.2.

| 1.10.3. | The EESC recommends that the number of European STEM-students (STEM = Science, Technology, Engineering, Mathematics) be increased, since it is remaining stagnant while countries in Asia have substantially increased their numbers of physics, ICT and engineering students. The EESC recommends setting initiatives and incentives to increase the number of additional engineers, technicians and high-tech jobs in Europe to reach its technological sovereignty/autonomy goals. |
| --- | --- |

1.10.3.

| 1.10.4. | Last but not least, the EESC estimates that it is important to keep the purchasing power of EU citizens and consumers high by focusing on the EU’s technology sovereignty/autonomy and thus reducing its dependence on imports (technology and energy imports) and increasing the number of high-tech jobs in Europe. |
| --- | --- |

1.10.4.

| 1.11. | To summarise the conclusions and recommendations, the question is whether the order of priorities in the mind of consumers has switched from: 1 environment, 2 price and 3 security of supply to: 1 security of supply, 2 price and 3 environment. |
| --- | --- |

1.11.

2.   General comments

| 2.1. | Definition of ‘emergency management’: ‘emergency management’ means the organisation and management of the resources and responsibilities for dealing with all humanitarian aspects of emergencies, i.e.:






  — | prevention; |
| --- | --- | --- |

2.1.

—

prevention;

| — | preparedness; |
| --- | --- |

—

preparedness;

| — | response; |
| --- | --- |

—

response;

| — | mitigation; |
| --- | --- |

—

mitigation;

| — | recovery. |
| --- | --- |

—

recovery.

| 2.2. | No one knows how long this brutal war in Ukraine will last, how much infrastructure will be destroyed, or how many millions of Ukrainian refugees will flee to the EU Member States — adding millions of new consumers to the single market. |
| --- | --- |

2.2.

| 2.3. | The war in Ukraine will certainly have dramatic consequences for the EU, since the EU heavily relies on fossil fuels and raw materials imported from Russia and Ukraine. Investment into own mining and production facilities for power is urgently recommended to achieve autonomy/sovereignty — one of the EU’s main goals. |
| --- | --- |

2.3.

| 2.4. | In 2021, some European countries imported 100 % of their natural gas imports from Russia, and some imported around 70 % of their oil imports from Russia. As of September 2022, some EU countries (e.g. Poland, Bulgaria and all three Baltic States) had stopped importing gas from Russia and many EU countries had managed to considerably reduce their imports of Russian natural gas by increasing gas imports from other countries, primarily LNG via LNG-terminals. In response, gas-prices have soared and are still rising in the EU. As of July 2022, average gas prices in the EU have been approximately eight times higher than in the USA, thus adversely affecting the EU’s competiveness. |
| --- | --- |

2.4.

| 2.5. | Consequently, the risk of massive job losses in the EU is increasing. According to EUROFER, the EU steel industry directly employs 330 000 highly-skilled people, and indirectly supports up to 2,2 million more. The aluminium, cement, paper, glass and chemical industries also directly and indirectly employ hundreds of thousands of people. Within the single market, the production facilities for energy production could provide hundreds of thousands of new well-paid jobs, and therefore increase the purchasing power of EU consumers. |
| --- | --- |

2.5.

| 2.6. | As regards food security, European countries will systematically seek to become less dependent on the supply of wheat from Ukraine and Russia. We need to look into fertiliser subsidies, set aside land for food and feed production and use agri-food waste to produce biogas. |
| --- | --- |

2.6.

3.   Disaster preparedness (4)

| 3.1. | The EU has done a great deal regarding preparing for emergencies, however, the war in Ukraine has shown the EU that it has to continue and even step up its efforts in the following areas:






  — | power outages (blackouts) caused by technical failures, cyberattacks, etc. that could affect:






  — | communication systems; |
| --- | --- | --- | --- |

3.1.

—

power outages (blackouts) caused by technical failures, cyberattacks, etc. that could affect:

—

communication systems;

| — | sanitation systems, water supply and wastewater treatment; |
| --- | --- |

—

sanitation systems, water supply and wastewater treatment;

| — | industry business continuity; |
| --- | --- |

—

industry business continuity;

| — | electricity and gas rationing plans for EU consumers and EU industry. This risk has increased dramatically since the war in Ukraine; |
| --- | --- |

—

electricity and gas rationing plans for EU consumers and EU industry. This risk has increased dramatically since the war in Ukraine;

| — | disruption to the availability of raw materials due to production chain or transport system breakdowns (e.g. the traffic jam involving 400 large cargo ships in the Shanghai harbour in April 2022 due to Shanghai’s COVID-19 lockdown); |
| --- | --- |

—

disruption to the availability of raw materials due to production chain or transport system breakdowns (e.g. the traffic jam involving 400 large cargo ships in the Shanghai harbour in April 2022 due to Shanghai’s COVID-19 lockdown);

| — | cyber threats or incidents: how could the EU build business resilience and ensure business continuity to safeguard the supply needed for EU consumers? |
| --- | --- |

—

cyber threats or incidents: how could the EU build business resilience and ensure business continuity to safeguard the supply needed for EU consumers?

| — | other attacks: enterprises must be equipped to withstand and rapidly recover from attacks. |
| --- | --- |

—

other attacks: enterprises must be equipped to withstand and rapidly recover from attacks.

| 3.2. | Emergencies and disasters emphasise the importance of the UN’s 17 Sustainable Development Goals (SDGs) (5). Disasters can be natural disasters (6), disasters caused by industrial or technological accidents (man-made machinery, ABC disasters), war and political and civil disasters (7), epidemics and famines, and the impact of food and feed production. |
| --- | --- |

3.2.

4.   Important organisations within the European Commission

| 4.1. | The EU does not lack competent and specialised bodies to help guide the debate and preparations on ‘Emergency preparedness’. Specifically, these include:






  — | DG ECHO (European Civil Protection and Humanitarian Aid Operations) (8); |
| --- | --- | --- |

4.1.

—

DG ECHO (European Civil Protection and Humanitarian Aid Operations) (8);

| — | ERCC (Emergency Response Coordination Centre) (9); |
| --- | --- |

—

ERCC (Emergency Response Coordination Centre) (9);

| — | UCP (Union Civil Protection) Knowledge Network (10); |
| --- | --- |

—

UCP (Union Civil Protection) Knowledge Network (10);

| — | European Union Civil Protection Mechanism (UCPM) (11). |
| --- | --- |

—

European Union Civil Protection Mechanism (UCPM) (11).

5.   Current examples of potential critical emergencies for the EU Member States, especially in the field of energy-producing facilities

| 5.1. | Breakdown in the fossil energy production supply chain (coal, oil, natural gas, uranium). In 2021, fossil fuels made up approximately 80 % of all primary energy used in the EU, the majority of which had been imported. |
| --- | --- |

5.1.

| 5.2. | Power blackouts and subsequent communication breakdowns caused by technical failures, cyberwar or terror attacks. Renewable electric power production is erratic: the wind does not always blow and the sun does not always shine when the EU needs high amounts of energy, thus any increase in wind and PV-power generation capacities within the EU has to be accompanied by a build-up of huge energy storage facilities. |
| --- | --- |

5.2.

| 5.3. | The ability to secure critical raw materials supplies (copper, lithium, cobalt, rare earth elements, etc.) through new EU single market strategies on mining, recycling, etc. |
| --- | --- |

5.3.

| 5.4. | The ability to secure a competitive single market for half-finished product supplies (e.g. the EU auto industry has seen a severe shortage of Ukrainian-produced cable looms since the war in Ukraine started). |
| --- | --- |

5.4.

| 5.5. | The material requirements for the enormous number of wind turbines needed to reach the decarbonisation goals for electricity production exceed the annual global production of copper by a factor of 14 (25 million tons versus the 350 million tons needed), the annual global production of aluminium by a factor of 7,2, and the annual global production of the special steel needed for wind turbines by a factor of 3,9. Solar panels are mainly produced in China. |
| --- | --- |

5.5.

| 5.6. | Massive fossil fuel supplies are urgently needed until a sufficient amount of production facilities for renewable energy installations has been built in the EU. |
| --- | --- |

5.6.

6.   Response

| 6.1. | Given the magnitude of the EU’s energy consumption, the EU’s green transition will take roughly two decades. The Council meeting in Versailles recommended that the transition be accelerated, which would prove a very challenging task. |
| --- | --- |

6.1.

| 6.2. | The major bottleneck preventing a faster transfer is not only about money, but rather the materials needed for the approximately 700 000 large 5 MW wind turbines needed across the EU, and the millions of photovoltaic installations, fusion energy, waterpower and energy storage facilities. In addition, geothermal facilities and hydrogen and ammonia and CO2-storage facilities will have to be built. In order to distribute the massively increased amount of decentralised electric power generated, high-voltage and medium-voltage power transmission lines will have to be expanded on a colossal scale. |
| --- | --- |

6.2.

| 6.3. | Each of these 700 000 large 5 MW wind turbines (which typically produce 12,5 GWh of electric energy p.a.) has a height of around 200 metres, a foundation of around 2 000 tons of reinforced concrete, requires approximately 600 tons of special steel, 20 tons of copper and a supply of very scarce rare earth materials which have to be imported mainly from China or Russia. If these tons of materials required are multiplied by the approximately 700 000 wind turbines needed within the EU, it becomes clear that we will need huge amounts of concrete, steel, copper and other materials — the production of which would emit huge additional amounts of CO2. For rare earth elements (for the electric generators and batteries), neodymium, dysprosium, etc., the shortage problem is even more dire, and would be very difficult to solve by 2050. |
| --- | --- |

6.3.

7.   Mitigation

| 7.1. | If Germany continues to build wind turbines at 2021 rates, building the 70 000 wind turbines needed for the Green Deal would take 160 years. |
| --- | --- |

7.1.

| 7.2. | To summarise, many engineers claim that achieving the Green Deal goals by 2050 is very challenging due to shortages of materials (rare earth elements, copper, steel, etc.), and of engineers and skilled workers (e.g. electricians) both being necessary for the EU’s Green Deal. |
| --- | --- |

7.2.

8.   Prevention

| 8.1. | Many energy-intensive industries are to be converted to renewable green hydrogen or ammonia produced by renewable electric power by 2050, including the steel industry, the chemical industry and the cement industry. Many people are unaware that transitioning all these energy-intensive industries requires approximately 10 times more renewable electric power than the transition to e-mobility and decarbonising the steel industry. |
| --- | --- |

8.1.

| 8.2. | Iron and steel production accounts for a quarter of all global industrial CO2 emissions. Around 1 870 million tons of steel were produced worldwide in 2020; approximately 57 % of that was produced in China, and 7 % in the EU. Of the 1 870 million tons of steel produced globally, around 1 300 million tons (65 %) are made via the integrated blast furnace route, where iron ore is reduced with coke, generating very high CO2 emissions (approximately 1,4 tons of CO2 per ton of steel). |
| --- | --- |

8.2.

| 8.3. | Within the EU 27 Member States, approximately 150 million tons of steel are produced p.a., approximately 90 million tons thereof via the blast furnace route. To switch the production of these 90 million tons of pig iron (reduced in the blast furnace with coke) to renewable hydrogen green iron, around 360 TWh p.a. of renewable electricity would be needed (by 2050). 360 TWh p.a. is a huge amount of renewable energy! It is more renewable electricity than that needed for the electrification of all passenger cars in the whole EU. No less than 30 000 large wind turbines will be needed to produce this renewable electricity for the EU’s steel industry. |
| --- | --- |

8.3.

| 8.4. | Looking at the European Union, electricity production in 2019 was approx. 2 904 TWh, only around 35 % of which was from renewable sources. However, about 38 % (1 112 TWh) was produced from fossil fuels and around 26 % from nuclear power (765 TWh). Only 13 % was produced from wind power, 12 % from hydropower plants, 4 % from solar power plants, 4 % from bioenergy and 2 % from geothermal supplies. The bulk of renewable electricity generation in the European Union in 2019 (1 005 TWh) was from wind power (367 TWh, 42 % of all renewables). A further 39 % was generated by hydropower plants (345 TWh), 12 % from solar power plants (125 TWh) and the remaining 6 % from bioenergy (55 TWh). |
| --- | --- |

8.4.

| 8.5. | The expansion of pumped storage hydropower plants is necessary to stabilise the grid in the event of an imminent blackout. |
| --- | --- |

8.5.

| 8.6. | Hydropower must be moved up the energy and climate policy agenda. Sustainably developed hydropower plants need to be recognised as renewable energy sources. Governments should include large and small hydropower in their long-term deployment targets, energy plans and renewable energy incentive schemes, on a par with variable renewables. |
| --- | --- |

8.6.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  EU Agency for the Cooperation of Energy Regulators.

1

(2)  https://www.entsog.eu/

2

(3)  https://www.entsoe.eu/

3

(4)  https://ec.europa.eu/echo/what/humanitarian-aid/disaster-preparedness_de

4

(5)  https://sdgs.un.org/goals

5

(6)  https://www.conserve-energy-future.com/10-worst-natural-disasters.php

6

(7)  https://www.samhsa.gov/find-help/disaster-distress-helpline/disaster-types/incidents-mass-violence

7

(8)  https://ec.europa.eu/echo/index_de

8

(9)  https://erccportal.jrc.ec.europa.eu/

9

(10)  https://civil-protection-knowledge-network.europa.eu/

10

(11)  https://ec.europa.eu/echo/what/civil-protection/eu-civil-protection-mechanism_de

11

---

ANNEX

The following section opinion texts were rejected in favour of amendments adopted by the Assembly but obtained at least a quarter of the votes cast:

| ‘1.3. | The EESC estimates that widespread and long-lasting European energy shortages can be prevented by taking the following actions:






  — | strengthening and developing the European energy single market; |
| --- | --- | --- |

‘1.3.

—

strengthening and developing the European energy single market;

| — | enhancing cooperation and coordination with like-minded partners; |
| --- | --- |

—

enhancing cooperation and coordination with like-minded partners;

| — | pursuing an ambitious trade policy and the diversification of supply; |
| --- | --- |

—

pursuing an ambitious trade policy and the diversification of supply;

| — | tackling labour market mismatches; |
| --- | --- |

—

tackling labour market mismatches;

| — | improving communication and raising awareness; |
| --- | --- |

—

improving communication and raising awareness;

| — | accelerating innovation and digitalisation; |
| --- | --- |

—

accelerating innovation and digitalisation;

| — | facilitating access to finance; |
| --- | --- |

—

facilitating access to finance;

| — | ensuring sufficient investments (to facilitate the green transition, etc.); |
| --- | --- |

—

ensuring sufficient investments (to facilitate the green transition, etc.);

| — | ensuring that policies are realistic. For example, in the field of energy and climate we must reassess the Fit for 55 package in order to strike a balance between delivering on the goals for 2030 and 2050 and finding a pathway through this transition that is economically and socially bearable’. |
| --- | --- |

—

ensuring that policies are realistic. For example, in the field of energy and climate we must reassess the Fit for 55 package in order to strike a balance between delivering on the goals for 2030 and 2050 and finding a pathway through this transition that is economically and socially bearable’.

Outcome of the vote:

Outcome of the vote:

| For: | 95 |
| --- | --- |
| Against: | 67 |
| Abstentions: | 25 |

For:

95

Against:

67

Abstentions:

25

| ‘1.6. | Within the set of measures to be taken, part of the response should, according to the EESC, be to implement the EU SET plan (Strategic Energy Technology) and the REPowerEU plan, in particular:






  — | improving energy efficiency and promoting circularity; |
| --- | --- | --- |

‘1.6.

—

improving energy efficiency and promoting circularity;

| — | implementing the REPowerEU plan to end the EU’s dependence on Russian fossil fuels; |
| --- | --- |

—

implementing the REPowerEU plan to end the EU’s dependence on Russian fossil fuels;

| — | increasing gas storage and coordinated refilling operations; monitoring and optimising electricity markets; channelling investments towards energy systems and enhancing connectivity in the immediate neighbourhood through ACER (*1), BEREC, ENTSO-G, ENTSO-E and the European Institute of Innovation and Technology’s knowledge and innovation communities (KICs) on InnoEnergy, Raw materials and Manufacturing. |
| --- | --- |

—

increasing gas storage and coordinated refilling operations; monitoring and optimising electricity markets; channelling investments towards energy systems and enhancing connectivity in the immediate neighbourhood through ACER (*1), BEREC, ENTSO-G, ENTSO-E and the European Institute of Innovation and Technology’s knowledge and innovation communities (KICs) on InnoEnergy, Raw materials and Manufacturing.

Outcome of the vote:

Outcome of the vote:

| For: | 104 |
| --- | --- |
| Against: | 61 |
| Abstentions: | 18 |

For:

104

Against:

61

Abstentions:

18

| ‘1.10.1. | The EESC asks the European Commission to develop plans and to undertake the following EU-wide coordinated measures and actions:






  — | massively speed-up the procurement of critical energy infrastructure, i.e. simplify and streamline EU regulations that slow down the procurement of critical energy infrastructure:






  — | The new EU Water Framework Directive. Priority must be given to securing a quick energy supply; |
| --- | --- | --- | --- |

‘1.10.1.

—

massively speed-up the procurement of critical energy infrastructure, i.e. simplify and streamline EU regulations that slow down the procurement of critical energy infrastructure:

—

The new EU Water Framework Directive. Priority must be given to securing a quick energy supply;

| — | The EU’s new supply chain regulation has to be simplified. The focus should be on securing a sustainable supply of critical raw materials and goods to the EU, negotiated in bilateral trade-agreements; |
| --- | --- |

—

The EU’s new supply chain regulation has to be simplified. The focus should be on securing a sustainable supply of critical raw materials and goods to the EU, negotiated in bilateral trade-agreements;

| — | reinforce production chains and transport systems to offset possible future disruption to the availability of critical raw materials for EU firms (industry and trade); |
| --- | --- |

—

reinforce production chains and transport systems to offset possible future disruption to the availability of critical raw materials for EU firms (industry and trade);

| — | reduce dependence on imports of critical materials and prefabricated products; |
| --- | --- |

—

reduce dependence on imports of critical materials and prefabricated products;

| — | focus on the EU’s technological sovereignty/autonomy; |
| --- | --- |

—

focus on the EU’s technological sovereignty/autonomy;

| — | develop a cross-border power network infrastructure (380 kV or higher); |
| --- | --- |

—

develop a cross-border power network infrastructure (380 kV or higher);

| — | secure the production of transformers for electricity voltage change (high/low, AC/DC); |
| --- | --- |

—

secure the production of transformers for electricity voltage change (high/low, AC/DC);

| — | restart the thousands of energy production projects (hydropower, geothermal, hydro storage, etc.) that have been sidelined for years either because they had a bad pay-back ratio (due to cheap gas from Russia) or due to bureaucratic barriers; |
| --- | --- |

—

restart the thousands of energy production projects (hydropower, geothermal, hydro storage, etc.) that have been sidelined for years either because they had a bad pay-back ratio (due to cheap gas from Russia) or due to bureaucratic barriers;

| — | explore new exploitation technologies. There are several regions within the EU with substantial natural gas reservoirs which can be extracted using new technologies recently developed by European universities. In light of the EU’s target for energy sovereignty/autonomy, the EU should seriously look into these new technologies and encourage the regions to try them’. |
| --- | --- |

—

explore new exploitation technologies. There are several regions within the EU with substantial natural gas reservoirs which can be extracted using new technologies recently developed by European universities. In light of the EU’s target for energy sovereignty/autonomy, the EU should seriously look into these new technologies and encourage the regions to try them’.

Outcome of the vote:

Outcome of the vote:

| For: | 96 |
| --- | --- |
| Against: | 66 |
| Abstentions: | 30 |

For:

96

Against:

66

Abstentions:

30

---

(*1)  EU Agency for the Cooperation of Energy Regulators’’

*1

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/22 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/22

---

Opinion of the European Economic and Social Committee on ‘A Digital Euro’

(own-initiative opinion)

(2023/C 75/04)

| Rapporteur: | Juraj SIPKO |
| --- | --- |

Rapporteur:

Juraj SIPKO

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 6.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 183/1/1 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

6.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

183/1/1

1.   Conclusions and recommendations

| 1.1. | The rapid process of technological innovation in the financial sector has led to the gradual development of digital currencies by central banks around the world. Like other central banks worldwide, the European Central Bank (ECB-Eurosystem) adopted a decision in July 2021 to launch an ‘investigation phase’ ahead of the possible introduction of a digital euro. The EESC is pleased that the ECB is continuing to work towards the introduction of a digital euro. Currently, the ECB-Eurosystem is taking a step-by-step approach towards the adoption of a digital euro, which is following a set time line. However, a decision on whether to adopt a digital euro has not yet been taken. |
| --- | --- |

1.1.

| 1.2. | The EESC considers financial and digital inclusiveness to be very important in the introduction of the digital euro. Thus, it expects that the digital euro will benefit everyone in the euro area. The digital euro should enable payment transactions to be carried out more quickly and more efficiently. |
| --- | --- |

1.2.

| 1.3. | The EESC notes that the digital euro will constitute a new form of money. In this regard, it stresses that while all of the positive aspects and opportunities offered must be taken into account when considering its adoption, all of the potential risks must also be pointed out, especially in relation to the financial sector. Therefore, the monitoring, supervision and management of the potential risks involved will need to be taken into account when designing the digital euro. |
| --- | --- |

1.3.

| 1.4. | The EESC considers financial stability to be one of the key issues when moving towards the introduction of a digital euro. Therefore, as it moves forward, it will be important that the ECB takes all necessary measures in the area of supervision to counter unlawful transactions, particularly for the purposes of money laundering and terrorist financing (AML/CFT), as well as to combat cyber attacks. |
| --- | --- |

1.4.

| 1.5. | As preparations are made for the possible introduction of a digital euro, the EESC sees scope for making the payment system more efficient and competitive. The digital euro could reduce risk while promoting financial stability. |
| --- | --- |

1.5.

| 1.6. | The EESC supports the steps taken by the ECB-Eurosystem towards the introduction of a digital euro. Given that this is a very complex project that is also strongly influenced by the current dynamic development of innovative technologies, it will be important that the ECB sets out various design options. Accordingly, it will be important to enable both online and offline transactions. Furthermore, in cross-border payment transactions, systems will need to be compatible with each other. |
| --- | --- |

1.6.

| 1.7. | The EESC is closely monitoring the ECB’s work on adopting a digital euro and will continue to do so. It will therefore be important that, as the decision-making process at ECB-Eurosystem level moves forward, all substantive and systemic measures are taken to select the most appropriate model that ensures financial inclusiveness, financial stability and privacy. The ECB is currently exploring and reviewing various design options. |
| --- | --- |

1.7.

| 1.8. | Given that this is a complex and particularly demanding project, which concerns every resident of the Member States of the European Union, the EESC stresses the need for civil society to be involved in the next stages of preparations, negotiations and discussions on the introduction of a digital euro. |
| --- | --- |

1.8.

2.   General comments

| 2.1. | The continuing evolution of technology is leading to rapid digitalisation across all sectors of the economy, including the overarching social structure. The rapid development and impact of technological innovation can also be seen in the financial sector and in institutions providing payment services. The rapid process of digitalisation is also continuing in the public sector. |
| --- | --- |

2.1.

| 2.2. | Central banks around the world are currently discussing and deciding on whether to introduce a central bank digital currency (CBDC). At this point, the central banks of the Bahamas and Nigeria have adopted a digital currency as legal tender. In addition, more than 110 countries around the world are exploring the possibility of introducing a digital currency. |
| --- | --- |

2.2.

| 2.3. | As the first G20 state to do so, the People’s Republic of China (1) has successfully launched a digital currency project, which is so far not interlinked with other central banks around the world. In January 2022, the US Federal Reserve System published a study on the advantages and disadvantages of introducing a digital dollar. |
| --- | --- |

2.3.

| 2.4. | Some 90 % of central banks, accounting for 95 % of global GDP, are currently in the process of considering the adoption of a digital currency (2). Around half of the world’s central banks are developing or carrying out specific trials in relation to the introduction of CBDCs. Moreover, two thirds of central banks intend to introduce a CBDC for retail transactions in the short or medium term. |
| --- | --- |

2.4.

| 2.5. | There is general agreement that lower costs and more efficient, faster and more secure payment transactions can be expected following the introduction of digital currencies by central banks. |
| --- | --- |

2.5.

| 2.6. | This process of central banks adopting digital currencies is linked to the dynamic developments in the cryptocurrency market. Furthermore, the emergence and rapid spread of COVID-19 has further accelerated this digitalisation process. |
| --- | --- |

2.6.

| 2.7. | When making decisions on introducing central bank digital currencies, it will be important to take into account the impact of such a move on macro-financial stability. States that have decided to adopt and potentially implement digital currencies are expected to see significant benefits, not only in terms of speed, efficiency, and volume of operations, but also in respect of the uninterrupted functioning of the payment and settlement system. |
| --- | --- |

2.7.

| 2.8. | The introduction of a digital euro by the European Central Bank (ECB) should be aimed at preserving the role of public money as the anchor of the payments system, and also contribute to European strategic autonomy and economic efficiency. In addition, it should contribute to a fairer, more diverse, and more resilient European retail payments market, while ensuring a high degree of privacy and security. The Eurosystem is indeed committed to enabling high privacy standards. However, higher levels of privacy than current payments solutions would need to be integrated into the regulatory framework. |
| --- | --- |

2.8.

3.   Main comments

| 3.1. | The EESC points out that the ECB should be focused on reducing and eliminating potential risks, when moving towards the introduction of a digital euro. As to the digital euro itself, there are several models under discussion, including models based on third-party validation and peer-to-peer validation and with offline or online functionality (3). |
| --- | --- |

3.1.

| 3.2. | The EESC expects to see the ECB’s strategy for adopting a digital euro involve an examination of the risks involved of every kind and a focus on taking measures to eliminate the potential risks. |
| --- | --- |

3.2.

| 3.3. | The EESC stresses that the ECB’s plans to introduce a digital euro should also focus on maintaining financial stability and ensuring a smooth monetary transition. Therefore, further in-depth analyses of the different design features of a digital euro will be important, including in relation to the future impact of the digital euro on macro-financial stability. |
| --- | --- |

3.3.

| 3.4. | The EESC expects that the process of technological development will also need to take into account other possible risks associated with this process. The ECB’s digital euro strategy will thus face two challenges, namely ensuring financial stability and smooth monetary policy transition on the one hand, and ensuring a dynamic process of technological development and innovation on the other hand. |
| --- | --- |

3.4.

| 3.5. | The EESC expects that all necessary measures against terrorist financing and other illegal operations will need to be taken when foreign payments are made (4). In this regard, the EESC sees considerable scope for mutually beneficial international cooperation and coordination between central banks and international monetary-financial and economic institutions (5). |
| --- | --- |

3.5.

| 3.6. | The EESC notes that when assessing the different forms of money, the functions they perform should be considered, i.e. the functions of store of value, unit of account, and medium of exchange. A digital euro should be mainly used as a means of payment and not become an instrument for financial investments, in order to avoid negative consequences for the financial sector. |
| --- | --- |

3.6.

| 3.7. | The EESC considers that, in order to achieve the maximum effect as regards this payment function, it will be important that the supply of funds is sufficient and free from any restrictions. The EESC also points out that, in reciprocal payment and settlement relations, it will be important for both natural and legal persons to be accepted. However, there will need to be tools in place to prevent the digital euro from being used for investment purposes (6). |
| --- | --- |

3.7.

| 3.8. | The EESC expects that the ECB will have to grapple with certain challenges when considering the introduction of a digital euro, in particular as regards the security of payments, their efficiency, financial inclusiveness, including financial stability and monetary policy transmission, etc. Private sector corporations’ plans to introduce digital currencies have accelerated CBDC projects. It is very important that the ECB anticipates further competition from private-sector digital currencies (7). |
| --- | --- |

3.8.

| 3.9. | The EESC points out that it will be important for the ECB to decide how to establish the conditions to prevent a potential market failure. Moreover, it will also be necessary to determine how to deal with private banks, as well as financial institutions providing domestic and foreign payment services. The ECB will therefore have an important decision to make at the preparatory stage as to which CBDC model to opt for. |
| --- | --- |

3.9.

| 3.10. | As of now, these are the recognised models for central bank digital currencies: the direct model, the indirect model, the intermediated model and the hybrid model. Furthermore, the EESC points out that one of the biggest challenges in deploying one of the possible models for the ECB’s digital currency will be the interoperability between central banks (8). |
| --- | --- |

3.10.

| 3.11. | The EESC would expect that cross-border payment systems for retail transactions using the digital euro will be sufficiently fast, lower cost, more transparent, more secure and much more accessible. |
| --- | --- |

3.11.

| 3.12. | The EESC stresses that the interconnection of retail payments will make it easier for individual transactions to be carried out under the different models adopted by the individual central banks when introducing the digital euro. The better the interoperability between payment service providers, the greater the satisfaction of users and service providers. |
| --- | --- |

3.12.

| 3.13. | The EESC envisages the digital euro as a new form of money. Technological innovation is leading to two forms of digital currency, namely (a) central bank digital assets and (b) private digital assets. Here, account must be taken not only of potential competition, but also of the status of the digital euro in international monetary relations, as the second most important reserve currency. |
| --- | --- |

3.13.

4.   Specific recommendations

| 4.1. | The EESC points out that if a digital euro is introduced, the ECB, in cooperation with commercial banks, will ensure that cash continues to be provided and can still be used in retail operations (9). |
| --- | --- |

4.1.

| 4.2. | The EESC points out that the ECB should monitor all potential risks. ‘Stablecoin’ will be one important measure for ensuring the stability of the currency in the blockchain (10). It will thus be important to specify how the ECB will deal with this form of digital currency — stablecoin — which could also be linked to the digital euro. |
| --- | --- |

4.2.

| 4.3. | The EESC stresses that cash will remain very important for the inclusiveness of a currency. Certain sections of society — especially older and financially vulnerable people — do not always have access to digital accounts and credit cards. For them, cash is the only means of payment. Besides, cash is a protection against excessive intrusiveness into the private sphere of citizens. The increasing volume of banknotes in the economy is proof of the trust in this form of money, probably also after and because of the financial crisis of 2008. |
| --- | --- |

4.3.

| 4.4. | The EESC notes that currently almost all of the central banks in the world that have adopted a strategy for introducing a central bank digital currency are seeking to establish and are testing out the form, system, design and model of their future digital currencies. |
| --- | --- |

4.4.

| 4.5. | The EESC sees the dilemma facing the ECB as a result of the process of technological innovation (11) in how to continue with the process of digitalising the euro that is under way, ensuring links with other central bank digital currencies, while also ensuring financial inclusiveness, and macroeconomic and financial stability. |
| --- | --- |

4.5.

| 4.6. | The EESC expects that the introduction of a digital euro is not envisaged as resolving all issues related to the evolving technological revolution. A significant decrease in cash payment methods can be expected. Furthermore, the issue of monetary sovereignty will need to be addressed, not least supporting the digitalisation process linked to foreign payments and transfers, including tackling the key issue of financial inclusion. These are all open questions that the ECB still faces today. |
| --- | --- |

4.6.

| 4.7. | The EESC notes that there cannot be a one-size-fits-all approach to a digital euro for all Member States, as there are national differences. Therefore, in the transition to a digital euro, the scope for its use in each country will need to be the primary consideration. The digital euro will be offered to all euro-area citizens, just as cash is offered to all euro-area citizens, regardless of their country. Its use may differ depending on the habits and norms of the individual countries. |
| --- | --- |

4.7.

| 4.8. | The EESC understands that when seeking to shape the different features of the introduction of the digital euro, it will be important to take particular account of privacy conditions as well as of the timing of the market launch. It will also be important to use the current infrastructure and the new technical architecture to ensure the security of payment transactions and procedures as regards customer identification. |
| --- | --- |

4.8.

| 4.9. | The EESC believes that in reality the digital euro will involve a high degree of privacy protection. Although the time frame has not yet been pinned down exactly, it is very important to make careful preparations at this stage. In addition, the EESC notes that when issuing a digital euro, the ECB will take all AML/CFT requirements into account, but that this does not mean that the ECB itself will do the KYC (know-your-customer) checks; these could be done, for instance, by supervised entities, depending on the design of the digital euro. |
| --- | --- |

4.9.

| 4.10. | The EESC believes that the assessment of national sovereignty as well as the impact on the European banking system will also be important. Although the entire European payment system is currently not completely uniform, it is a great advantage that it is accessible to both natural and legal persons. Up to now, and since the global financial crisis, it has been relatively efficient, stable and secure. |
| --- | --- |

4.10.

| 4.11. | The EESC calls for the completion of the Banking Union. A complete and genuine Banking Union would be beneficial to further strengthen the resilience and uniformity of the European banking sector. This is also crucial and beneficial in the light of a potential digital euro. |
| --- | --- |

4.11.

| 4.12. | The EESC points out that commercial banks in euro area countries currently benefit from favourable conditions for payment transactions. Against this backdrop, the commercial banks and other institutions in the financial sector, including institutions providing payment services, would be expected to cooperate intensively with the ECB in the design and introduction of the digital euro. |
| --- | --- |

4.12.

| 4.13. | The introduction and implementation of CBDCs in euro area countries will need to take into account at least the following, very important, aspects:






  i) | when adopting the digital euro as the basic means of payment, the option of carrying out payment transactions in cash will still need to be available; |
| --- | --- | --- |

4.13.

i)

when adopting the digital euro as the basic means of payment, the option of carrying out payment transactions in cash will still need to be available;

| ii) | the need for the digital euro to be usable and accessible within the euro area, and potentially also abroad; and, |
| --- | --- |

ii)

the need for the digital euro to be usable and accessible within the euro area, and potentially also abroad; and,

| iii) | the digitalisation process should mean that the digital euro can be used in transactions under the new conditions that did not exist for cash payments. |
| --- | --- |

iii)

the digitalisation process should mean that the digital euro can be used in transactions under the new conditions that did not exist for cash payments.

| 4.14. | The EESC expects that the ECB is preparing and is set to implement a range of measures aimed at introducing a digital euro, in accordance with the time frame adopted. In addition, it stresses the need for very close cooperation when it comes to ensuring a high degree of payment system interconnection, not only within the euro area Member States, but also with other central banks around the world and with relevant monetary-financial institutions, which will also provide the necessary technical assistance. |
| --- | --- |

4.14.

| 4.15. | The introduction of a digital euro will require a whole set of substantive and systemic conditions to be put in place to ensure that it functions effectively. As this will affect all citizens of the euro area Member States, including the Member States of the EU, there is a clear need for civil society, research and academia to be included in the next stages of discussions on adopting and introducing a digital euro. |
| --- | --- |

4.15.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  China launched a digital yuan project back in 2014, and the currency was in use during the Winter Olympic Games in 2022. So far, the digital yuan has been used only on Chinese territory.

1

(2)  For more information, see: https://news.bitcoin.com/105-countries-are-exploring-central-bank-digital-currencies-cbdc-tracker-shows/

2

(3)  For more information, see:

3

https://www.ecb.europa.eu/paym/digital_euro/investigation/governance/shared/files/ecb.degov220504_magdesignfeatures.en.pdf?2e15ee7911b93a720fbdebe09cfa1a79

(4)  More information can be found in the latest EESC opinion on the subject, on the Anti-money laundering legislative package, (OJ C 152, 6.4.2022, p. 89).

4

Anti-money laundering legislative package

(5)  The following institutions are most closely involved in the process of introducing a central bank digital currency: the International Monetary Fund, the Bank for International Settlements, the World Bank, and other public and private monetary-financial and economic institutions.

5

(6)  For more information, see:

6

https://www.ecb.europa.eu/paym/digital_euro/investigation/governance/shared/files/ecb.degov220711_tools.en.pdf?fb2430528d8f964513dd66ffcd8cbaf7

(7)  Private digital currencies (cryptocurrencies) can compete with central bank digital currencies. Since the global financial crisis, there has been a significant rise in private digital currencies.

7

(8)  When linking up different models of cross-border payment systems, it is important that they are compatible with each other.

8

(9)  For more information, see the previous EESC opinion on a Retail Payments Strategy for the EU, (OJ C 220, 9.6.2021, p. 72).

9

Retail Payments Strategy for the EU

(10)  Stablecoin is a fixed-price cryptocurrency whose market value is attached to other assets. Unlike other cryptocurrencies, such as bitcoin, stablecoin can be pegged to assets such as certain reserves or convertible currencies that can be traded on exchanges, including the US dollar or the euro.

10

(11)  The technological development here is based on a process of decentralising finance, as with the experiments being carried out by the big technology firms, for example. Diem/Libra and the introduction of the e-CNY are the result of a revolutionary technological process.

11

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/28 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/28

---

Opinion of the European Economic and Social Committee on Recapitalising EU companies — An innovative way towards sustained and inclusive recovery

(own-initiative opinion)

(2023/C 75/05)

| Rapporteur: | Antonio GARCÍA DEL RIEGO |
| --- | --- |

Rapporteur:

Antonio GARCÍA DEL RIEGO

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 6.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 186/0/2 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

6.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

186/0/2

1.   Conclusions and recommendations

| 1.1. | Recent evidence estimates an equity and hybrid capital shortfall of EUR 450-600 billion. This puts many companies at risk, especially considering that new economic tensions are arising and that EU companies are over-indebted. EU companies rely mainly on banking financing, and other sources of funding should therefore be encouraged. This requires involving actors such as asset managers, insurance companies and pension funds. |
| --- | --- |

1.1.

| 1.2. | In this context, the EESC recommends the development of a framework that enhances hybrid financial instruments, so that they are easy to implement, reinforce firms’ balance sheets and allow companies to maintain their level of investment without increasing their indebtedness. This would allow them to remain competitive and to be able to adapt to the future, by boosting their green and digital transformations. |
| --- | --- |

1.2.

| 1.3. | Highly subordinated instruments are the best possible alternative for several reasons:






  i) | They already exist and are regulated in different European countries, making them a secure instrument for Micro, Small and Medium-Sized Enterprises (MSMEs); |
| --- | --- | --- |

1.3.

i)

They already exist and are regulated in different European countries, making them a secure instrument for Micro, Small and Medium-Sized Enterprises (MSMEs);

| ii) | They are an agile long-term solution, easy to implement, for firms of all sizes, compared to more sophisticated alternatives such as bonds or shares; |
| --- | --- |

ii)

They are an agile long-term solution, easy to implement, for firms of all sizes, compared to more sophisticated alternatives such as bonds or shares;

| iii) | They are a product compatible with family businesses, which account for 60 % of EU firms, as usually these families wish to retain control of their company. |
| --- | --- |

iii)

They are a product compatible with family businesses, which account for 60 % of EU firms, as usually these families wish to retain control of their company.

| 1.4. | To be an effective solution, these instruments should have a quasi-equity status, so as to not account as debt in balance sheets, ranking just before equity in waterfall payments in the event that a company is liquidated. |
| --- | --- |

1.4.

| 1.5. | To have a large impact, reaching companies of all sizes, the best option is a scheme where there is collaboration between private and public institutions, including banks, asset managers, public sector, and institutional investors (insurers and pension funds). |
| --- | --- |

1.5.

| 1.6. | This recommendation serves a long-term goal with a solution that can be implemented in the short term, and would support the Capital Markets Union (CMU). An EU-wide instrument model could benefit from the visibility, liquidity and scale of the single market and generate broad appeal among institutional investors seeking debt and hybrid-type risk profiles but with higher returns, while catering to the needs of smaller companies. With sufficient EU-wide scale, a successful framework could develop into a well-defined asset class, encouraging investment and EU integration. |
| --- | --- |

1.6.

2.   Background

| 2.1. | Small and medium-sized companies are the heart of the economy: in the EU-27, they represent 99,8 % of all firms, almost two thirds (65 %) of employment and more than half (53 %) of the value added generated by the non-financial business sector (NFBS) (1). They are the real economy and the main factor for social cohesion in many European regions. There were over 22,5 million SMEs in 2020. There are just under 200 000 medium-sized SMEs, but they account for 17,3 % of value added and 16 % of employment (2). |
| --- | --- |

2.1.

| 2.2. | COVID-19 hit the economy hard throughout 2020 and for part of 2021, but the rapid response of governments with temporary public measures prevented a widespread wave of COVID-19-related bankruptcies, mainly through solutions to address liquidity and short-term issues that have resulted in over-indebtedness among EU companies. |
| --- | --- |

2.2.

| 2.3. | The end of most public support measures already granted coincides with new tensions affecting the global and European economies, such as energy crisis, inflation, the end of the ECB’s accommodative monetary stance, the widening of risk premia, the increased cost of financing, problems in supply chains and Russia’s invasion of Ukraine. |
| --- | --- |

2.3.

| 2.4. | Europe’s position as the leader of the green transition will require large investments from public and private agents. SMEs’ weakened position could make it difficult for them to adapt to new standards and cause them to lag behind large corporations or mid-sized companies from other parts of the world. |
| --- | --- |

2.4.

| 2.5. | Given that a high proportion of companies are overindebted (3) and at the same time need long-term resources to face upcoming challenges, new solutions that reinforce the capital of MSMEs and small midcaps are needed. Existing initiatives at European level, such as EIB’s ESCALAR programme, usually target high-growth corporates that are considered scale-ups or companies in their early stages that are financed by venture capital funds. New solutions should complement those currently in place and focus on existing and established MSMEs and small midcaps, which make up the majority of European firms. |
| --- | --- |

2.5.

| 2.6. | Some countries have launched selective measures to reinforce the investment capacity of companies, while avoiding the risk of ‘zombification’. In Spain and France, these programmes represent more than EUR 30 billion for 15 000 companies (4), using deeply subordinated loans as the main instrument and credit rating as a selection criterion to ensure recipients are viable firms. |
| --- | --- |

2.6.

3.   General observations

| 3.1. | The over-indebtedness of European companies demands some sort of recapitalisation instrument that allows them to keep or increase their investment effort. Public markets have supported existing listed companies reasonably well to date, but private ones lack the depth to support smaller companies. The equity and hybrid capital gap that the EU could face because of the pandemic and the reduction of state support measures is estimated at EUR 450-600 billion (5). |
| --- | --- |

3.1.

| 3.2. | MSMEs and small mid-caps generally report that they find it more difficult to access finance than large companies, especially long-term financing: |
| --- | --- |

3.2.

| 3.2.1. | When applying for a loan, a larger proportion claims that they face obstacles (7 % of SMEs compared with 4 % of large companies), they have lower success rates (72 % vs 85 %) and higher rejection rates (6 % vs 2 %) as well as worse conditions, according to the SAFE survey (6). |
| --- | --- |

3.2.1.

| 3.2.2. | Family businesses represent more than 60 % of all European companies (with the figures rising to 85 % in Spain and 75 % in Italy, France and Germany (7)). These companies are less likely to seek equity alternatives for long-term financing that require giving up control of the company. |
| --- | --- |

3.2.2.

| 3.3. | On top of this, SMEs tend to have a less diversified portfolio of external financial instruments, often bank-based and geared towards short-term uses.






  i) | SMEs’ dependency on banks remains high in the Eurozone, with 70 % of external financing being reliant on banks, against 40 % in the US (8). |
| --- | --- | --- |

3.3.

i)

SMEs’ dependency on banks remains high in the Eurozone, with 70 % of external financing being reliant on banks, against 40 % in the US (8).

| ii) | 63 % of large firms report using funds for fixed investment, compared with 38 % of SMEs, and only 28 % of micro firms (9). |
| --- | --- |

ii)

63 % of large firms report using funds for fixed investment, compared with 38 % of SMEs, and only 28 % of micro firms (9).

| 3.4. | This own-initiative opinion therefore recommends developing a common framework for highly subordinated financial instruments that boosts the recapitalisation of EU companies. This framework should ensure that these instruments have a quasi-equity consideration, so it does not affect the debt ratio of companies and their corporate rating. |
| --- | --- |

3.4.

| 3.4.1. | This opinion calls the EU to take action collectively to properly develop this common framework in line with the principles of subsidiarity and proportionality, authorising intervention by the Union when the objectives of an action can be better achieved at Union level by reason of scale and effects of the proposed action. |
| --- | --- |

3.4.1.

| 3.4.2. | This framework for highly subordinated instruments should:






  i) | Close the aforementioned financing shortfall in long-term financing to reinforce balance sheets and support investment; |
| --- | --- | --- |

3.4.2.

i)

Close the aforementioned financing shortfall in long-term financing to reinforce balance sheets and support investment;

| ii) | Provide family businesses with an instrument to boost their long-term investments without giving up control of their firm, as studies show that they are willing to distribute a share of profits and/or issue hybrid instruments (10); |
| --- | --- |

ii)

Provide family businesses with an instrument to boost their long-term investments without giving up control of their firm, as studies show that they are willing to distribute a share of profits and/or issue hybrid instruments (10);

| iii) | Be compatible with the practices of the main financial providers (commercial banks, asset managers, the public sector) so it can reach a majority of companies; |
| --- | --- |

iii)

Be compatible with the practices of the main financial providers (commercial banks, asset managers, the public sector) so it can reach a majority of companies;

| iv) | Help to attract institutional investors, such as insurance companies and pension funds, subject to the PRIIPs Regulation (11), who manage savings and are a key player for channelling more assets to the real economy. |
| --- | --- |

iv)

Help to attract institutional investors, such as insurance companies and pension funds, subject to the PRIIPs Regulation (11), who manage savings and are a key player for channelling more assets to the real economy.

| 3.5. | There are different highly subordinated instruments that could be used to reinforce SMEs and midcaps balance sheets, such as bonds, convertible bonds, dual-share schemes, and hybrid loans (such as participative loans):






  i) | Bond issuance is mainly used by large caps and for large emissions. They are complex and expensive. For example, even if the use of corporate bonds has grown considerably in recent years, there are only 2 000 active issuers in total, mainly larger companies (12); |
| --- | --- | --- |

3.5.

i)

Bond issuance is mainly used by large caps and for large emissions. They are complex and expensive. For example, even if the use of corporate bonds has grown considerably in recent years, there are only 2 000 active issuers in total, mainly larger companies (12);

| ii) | Private Convertible bonds have the main advantage of being extremely flexible in terms of structure, as they are a private contract. However, that also implies a low level of security for smaller companies, usually with less financial literacy, and a high transaction cost. They are mainly used by sophisticated venture capital providers; |
| --- | --- |

ii)

Private Convertible bonds have the main advantage of being extremely flexible in terms of structure, as they are a private contract. However, that also implies a low level of security for smaller companies, usually with less financial literacy, and a high transaction cost. They are mainly used by sophisticated venture capital providers;

| iii) | Dual share schemes refer to the issuance of two classes of shares, one of which usually has limited or no voting rights, while providing equity. Although in some Member States this instrument is allowed (13) (such as the Nordic countries, Poland, Portugal and Italy), in many others (such as Germany, France and Spain) it is not, and a large-scale deployment seems tougher to achieve, since it would require a high degree of adaptation to the company issuing shares; |
| --- | --- |

iii)

Dual share schemes refer to the issuance of two classes of shares, one of which usually has limited or no voting rights, while providing equity. Although in some Member States this instrument is allowed (13) (such as the Nordic countries, Poland, Portugal and Italy), in many others (such as Germany, France and Spain) it is not, and a large-scale deployment seems tougher to achieve, since it would require a high degree of adaptation to the company issuing shares;

| iv) | Hybrid loans are debt instruments that are deeply subordinated and oriented towards the long term (usually including grace periods). This is an instrument that is regulated in many jurisdictions, giving companies more security, and making the process more agile, since the product is not created in each operation. On top of this, it does not penalise companies in terms of indebtedness, as it ranks last in the repayment order, before equity. |
| --- | --- |

iv)

Hybrid loans are debt instruments that are deeply subordinated and oriented towards the long term (usually including grace periods). This is an instrument that is regulated in many jurisdictions, giving companies more security, and making the process more agile, since the product is not created in each operation. On top of this, it does not penalise companies in terms of indebtedness, as it ranks last in the repayment order, before equity.

| | Deployment | Feasibility | Track Record | Company protection | Investor protection |
| --- | --- | --- | --- | --- | --- |
| Bonds | Low | High | Low | Medium | High |
| Convertible bonds | Medium | Medium | Low | Low | High |
| Dual shares | Low | Medium | Medium | High | Medium |
| Hybrid loans | High | High | Medium-High | High | Medium |

Deployment

Feasibility

Track Record

Company protection

Investor protection

Bonds

Low

High

Low

Medium

High

Convertible bonds

Medium

Medium

Low

Low

High

Dual shares

Low

Medium

Medium

High

Medium

Hybrid loans

High

High

Medium-High

High

Medium

Source: Inbonis Rating.

| 3.6. | A hybrid loan instrument is the best alternative for several reasons:






  i) | They represent a long-term solution that is easy to implement and provides greater protection to companies, when compared with bonds or shares; |
| --- | --- | --- |

3.6.

i)

They represent a long-term solution that is easy to implement and provides greater protection to companies, when compared with bonds or shares;

| ii) | For MSMEs, it ensures that there is no dilution or loss of control, while having cost-related advantages, such as tax deductibility or lower issuance costs); |
| --- | --- |

ii)

For MSMEs, it ensures that there is no dilution or loss of control, while having cost-related advantages, such as tax deductibility or lower issuance costs);

| iii) | For lenders, it offers an attractive return, with no need to involve holders in corporate decisions; |
| --- | --- |

iii)

For lenders, it offers an attractive return, with no need to involve holders in corporate decisions;

| iv) | Participative loans, a type of hybrid loan, already exist and are regulated in many European countries, such as Spain (préstamos participativos), France, (prêts participatifs), Germany (Partiarisches Darlehen) or recently Portugal (empréstimos participativos) (14). |
| --- | --- |

iv)

Participative loans, a type of hybrid loan, already exist and are regulated in many European countries, such as Spain (préstamos participativos), France, (prêts participatifs), Germany (Partiarisches Darlehen) or recently Portugal (empréstimos participativos) (14).

| 3.6.1. | Hybrid loans are the chosen instrument for different public and private initiatives to address the lack of capital funding across the EU: at least six programmes in three Member States, as well as some European Investment Fund programmes, use this hybrid participative loan:






  i) | France has the Relance Programme, an EUR 12,7 billion government-supported subordinated debt programme, targeted at 10 000 firms, mainly SMEs, using participative loans and subordinated bonds. This programme is being distributed by banks and is financed by institutional investors; |
| --- | --- | --- |

3.6.1.

i)

France has the Relance Programme, an EUR 12,7 billion government-supported subordinated debt programme, targeted at 10 000 firms, mainly SMEs, using participative loans and subordinated bonds. This programme is being distributed by banks and is financed by institutional investors;

| ii) | In Spain, the EUR 1 billion Fund for the Recapitalisation of Covid-Affected Firms, for SMEs and midcaps that have solvency issues but are viable, using participating loans; |
| --- | --- |

ii)

In Spain, the EUR 1 billion Fund for the Recapitalisation of Covid-Affected Firms, for SMEs and midcaps that have solvency issues but are viable, using participating loans;

| iii) | Also in Spain, a 15-year, EUR 9 billion total Support Fund for the Productive Industrial Investment (EUR 600 million a year), public financed, using regular debt, participative loans and equity, targeted at companies with industrial investment projects; |
| --- | --- |

iii)

Also in Spain, a 15-year, EUR 9 billion total Support Fund for the Productive Industrial Investment (EUR 600 million a year), public financed, using regular debt, participative loans and equity, targeted at companies with industrial investment projects;

| iv) | In Valencia, the regional development bank, Instituto Valenciano de Finanzas, has launched several financing programmes that use a participative loan to support SMEs and strategic Midcaps with an investment project, totalling EUR 400 million a year; |
| --- | --- |

iv)

In Valencia, the regional development bank, Instituto Valenciano de Finanzas, has launched several financing programmes that use a participative loan to support SMEs and strategic Midcaps with an investment project, totalling EUR 400 million a year;

| v) | The Netherlands launched an EUR 400 million SME subordinated loan support programme. |
| --- | --- |

v)

The Netherlands launched an EUR 400 million SME subordinated loan support programme.

| 3.7. | To ensure effective deployment that reaches all MSMEs and has the maximum impact, the best operational scheme is one where there are multiple public and private originators and distributors, who might not be the same. Originators include banks, asset managers as well as the public sector, whereas the investors can be the own banks, the public-sector or institutional investors (insurers and pension funds). This framework refers to newly originated transactions, not the securitisation of existing ones. This is, for example, what was done in France, with its Relance programme (15). |
| --- | --- |

3.7.

| 3.8. | Mitigation of potentially perceived risks of a hybrid loan scheme being distributed at scale across Europe:






  Perceived risk | Solution |
| --- | --- | --- |
| Supervising shadow banking | Including tools to manage risk, such as the credit rating, would remove the risk of shadow banking. |
| Crowding out banks | A hybrid loan instrument would restore the solvency of companies and banks would therefore be willing to keep lending to them. |
| Compatibility with Debt Equity Bias Reduction Allowance (DEBRA) initiative | This initiative also seeks to avoid the over-indebtedness of companies, so it is compatible with the main objective of the DEBRA initiative. |
| Restoring solvency of non-viable companies | Introducing market standards such as the credit rating would prevent non-viable companies from accessing these instruments. Many public programmes using participative loans have included this requirement. |

3.8.

Perceived risk

Solution

Supervising shadow banking

Including tools to manage risk, such as the credit rating, would remove the risk of shadow banking.

Crowding out banks

A hybrid loan instrument would restore the solvency of companies and banks would therefore be willing to keep lending to them.

Compatibility with Debt Equity Bias Reduction Allowance (DEBRA) initiative

This initiative also seeks to avoid the over-indebtedness of companies, so it is compatible with the main objective of the DEBRA initiative.

Restoring solvency of non-viable companies

Introducing market standards such as the credit rating would prevent non-viable companies from accessing these instruments. Many public programmes using participative loans have included this requirement.

4.   Specific observations

| 4.1. | The proposed framework for hybrid loans should meet certain standards that make it attractive to all stakeholders: companies, financial providers acting as distributors and institutional investors. |
| --- | --- |

4.1.

| 4.2. | It is essential that the framework ensures an equity consideration for this type of hybrid loan with the following effects:






  i) | For the calculation of the debt capital ratio, so it does not add to existing indebtedness or does not have an excessive impact on the debt-to-capital ratio. For example, in France Article 313-14 of the Code monétaire et financier [Monetary and Financial Code] establishes that ‘participative loans are, for the purposes of assessing the financial situation of the companies receiving them, treated as equity capital’; |
| --- | --- | --- |

4.2.

i)

For the calculation of the debt capital ratio, so it does not add to existing indebtedness or does not have an excessive impact on the debt-to-capital ratio. For example, in France Article 313-14 of the Code monétaire et financier [Monetary and Financial Code] establishes that ‘participative loans are, for the purposes of assessing the financial situation of the companies receiving them, treated as equity capital’;

| ii) | For the purposes of capital reduction. This is the case, for example, of the Spanish regulation, which states that participative loans are included in the calculation of equity for the purposes of capital reduction and dissolution of companies, and that early repayment or amortization of participative loans can only happen if it is followed by a capital increase of the same amount (16); |
| --- | --- |

ii)

For the purposes of capital reduction. This is the case, for example, of the Spanish regulation, which states that participative loans are included in the calculation of equity for the purposes of capital reduction and dissolution of companies, and that early repayment or amortization of participative loans can only happen if it is followed by a capital increase of the same amount (16);

| iii) | In the event of insolvency, this hybrid loan should have a subordinated status, ranking behind ordinary debts or common creditors, and before shareholders. Failure to construct the debt in this way would likely undermine firms’ ability to raise debt from traditional sources. One of the aims of the CMU Action Plan is to achieve greater convergence among the different insolvency regimes across EU Member States. |
| --- | --- |

iii)

In the event of insolvency, this hybrid loan should have a subordinated status, ranking behind ordinary debts or common creditors, and before shareholders. Failure to construct the debt in this way would likely undermine firms’ ability to raise debt from traditional sources. One of the aims of the CMU Action Plan is to achieve greater convergence among the different insolvency regimes across EU Member States.

| 4.2.1. | There are cases in which hybrid loans have an equity consideration according to International Financial Reporting Standards (IFRS) and Basel II. For example, when a hybrid loan has perpetual maturity, it qualifies as equity under IFRS rules due to its deeply subordinated status (17). In general, hybrid instruments can be considered as equity if they are unguaranteed, subordinated and fully disbursed, if they are not redeemable at the initiative of the holder, if they can be used to cover losses and if the obligation to pay interests can be postponed (18). |
| --- | --- |

4.2.1.

| 4.2.2. | The EESC recommends modifying the Accounting Directive 2013/34/EU of the European Parliament and of the Council (19) so that the accounting procedure is harmonised for hybrid loans or other types of debt that have a maturity longer than eight years (20) with a grace period of at least three and with a variable interest rate, part of it linked to ‘success’ defined at discretion (e.g., on growth, on profitability...). This modification will facilitate the computation of hybrid loans as equity when calculating the net worth of a company for commercial law purposes and treated as equity or own funds for accounting purposes. |
| --- | --- |

4.2.2.

| 4.3. | To avoid uncertainty, the instrument should keep its debt consideration for other purposes (i.e., tax and legal), therefore the issuance of an equity-like instrument should not involve loss of voting control for companies. |
| --- | --- |

4.3.

| 4.3.1. | Another important point for companies and investors alike is that the periodic interest paid on the subordinated debt instrument must not be subject to any tax withholding or deduction at source, so that the pool receives the interest income on a gross basis. |
| --- | --- |

4.3.1.

| 4.4. | Regarding the investment side, a quasi-equity instrument such as the one proposed would qualify as an eligible instrument for European Long-Term Investment Funds (ELTIFs), according to Article 10 of the ELTIF Regulation (21), enabling it instantly to become part of the financial ecosystem. |
| --- | --- |

4.4.

| 4.4.1. | The ELTIFs could later be marketed in the EU by publishing a prospectus or a Key Information Document (KID) that complies with the requirement of the Prospectus Regulation (22) or the Packaged retail and insurance-based investment products Regulation, respectively. This would help integrate retail investors into private debt and the real economy, something that has not yet been achieved with the crowdlending initiatives. |
| --- | --- |

4.4.1.

| 4.4.2. | Ideally, the instrument should incorporate market standards such as credit ratings by ESMA-registered agencies or Environmental, Social and Governance indicators assessments, to enhance the investor base. |
| --- | --- |

4.4.2.

| 4.5. | Lastly, this initiative would support the CMU. An EU-wide approach, a common European instrument model, could benefit from the visibility, liquidity and scale of the single market and generate broad appeal amongst institutional investors seeking debt and hybrid-type risk profiles but with better returns, while catering to the needs of smaller companies. With sufficient EU-wide scale, a successful framework could develop into a well-defined asset class encouraging investment and EU integration. |
| --- | --- |

4.5.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  Annual Report on European SMEs 2020/2021, European Commission, July 2021.

1

(2)  Annual Report on European SMEs 2020/2021, European Commission, July 2021.

2

(3)  The debt ratio increased by 18,8 percentage points between the end of 2019 and early 2021, peaking at 164,4 %. ECB Economic Bulletin, Issue 2/2022.

3

(4)  Ministry of Economy of France, COFIDES, SEPIDES, Instituto Valenciano de Finanzas.

4

(5)  Recapitalising EU businesses post COVID-19, AFME and PwC.

5

(6)  Survey on the access to finance of enterprises (SAFE), European Commission, November 2021.

6

(7)  European Family Businesses, EFB.

7

(8)  European SMEs Financing Gap, Euler Hermes.

8

(9)  Survey on the access to finance of enterprises (SAFE), European Commission, November 2021.

9

(10)  Recapitalising EU businesses post COVID-19, AFME and PwC.

10

(11)  Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) (JO L 352 du 9.12.2014, p. 1).

11

(12)  The rise of non-bank finance and its implications for monetary policy transmission, 2021, ECB.

12

(13)  Study on minority shareholders protection, final report, European Commission.

13

(14)  Legal framework of participative loans approved by Decree Law 11/2022 of January 12.

14

(15)  Dispositif de garantie aux fonds de prêts participatifs et d’obligations subordonnées [French State Guarantee scheme for participative loan and subordinated bond funds], European Commission.

15

Dispositif de garantie aux fonds de prêts participatifs et d’obligations subordonnées

(16)  Resolution of December 20, 1996, of the Instituto de Contabilidad y Auditoría de Cuentas (Accounting and Auditing Institute).

16

(17)  Decision of the Commission SA.60113 (2021/N) — Finland — COVID-19 aid to Finnair.

17

(18)  Basel II. 4. Hybrid debt/capital instruments, Annex 1a. Definition of capital. (d) Hybrid debt/capital instruments.

18

(19)  Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).

19

(20)  It has to be remembered that the average life of a company is around that number, and for private equity is even lower (five years).

20

(21)  Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (OJ L 123 19.5.2015, p. 98).

21

(22)  Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ L 168, 30.6.2017, p. 12).

22

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/35 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/35

---

Opinion of the European Economic and Social Committee — Additional considerations on Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Survey 2022

(COM(2021) 740 final)

(own-initiative opinion)

(2023/C 75/06)

| Rapporteur: | Judith VORBACH |
| --- | --- |

Rapporteur:

Judith VORBACH

| Plenary Assembly decision | 24.3.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 6.10.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 133/0/0 |

Plenary Assembly decision

24.3.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

6.10.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

133/0/0

1.   Conclusions and recommendations

| 1.1. | Since the adoption of the first opinion on the Annual Sustainable Growth Survey 2022 (ASGS 2022), the situation has changed dramatically due to the Russian aggression against Ukraine. In the following, EU real GDP growth estimations were downgraded and inflation forecasts of the Eurozone were revised up to an all-time high, triggered largely by price hikes in the gas market. The EESC acknowledges that all key objectives of a prosperity-oriented economic policy are under pressure, while geoeconomic fragmentation and tensions as well as COVID-19 remain serious risk factors. |
| --- | --- |

1.1.

| 1.2. | The EESC explicitly reiterates its call for a balanced economic policy approach to tackle longstanding problems and to respond to the current crises. The EU’s goals as outlined in Article 3 of the TEU constitute the basis for the EU’s past, present and future prosperity, political stability, upward convergence, competitiveness and resilience. The current crisis must not be allowed to jeopardise fairness and environmental goals. With regard to rising prices, there is an urgent need to protect the most vulnerable and specifically exposed companies, in particular SMEs. Moreover, it is crucial to safeguard the purchasing power of low and medium-income households, who constitute a major part of economic demand. Solidarity with the people in the Ukraine, enhancing the EU’s strategic autonomy and striving for peace should also take centre stage. |
| --- | --- |

1.2.

| 1.3. | The Recovery and Resilience Facility (RRF) has become the key tool for delivering on the EU policy priorities under the European Semester (the Semester). It has helped to stabilise the economy during the pandemic and is playing a key role in responding to the current crisis. The EESC calls for the National Recovery and Resilience Plans (NRRPs) to be implemented in a such way that they have a tangible impact on people’s wellbeing. As the Country Specific Recommendations (CSRs) are going to play a more significant role, the EESC calls for careful monitoring and a balanced approach. The EESC calls for a reform of the Semester which guarantees quality participation of organised civil society (OCS). Concerning the NRRPs, the EESC welcomes the recommendation ‘drawing on the successful application of the partnership principle’, and calls for making the involvement of OCS mandatory. |
| --- | --- |

1.3.

| 1.4. | The EESC welcomes the increase in the renewable energy and efficiency targets and stresses that environmental sustainability must take centre stage, while also calling for a reform of the European electricity market to be promoted swiftly and as a matter of urgency. Massive investment is needed to promote the green transition and enhance strategic autonomy, and the EESC calls on the Commission to provide a structured view, showing which EU funds should be used and to what extent investment should be covered by EU programmes, Member States, or private or blended financing tools. The EESC recommends implementing a Climate Adjustment Fund and, in future, also looking into strengthening NextGenerationEU (NGEU) and/or InvestEU. When restructuring funds or drawing up the new Multiannual Financial Framework, the EESC warns against cutting funds relating to social objectives. |
| --- | --- |

1.4.

| 1.5. | The completion of the single market should further upward convergence between Member States. Distortions and barriers should be tackled and the regions should be supported to unlock their full potential. Progress is needed in completing the Capital Market and Banking Union as well in implementing the sustainable finance strategy is equally needed as ensuring financial market stability. The EESC calls for a fair and balanced approach to the enhancement of the business environment and productivity. Training and research remain vital tools to boost competitiveness and a fair twin transition and strategic autonomy. The EESC welcomes the proposals highlighted in the Communication on Our European Growth Model, but also stresses the importance of enhancing strategic autonomy, relocating the production of key products in the EU and not neglecting social and environmental goals along supply chains. |
| --- | --- |

1.5.

| 1.6. | The Commission rightly claims that public support to stimulate private investment needs to be well directed towards projects with clear added value, and competition policy should play a key role. The EESC stresses the importance of transparency and monitoring to ensure integrity and to achieve the intended goals. Windfall effects should be avoided by ensuring that investments that would have been made anyway are not subsidised, and public budgets should not be overburdened with risks. Finally, state aid measures should also be linked to the creation of quality jobs and to respect for workers’ rights, environmental standards and fiscal obligations. |
| --- | --- |

1.6.

| 1.7. | The EESC supports the Commission’s recommendations for allowing automatic stabilisers to operate, enhancing investment and to continuing to apply the general escape clause throughout 2023. However, the EESC has reservations concerning the limitation of the growth of nationally-financed current expenditure below medium-term potential output, and the intention to assess the relevance to open excessive deficit procedures in spring 2023. Thus far, the EU fiscal rules have barely been implemented and the sanctions have never been applied. The EESC reiterates its call for the fiscal framework to be modernised by setting realistic targets and incorporating a golden rule without jeopardising medium-term fiscal sustainability, while guidelines for a transition period should be put forward. A sound of value of the Euro has to be safeguarded, through a balanced monetary and fiscal approach in line with sound macroeconomic governance. Finally, the EESC highlights that a fair system of expenditure and revenue is a precondition for fiscal sustainability. |
| --- | --- |

1.7.

2.   General comments

| 2.1. | In February 2022, the EESC adopted an opinion on the ASGS 2022 (1). At that time, the EU had recently gone through the deepest recession in its history (2), while unprecedented supportive measures had been taken to soften the blow and stave off an unstable situation. With NGEU the EU had reached a new phase of economic policy and solidarity. As the Commission had allotted a significant role to the Semester in the RRF and therefore increased its importance for policy coordination, the EESC reiterated its call for closer involvement of OCS. The EESC welcomed the competitive sustainability agenda, while highlighting that its four dimensions — environmental sustainability, productivity, fairness and macroeconomic stability — should be placed on equal footing in order to achieve the intended reinforcing effects and a just green and digital transition. |
| --- | --- |

2.1.

| 2.2. | As in previous years, the additional opinion takes into account the ongoing Semester process and provides input for the next cycle. This is particularly important this year. Since the Russian aggression against Ukraine, the geopolitical landscape has changed dramatically, priorities have been shifted and policy has been adapted, as reflected in the Communications on RepowerEU (3) and Our European Growth Model (4). The Semester, which is itself undergoing a systemic change, has proved to be a credible framework for EU policy coordination during the pandemic. In the Spring Package, the implications of the current crisis are again reflected comprehensively. Similar to the Communication (5), this opinion is structured around the dimensions of the competitive sustainability agenda. |
| --- | --- |

2.2.

| 2.3. | The war in the Ukraine and the ensuing sanctions, together with containment measures applied in China and the deceleration of growth in the US, are hitting the EU economy. The rapid increase in energy and food commodity prices is feeding inflation, which erodes purchasing power and impedes competitiveness. The EU is vulnerable because of its geographical location, its heavy reliance on imported fuels and high integration in global value chains. In the Summer Forecast, real GDP growth estimations were downgraded to 2,7 % in 2022, while inflation forecasts were revised up to an all-time average high of 8,3 % in 2022 (6). The Commission stresses that the ‘unprecedented nature and size of the shocks ushered in by the war’ make projections highly uncertain. Further price increases, combined with second round effects, could reinforce stagflationary forces and political repercussions are likely. Geopolitical tensions and COVID-19 remain serious risk factors (7). |
| --- | --- |

2.3.

| 2.4. | The recent crisis puts pressure on all the key objectives of a prosperity-oriented economic policy (8), namely environmental sustainability, sustainable and inclusive growth, full employment and high-quality work, fair distribution, health and quality of life, financial stability, price stability, balanced trade based on a fair and competitive industrial and economic structure, and stable public finances. The EESC explicitly repeats its call for a balanced policy approach, which focuses on all of these objectives in order to tackle longstanding problems and to respond adequately to the present recent crises, in line with Article 3 TEU. Sticking to the EU’s aims and principles was the basis of the EU’s past prosperity, and also constitutes the basis for present and future political stability, upward convergence, competitiveness and resilience to new crisis. The EU’s reaction to the Russian aggression must not jeopardise fairness and environmental goals. |
| --- | --- |

2.4.

| 2.5. | The reasons for the unprecedented price hikes are manifold and also include European policy deficiencies. Commission President Ursula von der Leyen has quite rightly stated that the current electricity market design no longer works and needs to be reformed (9). The EESC urges the Commission and the Council to swiftly push forward a reform of the EU energy market, and as part of that also to tackle detrimental short-term volatility and long-term price increases. The EESC strongly calls for drastic, extraordinary and also temporary measures to be taken. Possible starting points include the merit order effect, the EU Energy Exchange (EEX), the misuse of market power and the impact of speculative transactions and high-frequency trading. Electricity prices should be decoupled from gas prices and price caps should be taken into account. Windfall profits should be skimmed off by levies, with care taken not to discourage investments in low-carbon solutions. |
| --- | --- |

2.5.

| 2.6. | The key focus of the EU’s priorities must be solidarity with the people in Ukraine, enhancing the EU’s strategic autonomy and striving for peace. This is in line with Article 21 TEU, which states that — amongst other things — the Union is to pursue policies to ‘safeguard its values, fundamental interests, security, independence and integrity’, ‘consolidate and support democracy’ and ‘preserve peace, prevent conflicts and strengthen international security’. To that end, the EESC also acknowledges the objectives enshrined in the Council’s Versailles Declaration, namely reinforcing EU sovereignty by reducing its strategic dependencies, increasing security of supply in the area of critical raw materials and phasing out fossil fuel dependencies on Russia. The EESC welcomes the steps being taken in order to progressively phase out fossil fuel dependencies and calls for further action in that direction. |
| --- | --- |

2.6.

| 2.7. | The RRF has become the key tool for delivering the EU policy priorities under the Semester and, indeed, it already has decisively helped to stabilise the economy during the pandemic, to amplify the twin transition and to step up cooperation between Commission and Member States. Henceforth, the RRF will play a key role in mobilising and steering resources to respond to the recent crisis and to implement REPowerEU. Member States are invited to propose a dedicated REPowerEU chapter in their NRRPs on the basis of the new CSRs. The EESC stresses the importance of implementing the updated NRRPs in an effective and sustainable way, so that they have a positive and tangible impact on people’s wellbeing. However, linking the achievement of the goals set out in the NRRPs to the disbursement of RRF tranches makes the CSRs more significant. This change in procedures has to be monitored and evaluated and the EESC calls on the Commission and the Council to ensure a balanced approach. |
| --- | --- |

2.7.

| 2.8. | In particular, closer involvement of social partners and civil society organisations in the Semester process is necessary at national level, in order to ensure that all societal groups are properly represented, to foster tailored-made solutions fully supported by OCS and to achieve broad ownership of the NRRPs. The EESC calls for a reform of the Semester which guarantees effective and quality participation with a directive or a regulation. During a formal consultation process based on rules and transparent procedures, civil society organisations should be duly informed in writing and given sufficient time to analyse the proposals and draft their remarks and proposals. The inclusion or rejection of these proposals should be accompanied by a justification contained in public documents. |
| --- | --- |

2.8.

| 2.9. | In the context of the NRRPs, the EESC appreciates the Commission’s recommendation on ‘drawing on the successful application of the partnership principle in cohesion policy programming and implementation’, as called for by the EESC in its opinion on ASGS 2022. The involvement of OCS has to become mandatory. In its first resolution (10) on civil society’s involvement in the design of the plans, the EESC concluded that this was largely insufficient in a majority of Member States and called for minimum standards to be laid down for such consultation. In its second resolution (11), the EESC called on many Member States to improve CSO involvement, transparent implementation and monitoring, as well as provision of information to the public, while encouraging further dialogue on NRRPs with all stakeholders, which could also help to prevent misuse and fraud. Moreover, the resolution includes good practices, such as establishing a monitoring body that includes OSC, which can serve as an example for other Member States. During its annual conference, the EESC’s European Semester Group renewed its call to make civil society participation mandatory by law (12). The call for proper involvement of OCS and local and regional authorities is also reflected in the joint own-initiative report of the Committees on Budgets and on Economic and Monetary Affairs on implementation of the RRF (13), providing the European Parliament’s input to the review report on RRF implementation which the European Commission adopted on 29 July 2022 (14). |
| --- | --- |

2.9.

3.   Specific comments

3.1.   Energy and environmental sustainability

| 3.1.1. | The Commission rightly highlights that accelerating decarbonisation ‘will reduce our dependence on fossil fuels while also helping reach our 2030 climate goals’. The EESC stresses that environmental sustainability must take centre stage and welcomes the increase in the renewable energy target to at least 45 % of the EU’s overall energy mix, along with the energy efficiency target of a 13 % drop in energy consumption by 2030 as part of the REPowerEU plan. Similarly, the recommendations concerning investments in energy are welcome, which should focus — among other things — on supporting vulnerable households, promoting sustainable mobility and industry decarbonisation, research and innovation and stepping up infrastructure, including in a cross-border context. |
| --- | --- |

3.1.1.

| 3.1.2. | Before the war in the Ukraine, there was already a gap between investment needs and financing. To reach the intermediate goal of a 55 % drop in emissions compared to 1990 by 2030, annual additional investment needs have been estimated at up to EUR 520 billion (15). Further needs arise for upskilling and reskilling, climate change adaptation and key technologies, such as batteries. On the other hand, about 30 % of the 2021-2027 EU budget will be spent on the green transition. Cohesion policy is expected to deliver around EUR 100 billion during this decade, and EUR 224,1 billion should come from the RRF (16). The Commission’s analysis has indicated that REPowerEU entails additional investment of EUR 210 billion between now and 2027, on top of what is needed to realise the objectives of the Fit for 55 proposals. To mobilise financing, various possibilities are proposed, largely relying on the RRF loan component. The EESC calls on the Commission to provide a structured view, showing which EU funds should be used and to what extent investment should be covered by EU programmes, Member States private investment or blended forms. |
| --- | --- |

3.1.2.

| 3.1.3. | Given the urgency and the common interest of accelerating energy transition, the EESC highly recommends that Member States swiftly and comprehensively use the opportunities offered by NGEU, the NRRPs and the recent REPowerEU Plan. If existing measures turn out to be not enough to meet the possibly rising funding needs, further action will be needed. The EESC calls for a Climate Adjustment Fund (17) to be established in order to provide immediate support in the event of disasters. Moreover, even if a golden rule is implemented, some Member States may still not have the capacity to raise the amounts needed without jeopardising their fiscal sustainability. Thus, strengthening the NGEU and/or InvestEU should be considered. Linking grants and/or loans to investment in energy transition might constitute a turning point. The EESC calls for a fair and balanced approach to the enhancement of the business environment and productivity. In any case, when restructuring existing funds and also in the context of the new Multiannual Financial Framework, the EESC warns against cutting funds relating to social objectives and a just transition. |
| --- | --- |

3.1.3.

| 3.1.4. | The Commission rightly highlights that the ‘transformation of the European economy will only succeed if it is fair and inclusive and if everybody can gain from the opportunities the twin transition brings.’ (18). These must not be empty words. The EESC reiterates its call for mapping and analysis of the impact the transition will have on employment and skills (19). Social dialogue and sound corporate governance with worker participation and the involvement of the social partners and civil society organisations in policymaking should be turned to even more in times of insecurity and crises. Finally, all aspects of environmental sustainability, including biodiversity and pollution prevention, should remain high on the agenda. The ‘do no significant harm principle’ should also be applied in the context of the updated NRRPs. |
| --- | --- |

3.1.4.

3.2.   Productivity

| 3.2.1. | The completion of the single market should further economic and social upward convergence between Member States. The EESC agrees with the Commission that distortions within and barriers to the single market need to be tackled. Helping the regions to unlock their full potential will not only contribute to a more integrated single market but also enhance the EU’s productivity and contribute to energy sustainability, as the capacity to produce renewables varies substantially between regions. Progress in completing the Capital Market and Banking Union is needed while ensuring financial market stability in order to further reliable and sound finance and investment. In particular, the borrowing for NGEU strengthens EU capital markets and the international role of the euro. Moreover, the EESC points to the sustainable finance framework which aims to channel private investment towards sustainability, while also stressing the importance of considering climate-related risks. |
| --- | --- |

3.2.1.

| 3.2.2. | The EESC welcomes a comprehensive policy approach that includes investment and reforms in order to enhance the business environment and promote productivity in a fair and balanced way. Reforms should focus on efficient public administration, modern transport infrastructure, quality training and education and resource efficiency. The EESC agrees with the Commission that independent, quality and efficient justice systems and well-functioning anti-corruption frameworks are essential. Research and innovation, together with education, remain vital tools for boosting productivity, competitiveness, the green and digital transitions, upward convergence and the EU’s strategic autonomy. The EESC welcomes the Commission’s recommendations to — among other things — facilitate knowledge transfers, produce excellence, foster business innovation and attract talent. |
| --- | --- |

3.2.2.

| 3.2.3. | The EESC comments on the Communication on Our European Growth Model as follows. The Commission highlights actions to reduce strategic dependencies, such as international partnerships, industrial alliances, public and private investment and, in particular, the diversification of supply chains. The EESC stresses how important it is that the EU promote a free trade agenda in a fair way without neglecting environmental and social goals along supply chains. When it comes to the supply of critical raw materials and supplies, the EU should not create new dependencies on states which do not share EU values, but strive for strategic autonomy. Moreover, the production of key products, such as medicines, should be relocated to the EU to secure their availability in the event of an emergency. |
| --- | --- |

3.2.3.

| 3.2.4. | Digitalisation is an enabler for the green transition, productivity and competitiveness. The Commission rightly highlights four areas of action, namely digital education, skills and competences, secure and sustainable digital and connectivity infrastructures, digital transformation of businesses, and the digitalisation of public services and education systems. To achieve these goals, more investments in key digital technologies are needed, including cyber security, artificial intelligence, data spaces and semiconductors. The EESC calls for sustainable digitalisation by safeguarding social rights, enhancing energy efficiency, and reducing electronic waste and water usage. |
| --- | --- |

3.2.4.

| 3.2.5. | The Commission claims that a major share of investments to finance the twin transition and to enhance resilience will come from the private sector, while public investments should be well targeted and help to crowd in private investments and correct market failures. Actually, the EU aims to mobilise at least EUR 1 trillion over the next decade through the EU budget and associated instruments. The Commission rightly states that public support needs to be well directed towards projects with clear added value, and competition policy should play a key role. In particular in the context of InvestEU or similar programmes, the EESC stresses the need for transparency and monitoring to ensure integrity and to achieve the intended goals. Windfall effects should be avoided by ensuring that investments that would have been made anyway are not subsidised. Allocations must be transparent and risks should be shared in a legally binding manner so that public sectors are not overburdened. In comparison to public funding, no higher costs should accrue, and state aid measures should be linked to the creation of quality jobs and to respect for workers’ rights, environmental standards and fiscal obligations. |
| --- | --- |

3.2.5.

3.3.   Fairness

| 3.3.1. | While the EU is relatively prosperous by global standards, inequalities between and within Member States and regions constitute a major challenge. The Commission illustrates that, thanks to a prompt policy response, overall income inequalities and risk of poverty or social exclusion remained relatively stable in 2019 and 2020, while mid-term effects are uncertain. Many that were already facing worse conditions have been disproportionally hit. The price hikes hit lower income households the hardest. Moreover, house prices continued to grow strongly, in some Member States recording the fastest growth in a decade, while interest rates are starting to increase. Millions of people suffer from reduced disposable incomes and are struggling to make ends meet. Huge uncertainties persist, climate-related disasters are on the rise and the twin transition is causing structural changes. |
| --- | --- |

3.3.1.

| 3.3.2. | Social sustainability is not only a goal in itself but also a precondition for a stable economic and political situation, fair productivity and competitiveness. Declining real incomes and clouded expectations affect not only individual wellbeing, but also economic demand and therefore investment plans, production and growth. Moreover, while the banking sector proved to be resilient and non-performing loans have been substantially reduced, except in the case of three Member States, this resilience may be jeopardised should there be a further economic downturn. The EESC warns against such second round effects. With a view to rising prices, there is an urgent need to protect the most vulnerable and to safeguard the purchasing power of low and medium-income households, who create a major part of demand. |
| --- | --- |

3.3.2.

| 3.3.3. | The EESC warmly welcomes the measures taken to protect the most vulnerable and to alleviate the social impact of the multiple crises in the EU, such as for instance SURE, and to support people fleeing from Ukraine. The EESC also agrees with the Commission on the importance of ensuring access to quality education at all levels, of adequate coverage by social safety nets and of affordable and social housing together with effective, resilient and sustainable healthcare systems. The EESC draws attention to the need to also support young people who are affected by the energy crisis. Indeed, the full implementation of European Pillar of Social Rights is crucial: its implementation in the European Semester cycle together with its monitoring via the Social Scoreboard is a step in the right direction. Last but not least, the reforms and investments within the NRRPs, which contribute to social inclusion and resilience, are very welcome. |
| --- | --- |

3.3.3.

| 3.3.4. | Interviews conducted in the context of the EESC’s resolution on OCS involvement indicate that the social dimension is relatively underdeveloped in some NRRPs. The EESC recommends paying attention to the distributive effects and carefully considering the European Pillar of Social Rights in the context of the NRRPs. Moreover, the EESC asks for an estimate to be provided of the investment needed to implement the Pillar. The EESC stresses the importance of striking a balance between economic freedoms and social and labour market rights. National protection rights in favour of employees should never be classified as administrative barriers to the market (20). When strengthening the single market, social and labour rights should be equally respected in order to safeguard the EU’s progress towards economic, social and environmental sustainability in a fair way. |
| --- | --- |

3.3.4.

3.4.   Macroeconomic Stability

| 3.4.1. | Enabling and implementing large-scale national and EU fiscal support contributed decisively to safeguarding economic, social and political stability, not least because they increased confidence. Moreover, while economic recovery has been seriously affected since the outbreak of war, the expansionary fiscal stance in 2022 is very likely to help moderate the impact of the recent crisis again and to safeguard stability. The EESC supports the Commission’s recommendations for allowing automatic stabilisers to operate and to enhance investment to implement the twin transitions. In particular, it is very pleased to see the general escape clause continue to apply throughout 2023, as, indeed, the economic situation of the EU has not returned to normal and Member States need to be able to react promptly when necessary. Acknowledging that the ECB has raised interest rates for the first time in eleven years, the EESC calls strongly for policy actions that ensure that the European bond spreads are moderate and prevent financial market turbulences, in order to not endanger private investment in the energy transition and to avoid a recession. While these targets may require making extensive use of the ECB’s toolbox, even so, monetary policy alone will not be able to curb current price dynamics in a sustainable way. |
| --- | --- |

3.4.1.

| 3.4.2. | The EESC welcomes the discretionary fiscal measures for dampening the effects of high energy prices, which are estimated at 0,6 % of EU GDP in 2022, for the most vulnerable and specifically exposed industries. However, the energy shortage and the impact on other commodity prices might be also relevant in the medium term, along with ongoing geopolitical tensions and further downward pressure on the EU economy. Moreover, the low growth prospects together with intensifying price pressures pose new dilemmas for the EU’s economic policy. Therefore, the EESC supports the Commission’s recommendation that the EU should stand ready to react to the evolving economic situation. The situation has to be observed carefully, so that new headwinds making a stabilising fiscal impulse necessary can be detected at an early stage, and the need to extend supportive measures anticipated. |
| --- | --- |

3.4.2.

| 3.4.3. | The EESC expresses reservations about limiting the growth of nationally-financed current expenditure below medium-term potential output in high-debt Member States, while highlighting that any control of primary current expenditure has to take into account the social impact and warning against cuts in social, healthcare and education spending. In contrast, divergences between Member States should be tackled in a prosperity-orientated way, for example by promoting research and development and furthering training. The EESC also has doubts about assessing the relevance of proposing to open excessive deficit procedures (EDPs) in spring 2023, and points to the fact that EU fiscal rules were barely implemented (21) and the sanctions of phase 2 of the excessive deficit procedure were never applied as in a time of economic hardship they would have made the situation even worse. Moreover, the EESC questions the possible application of EDPs while the escape clause is still active. |
| --- | --- |

3.4.3.

| 3.4.4. | The EESC reiterates its considerations regarding the deficiencies of the current fiscal framework and repeats its call for the framework to be modernised by — among other things — setting realistic and operational deficit and debt targets (22), incorporating a golden rule of investment and permitting greater flexibility and country-specific differentiation without jeopardising medium-term fiscal sustainability. A sound value of the Euro has to be safeguarded through a balanced monetary and fiscal approach in line with sound macroeconomic governance. The EESC has also called on the Commission to put forward guidelines for a transition period, during which the excessive deficit procedure should not be triggered, before the revised framework comes into force (23). Moreover, the EU Parliament stressed in its resolution of 8 July 2021, ‘the importance of having a clear pathway towards a reviewed fiscal framework, preferably prior to the deactivation of the general escape clause’, and highlighted that ‘the application of the current fiscal framework, in particular the adjustment paths, would lead to a high speed of debt reduction that could undermine the recovery path of the economies’. Finally, in order to avoid stability risks and to increase crisis preparedness and response capacity, the creation of appropriate EU funds should be considered. |
| --- | --- |

3.4.4.

| 3.4.5. | The EESC fully supports the recommendation that concerted efforts should continue to be made to step up the fight against aggressive tax planning and tax evasion, as well as the resulting spillover effects among Member States, and calls for coordinated action. The EESC welcomes the OECD agreement concerning the reform of corporate taxation and encourages the Member States to swiftly implement it. The EU should promote this agreement at international level, in particular with major trading partners. In addition, shifting the tax burden away from labour and — as long as the distributive impact is carefully considered — towards supporting the twin transitions are welcome strategies. For instance, property tax is less distortive and would allow for a tax shift away from labour. Moreover, the EESC draws attention to the fact that, in the context of ensuring prudent fiscal policy, only expenditure-related measures are addressed, not revenue-based measures. All in all, a fair revenue system is a precondition for fiscal sustainability and for the restoring sound public finances, in particular in heavily indebted countries. |
| --- | --- |

3.4.5.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

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(1)  See EESC opinion on Annual Sustainable Growth Survey 2022 (OJ C 275, 18.7.2022, p. 50).

1

(2)  See European Economic Forecast. Spring 2020 (europa.eu), page 1.

2

(3)  COM(2022) 230 final.

3

(4)  European Commission Communication on Towards a green, digital and resilient economy: our European Growth Model.

4

(5)  2022 European Semester: Spring Package Communication — European Commission (europa.eu).

5

(6)  Summer 2022 Economic Forecast: Russia's war worsens the outlook (europa.eu).

6

(7)  Spring 2022 Economic Forecast: Russian invasion tests EU economic resilience — European Commission (europa.eu).

7

(8)  See EESC opinion on Annual Sustainable Growth Survey 2022 (OJ C 275, 18.7.2022, p. 50).

8

(9)  Speech of Commission President Ursula von der Leyen during the debate at the plenary session of the European Parliament (8.6.2022) on the conclusions of the special European Council meeting of 30 and 31 May 2022.

9

(10)  OJ C 155, 30.4.2021, p. 1.

10

(11)  See EESC Resolution on Involvement of Organised Civil Society in the National Recovery and Resilience Plans — How to improve it? (OJ C 323, 26.8.2022, p. 1).

11

(12)  Annual ESG Conference 2022 — European Economic and Social Committee (europa.eu).

12

(13)  2021/2251 (INI), point 88.

13

(14)  COM(2022) 383 final.

14

(15)  Up from EUR 683 billion per year invested over the last decade. In a middle scenario, additional annual investment needs were estimated at EUR 360 billion on average until 2030. See Bruegel Policy Contribution Issue No 18/21 — September 2021. Even more investment will be needed beyond 2030.

15

(16)  COM(2022) 231 final.

16

(17)  See EESC opinion on Climate Adjustment Fund financed by Cohesion and NGEU (OJ C 486, 21.12.2022, p. 23).

17

Climate Adjustment Fund financed by Cohesion and NGEU

(18)  European Commission Communication Towards a green, digital and resilient economy (COM(2022) 83 final).

18

Towards a green, digital and resilient economy

(19)  See EESC opinion on Fit for 55: Delivering the EU’s 2030 Climate Target on the way to climate neutrality (OJ C 275, 18.7.2022, p. 101).

19

(20)  See EESC opinion on Annual Sustainable Growth Survey 2022 |European Economic and Social Committee (europa.eu), OJ C 275, 18.7, 2022, p. 50, point 3.2.3.

20

(21)  According to the IMF’s October 2015 forecasts, the 1/20th debt reduction rule was not expected to be observed by nine Member States in the following three years. The second phase of the excessive deficit procedure was not implemented (Bruegel Policy Contribution, March 2016).

21

(22)  Klaus Regling, Director of the European Stability Mechanism, proposes to adjust the debt ratio from 60 % to 100 %, while keeping the deficit per year at 3 % of GDP.

22

(23)  OJ C 429, 11.12.2020, p. 227, and OJ C 105, 4.3.2022, p. 11.

23

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/43 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/43

---

Opinion of the European Economic and Social Committee — Additional considerations on Recommendation for a Council recommendation on the economic policy of the euro area

(COM(2021) 742 final)

(own-initiative opinion)

(2023/C 75/07)

| Rapporteur: | Juraj SIPKO |
| --- | --- |

Rapporteur:

Juraj SIPKO

| Plenary Assembly decision | 22.3.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 6.10.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 170/1/2// |

Plenary Assembly decision

22.3.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

6.10.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

170/1/2//

1.   Conclusions and recommendations

| 1.1. | The EESC notes that the current economic development of the euro area and the European Union is characterised by a particularly high level of economic, geo-economic and political uncertainty. This uncertainty stems from two ongoing systemic shocks, i.e. the continued prevalence of COVID-19 and Russia’s invasion of Ukraine. There is also a new risk associated with fragmentation across sectors of international trade, payments, capital and financial markets, including manufacturing, research and transport. The systemic risks have led to a huge build-up of public debt and growth in inflation. However, tackling climate change remains the biggest challenge facing the euro area and EU Member States. |
| --- | --- |

1.1.

| 1.2. | The EESC reiterates that the fight against the continued prevalence of COVID-19 is far from over. Therefore, all substantive and systemic measures should be taken to tackle the disease, while at the same time preparing for other potential epidemics and pandemics. The EESC stresses, as confirmed by the experience of the past two years, that the highest rate of return on investment is in the health sector. |
| --- | --- |

1.2.

| 1.3. | The EESC supports an end to the Russian aggression and the war in Ukraine and the restoration of Ukraine’s territorial integrity. This can create the conditions for resilient, inclusive and sustainable economic growth in the eurozone countries and in the Member States of the European Union. |
| --- | --- |

1.3.

| 1.4. | The EESC is closely following the very unfavourable inflationary trends, which stem mainly from rising commodity, food and energy prices, including supply chain disruption. In this situation, raising interest rates is not a particularly effective tool. A monetary policy that is too tight may also increase recessionary risks and may delay private investments in the energy transition that are so urgently needed. Therefore, the EESC recommends that the ECB conduct an adequate proportionality assessment, carefully analysing the side-effects of a tightened monetary policy and its consequences for long-term price stability targets. However, the EESC encourages the European Central Bank to lower core inflation without compromising the economic recovery of the EU. Because of the aforementioned risks, the ECB should proceed cautiously in normalising monetary policy. |
| --- | --- |

1.4.

| 1.5. | In view of sharply rising energy and food prices, the EESC recommends that national economic policy-makers set up a functioning and effective social safety net for the most vulnerable population groups, including the most affected segments of the middle class, where nobody is left behind. |
| --- | --- |

1.5.

| 1.6. | The EESC is concerned about the ongoing build-up in public debt. It therefore recommends that steps be taken towards medium-term fiscal consolidation. With a view to replenishing national budgets, the EESC sees scope for equitable taxation and with it the effective use of public funds. |
| --- | --- |

1.6.

| 1.7. | The EESC points out that the activation of the general escape clause as a result of COVID-19 was the right decision. Although it has been extended until 2023, a further extension will need to be considered should the systemic risks persist. The EESC therefore expects the European Commission to prepare, without delay, concrete steps to reform the Stability and Growth Pact. |
| --- | --- |

1.7.

| 1.8. | Despite the progress made towards establishing a financial union, all substantive and systemic measures to complete the Banking Union and the Capital Markets Union need to be adopted and implemented. In this regard, the EESC calls on the organisations responsible and the competent institutions to join forces to create a financial union. |
| --- | --- |

1.8.

| 1.9. | The EESC highlights the negative impact of fragmentation. It points to the instability of the sovereign bond market in euro area markets. The EESC therefore welcomes the European Central Bank’s announcement of 15 June 2022 on the preparation of measures to tackle fragmentation in the euro area. |
| --- | --- |

1.9.

| 1.10. | The EESC supports the transformation of the euro area economies. At the same time, it points to the existential risk associated with climate change. In light of this, and despite the unforeseen complex geo-economic developments, it recommends a shift to renewable energy sources and the use of financial resources available under the recovery plan as well as other financial resources, including the support of private sector financing. |
| --- | --- |

1.10.

| 1.11. | Like other EU countries, euro area countries are currently faced with systemic shocks, risks and threats. Therefore, given the critical period in which humanity finds itself, the EESC calls on all countries and competent international institutions to work together to address all historically unprecedented systemic shocks, risks and threats that the world is currently facing. Delaying the adoption and implementation of measures may have far-reaching consequences, not only in terms of material loss, but also — and above all — in terms of human life. |
| --- | --- |

1.11.

2.   Background and context

| 2.1. | There are currently two systemic real shocks — COVID-19 and Russia’s invasion of Ukraine — which, alongside the subsequent geo-economic fragmentation, have resulted in a high degree of uncertainty. What is more, rising commodity and food prices have led to significant socioeconomic risks in both the euro area and the EU. In light of the existential threat posed by climate change, one of the greatest challenges for the euro area and EU Member States is the transition to a green economy. |
| --- | --- |

2.1.

| 2.2. | Today’s economic developments are being accompanied by unprecedented real external shocks in euro area countries. Therefore, from the point of view of the underlying macroeconomic indicators, these developments cannot be viewed as stable. In addition, some specific euro area Member States face long-standing structural challenges on their path towards building sustainable, resilient and inclusive economies. |
| --- | --- |

2.2.

| 2.3. | Prior to these two systemic shocks, inflation was relatively low in almost all euro area Member States. Relatively lower inflation rates were recorded even before the onset of the climate crisis, and some euro area countries even experienced deflation. Today’s inflation dynamics require making extensive use of the ECB’s toolbox. Currently, inflation is one of the greatest risks to sustainable, resilient and inclusive economic growth in the euro area. Reducing and stabilising inflation and keeping it within the inflation target, i.e. below 2 %, cannot be achieved without appropriate changes to the European Central Bank’s monetary policy. In this context, the Governing Council have taken the action needed to fulfil the ECB’s mandate to pursue price stability and to safeguard financial stability. In the near future, it is important that the ECB proceeds cautiously in normalising monetary policy. |
| --- | --- |

2.3.

| 2.4. | Inflation is the highest it has been since the creation of the European monetary union. It stems from a whole series of factors that led to gradually rising inflation rates even during the deepening global COVID-19 crisis. The economic recovery in the euro area now under way has further exacerbated this negative trend as a result of reduced supply. Russia’s invasion of Ukraine has also contributed to higher prices. It is legitimate to ask to what extent the European Central Bank’s monetary policy, using all available instruments at its disposal, can slow inflation growth and gradually return it to, and keep it within, the declared inflation target, without jeopardising the single currency’s stability and the economic recovery from the COVID-19 crisis. |
| --- | --- |

2.4.

| 2.5. | Current inflation trends are neither temporary nor short-term (as noted in autumn 2021), but reveal a high degree of uncertainty. In the second half of last year, price increases were mainly driven by energy prices, disruption of supply chains, an unusually steep rise in commodity prices and higher transport costs. Given that the reasons for current price dynamics are complex, monetary policy alone will not manage to curtail inflation. What is needed is a diversification of energy imports and thus reduced dependence on supplies from Russia. Diversification also offers euro area Member States an historic opportunity to embark on urgent structural reforms (e.g. administrative reforms, judicial reforms, reforms to strengthen the rule of law) and reduce dependence on imports of traditional energy inputs. In addition to this, market intervention to control current volatile prices dynamics in the energy market is needed. In this respect, the EESC welcomes the Commission proposal for an emergency intervention to address high energy prices. |
| --- | --- |

2.5.

| 2.6. | At the same time, there is evidence that many companies have been able to expand their unit profits despite rising energy prices. ECB analysis shows that profits have been a key contributor to overall domestic inflation as companies passed on higher costs and shielded off and expanded profit margins. Market interventions in the energy sector might also curtail price dynamics. |
| --- | --- |

2.6.

| 2.7. | Current price increases are mainly linked to supply. This trend is adversely affecting euro area competitiveness, leading to higher costs and putting upward pressure on wages and salaries at a time of economic downturn. Should this adverse pattern continue, it could potentially lead to stagflation (although currently not present in the euro area countries as a whole). In historical terms, stagflation was recorded almost 40 years ago. It cannot be ruled out that if external systemic shocks continue, it might result in undesirable stagflation. On the other hand, the EESC points to possible adverse effects on demand if low and middle-income earners are impacted by real wages losses. |
| --- | --- |

2.7.

| 2.8. | In 2021, there was a relatively favourable trend in economic growth across euro area Member States, with no expectation of a sharp slowdown in investment and trade flows as a result of high levels of economic uncertainty. The global COVID-19 crisis may deepen the divide in economic growth in the euro area if structural reforms are not adopted and implemented. This trend towards divergence may have a major impact on convergence and exacerbate this adverse development across euro area Member States. |
| --- | --- |

2.8.

| 2.9. | In the short term, the outlook for potential investment growth is not encouraging. The instruments adopted for the post-COVID recovery (Recovery and Resilience Facility) have started to become somewhat subdued as a result of the investment uncertainty caused by the war in Ukraine. It is therefore important that individual economies are able to cope with the continued disruption of trade and investment flows and with the continued uncertainty of the global economy, but mainly the high level of uncertainty in the euro area Member States. |
| --- | --- |

2.9.

| 2.10. | The economic slowdown also stems from the significant energy price rises facing households. Some Member States have taken measures to tackle price growth in the form of subsidies, changes to VAT, including additional social contributions, and social energy tariffs for households on the lowest incomes. There is therefore a need to rethink the efficient use of energy in households and to change energy consumption habits. Rising energy prices have led to a gradual displacement of other items from the consumer basket, for which there has now been a fall in demand. What is more, higher energy prices for households are leading to a change in the pattern of household consumption and a significant drop in the consumption of certain consumer items. However, energy is a basic good and can only be reduced to a limited extent, meaning that poorer households in particular will suffer from these price hikes. |
| --- | --- |

2.10.

| 2.11. | COVID-19 has had a very negative impact on public finances in euro area Member States. The general escape clause of the Stability and Growth Pact was activated in March 2020 to tackle the COVID-19 crisis. The State Aid Temporary Framework was also set up, allowing large-scale use of fiscal stimulus to support the business sector but also to maintain social stability. |
| --- | --- |

2.11.

| 2.12. | The fiscal response and the contraction in output have resulted in a significant increase in government debt ratios, particularly in some high-debt Member States. Continuing to ensure public debt sustainability through a gradual reduction of public debt is of paramount importance. Given that energy prices will continue to remain at a high level in the medium-term, a review of market and price-building mechanisms, together with further fiscal support measures, will be necessary in order to support households and companies particularly affected by energy price increases. |
| --- | --- |

2.12.

| 2.13. | Increased spending on security and other critical priorities may lead to a temporary decline in the euro area’s economic position in the world economy. Against this backdrop, euro area Member States are facing the major challenge of moving towards sustainable economic growth and maintaining the share of the euro area economy vis-à-vis other global competitors, using all available tools coupled with effective individual policies, including diplomatic tools. |
| --- | --- |

2.13.

| 2.14. | More recently, the euro exchange rate has fallen against the US dollar as a result of adverse geopolitical developments, a decline that started in May 2021. The depreciation of the euro, the second largest reserve currency, stems mainly from the different monetary policies pursued by the European Central Bank and the Federal Reserve System (FED). |
| --- | --- |

2.14.

| 2.15. | Drawing on the above analyses, the European Commission has presented its economic outlook (July 2022), which is chiefly determined by developments in Ukraine. This outlook assumes that, this year, economic growth will be 2,7 % in the EU Member States and 2,6 % in the euro area, falling to 1,5 % and 1,4 % next year, according to Commission forecasts. The average inflation rate is projected to reach 7,6 % in the EU and 7,6 % in the euro area this year whereas, next year, inflation is expected to fall to 4,6 % and 4 % respectively. |
| --- | --- |

2.15.

2.   General comments

| 3.1. | The EESC stresses that the short- but also medium-term economic development of the euro area countries is, and has the potential to be, strongly influenced by the impact of Russia’s invasion of Ukraine. This adverse development is systemic and there is no parallel in post-war history. It is therefore very difficult to compare it with other shocks that have historically had a negative impact on economic developments in the euro area. In any case, there is a very high degree of uncertainty which makes it harder to determine the outlook for future developments. |
| --- | --- |

3.1.

| 3.2. | The EESC points out that the trajectory of the underlying macroeconomic and microeconomic indicators in the euro area countries is not encouraging. The level of uncertainty is especially high. In particular, there are a number of unknown variables that may affect the already extremely high levels of uncertainty, mainly of a geopolitical and economic nature. |
| --- | --- |

3.2.

| 3.3. | The EESC views the inflation trend as posing a high risk to socioeconomic progress in the euro area countries. The current inflation risk is mainly linked to supply and disruption of value chains. Developments in Ukraine, particularly in the area of energy inputs, including commodity prices, together with measures to contain the spread of COVID-19, have led to changes on the supply side. |
| --- | --- |

3.3.

| 3.4. | Today’s inflation dynamics require making extensive use of the ECB’s toolbox to achieve price stability using accommodative monetary policy. The ECB should proceed cautiously in normalising monetary policy. What is more, it is expected that monetary policy will continue to support economic policy in the euro area member countries. |
| --- | --- |

3.4.

| 3.5. | The EESC stresses that the inflation risk has not been contained in the Member States and attempts to eliminate it are only partial. Given the ongoing unfavourable trend in inflation and its impact on households, coupled with developments in competitiveness, the EESC calls on all competent and responsible institutions to adopt and implement all urgent measures to offset the negative price shocks. At the same time, turbulence in the sovereign bonds market in the euro area must be prevented (1). |
| --- | --- |

3.5.

| 3.6. | The EESC welcomes the publication of the REPowerEU programme. It expects this programme to contribute to a gradual reduction of dependence on energy inputs from the Russian Federation. It also offers the possibility to gradually eliminate the greatest cost risks which are a major threat to price stability in euro area countries. |
| --- | --- |

3.6.

| 3.7. | The EESC expects REPowerEU to make two further key contributions: (i) REPowerEU could stimulate a major increase in investment in selected sectors and areas, thus realising an idea that pre-dates Russia’s invasion of Ukraine. The basic idea is that this year will be significant in terms of growth in investment, especially in selected areas of public interest; (ii) REPowerEU should also make a substantial contribution to the most important structural changes facing the current generation and thus meet the key objectives of making euro area economies more competitive, sustainable and resilient, in pursuit of the headline targets set out in the Green Deal. |
| --- | --- |

3.7.

| 3.8. | The EESC is closely monitoring how investment is being fundamentally re-allocated, compared to original investment plans. Investment growth can be expected to be lower in sectors linked to energy restructuring and the implementation of the Green Deal priorities for EU countries. It is unclear what the outlook will be in sectors and areas that are not directly linked. Against this backdrop, it will be important to see the development of small and medium-sized enterprises in traditional economic sectors (not strategically necessary or seeking world class excellence), using potential opportunities in individual regions. |
| --- | --- |

3.8.

| 3.9. | The EESC strongly supports giving due consideration not only to meeting current critical priorities but also to ensuring uniform innovation performance across regions, the euro area and the EU as a whole. Underestimating this goal may exacerbate divergent trends between regions in the euro area and the EU Member States. |
| --- | --- |

3.9.

| 3.10. | The EESC welcomes the possibility of stronger convergence thanks to growth in the formerly less developed euro area Member States, which over the long term have been growing at a higher rate than the euro area average. In this context, it should be noted that COVID-19 and the current war in Ukraine may lead to a deepening and divergent process in the euro area Member States, which is not conducive to achieving the basic ideas set out in the Maastricht Treaty. |
| --- | --- |

3.10.

| 3.11. | The EESC welcomes and supports the ongoing debate on the design of the new institutional framework for public finances in the EU Member States. In this context, the Committee points out that updating the Stability and Growth Pact’s fiscal rules is associated above all with the challenge of reconciling financial sustainability with clear public investment needs. |
| --- | --- |

3.11.

| 3.12. | The EESC sees scope for mutual coordination and links between different types of policies aimed at ensuring sustainable public debt. Furthermore, in justified cases there is a need to support fiscal strategies in line with a medium-term approach to fiscal correction that is geared towards recovery and resilience. The Committee expects realistic and workable solutions to be reached, resulting in a platform on public finances which should be implemented without delay. |
| --- | --- |

3.12.

| 3.13. | Given that public budgets are under strain following the COVID-19 crisis, further compensatory measures to support households and companies to cope with the energy crisis must be targeted and effective. The EESC rightly understands and respects the current reasons for safeguarding security, humanitarian and social needs and their impact on national budgets in the euro area. In this context, the EESC welcomes the Commission’s decision to prolong the activation of the escape clause of the Stability and Growth Pact, and calls on the Commission to put forward concrete reform proposals for the Stability and Growth Pact as soon as possible. |
| --- | --- |

3.13.

| 3.14. | The EESC has repeatedly stated that, as in the past, and even more so today, greater efforts are needed to strengthen the euro area’s position in the international context. Currently, euro area economies are facing new challenges linked to the overall security risk and structural changes. In addition, economic and political developments may affect the position of the euro in the international monetary and payment system. Ending the Russian aggression and the war in Ukraine and restoring Ukraine’s territorial integrity may lead to a revival of the world economy and to a stronger euro area economy within it. |
| --- | --- |

3.14.

3.   Specific comments

| 4.1. | The EESC is convinced that, in order to ensure relative socioeconomic stability in the euro area Member States, against the prevailing backdrop of high levels of geopolitical and economic uncertainty, linked to the risks of rising inflation and growing public debt, it will be important to focus on the right priorities when drawing on Recovery and Resilience Facility (RRF) funds. This instrument enables EU Member States to jointly issue bonds on the capital markets, and has so far been very effective. The EESC would therefore very much welcome its practical use in future too. In this connection, the EESC sees scope for using the RRF beyond 2026. |
| --- | --- |

4.1.

| 4.2. | The EESC stresses that Russia’s ongoing invasion of Ukraine may lead to an unwanted recession and even stagflation in certain euro area countries. Therefore, careful monitoring of these adverse developments, and pre-emptive action to deal with them, is needed now more than ever. |
| --- | --- |

4.2.

| 4.3. | The EESC notes that unemployment and labour market trends point to relative stability. At the same time, the Committee highlights relatively large discrepancies between national unemployment rates compared to the pre-2008 period. Structural unemployment is prevalent in some euro area Member States, coupled with a shortage of skilled labour. It is this relative shortage of highly skilled labour that does not allow sufficient scope to increase competitiveness in selected sectors and areas. In this context, the EESC notes that there is still sufficient, and as yet untapped, scope for upskilling and reskilling within the euro area Member States and the EU. |
| --- | --- |

4.3.

| 4.4. | The EESC is very concerned about the negative trends in inequality and about rising poverty in the euro area Member States and across the EU. Inequality in the broadest sense of the term is, to a large extent, also the legacy of the global financial crisis. COVID-19 has further exacerbated this adverse trend. Rising energy and food prices are currently affecting the most vulnerable population groups, as well as low- and middle-income households. For this reason, the EESC urgently calls on all competent institutions to set up a social safety net that works effectively and where nobody is left behind. |
| --- | --- |

4.4.

| 4.5. | The EESC draws attention once again to the possible and unforeseen development of further mutations, pandemics and epidemics. The emergence and rapid spread of COVID-19 revealed that the health sector was highly unprepared for the pandemic. More in-depth preparation, but above all a more responsible policy by all competent bodies and institutions in this area, is therefore imperative. The EESC notes that, as developments over the past two years have shown, the greatest return on investment comes from investment in health and prevention. |
| --- | --- |

4.5.

| 4.6. | The EESC stresses that supporting the provision of additional liquidity since the outbreak of COVID-19 has been the right decision. However, given that some particular operations were suspended, it will now be necessary to focus on ensuring the solvency of certain businesses. Additional liquidity will also be needed to support post-pandemic growth. The EESC therefore considers it crucial to push ahead with the establishment of the Capital Markets Union and the Banking Union. |
| --- | --- |

4.6.

| 4.7. | The EESC points out that a process of fragmentation in the world economy is under way. Russia’s invasion of Ukraine has led to fragmentation in international trade, international payments, international currency-financial relations, international transport, international science and research, global value chains, and in other areas too. This process has had a very negative impact on socioeconomic developments in the euro area countries. |
| --- | --- |

4.7.

| 4.8. | The EESC notes that the current high level of economic and geo-economic uncertainty, accompanied by high risks, is the most complex situation in the entire history of the European integration project. Given the unpredictability of future socioeconomic developments, there is a strong need for the competent institutions to adopt and implement a whole host of measures to reduce and eliminate external shocks to the economies of the euro area Member States. |
| --- | --- |

4.8.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

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(1)  The EESC therefore welcomes the ECB’s announcement of 15 June 2022 that it intends to work on an instrument to combat fragmentation in the euro area.

1

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/50 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/50

---

Opinion of the European Economic and Social Committee on ‘Enhancing labour mobility to support economic recovery’

(own-initiative opinion)

(2023/C 75/08)

| Rapporteur: | Philip VON BROCKDORFF |
| --- | --- |

Rapporteur:

Philip VON BROCKDORFF

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 101/0/0 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

101/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC has in a number of its opinions referred to the importance of labour mobility and has noted that over the years, intra-EU labour mobility has increased but only at moderate pace. |
| --- | --- |

1.1.

| 1.2. | The EESC believes that a more in-depth analysis is needed as to why — other than the restrictions caused by the pandemic — the stock of EU movers of working age is growing by a smaller percentage increase than in previous years. The EESC also calls for a study to determine the economic cost of the current state of the labour market. |
| --- | --- |

1.2.

| 1.3. | The EESC recommends more effective national measures with an emphasis on active labour market policies, such as in-work benefits for EU and third-country workers. |
| --- | --- |

1.3.

| 1.4. | The EESC calls on the European Commission to include in the European Semester indicators as part of country-specific recommendations to monitor national policies that in one way or another restrict the mobility of workers across the EU. |
| --- | --- |

1.4.

| 1.5. | The EESC also calls on the European Commission to analyse negative developments related to labour mobility, particularly the brain drain in certain sectors and regions. At the same time, measures to counter the brain drain must go hand in hand with those to promote upward social and economic convergence. |
| --- | --- |

1.5.

| 1.6. | The EESC also recommends that Member States further improve their relevant portals with the inclusion of the minimum working conditions required by national legislation to avoid abuse. The EESC also calls for further efforts in improving language skills. |
| --- | --- |

1.6.

| 1.7. | The EESC calls on Member States to facilitate the mobility of persons with disabilities. |
| --- | --- |

1.7.

| 1.8. | The EESC also considers gender equality to be an important factor in enhancing labour mobility in the EU as stated in SOC/731 (1). |
| --- | --- |

1.8.

| 1.9. | The EESC calls on the European Commission to continuously monitor social security coordination and ensure common solutions to new arising situations such as teleworking from abroad. Moreover, the EESC calls for efforts to be stepped up to create a European social security number as a possibility to overcome obstacles in access to social security in cross-border situations. |
| --- | --- |

1.9.

| 1.10. | The EESC notes that good working and employment conditions, as well as quality–of-life aspects such as the availability of good schools and recreational facilities, are necessary for businesses to maintain a competitive advantage and to attract skilled workers. |
| --- | --- |

1.10.

| 1.11. | The EESC also notes that the COVID-19-pandemic clearly enhanced opportunities for teleworking. More and more workers are interested in working remotely from abroad for a short period or temporarily. The EESC looks forward to upcoming social partner negotiations on a directive on the matter. |
| --- | --- |

1.11.

| 1.12. | The EESC calls for an EU-wide network of information points, including online but also physical and telephone services, aimed at helping workers and employers in dealing with enquiries in areas such as banking and insurance services. |
| --- | --- |

1.12.

| 1.13. | Finally, the EESC highlights the importance of the ongoing statistical analysis of labour mobility flows to help address skills mismatches in EU labour markets and to assess the impact of developments such as the war in Ukraine and the movements of working-age persons within and between EU Member States. |
| --- | --- |

1.13.

2.   General comments

| 2.1. | At a time of great economic uncertainty, with economic forecasts being revised downwards and with a likely increase in the euro area interest rate to counter high rates of inflation just around the corner, labour mobility in the EU could play a crucial role in the EU’s economic recovery and growth prospects. It is generally recognised that the free movement of workers and services contributes to economic growth and cohesion in the Union and creates job opportunities in the Single Market. The effect is clear: an increase in mobility to fill existing vacancies improves the allocation of labour resources, increases economic output and welfare, particularly if the working conditions on offer are fair. The EU’s labour market is also based on the principle of equal treatment as enshrined in Article 45 TFEU and specified in a number of pieces of secondary legislation. Overall, the EU economy stands to gain from increased labour mobility. However, for individual Member States, there may be gains and losses, depending on the long-term effects of the direction of mobility flows. In the short-term, labour mobility would be beneficial for sending countries characterised by structural unemployment. However, the net effects for receiving countries would largely depend, inter alia, on the working conditions provided to workers. |
| --- | --- |

2.1.

| 2.2. | The EESC has in a number of its opinions referred to the importance of labour mobility and has noted that intra-EU labour mobility has increased over the years but at moderate pace and, in percentage terms, still lags behind labour mobility with the US. According to a study conducted by the Directorate-General for Regional Policy of the European Commission, the US population who have moved to another state make up around 2,8 % of the total working age population, whereas in the EU the share is around 1,2 per cent (2). |
| --- | --- |

2.2.

| 2.3. | According to the Eurostat population statistics for 2019, there were 13 million EU persons of working age (20–64) who moved from one Member State to another. However, the stock of EU movers of working age grew by a smaller percentage increase than in previous years, and the pandemic has not helped increase these numbers. |
| --- | --- |

2.3.

| 2.4. | The EU 2019 Labour Force Survey indicated a figure of 11,9 million EU movers of working age (defined as EU citizens who reside in a Member State other than their country of citizenship), of whom 9,9 million were active movers (defined as EU citizens who take up employment in a different Member State without the need to obtain a work permit). This represents 4,2 % of the total labour force in the then 28 Member States. The UK leaving the EU has obviously reduced work opportunities for EU citizens and the main destination countries now are Germany, France, Italy and Spain. |
| --- | --- |

2.4.

| 2.5. | Romania and Poland are the most important countries of origin of active movers, with the main sectors of economic activity for EU movers being manufacturing and wholesale and retail trade. Other relatively important sectors are construction and transport, social care and domestic services, tourism and agriculture. |
| --- | --- |

2.5.

| 2.6. | The number of cross-border workers in the EU-28 was 1,5 million and, again, with UK exiting the EU, the number has fallen, with the main countries of residence of cross-border workers being France, Germany and Poland, with other notable flows occurring between Slovakia, Hungary and Austria. The EESC notes that labour mobility within the EU is motivated by a variety of reasons, depending on one’s personal situation including pay differences between the host country and the cross-border worker’s country of residence. The decision to move abroad to take up work can indeed be based on a combination of several reasons including employment offered on a seasonal basis in sectors such as agriculture and tourism. More recently, the worsening purchasing power impacting citizens across the EU may actually discourage labour mobility, especially if rising prices also have an impact on the cost of rented accommodation. |
| --- | --- |

2.6.

| 2.7. | In recent years, there has been increased mobility among highly educated movers, with more than a third of EU movers falling into this category. Conversely, the share of low-skilled movers has fallen by the same percentage as the increase in highly educated movers. It is relevant to note that the mobility of highly skilled movers is an important developer of the knowledge-based economy. The most important EU destination countries for highly skilled movers are Germany, Spain, France, Belgium and Austria. Whereas highly skilled movers work most commonly as professionals in business, teaching, science and engineering, over-qualification appears to be quite prevalent. It is estimated that 55 % of highly skilled movers are women. |
| --- | --- |

2.7.

| 2.8. | According to Eurostat’s demographic projections, the mean age of EU citizens is expected to increase. Significantly also, the working age population is expected to fall as a proportion of the entire population, particularly those between the age of 20 and 39 years. Conversely, older age groups will have large proportional increases. These demographic developments will have a considerable impact on the potential number of EU movers in the years ahead, since people are most likely to move at the beginning of their working lives and, as they grow older, are less likely to move. This is corroborated by evidence, with persons aged from 20 to 29 and from 30 to 39 registering higher annual outflow numbers than other age groups. |
| --- | --- |

2.8.

| 2.9. | Since the number of persons in younger age cohorts is also falling in sending countries, this is expected to result in falling numbers of mobility workers across the EU. However, this expected decrease in mobility flows may be counteracted by the EU’s ageing population, with an increased demand for specialised health and social care, requiring an increase in the recruitment of mobile workers. |
| --- | --- |

2.9.

| 2.10. | It is evident from the above that mobility flows across the EU remain a challenge that limits supply and causes mismatches in most sectors, including IT and high-tech industry. This situation has not been helped by the pandemic, with intra-EU mobility being constrained by lockdowns and other restrictive measures such as border closures and travel bans. Prior to the pandemic, East-West labour mobility had dominated South-North flows, and this is expected to continue with the influx of refugees from war-ravaged Ukraine. In any event, the sooner mobility among EU citizens returns to pre-pandemic levels, the better. The number of active labour market movers fell by 4 per cent between 2019 and 2020 (3). |
| --- | --- |

2.10.

| 2.11. | The mutual recognition of diplomas and qualifications is essential to fill in vacancies where labour shortages persist and to facilitate mobility. However, the recognition system needs to be reinforced to work effectively and to support labour mobility. The problem mainly arises in the mutual recognition of vocational qualifications rather than at academic or professional level. That said, it is relevant to acknowledge that there is a different approach to the mutual recognition between academic and vocational qualifications. One should also keep in mind that according to Article 166 TFEU, the EU shall fully respect the responsibility of the Member States for the content and organisation of vocational training, while supporting and supplementing the action of the Member States. |
| --- | --- |

2.11.

3.   Specific comments

| 3.1. | The EESC believes that a more in-depth analysis is needed as to why — other than the restrictions caused by the pandemic — the stock of EU movers of working age is growing by a smaller percentage increase than in previous years. The EESC also calls for a study to determine the economic cost of the current state of the labour market, characterised by fragmentation along the lines of Member States: ‘the cost of a non-unified EU labour market’. |
| --- | --- |

3.1.

| 3.2. | The EESC recommends more effective national policy measures such as mobility incentives including circular mobility (by investing in countries of origin through exchange and mutual learning programmes), with an emphasis on active labour market national policy measures, such as in-work benefits for EU and third-country workers. In this connection, the EESC believes that offering jobseekers financial support, such as covering costs of relocation to take up a job in another Member State or region, would further encourage mobility. In addition, further efforts are needed to improve information regarding jobs in other EU countries, as well as relocation assistance to support the logistics of moving country — e.g. finding accommodation, registering for tax purposes, finding a school for your children, possibly assistance in finding a job for partners, etc. The EESC recommends making use of AI tools in a common EU-wide web that centralises all the job offerings across EU Member States, to better match profiles and job requirements. In the same vein, more targeted incentives should be provided to encourage unemployed workers to move to Member States with low levels of unemployment. The lack of skilled labour is the most pressing issue for European firms, as stated by the SAFE report issued by the ECB on 1 June 2022. |
| --- | --- |

3.2.

| 3.3. | The EESC regrets that the EU labour market remains fragmented. Labour mobility has been the victim of the piecemeal approach adopted so far. Further disjointed policies, particularly at national level, need to be avoided. Whereas it is necessary to safeguard equal treatment between local and mobile workers, the EESC calls on the European Commission to include in the European Semester indicators as part of country-specific recommendations to monitor national policies that in one way or another restrict the mobility of workers across the EU. |
| --- | --- |

3.3.

| 3.4. | Increasing the mobility of EU workers and professionals can only happen if there is better enforcement of existing provisions, access to information and cooperation between Member States. The EESC believes that the role of the European Commission in all this is critical. The EESC notes that individual Member States may be reluctant to adopt more Single Market reforms out of fear this might lead to short-term job losses, particularly in those countries that are already lagging behind, and in low-productivity countries/sectors. In theory, the free movement of labour would help address this issue, but from a national perspective, this could lead to a loss of resources and potential brain/skills drain in the interim. It may be necessary, therefore, for the European Commission to analyse negative developments related to labour mobility, particularly the brain drain in certain sectors and regions. At the same time, measures to counter the brain drain must go hand in hand with those to promote upward social and economic convergence. The EESC acknowledges that there could be a number of variables at play, including the demographic outlook and its effect on the size and composition of the working-age population in both sending and receiving countries. |
| --- | --- |

3.4.

| 3.5. | Whereas educational and validation standards need to be maintained at all times, the EESC calls on Member States to reduce bureaucracy and adhere to the fundamental principle of equal treatment. In this connection, further improvements in the mutual recognition mechanisms and job mobility portals are deemed necessary. The EESC notes important improvements to the EURES job mobility portal, the Europass online platform and the European skills, competences, qualifications and occupations classification system (ESCO) and calls on Member States to further improve their relevant portals with the inclusion of the minimum working conditions required by national legislation. The latter is considered particularly relevant to avoid abuses in working conditions for mobile workers in cross-border regions and for third-country workers. The EESC also calls for further efforts to improve language skills, since lack of language skills poses a major barrier to free movement in the EU. |
| --- | --- |

3.5.

| 3.6. | The EESC calls on Member States to facilitate the mobility of persons with disabilities. Relevant to this is the adoption of a common European definition of disability status, in line with the UN Convention on the Rights of Persons with Disabilities, and the mutual recognition of disability status among Member States. |
| --- | --- |

3.6.

| 3.7. | The EESC considers gender equality to be an important factor in enhancing labour mobility in the EU, as stated in SOC/731. This should be part of a wider commitment to abide by the standards of democracy and equality for all as a means to increasing labour mobility. |
| --- | --- |

3.7.

| 3.8. | The EESC recommends that host Member States provide persons working in the host country with access to training, such as language programmes, at the start of their professional experience and retraining, if required at a later stage, in order to address the shortage of labour in certain sectors and to support digital transitions and measures towards a climate-neutral economy. |
| --- | --- |

3.8.

| 3.9. | The EESC also notes that Erasmus+ could enhance labour mobility across the EU and points to a study carried out in 2011 (4) which analyses how studying abroad affects labour market mobility later in life using the exposure to Erasmus as an independent source of variation in studying abroad. The study found that studying abroad significantly increases the likelihood of working abroad after obtaining an academic qualification. Graduates who have studied abroad are about 15 percentage points more likely to work abroad after graduation. |
| --- | --- |

3.9.

| 3.10. | The EESC welcomes the improved social security coordination in the EU but notes with some concern that difficulties still exist for mobile workers, and especially cross-border and frontier workers, in accessing social protection systems. The EESC therefore calls on the European Commission to continuously monitor social security coordination and ensure common solutions to new arising situations such as teleworking from abroad. The importance of coordinated action at Union level cannot be stressed enough. Member States must ensure the social rights of mobile workers at all times, including during crisis situations. Whilst acknowledging existing differences in pension schemes across the EU, the EESC also calls for increased efforts to better coordinate and enforce pensions rights of mobile workers across the EU, possibly through targeted country-specific recommendations within the European Semester. Moreover, the EESC calls for efforts to be stepped up to create a European social security number as a possibility to overcome obstacles in access to social security in cross-border situations. |
| --- | --- |

3.10.

| 3.10.1. | It has to be noted that the pan-European Personal Pension Product (PEPP) (5) is supposed to be particularly appealing to self-employed individuals and to mobile workers who work in different countries throughout their working life. The ability to switch providers of PEPPs across borders will undoubtedly contribute to labour mobility, although quite how far it will do so is not clear, as no PEPPs are available yet. |
| --- | --- |

3.10.1.

| 3.10.2. | When it was introduced, the EESC welcomed the PEPP concept as a crucial step in encouraging EU citizens to make adequate provision for their retirement years and as an essential building block in the Capital Markets Union (CMU). However, as the supply of PEPPs still has to materialise, the EESC sees the need to make an additional effort in the context of the CMU’s Action Plan (6), under Action 9, with a view to stimulating participation in occupational pension schemes. |
| --- | --- |

3.10.2.

| 3.11. | The EESC notes that the COVID-19-pandemic clearly enhanced opportunities for teleworking (7). More and more workers have an interest in working remotely from abroad for a short period or temporarily. The EESC looks forward to upcoming social partner negotiations on the review and update of the 2002 Autonomous Agreement on Telework, to be put forward for adoption in the form of a legally binding agreement implemented via a directive. |
| --- | --- |

3.11.

| 3.12. | The EESC notes that good working and employment conditions, as well as quality of life aspects such as the availability of good schools, and facilities of a high and sustainable standard, are necessary for businesses to maintain a competitive advantage and to attract skilled workers. The EESC also highlights the relevance of ongoing investment in formal and informal training and life-long learning, in order to support the transition towards the digital and carbon-neutral economy. In a dynamic and rapidly changing environment, adapting quickly and effectively to the changing needs of the labour market, while recognising the impact of labour supply shortages on the existing workforce, is crucial. Relevant to this is the European social partners’ framework agreement on digitalisation, which states that both parties commit to upskill or reskill to meet the digital challenges of enterprises. |
| --- | --- |

3.12.

| 3.13. | The EESC stresses the need for the digitalisation of procedures for labour mobility and the posting of workers in order to improve the exchange of information between national authorities and remove barriers that are not proportionate. This will also help to monitor and enforce rules correctly. The EESC agrees with the proposal contained in the European Parliament resolution of 20 May 2021 — Impacts of EU rules on the free movements of workers and services: intra-EU labour mobility as a tool to match labour market needs and skills (2020/2007(INI)) (8) — which recommends setting up a one-stop helpdesk for workers and future employers on applicable EU rules, based both digitally and physically within the European Labour Authority (ELA). As laid down in Article 5 of the ELA Regulation, the ELA shall improve the availability, quality and accessibility of information on labour mobility, including through a single Union-wide website acting as a single portal for accessing information sources and services at Union and national level in all languages of the EU. Furthermore, the ELA should support Member States in updating their national websites. |
| --- | --- |

3.13.

| 3.14. | Concurrently, the EESC calls on Member States to digitalise public services, in particular the relevant social security services, to facilitate European worker mobility across the EU, while at the same time guaranteeing the portability of rights and compliance with obligations with regard to the mobility of workers and professionals. |
| --- | --- |

3.14.

| 3.15. | At the same time, the EESC calls for an EU-wide network of information points, including online but also physical and telephone services, aimed at helping workers and employers in dealing with enquiries in areas such as banking and insurance services. |
| --- | --- |

3.15.

| 3.16. | The EESC highlights the importance of the ongoing statistical analysis of labour mobility flows to help address skills mismatches in EU labour markets and to assess the impact of developments such as the war in Ukraine and the movements of working-age persons within and between EU Member States. The EESC acknowledges that matching at the European level is far more difficult than at the national or regional level. Nonetheless, the EESC believes that the role of EURES advisors in providing informed support to mobile workers is crucial. |
| --- | --- |

3.16.

| 3.17. | Also relevant is research on the mobility of third-country workers and their working conditions. The EESC is concerned at the occurrence of precarious working conditions for third-country workers in Member States and calls for stronger enforcement of rules. The EESC also notes that labour mobility from EU Member States will not be enough to meet skills shortages. Labour migration from third countries will also need to be facilitated and enhanced. In this respect, the EESC welcomes the recent package on migration policy, but reiterates its viewpoint that effective steps need to be taken to enable unemployed EU citizens to enter the labour market. |
| --- | --- |

3.17.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 443, 22.11.2022, p. 63.

1

(2)  https://epc2010.princeton.edu/papers/100976.

2

(3)  Annual Report on Intra-EU Labour Mobility (2021).

3

(4)  Parey and Waldinger (2011) Studying abroad and the effect on international labour market mobility; evidence from the introduction of Erasmus.

4

(5)  EESC opinion: Pan-European Personal Pension Product (OJ C 81, 2.3.2018, p. 139).

5

(6)  See EESC opinion: A Capital Markets Union for people and businesses — new action plan (OJ C 155, 30.4.2021, p. 20).

6

(7)  OJ C 220, 9.6.2021, p. 13, OJ C 220, 9.6.2021, p. 106.

7

(8)  OJ C 15, 12.1.2022, p. 137.

8

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/56 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/56

---

Opinion of the European Economic and Social Committee on Improving equality in the EU

(own-initiative opinion)

(2023/C 75/09)

| Rapporteur: | Ozlem YILDIRIM |
| --- | --- |
| Co-rapporteur: | Cristian PÎRVULESCU |

Rapporteur:

Ozlem YILDIRIM

Co-rapporteur:

Cristian PÎRVULESCU

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 140/13/31 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

140/13/31

1.   Conclusions and recommendations

| 1.1. | The EESC refers to the preamble of the Charter of Fundamental Rights of the European Union, which states that ‘the Union is founded on the indivisible, universal values of human dignity, freedom, equality and solidarity’. It also stresses the importance of Article 20 of the Charter, which enshrines the principle of equality before the law for all. |
| --- | --- |

1.1.

| 1.2. | Furthermore the EESC points out that the application of the principle of equality not only prohibits discrimination, but also promotes the consistent application of the rule of law. |
| --- | --- |

1.2.

| 1.3. | The EESC strongly urges the Council, the Parliament and the Commission to further develop protection against discrimination in access to goods and services, notably by adopting the proposal for a directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation (1). |
| --- | --- |

1.3.

| 1.4. | The EESC believes that the Charter of Fundamental Rights of the European Union provides a solid basis, and that the instruments for the protection of fundamental rights must be developed in a uniform way throughout the Union. Furthermore, it is essential that all interactions, environments and situations in which discrimination may occur be included. Differences in legal protection produce unacceptable rights hierarchies and leave entire groups of people unprotected. |
| --- | --- |

1.4.

| 1.5. | The current European protection system is essentially based on victims’ individual recourse to judicial redress and to the law. However, numerous studies show that reporting and procedures do not address the structural, intersectional and systemic dimensions of inequalities, and that victims’ recourse to the law is insignificant, statistically exceptional, and used only as a last resort (2). |
| --- | --- |

1.5.

| 1.6. | The EESC stresses that inequalities and complex discrimination created by social structures can only be addressed through consistent and complex policies, real resources and long-term engagement. Awareness-raising, visibility and training are key levers that should be incorporated into all areas of society. |
| --- | --- |

1.6.

| 1.7. | The EESC believes that promoting equality and protecting fundamental rights must be integrated into a broader social vision that multiplies and strengthens the tools through which the Member States and the European Institutions give support to individuals and public and private actors. |
| --- | --- |

1.7.

| 1.8. | The EESC believes that the EU must actively promote recognition of the general principle of equality and positive obligations to enforce this principle. Furthermore, in order to achieve this, the institutions must begin developing the next generation of measures to promote equality in Europe. |
| --- | --- |

1.8.

| 1.9. | While the EESC recognises that technological developments help facilitate access to rights for many citizens, it stresses that they can also create new inequalities, and that they therefore give rise to a new need to intervene in order to ensure the principle of equal treatment is monitored and applied. |
| --- | --- |

1.9.

| 1.10. | To overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make the legal framework an effective deterrent in regulating discrimination, the EESC is in favour of EU legislation to adopt standards that facilitate the implementation of collective action in the Member States that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment. |
| --- | --- |

1.10.

| 1.11. | The EESC believes that the Union must ensure security, equal treatment, and protection by Member State authorities for political, trade union and community actors as a corollary of its values of democracy, the rule of law, and non-discrimination based on political opinions. |
| --- | --- |

1.11.

| 1.12. | The ability of all civic actors to work with existing legal instruments and to work with public institutions (in particular those involved in the protection of human rights) must also be improved. |
| --- | --- |

1.12.

2.   General comments

| 2.1. | The EESC refers to the preamble of the Charter of Fundamental Rights of the European Union, which states that ‘the Union is founded on the indivisible, universal values of human dignity, freedom, equality and solidarity’. It also stresses the importance of Article 20 of the Charter, which enshrines the principle of equality before the law for all. |
| --- | --- |

2.1.

| 2.2. | Furthermore the EESC points out that the application of the principle of equality not only prohibits discrimination, but also promotes the consistent application of the rule of law. |
| --- | --- |

2.2.

| 2.3. | Today, the European Union recognises the multiple forms of inequalities and their intersectional dimensions (including gender, ethnic, social and generational inequalities, among others). |
| --- | --- |

2.3.

| 2.4. | More than 20 years after the adoption of the Treaty of Amsterdam, all European and national indicators reveal the persistence of discrimination based on ethnic origin, race, sex, sexual orientation, opinions and beliefs, disability and age, in areas such as employment, access to goods, education, and also public services and social protection. |
| --- | --- |

2.4.

| 2.5. | This persistent discrimination stems in particular from complex processes which often overlap, and are the result of in-built processes and of systems and rules that produce and reproduce direct or indirect discrimination. This patchwork of sources of inequality produces situations that are therefore systemic in nature and that constitute real obstacles to promoting equality (3). |
| --- | --- |

2.5.

| 2.6. | Through its members and also through activities carried out directly in the Member States, the EESC also notes a worsening general social climate, and an increase in discriminatory behaviour towards vulnerable people. From this point of view, there is a clear need for swift and concerted action at national and European level. |
| --- | --- |

2.6.

| 2.7. | Additionally, following nearly two years of crisis related to COVID-19, several UN agencies, including the International Labour Organization (4), have noted worrying signs of rising social and regional inequalities. The COVID-19 crisis has exacerbated social and economic inequalities and significantly affected European businesses by making it harder for them to maintain and create jobs. |
| --- | --- |

2.7.

| 2.8. | Consequently, social groups facing poverty or in precarious situations are more vulnerable to discrimination, which is then compounded by other factors leading to vulnerability. The EESC stresses the need to target the specific nature of this discrimination and develop a strong policy to combat discrimination against economically and socially disadvantaged groups within the EU. |
| --- | --- |

2.8.

| 2.9. | The EESC stresses that inequalities and complex discrimination created by social structures can only be curbed through strong policies, real resources and long-term engagement. Greater and more significant support for national equality and human rights bodies is needed, especially as regards improving their independence and increasing their staffing and financial resources. Awareness-raising, visibility and training are key levers that should be incorporated into all areas of society and public policy. |
| --- | --- |

2.9.

| 2.10. | The EESC believes that promoting equality and protecting fundamental rights must be integrated into a broader social vision that multiplies and strengthens the tools through which the Member States and the European Institutions give support to individuals and public and private actors. |
| --- | --- |

2.10.

| 2.11. | The EESC reiterates its full support for the new European Pillar of Social Rights action plan, believing that it contains several aspects that are consistent with the promotion of equality, the protection of fundamental rights, and the fight against discrimination (5). More attention to their implementation is essential for achieving the action plan’s objectives. |
| --- | --- |

2.11.

| 2.12. | In line with its previous opinions (6), the EESC recognises the EU’s efforts in the fields of gender equality; protection against discrimination on the grounds of ethnic origin, race or age, religion, and opinion or belief; the protection of LGBTQIA+ rights and the rights of persons with disabilities; as well as its work on Roma integration and upholding migrants’ rights. |
| --- | --- |

2.12.

| 2.13. | As the Committee has already stated, the Charter holds potential that neither human rights institutions, civil society organisations nor the social partners have exploited. Improvements are needed to further develop the EU’s impact on protection and prevention and on promoting, implementing and applying the principle of equality (7). |
| --- | --- |

2.13.

| 2.14. | The current European protection system is essentially based on victims’ individual recourse to judicial redress and to the law. However, all studies show that reporting and procedures do not address the structural, intersectional and systemic dimensions of inequalities, and that victims’ recourse to the law is insignificant, statistically exceptional, and used only as a last resort (8). |
| --- | --- |

2.14.

| 2.15. | Today in terms of employment, the fight against discrimination is limited to situations that correspond to the forms of discrimination referred to in Article 19 of the Treaty on the Functioning of the European Union (sex, race or ethnic origin, religion or belief, disability, age or sexual orientation). |
| --- | --- |

2.15.

| 2.16. | Moreover, the protection conferred by Union law on access to goods and public services only covers race or ethnic origin, and gender equality. No other form of inequality is treated as such, and protection against discrimination varies from one form to another. |
| --- | --- |

2.16.

| 2.17. | Today, there are considerable differences in the protection against discrimination offered by Member States. Some Member States grant protection in access to goods and services against all forms of discrimination laid down in Article 19, while others grant protection beyond these. Consequently, protection against discrimination (and thus equality) varies between Member States. |
| --- | --- |

2.17.

| 2.18. | It is in the light of these findings that subsequent steps need to be taken to overcome the current limits of the implementation of the EU’s equality protection mechanism with an approach based on inclusion. |
| --- | --- |

2.18.

3.   Specific comments

3.1.   Promoting affirmation of a general principle of equality in the Member States

| 3.1.1. | The current situation in Europe highlights the fact that the principle of equality is an aspiration which is still subject to considerable uncertainty. For example, the Commission itself confirms that during the COVID-19 period, equal access to healthcare became a considerable challenge in Europe (9). |
| --- | --- |

3.1.1.

| 3.1.2. | While some European countries incorporate the general principle of equality into their legal frameworks by enshrining a right to equal treatment in civil society, in economic relations, and with the State, others only crack down on discrimination expressly prohibited by law, with no positive obligation to implement the principle of equality (10). |
| --- | --- |

3.1.2.

| 3.1.3. | This difference creates a significant gap between European citizens and residents as regards the scope of the principle of equality and its protection under law, and of the requirements in place for its effective implementation. |
| --- | --- |

3.1.3.

| 3.1.4. | The EESC urges the Commission to recognise the structural difficulties that prevent fully achieving equality, and that also reveal both the limits of what has been achieved and the scale of inequalities in Europe today. National equality and human rights organisations should be actively involved in this continuous evaluation process. |
| --- | --- |

3.1.4.

| 3.1.5. | The EESC considers it absolutely essential that the Union adopt an ambitious policy to promote the principle of equality and equal opportunities, commensurate with the values enshrined in the Treaty on European Union and in the Charter of Fundamental Rights, by engaging with all areas within its competence. In this regard, the EESC supports the European Commission’s new initiative, based on Articles 157 and 19 of the Treaty, on the effectiveness of national equality bodies and developing their potential, their multiple roles and their capacities. |
| --- | --- |

3.1.5.

| 3.1.6. | The EU must give itself the practical means to translate the general principle of equality into a legal principle applicable to all Member States, which would provide protection beyond unequal treatment linked to the seven forms of discrimination protected by Article 19 of the Treaty on the Functioning of the European Union. The use of structural funds would, for example, be an efficient way to effectively implement anti-discrimination measures. |
| --- | --- |

3.1.6.

| 3.1.7. | Recognising a general principal of equal treatment and creating positive obligations, as well as recognising their systemic dimension, would be ways to improve the fight against economic and social inequalities. |
| --- | --- |

3.1.7.

3.2.   Tackling digital inequalities and discrimination

| 3.2.1. | While the EESC recognises that technological developments help facilitate access to rights for many citizens, it believes that they also lead to new inequalities in access to rights and services, and a new need to intervene in order to uphold the principle of equal treatment. |
| --- | --- |

3.2.1.

| 3.2.2. | The digitalisation of government services and of access to goods and services (particularly essential services) has led to a profound change in the relationship with the user, removing physical barriers but also creating new digital barriers. It prevents access to rights and services for certain citizens, especially the most disadvantaged, the vulnerable and those with disabilities, as well as the majority of older people in Europe (11). |
| --- | --- |

3.2.2.

| 3.2.3. | These shortcomings call for developing and implementing new public policies for digital inclusion, as well as for creating positive obligations for both public and private operators with regard to users, including free and easy access. |
| --- | --- |

3.2.3.

| 3.2.4. | In addition to the technical difficulties of digital access, and in connection with the tools derived from algorithms (12) and biometric technologies (13), the EESC notes that we are facing new rights violations and forms of discrimination. |
| --- | --- |

3.2.4.

| 3.2.5. | As highlighted by the work of the Council of Europe (14) and the Fundamental Rights Agency (15), algorithmic decisions lead to decision-making tools with discriminatory biases based on the search for automated results. The most relevant legal instruments to mitigate the risks of AI driven discrimination are non-discrimination law and data protection law. If effectively enforced, both legal instruments could help to fight illegal discrimination. |
| --- | --- |

3.2.5.

| 3.2.6. | The EESC believes that controlling these effects would require commitment to strong public policy that applies to the entire European internal market, as well as to economic operators outside Europe. This would require (in line with the Digital Services Act currently being adopted) the introduction of processes for monitoring automated decision-making, as well as for data verification, evaluation, impact studies and for correction processes in the development and implementation of these technologies. The adoption of the directive on digital services could also help to provide solutions. |
| --- | --- |

3.2.6.

3.3.   Developing the protection of equal treatment and the fight against discrimination in the professional world

| 3.3.1. | The EESC stresses the importance of employment for integration and for making the promise of equality for all a reality. |
| --- | --- |

3.3.1.

| 3.3.2. | Despite the EU’s historic commitment to gender equality in employment, the current situation reminds us that, historically, women are the first to suffer the consequences of crises, be they economic, social, health or others. Gender equality in the workplace remains one of the major challenges faced by European countries. The COVID-19 crisis saw female employment rates drop across all ages in all occupational groups, falling globally to 61,8 % (16). |
| --- | --- |

3.3.2.

| 3.3.3. | These gender-related inequalities simply add to the other forms of inequality. Eurostat’s 2019 survey shows that 68 % of people with disabilities were at risk of poverty or social exclusion, compared to 28,4 % of the general population (17). Of those who considered themselves LGBT, 21 % felt discriminated against at work, as did 25 % of people with Maghreb, African or Roma origins (18). |
| --- | --- |

3.3.3.

| 3.3.4. | The 2020 Eurobarometer on discrimination showed that 59 % of Europeans believe that the primary cause of discrimination is ethnic origin or skin colour, with studies showing that it is particularly significant in the area of employment, where it has a considerable impact on equal opportunities and social integration. Efficient methods should be put in place to determine such discrimination before the courts, such as the Clerc method, recognised by the French supreme courts, which makes it possible to compare the career developments of people hired at the same level (19). |
| --- | --- |

3.3.4.

| 3.3.5. | Today, European policy on combating discrimination in employment is limited to a legal framework that allows reports of situations of discrimination to be brought before the courts, imposing on the potential victim the very heavy burden of fighting discrimination by bringing one or more cases against their employer, service provider or the State. |
| --- | --- |

3.3.5.

| 3.3.6. | The Commission has long acknowledged that discrimination is the product of collective phenomena. Litigation on a case-by-case basis is a heavy weight for victims to bear. Refusal to take legal action in cases of discrimination is well documented and widespread (20). Discrimination in employment makes up a fraction of litigation cases, while legal action in cases of discrimination in access to goods and services is almost non-existent. Non-judicial mechanisms and processes for promoting equality could be strengthened, as could support for pro bono legal work and litigation in the public interest. |
| --- | --- |

3.3.6.

| 3.3.7. | To overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make the legal framework an effective deterrent in regulating discrimination, the EESC is in favour of EU legislation to adopt procedural tools that facilitate access to rights in the Member States, for example by using collective action mechanisms that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment. |
| --- | --- |

3.3.7.

| 3.3.8. | Furthermore, if the European Union intends to combat workplace discrimination efficiently, legal proceedings cannot be the only form of intervention in the face of collective and systemic discrimination. |
| --- | --- |

3.3.8.

| 3.3.9. | The European Union should broaden its range of actions against discrimination beyond simple judicial redress by requiring forecasting tools to be implemented, allowing for proactive intervention, correcting practices and preventing discrimination. |
| --- | --- |

3.3.9.

| 3.3.10. | The EESC believes that comparable policies on discrimination must be implemented, based on all the criteria set out in Article 19 of the Treaty on the Functioning of the European Union. It therefore calls on the European Commission to:






  i. | commit to efficient enforcement of the existing measures or adopting new measures to promote equality in employment and ensure the effective implementation of existing legislation within the framework of its employment and anti-discrimination policy; |
| --- | --- | --- |

3.3.10.

i.

commit to efficient enforcement of the existing measures or adopting new measures to promote equality in employment and ensure the effective implementation of existing legislation within the framework of its employment and anti-discrimination policy;

| ii. | ensure that measures are adopted to broaden the definition of discrimination in the workplace and to strengthen employer assessment, reporting and monitoring obligations; |
| --- | --- |

ii.

ensure that measures are adopted to broaden the definition of discrimination in the workplace and to strengthen employer assessment, reporting and monitoring obligations;

| iii. | support businesses in developing anti-discrimination and inclusion practices. |
| --- | --- |

iii.

support businesses in developing anti-discrimination and inclusion practices.

3.4.   Broadening and unifying the scope of protection against discrimination within the Union

| 3.4.1. | The EESC strongly urges the European Union to further develop protection against discrimination in access to goods and services, notably by adopting the proposal for a directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation. |
| --- | --- |

3.4.1.

| 3.4.2. | The EESC notes that current protection against discrimination in access to goods and services creates a protection hierarchy based on the recognised forms of discrimination, and therefore creates situations of unequal protection for those covered by these criteria for discrimination. |
| --- | --- |

3.4.2.

| 3.4.3. | While the principle of non-discrimination is an important part of safeguarding fundamental rights within the Union, as long as adoption of the draft directive is suspended, the European Union will not be able to fulfil its mission to ensure equal enjoyment of rights in the European public space. |
| --- | --- |

3.4.3.

| 3.4.4. | The EESC calls on the Council, the Parliament and the Commission to ensure that measures are taken to adopt this draft directive in a version that incorporates its overarching proposals on improving access to rights and redress including, in particular, mechanisms to facilitate access to rights through the adoption of collective action procedures to ensure the effectiveness and recognition of the competences of national anti-discrimination bodies. |
| --- | --- |

3.4.4.

| 3.4.5. | The EU should step up its efforts and cooperation on the ground to ensure that the dignity and fundamental rights of LGBTQIA+ people are respected without exception, that they are nowhere subject to prosecution, and that their participation in public life is strengthened. |
| --- | --- |

3.4.5.

| 3.5. | The EESC believes that the EU must actively promote the recognition of a general principle of equal opportunities and positive obligations. The EU institutions should also support national equality and human rights organisations by adopting binding standards so that they are able to exploit their full potential and ensure the effective application of existing legislation. |
| --- | --- |

3.5.

3.6.   Safeguarding protection against political, trade union and civic discrimination

| 3.6.1. | The EESC notes that in recent years, political and trade union or workers’ association activists, as well as civic activists across Europe have faced difficulties in exercising their freedom of expression and action, for example in exercising their right to protest, in order to voice their demands or to negotiate. |
| --- | --- |

3.6.1.

| 3.6.2. | The EESC believes that both the Union and the Member States must in accordance with their legislation and applicable international instruments effectively ensure security, equal treatment, and protection by Member State authorities for political actors, social partners and community actors as a corollary of its values of democracy, the rule of law, and non-discrimination based on political opinions. |
| --- | --- |

3.6.2.

| 3.6.3. | All Member States have ratified ILO C087 Freedom of Association and Protection of the Right to Organise Convention and ILO C098 Right to Organise and Collective Bargaining Convention. Freedom of association and the right to organise must also be respected and promoted. It is important that discussions take place at national and EU level on how to ensure workers can have access to trade union representation, and exercise rights to collectively organise and take collective action (21). In line with the International Labour Organization’s internationally recognised standards, the EESC strongly encourages Member States and the Commission to ensure in accordance with their legislation, industrial relations systems and applicable international instruments, that they effectively protect freedom of association and right to organise and collective bargaining. |
| --- | --- |

3.6.3.

3.7.   Effective national institutions to promote equality, protect fundamental rights and combat discrimination

| 3.7.1. | Too often, the application of European and national regulations in this area comes with significant limitations linked to the legal, institutional, organisational and financial aspects that characterise each Member State. |
| --- | --- |

3.7.1.

| 3.7.2. | The Committee believes that concrete plans should be established, including financial support, to improve the capacity of the relevant national institutions. |
| --- | --- |

3.7.2.

| 3.7.3. | The Committee encourages the Commission to develop assistance programmes for national institutions with human rights responsibilities in order to improve, strengthen and streamline their capacities (through the creation and accreditation of and compliance with international standards) by including awareness raising and knowledge, and by catering to the specific needs of all groups. |
| --- | --- |

3.7.3.

| 3.7.4. | The ability of all civic and social actors to work with existing legal instruments and to work with public institutions (in particular those involved in the protection of human rights) must also be improved. Better support is needed for social actors and civil society organisations to ensure access to the law for victims of discrimination. This support could take the form of training, awareness-raising, knowledge and best practice sharing, financial and organisational support, and protection against attacks and smear campaigns. |
| --- | --- |

3.7.4.

| 3.7.5. | As previously suggested, the Committee reiterates the need to create an effective and accessible mechanism for identifying and reporting physical and verbal attacks, intimidation and harassment (including through abusive legal proceedings), and hate speech against civil society organisations, including those that protect human rights (22). When these attacks are launched in the digital sphere, they must be quickly identified, and the corresponding publications removed. |
| --- | --- |

3.7.5.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  COM(2008) 426.

1

(2)  Agency for Fundamental Rights, Equality in the EU 20 years on from the initial implementation of the equality directives, April 2021.

2

Equality in the EU 20 years on from the initial implementation of the equality directives

(3)  Mulder, J., Indirect sex discrimination in employment, European network of legal experts in gender equality and non-discrimination, European Commission, 2020.

3

(4)  See in particular the 8th ILO report on the employment impact of the ongoing crisis, October 2021: International Labour Organization, COVID-19: ILO Monitor — 8th edition, 27 October 2021.

4

COVID-19: ILO Monitor — 8th edition

(5)  The European Pillar of Social Rights action plan, COM(2021) 38 (OJ C 374, 16.9.2021, p. 38).

5

(6)  See opinions on: The situation of women with disabilities (SOC/579) (OJ C 367, 10.10.2018, p. 20); The situation of Roma women (SOC/585) (OJ C 110, 22.3.2019, p. 20); Shaping the EU agenda for disability rights 2020-2030 (SOC/616) (OJ C 97, 24.3.2020, p. 41); Diversity management in the EU Member States (SOC/642) (OJ C 10, 11.1.2021, p. 7); the LGBTIQ Equality Strategy 2020-2025 (SOC/667) (OJ C 286, 16.7.2021, p. 128), the Action plan on integration and inclusion 2021-2027 (SOC/668) (OJ C 286, 16.7.2021, p. 134); the Strategy for the rights of persons with disabilities (SOC/680) (OJ C 374, 16.9.2021, p. 50); and The new EU Roma strategic framework for equality, inclusion and participation post-2020.

6

The situation of women with disabilities

The situation of Roma women

Shaping the EU agenda for disability rights 2020-2030

Diversity management in the EU Member States

LGBTIQ Equality Strategy 2020-2025

Action plan on integration and inclusion 2021-2027

Strategy for the rights of persons with disabilities

The new EU Roma strategic framework for equality, inclusion and participation post-2020

(7)  Opinion on the new strategy for the Implementation of the Charter of Fundamental Rights of the European Union (SOC/671) (OJ C 341, 24.8.2021, p. 50).

7

Implementation of the Charter of Fundamental Rights of the European Union

(8)  European Union Agency for Fundamental Rights, Equality in the EU 20 years on from the initial implementation of the equality directives, op. cit.

8

Equality in the EU 20 years on from the initial implementation of the equality directives

(9)  European Commission, Solidarity in Health: Reducing health inequalities in the EU (COM(2009) 567 final).

9

Solidarity in Health: Reducing health inequalities in the EU

(10)  Crowley, N., Making Europe More Equal: A legal duty?, Equinet, 2016.

10

Making Europe More Equal: A legal duty?

(11)  Défenseur des droits (Defender of Rights): Dématérialisation et inégalités d’accès aux services publics (Dematerialisation and inequalities in access to public services), 2019; and Dématérialisation des services publics: trois ans après, où en est-on? (Dematerialisation of public services: three years on, where are we now?), 2022.

11

Dématérialisation et inégalités d’accès aux services publics

Dématérialisation des services publics: trois ans après, où en est-on?

(12)  Gerards, J., Xenidis, R., Algorithmic discrimination in Europe, European network of legal experts in gender equality and non-discrimination, European Commission, 2020.

12

Algorithmic discrimination in Europe

(13)  Défenseur des droits (Defender of Rights), Technologies biométriques: l’impératif respect des droits fondamentaux (Biometric Technologies: the imperative respect for fundamental rights), 2021.

13

Technologies biométriques: l’impératif respect des droits fondamentaux

(14)  Council of Europe, Zuiderveen Borgesius, F., Discrimination, Artificial Intelligence and algorithmic decision-making, 2018.

14

Discrimination, Artificial Intelligence and algorithmic decision-making

(15)  European Union Agency for Fundamental Rights, Getting the Future Right: Artificial intelligence and fundamental rights, 2021.

15

Getting the Future Right: Artificial intelligence and fundamental rights

(16)  European Institute for Gender Equality (EIGE), Gender equality and the socio-economic impact of the COVID-19 pandemic.

16

Gender equality and the socio-economic impact of the COVID-19 pandemic

(17)  Eurostat, Income inequalities, 2019.

17

(18)  European Union Agency for Fundamental Rights, Equality in the EU 20 years on from the initial implementation of the equality directives, op. cit.

18

Equality in the EU 20 years on from the initial implementation of the equality directives

(19)  Chappe. V.A., ‘La preuve par comparaison: méthode des panels et droit de la non-discrimination’ [Proof by comparison: Panel methods and the right to non-discrimination], Sociologies pratiques, 2011/2 No 23, p. 45 to 55; Framework Decision of the Défenseur des droits (Defender of Rights) No 2022, 139 of 31 August 2022; Court of Cassation: Social Chamber 10/7/1998 No 90-41231; Social Chamber 4/7/2000, No 98-43285; Social Chamber 28/6/2006 No 04-46419.

19

Sociologies pratiques

(20)  European Union Agency for Fundamental Rights, Equality in the EU 20 years on from the initial implementation of the equality directives, op. cit.

20

Equality in the EU 20 years on from the initial implementation of the equality directives

(21)  See also the Opinion on Decent minimum wages across Europe (SOC/632), point 4.5.3 and point 4.5.6, OJ C 429, 11.12.2020, p. 159.

21

Decent minimum wages across Europe

(22)  Opinion on the new strategy to strengthen the application of the Charter of Fundamental Rights in the EU (SOC/671) (OJ C 341, 24.8.2021, p. 50).

22

strategy to strengthen the application of the Charter of Fundamental Rights in the EU

---

ANNEX

The following amendments, which received at least a quarter of the votes cast, were rejected during the discussions (Rule 59(3) of the Rules of Procedure):

AMENDMENT 1

SOC/724 — Improving equality in the EU

Point 3.3.7

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| To overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make the legal framework an effective deterrent in regulating discrimination, the EESC
  is in favour of EU
  legislation to adopt procedural tools that facilitate access to rights in the Member
  States
  , for example by using collective action mechanisms that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment. | To overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make the legal framework an effective deterrent in regulating discrimination, the EESC
  encourages Member States to consider and, where needed, take appropriate actions to ensure and support access to justice. This could include
  legislation to adopt procedural tools that facilitate access to rights in the Member
  State concerned
  , for example by using collective action mechanisms that
  can
  improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment. |

Section opinion

Amendment

To overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make the legal framework an effective deterrent in regulating discrimination, the EESC
  is in favour of EU
  legislation to adopt procedural tools that facilitate access to rights in the Member
  States
  , for example by using collective action mechanisms that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment.

To overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make the legal framework an effective deterrent in regulating discrimination, the EESC
  encourages Member States to consider and, where needed, take appropriate actions to ensure and support access to justice. This could include
  legislation to adopt procedural tools that facilitate access to rights in the Member
  State concerned
  , for example by using collective action mechanisms that
  can
  improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment.

Reason

In the study group and in the SOC section there was no agreement across all three groups on this matter. Procedural law traditionally belongs to the competence of the Member States. Thus it should be for Member States to decide whether they wish to introduce at national level collective actions/collective redress as a tool to enforce the equality principle. This would also allow for any national systems to be adapted to the national realities. Furthermore, one should not forget that collective redress could also be misused.

Outcome of the vote

| In favour: | 59 |
| --- | --- |
| Against: | 104 |
| Abstention: | 13 |

In favour:

59

Against:

104

Abstention:

13

AMENDMENT 2

SOC/724 — Improving equality in the EU

Point 3.3.10

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| The EESC believes that comparable policies on discrimination must be implemented, based on all the criteria set out in Article 19 of the Treaty on the Functioning of the European Union. It therefore calls on the European Commission to:






  — | commit to efficient enforcement of the existing measures or adopting new measures to promote equality in employment and ensure the effective implementation of existing legislation within the framework of its employment and anti-discrimination policy; |

Section opinion

Amendment

The EESC believes that comparable policies on discrimination must be implemented, based on all the criteria set out in Article 19 of the Treaty on the Functioning of the European Union. It therefore calls on the European Commission to:

—

commit to efficient enforcement of the existing measures or adopting new measures to promote equality in employment and ensure the effective implementation of existing legislation within the framework of its employment and anti-discrimination policy;

| — | ensure that measures are adopted
  to broaden
  the definition of discrimination in the workplace and to
  strengthen employer
  assessment, reporting and monitoring obligations; |
| --- | --- |

—

ensure that measures are adopted
  to broaden
  the definition of discrimination in the workplace and to
  strengthen employer
  assessment, reporting and monitoring obligations;

| — | support businesses in developing anti-discrimination and inclusion practices. |
| --- | --- |

—

support businesses in developing anti-discrimination and inclusion practices.

The EESC believes that comparable policies on discrimination must be implemented, based on all the criteria set out in Article 19 of the Treaty on the Functioning of the European Union. It therefore calls on the European Commission to:

| — | commit to efficient enforcement of the existing measures or adopting new measures to promote equality in employment and ensure the effective implementation of existing legislation within the framework of its employment and anti-discrimination policy; |
| --- | --- |

—

commit to efficient enforcement of the existing measures or adopting new measures to promote equality in employment and ensure the effective implementation of existing legislation within the framework of its employment and anti-discrimination policy;

| — | ensure that measures are adopted
  that help making efficient use of
  the definition of discrimination
  as laid down in EU law
  in the workplace and to
  provide guidance to employers in their
  assessment, reporting and monitoring obligations; |
| --- | --- |

—

ensure that measures are adopted
  that help making efficient use of
  the definition of discrimination
  as laid down in EU law
  in the workplace and to
  provide guidance to employers in their
  assessment, reporting and monitoring obligations;

| — | support businesses in developing anti-discrimination and inclusion practices. |
| --- | --- |

—

support businesses in developing anti-discrimination and inclusion practices.

Reason

This point is about implementing policies based on criterial set out in Article 19 of the TFEU. Points 3.4.1 (and 1.3) of this opinion already state that ‘The EESC strongly urges the European Union to further develop protection against discrimination in access to goods and services, notably by adopting the proposal for a directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation.’ The amendment aims at modifying the text to indicate what kind of measures are needed to make the implementation and application of EU anti-discrimination rules efficient.

Outcome of the vote

| In favour: | 67 |
| --- | --- |
| Against: | 109 |
| Abstention: | 11 |

In favour:

67

Against:

109

Abstention:

11

AMENDMENT 3

SOC/724 — Improving equality in the EU

Point 3.4.4

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| The EESC calls on the Council, the Parliament and the Commission to ensure that measures are taken to adopt this draft directive in a version that incorporates its overarching proposals on improving access to rights and redress
  including, in particular,
  mechanisms to facilitate access to rights through the adoption of collective action procedures to ensure the effectiveness and recognition of the competences of national anti-discrimination bodies. | The EESC calls on the Council, the Parliament and the Commission to ensure that measures are taken to adopt this draft directive in a version that incorporates its overarching proposals on improving access to rights and redress
  while leaving it to the Member States to decide on possible
  mechanisms to facilitate access to rights through the adoption of collective action procedures to ensure the effectiveness and recognition of the competences of national anti-discrimination bodies. |

Section opinion

Amendment

The EESC calls on the Council, the Parliament and the Commission to ensure that measures are taken to adopt this draft directive in a version that incorporates its overarching proposals on improving access to rights and redress
  including, in particular,
  mechanisms to facilitate access to rights through the adoption of collective action procedures to ensure the effectiveness and recognition of the competences of national anti-discrimination bodies.

The EESC calls on the Council, the Parliament and the Commission to ensure that measures are taken to adopt this draft directive in a version that incorporates its overarching proposals on improving access to rights and redress
  while leaving it to the Member States to decide on possible
  mechanisms to facilitate access to rights through the adoption of collective action procedures to ensure the effectiveness and recognition of the competences of national anti-discrimination bodies.

Reason

In the study group and in the SOC section there was no agreement across all three groups on this matter. Procedural law traditionally belongs to the competence of the Member States. Thus it should be for Member States to decide whether they wish to introduce at national level collective actions/collective redress as a tool to enforce the equality principle. This would also allow for any national systems to be adapted to the national realities. Furthermore, one should not forget that collective redress could also be misused.

Outcome of the vote

| In favour: | 60 |
| --- | --- |
| Against: | 114 |
| Abstention: | 11 |

In favour:

60

Against:

114

Abstention:

11

AMENDMENT 4

SOC/724 — Improving equality in the EU

Point 1.10

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| To
  overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make
  the
  legal framework an effective deterrent in regulating discrimination
  , the EESC is in favour of EU
  legislation to adopt standards that facilitate the implementation of collective action in the Member
  States
  that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment. | The EESC encourages Member States to consider and, where needed, take appropriate actions to
  overcome
  or alleviate
  the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make
  their
  legal framework an effective deterrent in regulating discrimination
  . This could include
  legislation to adopt standards that facilitate the implementation of collective action in the Member
  State concerned
  that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment
  . To facilitate exchanges of best practices, the European Commission is invited to provide information on the different national legislative frameworks in this regard
  . |

Section opinion

Amendment

To
  overcome the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make
  the
  legal framework an effective deterrent in regulating discrimination
  , the EESC is in favour of EU
  legislation to adopt standards that facilitate the implementation of collective action in the Member
  States
  that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment.

The EESC encourages Member States to consider and, where needed, take appropriate actions to
  overcome
  or alleviate
  the burden of litigation on individuals, to give legal action a weight commensurate with the practices it denounces, and to make
  their
  legal framework an effective deterrent in regulating discrimination
  . This could include
  legislation to adopt standards that facilitate the implementation of collective action in the Member
  State concerned
  that improve both access to judicial redress and its impact on combating discrimination and upholding equal treatment
  . To facilitate exchanges of best practices, the European Commission is invited to provide information on the different national legislative frameworks in this regard
  .

Reason

In the study group and in the SOC section there was no agreement across all three groups on this matter. Procedural law traditionally belongs to the competence of the Member States. Thus it should be for Member States to decide whether they wish to introduce at national level collective actions/collective redress as a tool to enforce the equality principle. This would also allow for any national systems to be adapted to the national realities. Furthermore, one should not forget that collective redress could also be misused.

Outcome of the vote

| In favour: | 65 |
| --- | --- |
| Against: | 113 |
| Abstention: | 8 |

In favour:

65

Against:

113

Abstention:

8

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/67 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/67

---

Opinion of the European Economic and Social Committee on Ensuring strong European solidarity for rare disease patients

(own initiative opinion)

(2023/C 75/10)

| Rapporteur: | Alain COHEUR |
| --- | --- |

Rapporteur:

Alain COHEUR

| Plenary Assembly decision | 24.2.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 171/1/1 |

Plenary Assembly decision

24.2.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

171/1/1

1.   Conclusions and recommendations

| 1.1. | In 2009, the European Economic and Social Committee (EESC) adopted opinion SOC/330 on the Proposal for a Council Recommendation on a European action in the field of rare diseases (1), expressing its support, concerns and suggestions with a view to raising awareness of all the needs of people living with rare diseases. The EESC deeply regrets that, more than 10 years after the adoption of its opinion, it has to reiterate its call for a comprehensive European approach that takes into account all the needs of people with rare diseases, and calls for European solutions to mitigate the impact of rare diseases on daily, family and professional life. |
| --- | --- |

1.1.

| 1.2. | The EESC strongly reaffirms its support for and solidarity with rare disease patients, their families and the rare disease community at large. The European Union (EU) could be the champion of the right to healthcare for all throughout the European Union and demonstrate that rare doesn’t mean alone. Supporting fundamental research and a European Health Data Space (EHDS) based on the FAIR principle (findability, accessibility, interoperability and reusability) is necessary for faster diagnosis and treatment of rare diseases. The EESC advises recognising and fully promoting Orphanet’s expertise in order to enhance the European health data ecosystem to benefit rare disease patients. Making Orphanet’s — website available in all EU languages would provide great added value for rare disease patients and health care professionals. |
| --- | --- |

1.2.

| 1.3. | The EESC reaffirms the findings on the prevalence of rare diseases in the EU, the similarities in the rare disease patients’ pathways and social protection challenges despite the heterogeneity or multitude of diseases and the dispersion of patients and expertise. |
| --- | --- |

1.3.

| 1.4. | The EESC welcomes the principle of the right to access healthcare proposed by the European Pillar of Social Rights, the United Nations resolution and the attention given by the Conference on the Future of the European Union (COFEU) and the 2022 French Presidency of the Council of the EU to rare diseases, with a view to ensuring that the situation for rare disease patients is not aggravated by health inequality. The Committee highlights the importance of an ambitious European care strategy for informal caretakers of rare disease patients. |
| --- | --- |

1.4.

| 1.5. | The EESC recommends seizing the political momentum and building on the recommendations by institutions and civil society, with the aim of establishing a comprehensive European action plan on rare diseases with SMART goals attainable by 2030, to ensure that all rare disease patients in the EU enjoy equal opportunities to diagnosis, treatment and a holistic perspective on integrated care. The aim must be for patients to receive a diagnosis of their rare disease within a year. |
| --- | --- |

1.5.

| 1.6. | The EESC suggests extending the Health Emergency Preparedness and Response Authority (HERA) mandate or using it as a model to create a new European authority for non-communicable diseases that would foster coordination on and solidarity for rare diseases in order to coordinate the implementation of a European action plan on rare diseases and to ensure a European approach to non-communicable rare diseases. Working in synergy with Orphanet, which would benefit from structural EU support so that it can publish its work in all the official languages of the EU, would guarantee that both patients and professionals have access to the information they need. |
| --- | --- |

1.6.

| 1.7. | The EESC gives Member States’ civil society a voice in order to enhance political dialogue with the public and supports the European institutions through structural and permanent cooperation in order to develop policy that is fully supported. The EESC recommends that the next trio-presidency 2023–2024 Spain, Belgium, Hungary keep the rare disease policy on the agenda, bearing in mind the 2022 evaluation of the European Reference Networks (ERNs) and the Commission’s pledge to revise its rare disease strategy by early 2023, by incorporating rare diseases into public health policy for future Commission terms of office. Stakeholder and social partner involvement is crucial in developing an ambitious strategy. |
| --- | --- |

1.7.

| 1.8. | The EESC requests initiatives such as a resolution to empower rare disease patients and stimulate their participation in rare disease policy and recommendations in line with Article 4 of the UN Convention on the Rights of Persons with Disabilities (UNCRPD). Patient associations, a source of experience, can play a vital role as representatives by speaking out on behalf of patients; their media appearances and participation in policy recommendations are to be guaranteed and supported (2). |
| --- | --- |

1.8.

| 1.9. | The EESC calls for recognition of the importance of accessing a rare disease diagnosis during perinatal or neonatal screening or as soon as possible after the onset of health or developmental problems, the benefits of multidisciplinary healthcare and a holistic perspective in relation to patients’ needs and pathways, which might benefit from integrated medical and social care and centralised care coordination, and above all, optimisation of the financial accessibility of care. |
| --- | --- |

1.9.

| 1.10. | The EESC states that quality health services can never be the privilege of those who can, for any reason, secure better access to the relevant national health service, afford the highest insurance premiums, out-of-pocket payments or organise the most profitable collection campaigns. The importance of solidarity-based health insurance systems that protect rare disease patients cannot be underestimated. The EESC would welcome a debate on the benefits and challenges for European solidarity-based mutual health insurance funds to cover innovative treatment for rare disease patients. |
| --- | --- |

1.10.

| 1.11. | The EESC recognises how important it is for European rare disease patients to be able to access cross-border treatment for diagnosis and care. The ability to both travel for treatment and avoid excessive travel via telemedicine can improve access to care for rare disease patients, especially those with very rare diseases. The EESC requests that the functioning of the ERNs be optimised and calls for their integration into the entire EU and healthcare systems of the Member States. The EESC suggests that the option of drawing up a convention for care in ERNs be explored. |
| --- | --- |

1.11.

| 1.12. | In view of the unequal economic situations of the Member States, the EESC recommends and expects a reflection on the possibility of creating a Special EU Financial Fund which Member States contribute to and benefit from according to their financial capacity in order to ensure access to treatment for all European rare disease patients, especially those with unmet medical needs, ensure genuine solidarity in the EU. The EESC supports models of joint purchasing and contributions, such as the European fair price calculator for medicines, to increase the accessibility of pharmaceutical treatment for Member States and rare disease patients and requests that this be taken into account in the Revision of the EU’s legislation on orphan and paediatric medicines (medicines for people with rare diseases and for children). |
| --- | --- |

1.12.

| 1.13. | The EESC advises researching a solidarity fund for rare diseases, specifically those not included in the ERNs. Such a fund can be a useful addition when the compulsory health insurance does not cover costs for complex or rare disease treatment or cross-border care and the EESC believes that a mutualisation at the European level is a necessity. A European solidarity fund for rare disease patients should:






  — | aim to prevent rare disease patients from incurring unbearable costs for medically necessary and justifiable healthcare that is available in the EU and from suffering further health inequality due to the rarity of their disease; |
| --- | --- | --- |

1.13.

—

aim to prevent rare disease patients from incurring unbearable costs for medically necessary and justifiable healthcare that is available in the EU and from suffering further health inequality due to the rarity of their disease;

| — | express European solidarity in order to improve access to healthcare available across the EU for all patients with a rare disease, to better enforce patients’ rights to cross-border healthcare, and to optimise and facilitate the use of ERNs; |
| --- | --- |

—

express European solidarity in order to improve access to healthcare available across the EU for all patients with a rare disease, to better enforce patients’ rights to cross-border healthcare, and to optimise and facilitate the use of ERNs;

| — | complement national social security and health insurance provisions by developing a fund to cover associated and unavoidable costs related to cross-border care within the EU, and facilitate European cooperation in tackling public health challenges that would benefit from a structural and supportive cross-border approach. |
| --- | --- |

—

complement national social security and health insurance provisions by developing a fund to cover associated and unavoidable costs related to cross-border care within the EU, and facilitate European cooperation in tackling public health challenges that would benefit from a structural and supportive cross-border approach.

2.   General observations on rare diseases

| 2.1. | Rare diseases are rare, but rare disease patients are numerous — a disease is classified as rare based on prevalence. In the EU a rare disease is defined as a condition which is often chronic, sometimes disabling or life-threatening, and which does not affect more than 1 in 2 000 persons (3). In 2019, Orphanet — the portal for rare diseases and orphan drugs — counted 6 172 unique rare diseases (4). 71,9 % of these rare diseases have a genetic origin and 69,9 % manifest in early childhood. 3,5 % - 5,9 % of the population is estimated to have a rare disease resulting in approximately 36 million patients in the EU. |
| --- | --- |

2.1.

| 2.2. | The complexity and chronic nature of many rare diseases often reach beyond the life of the patient alone and impact many others such as the family, but also health and social care systems. Families can become at risk of isolation and aggravated vulnerability and, given the gender dimension of informal care (5), a rare disease can significantly affect the lives of mothers and women in particular. Access to social protection for informal carers should therefore be a particular focus. |
| --- | --- |

2.2.

| 2.3. | Although more than 6 172 diseases have already been identified and can lead to a patient being diagnosed, definitions, characterisations or diagnostic tests may still be lacking for some conditions and these are so-called syndromes without a name (SWAN). The health gap is even more pronounced for patients without a diagnosis. Their unmet needs are even higher and the inequality even greater since a diagnosis is necessary to obtain appropriate medical care or additional social and health insurance benefits. |
| --- | --- |

2.3.

| 2.4. | Persisting inequalities in access to healthcare require proactive and targeted community-based models so that the most vulnerable groups for instance people with physical, psychosocial and sensory disabilities can receive diagnoses and care. Previous EESC opinions have addressed healthcare for migrants and for EU citizens with a migrant background; this expertise and these recommendations need to be built on as part of a common approach to rare diseases (6). |
| --- | --- |

2.4.

| 2.5. | Diagnosing a rare disease — if not identified by perinatal screening — takes an average of around 4,5 years after health or developmental challenges arise. Research has found that periods of diagnostic uncertainty — often including misdiagnosis and/or incorrect treatment that causes deleterious consequences — fluctuate between up to 5 and 7 years (7). The path to a conclusive and correct diagnosis often amounts to an odyssey that involves being seen by several healthcare professionals: research has demonstrated how 22 % of diagnosed rare disease patients consulted more than five healthcare professionals and 7 % even more than ten (8). |
| --- | --- |

2.5.

| 2.6. | Raising awareness among healthcare professionals so that they can better detect potential rare diseases and empowering them to refer patients and speed up the diagnostic process require information sharing, adequate and continuous high-quality training of the workforce and timely workforce planning with the involvement of social partners. |
| --- | --- |

2.6.

| 2.7. | Prioritisation and structured investment in fundamental medical research on causes of rare diseases, including genetic causes, must lead to more efficient treatment and possibly even access to cures for rare disease patients. European financing instruments such as the 2021-2027 EU4Health programme — a vision for a healthier EU — and regulations such as the proposal on the EHDS should support such research. |
| --- | --- |

2.7.

| 2.8. | The knowledge and expertise required to diagnose and manage the specialised therapeutic care needs required for some rare diseases can be unavailable in some Member States and geographically dispersed throughout the EU. Treatments need to be more available, accessible and affordable, with patients reporting unavailability where they live (22 %), waiting lists hampering access to treatment (14 %), financially unaffordable treatment (12 %) and financial support being unavailable to facilitate travel to receive treatment in another country (12 %) (9). |
| --- | --- |

2.8.

| 2.9. | Quality of care requires health services to be timely, equitable, integrated and efficient (10). Perinatal and neonatal screening are vital processes in early diagnosis. The Recommendation on Cross Border Genetic Testing Of Rare Diseases in the European Union by the Commission Expert Group on Rare Diseases and Eurordis’ work on screening throughout the EU lay the groundwork for a Europe-wide recommendation. |
| --- | --- |

2.9.

| 2.10. | The path to diagnosis, receiving a diagnosis and life with a rare a disease can be mentally challenging for the patient and/or their family. Psychological and social vulnerability can be caused by the invisibility of a disease, its physical burden and a lack of knowledge or understanding of the conditions from others. Daily life can be aggravated by poor care coordination but also by challenges of a practical, administrative, educational, professional or financial nature (11). A holistic approach to care covers the 360o spectrum of health (prevention and continuous, curative, rehabilitative and palliative healthcare), social and everyday needs and requires high-quality integrated multidisciplinary medical and social care. |
| --- | --- |

2.10.

| 2.11. | Rare Disease Day raises awareness and recognition among society at large and increases understanding and social inclusion of patients and families. Informing rare disease patients and ensuring the wellbeing of patients and their family requires an ecosystem of healthcare professionals, mutual health insurance funds, (digital) contact groups and patient associations. |
| --- | --- |

2.11.

3.   General observations on the European rare disease policy

| 3.1. | The EU identified rare diseases as a priority in the field of public health more than 20 years ago and took action that resulted in: increased research and development, the Member States’ adopting national action plans on rare diseases, coordination of cross-border cooperation in the ERNs and patients’ rights to access cross-border care (12). The Commission accepted recommendation 3 ‘Improve support to facilitate rare disease patients’ access to healthcare’ and announced that it would revise its rare disease strategy where appropriate by early 2023 (13). The European Parliament adopted its resolution on the EU public health strategy in the post COVID-19 era, which calls for an EU action plan for rare diseases (14). The EU also enshrined ‘timely access to affordable, preventive and curative health care of good quality’ in the European Pillar of Social Rights (15). |
| --- | --- |

3.1.

| 3.2. | The announced Communication on a European care strategy is expected to include support for implementation of the European Pillar of Social Rights and proper recognition of informal carers. Families of rare disease patients would benefit from a strategy that better recognises carers and their rights across the EU, that offers more flexibility in the exercise of carers’ rights in cross-border situations and that includes mental health (that of formal and informal carers) as a main concern (16). |
| --- | --- |

3.2.

| 3.3. | EU Member States co-sponsored the 2021 United Nations Resolution Addressing the challenges of persons living with a rare disease and their families (17), which includes a call to ‘strengthen health systems...to empower persons living with a rare disease in addressing their physical and mental health needs to realize their human rights, including their right to the highest attainable standard of physical and mental health, to enhance health equity and equality, end discrimination and stigma, eliminate gaps in coverage and create a more inclusive society’. |
| --- | --- |

3.3.

| 3.4. | The Employment, Social Policy, Health and Consumer Affairs Council (Health) addressed Europe’s response to rare diseases and discussed whether it would be useful to strengthen cooperation and coordination on rare diseases between Member States and at EU level. The presidency of the Council considered that boosting EU action in this field would bring the tangible benefits of the public health union to European citizens. The European Health Data Space is one tool that should contribute to more effective EU action, by playing a role in combating rare diseases and ensuring access to high-quality health data within a safe framework. It must make new, safer, personalised treatment accessible sooner (18). |
| --- | --- |

3.4.

| 3.5. | The report on the outcome of the Conference on the Future of the EU includes a proposal on equal access to healthcare for all, with the objective of establishing a ‘right to health’ — guaranteeing all Europeans equal and universal access to affordable, preventive, curative and quality health care. The Conference plenary specifically recognized and referenced the rare disease community, supporting: faster and stronger decision-making on key subjects and to improve the effectiveness of European governance as it moves towards the development of the European Health Union; the need to make sure anyone can access existing treatments, wherever first available in the EU; to that end, facilitating cross-border cooperation, especially in the case of rare diseases; reinforcing the healthcare system to reinforce the resilience and quality of our healthcare systems, in particular, through the further development, coordination and funding of the European Reference Networks as they constitute the basis of the development of networks of medical care for highly specialised and complex treatments (19). |
| --- | --- |

3.5.

| 3.6. | The 2021 ‘Europe’s Beating Cancer plan: A new EU approach to prevention, treatment and care’, the list of actions to be achieved by 2030 and the involvement of stakeholders are an approach to European health policy aimed at tackling health inequalities within the EU (20). The plan also builds on the European Reference Networks, which are pioneers in exchanging expertise on diagnosing and treating rare diseases. |
| --- | --- |

3.6.

4.   Specific observations on rare diseases and rare disease policy

| 4.1. | Evaluating the follow-up to the EESC opinion on the Proposal for a Council Recommendation on a European action in the field of rare diseases (21), the EESC sees that, while the recommendations are currently still being addressed with varying degrees of success for instance, through the development of ERNs from 2017 onwards, the introduction of a communication and reporting system, handbooks or guidelines to facilitate dialogue between different professional cultures within the EU and the EHDS to include a requirement for patients to be able to access their data the EU rare disease policy requires urgent action, with a lot of catching-up to be done. |
| --- | --- |

4.1.

| 4.2. | ERNs are a flagship of concrete European cooperation between healthcare systems facilitating clinical trials and expertise in diagnosis and treatment for European patients with rare diseases. The potential of these ERNs has currently not yet been fully examined and is not yet in operation. An evaluation is scheduled to commence in 2022 (22). The 24 ERNs, founded in 2017, reached 1 466 ERN-members in all European Member States, including more than 900 healthcare units located in over 313 hospitals. 1,7 million patients are being treated by ERN-members, however, only 2 100 complex and very rare disease patients cases have been dealt with through the Clinical Patient Management System (CPMS). |
| --- | --- |

4.2.

| 4.3. | Factors to be addressed in order to optimize the potential of ERNs are: the lack of reimbursement for healthcare providers participating in the ERNs, no specific reimbursement for virtual consultations via CPMS, problems of administrative or technical interoperability. Another working point is the integration of ERNs into national healthcare systems via the affiliated reference centres for rare diseases, guaranteeing the promotion of their existence and accessibility. |
| --- | --- |

4.3.

| 4.4. | Centralising care for rare disease patients while maintaining a sufficient number of centres of expertise would benefit the quality of care. Criteria that define a centre of expertise need to be established. Centres of expertise require specific and adequate funding. Given that civil society and the social partners generate the resources used to fund public health expenditure, they should be given a strategic role in distributing such resources. Local, regional and national care networks need to be made aware of the existence of centres of expertise and encouraged to participate in ERNs to facilitate access to care and improve the quality of care. |
| --- | --- |

4.4.

| 4.5. | Cross-border multi-stakeholder partnerships and consortia supported with EU funding, bringing together civil society and experts on rare diseases and health or social policy, academia, medical partners, knowledge centres, patient associations, not for profit mutual health insurance funds and expert patients have been shown to be enriching ecosystems for European research and cooperation. They have contributed to formulating patient-centred policy recommendations, pilot projects and studies to improve the access of European rare disease patients to high quality holistic and integrated health and social care (23). The time has come to consolidate these recommendations and best practices into coherent policy that integrates national, cross-border and European initiatives, leaving no rare disease patient behind. |
| --- | --- |

4.5.

| 4.6. | The participatory Rare 2030 Study on Foresight in Rare Disease Policy formulated eight crucial recommendations on treatment, care, research, data and European and national infrastructure, with a roadmap and SMART goals setting the tone for the next decade of rare disease policy: 1) long-term, integrated European and national plans and strategies; 2) earlier, faster, more accurate diagnosis; 3) access to high quality healthcare; 4) integrated and person-centred care; 5) partnerships with patients; 6) innovative and needs-led research and development; 7) optimising data for patient and societal benefit; 8) available, accessible and affordable treatments (24). |
| --- | --- |

4.6.

| 4.7. | Acknowledging the expertise of rare disease patients, relatives and health care professionals formed the crux of the EMRaDi-project, which amongst others, examined supply and demand in the field of rare diseases in the Euregio Meuse-Rhine. The project also analysed the day-to-day reality and patient pathways based on 104 in-depth interviews on eight rare diseases (25). The latter confirmed assumptions about diagnostic difficulties, an increased burden in care coordination (with patients encountering between six and 25 healthcare professionals in their patient pathway), the need and preference for multidisciplinary care in specialised centres and by extension the need for a broader holistic perspective on the entire 360o spectrum of informational needs, psychological support, social inclusion and development chances, practical and administrative but also cross-border healthcare needs. The project formulated recommendations on holistic care; telemedicine and European solidarity (26). |
| --- | --- |

4.7.

| 4.8. | The COVID-19 pandemic accelerated the digitalisation of healthcare, the use of new technologies and the deployment of telemedicine. Regulation, capacity building and reimbursement of telemedicine, comprising teleconsultation, tele-expertise, telemonitoring and mobile health, need to be the result of consultation with social partners and stakeholders from the medical sector and must above all ensure patient safety and the quality and continuity of care and treatment. Optimal use of telemedicine prevents patients, including those with rare diseases, from having to travel excessively either within their own country or across Europe. |
| --- | --- |

4.8.

| 4.9. | Advancing academic research, health economics and quality of care for rare diseases require patient registries based on the FAIR principle (findability, accessibility, interoperability and reusability). Initiatives such as the European Registry Data Warehouse, the European Rare Disease Registry Infrastructure metadata repository (ERDRI.mdr) and the European Health Data Space need to trigger a debate on concise, standard registration and the purpose of registers. |
| --- | --- |

4.9.

| 4.10. | Mapping of the supply and demand in the field of rare diseases requires quantitative analyses of prevalence, care consumption and care costs of patients with rare diseases with utmost respect for the patients privacy. An innovative methodology by the Belgian health insurance funds permitted a first analysis of prevalence, care costs and care consumption of rare disease patients compared to the average care cost and care consumption of its affiliated members (27). |
| --- | --- |

4.10.

| 4.11. | The analysis confirmed a higher care consumption than the average member (more frequent hospital visits and admission, more frequent GP and specialist care), which can be explained by the more complex care needs. The costs in the compulsory health insurance system were confirmed as ten times the average member with a yearly out-of-pocket contribution three times the average member. Medicines comprised the biggest part, averaging half of spending. Real costs are to be expected much higher since the study did not take into account the socioeconomic circumstances of the family or other non-reimbursed costs such as psychological care or paramedical care, complementary insurance or mere out-of-pocket costs. The analysis does prove the importance of strong solidarity-based health insurance systems that intervene to protect rare disease patients. When rare diseases patients refuse or do not take up care for financial reasons, this will have an impact on their health, quality of life later on and presents a financial risk of heightened costs in the long run. |
| --- | --- |

4.11.

| 4.12. | The Revision of the EU’s legislation on orphan and paediatric medicines (medicines for people with rare diseases and for children) requires an ambitious approach to ensure that orphan medicines and treatment are affordable for Member State healthcare systems and patients. Currently affordability is a barrier for many rare disease patients. Different forms of European cooperation and models of joint purchasing of medicines between countries — such as Beneluxa (28) or as seen during the COVID-19 pandemic regarding vaccines — have improved access to treatments thanks to a common, transparent, sustainable and supportive EU approach. The debate on fair pricing and the transparency of R & D costs for medicines is enhanced by the proposal for a fair price calculator for medicines and AIM’s fair pricing model for calculating a FAIR price for new or existing medicines (without generic competition) and comparing it to the price paid or being negotiated (29). |
| --- | --- |

4.12.

| 4.13. | When there is no regular reimbursement possible, different provisions for accessing orphan products by rare disease patients exist in different Member States, including compassionate use programmes, provisions for off-label drugs use and, for instance, also Special Solidarity Fund interventions (30). Solidarity funds can be a useful addition when the compulsory health insurance does not cover costs for complex or rare disease treatment or cross-border care. This is most certainly the case when no recognised reference centres exist in the EU. Despite the budgetary impact of rare disease treatment, reflections on European conventions for care in ERNs or for rare disease patients accessing care in a reference centre in another Member State, have not materialised. |
| --- | --- |

4.13.

| 4.14. | The Health Emergency Preparedness and Response Authority (HERA) originated as a response to the COVID-19 pandemic, and as a key pillar of the European Health Union. It aims to prevent, detect, and rapidly respond to health emergencies and to anticipate threats and potential health crises, through intelligence gathering and building the necessary response capacities. Its mission can be extended beyond communicable diseases and its mandate means it can tackle other health threats. The current governance structure of the European Health Union doesn’t yet include institutionalised support on preparedness and responses to rare disease challenges the Member States might be faced with. HERA can serve as a model for a new authority for non-communicable diseases that would foster coordination and solidarity for rare diseases. |
| --- | --- |

4.14.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 218, 11.9.2009, p. 91.

1

(2)  The UN Human Rights Office (2006), Convention on the Rights of Persons with Disabilities.

2

(3)  European Commission (2019), Rare Diseases.

3

(4)  Orphanet (2021) Orphanet in numbers: 6 172 diseases https://www.orpha.net/consor/cgi-bin/index.php; Nguengang Wakap S., Lambert D.M., Olry A., Rodwell C., Gueydan C., Lanneau V., Murphy D., Le Cam Y., Rath A. Estimating cumulative point prevalence of rare diseases: analysis of the Orphanet database. Eur J Hum Genet. 2020 Feb.;28(2):165-173. doi: 10.1038/s41431-019-0508-0. Epub 2019 Sep 16. PMID: 31527858; PMCID: PMC6974615.

4

(5)  Eurocarers (December 2021), The gender dimension of informal care.

5

(6)  OJ C 256, 27.10.2007, p. 123.

6

(7)  Eurordis; Rare disease impact report: insights from patients and the medical community 2013 detailing diagnostic uncertainty of low prevalence diseases in the United States and the United Kingdom.

7

(8)  Koning Boudewijnstichting (2014), Zoom: nieuwe perspectieven op gelijke kansen- Zeldzame ziekten.

8

(9)  Kole, A., Hedley V., et al. (2021), Recommendations from the Rare 2030 Foresight Study: The future of rare diseases starts today: Available, accessible and affordable treatments — what do people living with a rare disease think? p. 119.

9

(10)  World Health Organization (2022), Quality of care.

10

(11)  Loridan J., Noirhomme C. (2020), Field analysis of existing RD patient pathways in the EMR.

11

(12)  Regulation (EC) No 141/2000 of the European Parliament and of the Council of 16 December 1999 on orphan medicinal products (OJ L 18, 22.1.2000, p. 1); Council Recommendation of 8 June 2009 on an action in the field of rare diseases (OJ C 151, 3.7.2009, p. 7); Directive 2011/24/EU of the European Parliament and of the Council of 9 March 2011 on the application of patients’ rights in cross-border healthcare (OJ L 88, 4.4.2011, p. 45).

12

(13)  European Court of Auditors (2019), EU actions for cross-border healthcare: significant ambitions but improved management required.

13

(14)  European Parliament (10 July 2020), The EU’s public health strategy post-COVID-19 European Parliament resolution of 10 July 2020 on the EU’s public health strategy post-COVID-19 (2020/2691(RSP) (OJ C 371, 15.9.2021, p. 102).

14

(15)  Communication from the Commission to the European Parliament, the Council, the European Economic and Social committee and the Committee of the Regions — The European Pillar of Social Rights Action Plan (COM(2021) 102 final).

15

(16)  International Association of Mutual Benefit Societies (AIM) (2022), AIM’s Views on the EU Care Strategy.

16

(17)  United Nations (5 January 2022), A/RES/76/132: Resolution adopted by the General Assembly on 16 December 2021 on Addressing the challenges of persons living with a rare disease and their families.

17

Addressing the challenges of persons living with a rare disease and their families

(18)  Employment, Social Policy, Health and Consumer Affairs Council (Health) (29 March 2022), Main results — Europe’s response to rare diseases.

18

(19)  Conference on the Future of Europe, Report on the final outcome May 2022.

19

(20)  Europe’s Beating Cancer Plan Communication from the commission to the European Parliament and the Council (2021).

20

(21)  OJ C 218, 11.9.2009, p. 91.

21

(22)  Commission staff working document Accompanying the document ‘Report from the Commission to the European Parliament and the Council on the operation of Directive 2011/24/EU on the application of patients’ rights in crossborder healthcare’ (SWD(2022) 200 final), European Reference Networks, p. 29-36.

22

(23)  INNOVCARE (2018), Bridging the gaps between health, social and local services to improve care of people living with rare and complex conditions; EMRaDi (2020), Rare diseases do not stop at borders; RARE 2030 (2021), Foresight in Rare Disease Policy.

23

(24)  Kole, A., Hedley V., et al. (2021) Recommendations from the Rare 2030 Foresight Study: The future of rare diseases starts today.

24

Rare 2030 Foresight Study: The future of rare diseases starts today

(25)  EMRaDi (2020), Final report of the EMRaDi project.

25

(26)  EMRaDi project (2019) Factsheet EMRaDi — How to get EU actions on rare diseases (RD) closer to RD patients and their relatives? From local and cross-border developments to European solutions.

26

(27)  Noirhomme C., (December 2020), MC informations 282, Analyse de la consommation et des dépenses de soins des personnes atteintes de maladies rares, p. 20-29.

27

(28)  Beneluxa Initiative on Pharmaceutical Policy.

28

(29)  AIM — European fair price calculator for medicines; AIM offers a tool to calculate fair and transparent European prices for accessible pharmaceutical innovations.

29

(30)  Maastricht University (2020), Report on the analysis of legal, financial and reimbursement mechanisms of rare diseases for treatment costs of EMR rare diseases patients, 3.2 ‘Orphan medical products’ p. 43-45.

30

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/75 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/75

---

Opinion of the European Economic and Social Committee on The role of family members caring for people with disabilities and older persons: the explosion of the phenomenon during the pandemic

(own-initiative opinion)

(2023/C 75/11)

| Rapporteur: | Pietro Vittorio BARBIERI |
| --- | --- |

Rapporteur:

Pietro Vittorio BARBIERI

| Plenary Assembly decision | 24.2.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 170/0/0 |

Plenary Assembly decision

24.2.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

170/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC expresses its concern at the living conditions of people who provide long-term care for relatives with disabilities and chronic and degenerative diseases, including cognitive decay and cancer. |
| --- | --- |

1.1.

| 1.2. | The EESC notes that these situations have become even more dire during the COVID-19 pandemic, making structural measures in social policies and services indispensable. |
| --- | --- |

1.2.

| 1.3. | In order to optimise the social policies and better tailor the necessary support, the EESC emphasises the need to establish a common definition of the role and the situation of a family member providing long-term care for a relative with a disability or suffering from chronic or degenerative diseases — including cognitive decay and cancer — outlining specific characteristics and scaling the interventions, as well as valuing the role of those involved, including within community services. |
| --- | --- |

1.3.

| 1.4. | The EESC notes the need to further define the phenomenon through sociological studies and analyses, and through statistics that focus on the impact of long-term caregiving on the caregiving relative, regardless of whether or not they are also otherwise employed. |
| --- | --- |

1.4.

| 1.5. | The EESC believes that the approach to managing this issue of family members providing care should be based on joint action by public policies, employers through social dialogue and, finally, family caregivers themselves and the organisations that represent them, ensuring that they are involved from shaping public policy all the way through to its implementation. |
| --- | --- |

1.5.

| 1.6. | The EESC stresses the importance of ensuring health protection services, including preventive healthcare and regular specialist medical check-ups, and of promoting specific training on how to look after their own health, for citizens who provide long-term care for their relatives. |
| --- | --- |

1.6.

| 1.7. | The EESC calls for specific surveys to be carried out in national pension schemes, aimed at gathering information with a view to scaling and adapting the right to alternative forms of remuneration for those who are forced to give up employment to provide long-term care for a family member with a chronic or degenerative disease, or who has a disability. |
| --- | --- |

1.7.

| 1.8. | The EESC, noting the ongoing gender disparity among family caregivers, and in line with opinion on the Gender equality strategy (1), calls for action to mitigate this gender inequality, including by strengthening the implementation of recommendations already set out in Directive (EU) 2019/1158 of the European Parliament and of the Council (2). |
| --- | --- |

1.8.

| 1.9. | The EESC, noting the as yet limited awareness of the living conditions of those concerned, calls for a European day to be established for people who provide long-term care to family members, aimed at raising awareness of the issue and encouraging appropriate support policies and measures. |
| --- | --- |

1.9.

| 1.10. | The EESC highlights the importance of providing housing support and home services with a particular focus on health and nursing needs, as well as psychological support for the caregiver and the family unit, or for the person with a disability themselves. |
| --- | --- |

1.10.

| 1.11. | The EESC stresses the importance of encouraging and ensuring emergency services for unexpected events, which make it impossible to provide treatment in the long term or temporarily, and relief services, that limit the effects of excessive and prolonged overloading. There should also be concessions and facilitated procedures that reduce red tape for carers. |
| --- | --- |

1.11.

| 1.12. | The EESC considers the provision of services and support that enable people with disabilities to take independence pathways outside the family unit of origin to be crucial. This includes the provision of services and support through pathways to personal autonomy, alternative housing solutions, and independent living pathways for people with disabilities. Such policies inevitably also have a positive impact on the burden of care shouldered by family members, who are otherwise obliged to provide long-term care. |
| --- | --- |

1.12.

| 1.13. | The EESC calls for consideration to be given by Member States to adopting measures, including through financial aid, that address the risk of impoverishment of those who — despite specific policies, services and support aimed at combating this phenomenon — are nonetheless forced to give up paid employment, or reduce their working hours, in order to provide long-term care for their relatives. |
| --- | --- |

1.13.

| 1.14. | The EESC calls for the ample provision of quality long-term assistance services to be encouraged in Member State policies. |
| --- | --- |

1.14.

| 1.15. | The EESC calls for employers to be encouraged and supported who promote flexible working arrangements and fringe benefits beyond those already provided for under state rules for employees that provide ongoing care for relatives. |
| --- | --- |

1.15.

2.   Description of the phenomenon

| 2.1. | Eurostat’s 2018 statistics on Reconciliation of work and family life (3) showed that over 300 million EU residents belonged to the 18-64 age group, and that around a third of these had care responsibilities. This translates to around 100 million people who cared for children aged younger than 15 years, and/or incapacitated relatives (ill, older and/or disabled) aged 15 years or more. In contrast, around 200 million people in the EU had no care responsibilities at all. Of those who did, the majority (74 %) cared for children aged younger than 15 years who lived in the same household. Of the remaining 26 %, 3 % cared for children living outside the household, 7 % for multiple children living both inside and outside the household, 4 % for both children and incapacitated relatives, and the final 12 % for incapacitated relatives only. |
| --- | --- |

2.1.

| 2.2. | In 2018, one in three EU residents aged 18-64 years had care responsibilities (34,4 %, compared to the 65,6 % who had no care responsibilities at all). The breakdown of the group with care responsibilities was as follows: 28,9 % cared for children younger than 15 years of age only, 4,1 % cared for incapacitated relatives aged 15 years or more, and less than 2 % for both young children and incapacitated relatives. |
| --- | --- |

2.2.

| 2.3. | The majority of those who provided care for incapacitated relatives were women: 63 %, compared to 37 % of men. These caregivers mostly belonged to the older age groups: 48,5 % were aged 55-64, and 35 % were aged 45-54. Only 5,5 % belonged to the 18-44 age group. |
| --- | --- |

2.3.

| 2.4. | Across all current (27) and former (1) Member States (EU-28), there was a 3,3 percentage-point gap between men (2,5 %) and women (5,9 %) who confirmed having reduced or interrupted their working time for more than one month during their current or previous employment due to care responsibilities for ill, older and/or disabled relatives. The largest gap was found in Bulgaria (6,8 p.p.) and the smallest in Cyprus (1,1 p.p.), with women more often than men making changes to their work life (Eurostat, 2018). |
| --- | --- |

2.4.

| 2.5. | In 2018, 29,4 % of employees in the EU-28 said that it was generally possible for them to work flexible (adapted) hours and to use whole days of leave for care. Differences were observed across all EU Member States. Slovenia had the highest rate of employees with the possibility for both flexible hours and time off for care (60,4 %), followed by Finland (57,1 %) and Denmark (55,1 %). The lowest rates were recorded in Hungary (7,5 %), Poland (7,3 %) and Cyprus (3,8 %). On the other hand, 1 in 4 employees (25,2 %) said they did not have the possibility to work flexible hours or to take whole days off for care. As with those who did, the trend varied across Member States, with ranges from 6,9 % in Latvia and 7,7 % in Slovenia, to 58,6 % in Poland and 58,7 % in Cyprus (Eurostat, 2018). |
| --- | --- |

2.5.

| 2.6. | Effects on health: in 2009 Elizabeth Blackburn, Carol Greider and Jack Szostak won the Nobel Prize in Medicine for the discovery that demonstrated the biological impact of stress common in long-term caregivers. Long-term care shortened the telomeres of mothers of children with special needs by between 9 and 17 years. The impact of this prolonged stress is largely supported by international scientific literature. |
| --- | --- |

2.6.

| 2.7. | During the hearing of 4 July 2022, the European Commission revealed that between 33 and 39 billion hours per year are spent on informal care, equivalent in value to between 2,4 and 2,7 % of the EU’s GDP. The MFF — the amount of EU investment in innovative projects for the future — totals less than half this amount, at around 1,02 % of EU GDP. |
| --- | --- |

2.7.

| 2.8. | The personal experiences of family caregivers, gathered by disability NGOs, show that opportunities for social interactions and for maintaining cultural and sporting interests are severely constrained and restricted due to the often unpredictable personal care activities that fall to them and a lack of alternatives to the care they provide, which is very often compounded by deprivation of personal time and space for relief. |
| --- | --- |

2.8.

| 2.9. | There is a gender disparity when it comes to long-term care activities for relatives with disabilities, and chronic and degenerative diseases, which pushes the additional workload onto women, as evidenced in statistical literature and in the personal experiences of those concerned. The greatest impacts include carers giving up their jobs, limited career progress, being forced to scale back to part-time work and, more broadly, material and other forms of impoverishment. |
| --- | --- |

2.9.

| 2.10. | In the EU, 25 % of women and 3 % of men said they could not take up paid employment or that they were forced to work part time due to care duties they had for family members, children, older people or those with illnesses (4). |
| --- | --- |

2.10.

| 2.11. | Those who give up employment are often not covered by social security contributions for old-age pensions in later years, and thus are likely to end up in the welfare or destitution support systems. |
| --- | --- |

2.11.

| 2.12. | The scaling-back and reduction of personal and family services, albeit in different ways across EU countries, is causing even more of a burden for citizens who provide long-term care for relatives with disabilities and chronic and degenerative disorders, including cancer. |
| --- | --- |

2.12.

| 2.13. | As these carers are not carrying out work in a framework of an employment relationship, they do not benefit from health protection measures and prevention measures against ill health that have been stabilised and consolidated for employed workers. |
| --- | --- |

2.13.

| 2.14. | Looking at the personal experiences of family caregivers, it appears that continuous and long-term care activities (among others) are an often obligatory or forced choice borne from the inadequacy of care services and a desire not to institutionalise the dependent relative; even where service standards are good, there is still quite a significant residual burden of care. |
| --- | --- |

2.14.

| 2.15. | The family unit of origin’s dependence on care due to a lack of alternatives, help and support often leaves those with disabilities unable to lead autonomous and independent lives. |
| --- | --- |

2.15.

| 2.16. | Eurofound’s Living, working and COVID-19 study (5) noted a significant increase in both formal and informal home care responsibilities and a fall in the use of residential care during the pandemic. |
| --- | --- |

2.16.

| 2.17. | In EU countries, social protection spending on institutionalisation in potentially segregated residential facilities tends to be largely and strategically greater compared to spending on policies for supporting autonomous and independent living, despite the principles and guidelines of the EU Strategy for the Rights of Persons with Disabilities 2021-2030, in which the European Commission called on Member States to implement good practices of deinstitutionalisation in the area of mental health and in respect of all persons with disabilities, including children, to strengthen the transition from institutional care to services providing support in the community. |
| --- | --- |

2.17.

| 2.18. | Care overload affects a wide array of people whose individual circumstances shape the intensity, duration and type of care provided, in addition to the potential progression of the same, and consequently the overload. These include people with mental disabilities, severe intellectual disabilities, those affected by senile dementia and those who suffer from chronic or degenerative diseases, including cancer. In many cases, even strictly health-related care is left to the charge of the caregiver. |
| --- | --- |

2.18.

| 2.19. | Despite the considerable differences, certain stereotypes surrounding family care still persist. For example, the stereotype that reduces family care situations to inevitable fate or to a mere emotional and conscious choice made by the family caregivers themselves. Imposing personal care on the relatives of the person with a disability, in certain specific situations, hinders the dependant’s ability to live autonomously and independently, compromising and limiting their choices and opportunities to follow their own path in life. |
| --- | --- |

2.19.

| 2.20. | Despite the considerable differences linked to the varying quality of support services, emergency management (carer illness, specific acute situations, housing emergencies, conflict and uncontrolled stress, etc.) is a particularly important factor during exceptional events and in terms of the related stress and anxiety. |
| --- | --- |

2.20.

| 2.21. | In situations of increased pressure and with a lack of alternative solutions to direct family care, the possibility of losing the family caregiver (to loss of personal autonomy, degenerative disease, old age or death) causes profound and justified anxiety. This anxiety heightens where there is a total lack of viable alternative care. Exclusively relying on a family member to shoulder the burden of care leads to the isolation of the family unit, especially in very intensive cases, with predictable and sometimes even pathological effects. |
| --- | --- |

2.21.

| 2.22. | In EU law, there is no uniform recognition of the role of those who provide care for relatives with chronic or degenerative diseases, or with a disability, including of its value in relations with services, but also of the risks and the needs involved in their care activities. |
| --- | --- |

2.22.

| 2.23. | Cases of increased exclusion, risk and disadvantage appear to be linked to the quality and quantity of family, personal, disability and independent living services, as well as home services (particularly healthcare and rehabilitation); however no surveys have been able to identify and outline with certainty all aspects of this possible link, nor provide potential good practices. |
| --- | --- |

2.23.

| 2.24. | Directive (EU) 2019/1158 on work-life balance for parents and carers laid out a series of interventions in the form of family care to offset gender inequalities, as well as further interventions for a better balance between care and working time; beyond the analysis of the real impact in the Member States, the Directive does not cover family carers who are not otherwise employed, who have given up work or who are retired. |
| --- | --- |

2.24.

| 2.25. | Support for citizens who provide long-term care for relatives with a disability or who suffer from chronic or degenerative diseases is often provided by non-profit organisations founded by the family members themselves, as revealed in the hearing of the thematic study group on disability rights of 16 September 2021. |
| --- | --- |

2.25.

| 2.26. | In the EU-27, around 6,3 million people work in the long-term care sector — that is 3,2 % of the entire EU workforce (based on LFS data, 2019). There are large differences between Member States, with the very low rates recorded in certain countries (1,8 % or lower in Bulgaria, Croatia, Cyprus, Estonia, Greece, Hungary, Italy, Lithuania, Poland and Romania) most likely reflecting a dependence on informal (family) care in these countries, and also a reliance on home caregivers employed by families, which falls outside these statistics. |
| --- | --- |

2.26.

| 2.27. | One Eurofound study (2020) noted that the wages in long-term care and other social services were 21 % below the average, and called for collective bargaining in the sector to be promoted to address this problem (6). |
| --- | --- |

2.27.

3.   Building a policy to assist caregivers

| 3.1. | There is a need to establish a common definition of the role and the situation of a family member providing long-term care for a relative with a disability or suffering from chronic or degenerative diseases, including cognitive decay and cancer, outlining specific characteristics and scaling the support measures — a definition that helps recognise the status, policies and support services in EU countries. |
| --- | --- |

3.1.

| 3.2. | A comprehensive review of welfare policies shows there is both a need and an opportunity to value and ensure the involvement and participation of citizens (both caregivers and dependants) in jointly programming the services that concern them and, earlier still, in strategic policymaking. |
| --- | --- |

3.2.

| 3.3. | In order to define the phenomenon, it is imperative that a study be carried out on the situations and living conditions of citizens who provide long-term care for relatives with disabilities and chronic and degenerative diseases, including cognitive decay and cancer. |
| --- | --- |

3.3.

| 3.4. | For the purpose of providing accurate information for policy-making in this area, Eurostat should update the Reconciliation of work and family life survey from 2018 and further investigate the impacts of long-term caregiving on the caregiving relative, regardless of whether or not they are otherwise employed. |
| --- | --- |

3.4.

| 3.5. | Citizens who provide long-term care for relatives should be guaranteed health protection — including prevention measures against accidents they have in their caring duties, as well as against diseases and ill health resulting from their care duties — that offers appropriate protection as similar as possible to that guaranteed for employees and the self-employed. |
| --- | --- |

3.5.

| 3.6. | It would be desirable to carry out economic, legal and impact analyses aimed at determining shared, fair and sustainable criteria for recognising the labour-intensive working conditions of long-term caregiving for relatives in the case of citizens who also juggle regular employment at the same time. |
| --- | --- |

3.6.

| 3.7. | Economic, legal and impact analyses should also be undertaken with a view to pinpointing economic support measures for those who give up employment to care for a family member who is older or has a chronic or degenerative disease, or who has a disability. |
| --- | --- |

3.7.

| 3.8. | In line with the opinion on the Gender equality strategy (7), action must be taken to mitigate gender inequality in the area of long-term caregiving for relatives, including by strengthening the implementation of the recommendations already set out in Directive (EU) 2019/1158. |
| --- | --- |

3.8.

| 3.9. | The success and efficiency of policies and services for family members who provide long-term care are closely linked to the policies and support provided to individuals with a disability who wish to or who can live independently, including outside the family unit of origin where they are tied to the latter due to a dependence on care. |
| --- | --- |

3.9.

| 3.10. | Knowledge and awareness of the phenomenon still appears to be patchy and limited to a few observers and social actors. This limited awareness needs to be rectified, including through specific initiatives, in order to strengthen and encourage appropriate support policies and measures. The EESC therefore calls for a European day to be established for people who provide long-term care to family members. |
| --- | --- |

3.10.

| 3.11. | The EESC urges the European Union to work closely with the Member States to improve living conditions for both long-term caregivers of dependent relatives and for the family unit as a whole, as well as to prevent care from being an imposed activity. Specific measures to reach these goals should include:






  — | recognising and valuing the role of those involved, including recognition within community services; |
| --- | --- | --- |

3.11.

—

recognising and valuing the role of those involved, including recognition within community services;

| — | ensuring housing services and support in order to prevent isolation, marginalisation and physical and mental overload; |
| --- | --- |

—

ensuring housing services and support in order to prevent isolation, marginalisation and physical and mental overload;

| — | strengthening home services with a special focus on health and nursing needs; |
| --- | --- |

—

strengthening home services with a special focus on health and nursing needs;

| — | providing psychological support services for family caregivers and the family unit; |
| --- | --- |

—

providing psychological support services for family caregivers and the family unit;

| — | providing for concessions and facilitated procedures for carrying out administrative activities; |
| --- | --- |

—

providing for concessions and facilitated procedures for carrying out administrative activities;

| — | ensuring emergency services for unexpected events or where it is not possible to provide care; |
| --- | --- |

—

ensuring emergency services for unexpected events or where it is not possible to provide care;

| — | ensure relief services that limit the effects of excessive and prolonged physical and mental overloading of family members; |
| --- | --- |

—

ensure relief services that limit the effects of excessive and prolonged physical and mental overloading of family members;

| — | addressing, including through financial aid, the risk of impoverishment of those who give up paid employment or reduce their working hours, and of the family unit as a whole; |
| --- | --- |

—

addressing, including through financial aid, the risk of impoverishment of those who give up paid employment or reduce their working hours, and of the family unit as a whole;

| — | encouraging the ample provision of quality long-term assistance services in Member State policies; |
| --- | --- |

—

encouraging the ample provision of quality long-term assistance services in Member State policies;

| — | promoting, where possible, pathways to personal autonomy, alternative housing solutions, and independent living pathways for people with disabilities; |
| --- | --- |

—

promoting, where possible, pathways to personal autonomy, alternative housing solutions, and independent living pathways for people with disabilities;

| — | implementing support measures for family members who provide care based on joint action by public policies (recognising and strengthening the role of the family caregiver; reliable and available services; carer health; promoting resistance solutions; social protection and compensation schemes for those who provide care, etc.), employers through social dialogue and, finally, the family caregivers themselves and the organisations that represent them, ensuring that they are involved from policy shaping all the way through to its implementation. |
| --- | --- |

—

implementing support measures for family members who provide care based on joint action by public policies (recognising and strengthening the role of the family caregiver; reliable and available services; carer health; promoting resistance solutions; social protection and compensation schemes for those who provide care, etc.), employers through social dialogue and, finally, the family caregivers themselves and the organisations that represent them, ensuring that they are involved from policy shaping all the way through to its implementation.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 364, 28.10.2020, p. 77

1

(2)  Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU (OJ L 188, 12.7.2019, p. 79).

2

(3)  ‘Reconciliation of work and family life’, Eurostat 2018.

3

(4)  OJ C 194, 12.5.2022, p. 19, point 3.8.

4

(5)  https://www.eurofound.europa.eu/publications/report/2020/living-working-and-covid-19

5

(6)  Eurofound (2020), Long-term care workforce: Employment and working conditions.

6

Long-term care workforce: Employment and working conditions.

(7)  OJ C 364, 28.10.2020, p. 77.

7

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/82 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/82

---

Opinion of the European Economic and Social Committee on Digital Innovation Hubs and SMEs

(own-initiative opinion)

(2023/C 75/12)

| Rapporteur: | Giuseppe GUERINI |
| --- | --- |
| Co-rapporteur: | Nicos EPISTITHIOU |

Rapporteur:

Giuseppe GUERINI

Co-rapporteur:

Nicos EPISTITHIOU

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Consultative Commission on Industrial Change (CCMI) |
| Adopted in section | 13.9.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 136/0/0 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Consultative Commission on Industrial Change (CCMI)

Adopted in section

13.9.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

136/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC strongly believes that the European economy can benefit from the digital and green transitions and become more competitive, sustainable, resilient and autonomous. |
| --- | --- |

1.1.

| 1.2. | To achieve such goals, the EU must improve its R & D and innovation capacity and increase the dissemination of technologies among citizens, public administrations and enterprises. |
| --- | --- |

1.2.

| 1.3. | The Committee considers that EU R & D investment should be boosted to 3 % of GDP as soon as possible. The EU must develop a distinct skill set in new-generation digital technologies and ensure that they become a part of the business models of EU businesses. |
| --- | --- |

1.3.

| 1.4. | The twin transitions offer many opportunities for enhancing SMEs’ competitiveness, but they can also pose a threat. To avoid such risks, European SMEs must be accompanied through transitions with a set of policies and instruments. |
| --- | --- |

1.4.

| 1.5. | Whilst they can be extremely innovative, traditional SMEs find difficulties in managing the twin transitions due to financial and organisational limits, as well as lack of competences. |
| --- | --- |

1.5.

| 1.6. | Access to finance for innovation for SMEs must be radically improved in every Member State, also through recourse to equity financing and tax incentives linked to digital technologies and skills. |
| --- | --- |

1.6.

| 1.7. | DIHs function as one-stop-shops that provide analyses and solutions to companies for tackling the twin transitions. The EESC believes that more EU companies, even those in the social economy, should engage in the DIHs’ activities, and that the results should be better communicated, particularly to SMEs. |
| --- | --- |

1.7.

| 1.8. | DIHs can serve as platforms for testing technological solutions prior to investing (‘test before invest’), for exchanging best practices and developing digital skills. They can also play a major role in harnessing the potentials of digital technologies for sustainability. |
| --- | --- |

1.8.

| 1.9. | The Committee believes that there is a lack of clear vision on the future development of the DIHs, especially in light of the newly established EDIHs. KPIs that measure the performance of DIHs are needed, with the goal of transforming them into the main European centres for the inclusive innovation of SMEs. |
| --- | --- |

1.9.

| 1.10. | The EESC considers that the DIHs should act as ‘middle-layers’, designed to listen to SMEs demands and identify tools and solutions to guide them. Raising awareness on the important role that the DIHs can play is paramount. |
| --- | --- |

1.10.

| 1.11. | The Committee notices several SME policies are not implemented at national level, and there is a large gap in communication on these facilities for SMEs. The EU and the Member States must jointly engage in raising awareness on existing European and national initiatives for SMEs, including the benefits of joining the DIH network. |
| --- | --- |

1.11.

| 1.12. | The EESC considers that proper financing needs to be ensured for the DIHs’ activities — from business development and R&I support programmes, to subsidised financing for businesses and participation in calls for tender. |
| --- | --- |

1.12.

| 1.13. | The EESC believes that DIHs should focus their attention on supporting regional economies and local SME systems, and recommends a regional mapping of existing hubs and an action plan focusing on regional development and greater inclusion and participation. Cooperation between large companies and SMEs can bring digital innovation to new levels, harnessing the now unused potential of supply chain based innovation. |
| --- | --- |

1.13.

| 1.14. | The EESC notes that there are differences among European regions in the distribution of DIHs, with eastern and south-eastern Europe lagging behind. Reducing disparities between Member States and regions is of vital importance for European progress. |
| --- | --- |

1.14.

| 1.15. | DIHs must support SMEs in upskilling and reskilling their workforce, including entrepreneurs, also for ensuring future employability in rapidly changing contexts. Education systems must be developed with a strong focus on STEM, starting from primary schools. Moreover, technical and vocational secondary and tertiary education and local universities are important actors. Digital skills are a critical factor to achieving full digitalisation and attracting young talents also into traditional sectors. |
| --- | --- |

1.15.

| 1.16. | Trade unions, civil society organisations, employers’ associations and public authorities, need to work together both in governing DIHs’ missions and strategies and to develop lifelong learning and vocational training programmes that guarantee continued employability with decent workplaces and salaries, ensuring workers’ social rights and active participation. Social dialogue is vital in the process, and gender equality must be secured. |
| --- | --- |

1.16.

2.   Context of the proposal and general considerations

| 2.1. | The digital transformation is having extraordinary effects on the economy, the environment and society as a whole. It is increasing the productivity of economic systems, improving public services and people’s quality of life, and generating new development. Businesses and organisations (public and private, market and social) that have embarked on a path of digital transformation have developed their services, products and processes, and become more competitive. |
| --- | --- |

2.1.

| 2.2. | Fears concerning the negative impacts on employment as a result of digitalisation have also been more clearly put into context: highly standardised activities in sectors that are more exposed to competition do present displacement risks, but these risks are much lower in sectors with greater added value and in manufacturing. Overall, the European economy can benefit from the digital and environmental transitions and become more competitive, sustainable, resilient and autonomous. |
| --- | --- |

2.2.

| 2.3. | The changes being brought about by the digital transformation are fundamental and rapid. They require all organisations to continuously keep up with the frenetic pace of change, including by reinventing themselves. SMEs, the backbone of the European economy, have been among the organisations that have suffered the most from the digital transformation. |
| --- | --- |

2.3.

| 2.4. | Traditional SMEs tend to concentrate resources, which are scarce in terms of financing, human capital and organisational structure, into consolidated activities and practices. Even when they are highly innovative, SMEs tend to prefer incremental innovation (mid-tech) over the radical innovation (high-tech) that is typical of the digital domain. SMEs are also relying on traditional bank loans as financing, which is sometimes hindered by a lack of collateral or credit history. Enhanced financing opportunities can be developed, especially with regard to equity financing, which remains less developed in the EU compared to the USA for example, where much financing is available at stages where debt cannot be repaid. |
| --- | --- |

2.4.

| 2.5. | The COVID-19 pandemic has accelerated digital transformation processes: key facets of the economy and society such as work, trade, education, communication, entertainment, were suddenly made virtual. In order to survive, SMEs have also had to develop a digital presence. |
| --- | --- |

2.5.

| 2.6. | The COVID-19 pandemic also limited trade flows and disrupted global value chains, demonstrating the need and urgency for Europe to acquire a much higher level of technological independence. This is the direction in which the EU’s strategies for developing autonomous and highly competitive solutions for key technologies for the future are moving. This entails policy choices that need to be welcomed and encouraged. Although progress has been made, there is still significant room for improvement in terms of the digital transformation of businesses, public authorities and other organisations. |
| --- | --- |

2.6.

| 2.7. | The EESC believes that the ability to both produce innovation, and to disseminate it in society and the economy, will be the key factors that will determine EU’s competitiveness between now and 2050. To this end, and as maintained by the European Commission in the Digital Europe (1) programme, the EU must develop a distinct skill set in new-generation digital technologies such as IoT (internet of things), big data, artificial intelligence, robotics, cloud computing and blockchain, and ensure that these enabling technologies become a permanent part of the business models of European businesses, including through Digital Innovation Hub activities. For the sake of clarity, in this opinion we refer to both DIHs and EDIHs as DIHs. |
| --- | --- |

2.7.

| 2.8. | What has been said about the digital transition is also valid for the green transition. The two phases of the systemic transition have much in common and create a double burden for SMEs (and, of course, different opportunities that must be carefully assessed). |
| --- | --- |

2.8.

| 2.9. | The digitalisation of European industry will have a direct impact on the achievement of the climate objectives of the Green Deal and on the Sustainable Development Goals (SDGs) of the 2030 Agenda. However, advanced digital projects are also using significant quantities of energy, and the EESC believes that EDIHs can play a major role in looking into the impact on the green transition. Sustainable production and circular business models in Europe can only be achieved through major investments in new emerging technologies. |
| --- | --- |

2.9.

| 2.10. | These challenges require the rapid and vigorous development of the EU’s technological capacity. The EESC notes that the EU is still behind in terms of R & D investment relative to GDP (2,32 % in 2020, compared to 3,08 % in the USA and 3,2 % in Japan) (2). Investments in R & D should be boosted as soon as possible to 3 % of GDP to allow the EU to compete globally in the world of the digital transition. |
| --- | --- |

2.10.

| 2.11. | At European level, companies, and not just SMEs, struggle in adopting new technologies. The EESC — through several opinions — has highlighted the fact that, while the digital transformation involves significant opportunities for businesses throughout the EU, many of them still face barriers and legal uncertainties, particularly when it comes to cross-border activities. Uncertainties that, for many SMEs, add up to the lack of access to finance or investment resources, as well as skills shortages. |
| --- | --- |

2.11.

| 2.12. | Hence, tools to support SMEs to overcome these gaps should be developed and strengthened. Digital Innovation Hubs (DIH) are the main instruments for this purpose. The EESC believes that more companies in Europe should collaborate with DIH and that the results obtained should be better communicated, particularly to SMEs. |
| --- | --- |

2.12.

3.   Digital Innovation Hubs as infrastructure to support SMEs

| 3.1. | Digital Innovation Hubs are different entities (organisationally, in terms of governance and in terms of services provided), set up across Europe to aid SMEs in undergoing digital transformation. DIHs function as one-stop-shops that provide analyses and solutions to companies for tackling the twin transitions. |
| --- | --- |

3.1.

| 3.2. | DIHs provide SMEs with value-added services such as up- and re-skilling, consulting on innovation, technologies, strategies, finance, the green transition and the circular economy. They also often offer technological facilities and platforms for testing technological solutions before making investments (‘test before invest’). |
| --- | --- |

3.2.

| 3.3. | The wide network of DIHs in Europe is currently undergoing major restructuring. The recently selected European DIHs (EDIH) will be 50 % financed by Digital Europe funds and 50 % by national and regional funds, and will be tasked with supporting the digitalisation of SMEs and public authorities. Following the adoption of the Digital Europe programme, the first EDIHs will be operational from September 2022. The current DIHs will continue to operate in support of the digital transformation of SMEs and regions using Horizon Europe and ERDF resources. The EESC believes that this overlapping of names could cause confusion among the recipients of the services. |
| --- | --- |

3.3.

| 3.4. | The EESC believes that there is a lack of clear vision on the future development of DIHs. Therefore, the EESC calls for some clear KPIs to measure the performance of the DIHs overtime, as well as to map out how the digitalisation strategy of SMEs is progressing at European level. DIHs must become a thorough network of one stop shops for assisting the digital needs of SMEs. |
| --- | --- |

3.4.

| 3.5. | EDIHs will be more uniform in terms of size, governance and tasks. They will have a fairly extensive geographical presence and will develop specific, high-level capacities in individual ‘key enabling technologies’ as defined by the Digital Europe programme. They will assist the digital transformation of companies, particularly SMEs and mid-caps, and public authorities. |
| --- | --- |

3.5.

| 3.6. | While the key enabling technologies and high tech centred approach followed by the European Commission for the EDIHs is coherent with the goals of Europe’s technological competitiveness set forth in the Digital Europe programme, it raises concerns in term of its ability to fit with the innovation pathways of SMEs. |
| --- | --- |

3.6.

| 3.7. | The EESC considers that it is essential, in the strategy for increasing the digital capacity of SMEs, for more attention to be paid to the nature of the demand coming from these types of businesses, as well as the potential critical issues that could arise in these processes of radical change. This will be achieved by having more capacity to listen to the needs of SMEs and by collaborating with various stakeholders, including large companies, in dedicated innovation programmes. |
| --- | --- |

3.7.

| 3.8. | SMEs do not have official organizational roles for innovation and R & D, and their approach to innovation is mainly geared to mid-tech (integration of established technologies) and incremental innovation (progressive and slower than radical digital innovation), which also develops through informal and semi-formal ways of exchanging expertise and experimentation with other companies, including as part of sub-contracting relationships. Key technologies could also be introduced in SMEs by building strategic and technological development pathways that include such technologies. |
| --- | --- |

3.8.

| 3.9. | Innovation processes for SMEs therefore require a ‘middle-layer’ between demand and supply. It should be designed to listen to (even a weak) demand and identify the most apt tools and solutions from among an over-abundant and chaotic supply of technological answers. DIHs could be this ‘middle-layer’. Raising awareness on the important role that the EDIHs can play is paramount. |
| --- | --- |

3.9.

| 3.10. | The results achieved by DIHs in this regard, can already be considered positive. According to the EIB: ‘The data collected show that digital innovation hubs play a key role in supporting European SMEs in the digital transformation. [...]. Over 70 % of surveyed enterprises that had used a digital innovation hub believe that the support they received has improved their digital journey’. |
| --- | --- |

3.10.

| 3.11. | Digital Innovation Hubs can also play a very important role in promoting the digitalisation of social economy enterprises, particularly for social enterprises operating in the welfare and home care sector, where digital technologies can help to improve services by addressing the needs of people with disabilities. |
| --- | --- |

3.11.

4.   Proposals for improving European policies on digital innovation for SMEs

| 4.1. | The EESC appreciates the attention devoted to SMEs and the amount of policies and programmes for their support. However, the Committee notices the overall approach of the EC is not focused enough on the processes and needs of SMEs. Moreover, not all of these policies are implemented at national level and there is large gap in the communication of these facilities among SMEs. Raising awareness on European and national initiatives must become a priority and the responsibility must be shared between the European institutions and Member States. |
| --- | --- |

4.1.

| 4.2. | The EESC believes that, in order to implement the tasks of DIHs, proper financing needs to be ensured through the use of various sources, from business development and R&I support programmes at regional, national and European level, to subsidised financing for businesses and participation in calls for tender. On the SME side, the possibility of accessing tax incentives linked to investments in digital innovation and related skills, must be provided for. |
| --- | --- |

4.2.

| 4.3. | The EESC believes that DIHs should play a key role in the smooth and balanced economic and employment development of the EU and, specifically, accompany the twin digital and green transitions of SMEs. To this end, they should also develop the provision of so-called ‘non-market’ services as part of training and awareness-raising activities, and the costs of these activities of public relevance should be covered by public funding. |
| --- | --- |

4.3.

| 4.4. | The EESC believes that DIHs should, above all, play the role of system integrators, bringing together SMEs’ needs and technological solutions. To this end, it is crucial that DIHs develop the capacity to operate as local innovation platforms, bringing together the skills and resources of local innovation networks (and possibly external ones) and the demand/opportunities arising from local production systems, before developing specific skills in individual key technologies specific to other R&I entities (research centres, universities, large companies). |
| --- | --- |

4.4.

| 4.5. | Given the standardisation of processes and incentives for cross-border cooperation and the sharing of knowledge, experience and practices, including through a shared digital platform, the EESC believes that DIHs should focus their attention on supporting regional economies and local SME systems. The EESC therefore recommends a regional mapping of existing hubs in collaboration with SME employers’ organisations, and an action plan focusing on regional development and greater inclusion and participation. |
| --- | --- |

4.5.

| 4.6. | The EESC notes that differences remain in the distribution of DIHs among European regions, with the same eastern and south-eastern European countries that have had low digitalisation turnouts in recent years lagging behind. In a previous opinion, the EESC stated that ‘It will be a particular priority to address the digital divide. [...] the pandemic has highlighted both the opportunities and disadvantages of digital communication, particularly for those living in rural areas’. Reducing disparities between Member States and regions is of vital importance for European progress. |
| --- | --- |

4.6.

| 4.7. | The EESC believes that, in order to incentivise the digital and green transitions for SMEs, two key dimensions must be properly monitored and addressed: widespread digital skills and cooperation between companies, starting with production and supply chains. |
| --- | --- |

4.7.

| 4.8. | Digital skills are a critical factor, especially for SMEs, since they constitute the main obstacle to achieving full digitalisation, even in the presence of strong financial incentives for investments. For SMEs, up- and re-skilling involves both the employed workforce and entrepreneurs that are directly involved in the production processes and in innovation and investment choices. Where entrepreneurs lack digital skills, this prevents them from taking advantage of the opportunities provided by digital technologies, and is a serious hindrance to companies’ competitiveness, which has a negative impact on employment. |
| --- | --- |

4.8.

| 4.9. | SMEs do not have official organizational roles for innovation and R & D, and their approach to innovation is mainly geared to mid-tech (integration of established technologies) and incremental innovation (progressive and slower than radical digital innovation), which also develops through informal and semi-formal ways of exchanging expertise and experimentation with other companies, including as part of sub-contracting relationships. Key technologies could also be introduced in SMEs by building strategic and technological development pathways that include such technologies. |
| --- | --- |

4.9.

| 4.10. | Trade unions, non-governmental and civil society organisations, employers’ associations and public authorities, whose leading role must guide DIHs’ mission and strategies, need to work together to develop up- and re-skilling, lifelong learning and vocational training programmes that guarantee the continuous employability of the workforce, decent workplaces and salaries and social rights. Workers must play a leading role in digital transformation processes and gender equality must be secured. Social dialogue is crucial for this purpose, and must be supported to identify the short- and medium-term needs, as well as the long-term policy effects. |
| --- | --- |

4.10.

| 4.11. | Cooperation between large companies and SMEs, starting from production and supply chains, could bring digital innovation to new levels, overcoming many barriers to knowledge, standardisation and costs. |
| --- | --- |

4.11.

| 4.12. | The EESC believes that the future strategic role of EDIHs depends on two factors: the ability to transmit to policy-makers the needs, constraints and opportunities of SMEs related to R & D&I in order to better design policies that promote the relevance and quality of SMEs; and the ability to enhance our social and entrepreneurial ecosystem, contributing to make it more resilient and forward-looking. |
| --- | --- |

4.12.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

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(1)  Regulation (EU) 2021/694 of the European Parliament and of the Council of 29 April 2021 establishing the Digital Europe Programme and repealing Decision (EU) 2015/2240 (OJ L 166, 11.5.2021, p. 1).

1

(2)  https://ec.europa.eu/eurostat/statistics-explained/index.php?title=R%26D_expenditure&oldid=551418.

2

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/88 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/88

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Opinion of the European Economic and Social Committee on Towards a sustainable plant protein and plant oil strategy for the EU

(own-initiative opinion)

(2023/C 75/13)

| Rapporteur: | Lutz RIBBE |
| --- | --- |

Rapporteur:

Lutz RIBBE

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Section for Agriculture, Rural Development and the Environment |
| Adopted in section | 5.10.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 158/2/3 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted in section

5.10.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

158/2/3

1.   Conclusions and recommendations

| 1.1. | Livestock farming (including meat and dairy products and eggs) is an economically important agricultural sector in the EU. However, in recent years it has increasingly been the subject of public debate, among other things because of the regional and global environmental impact of intensive livestock farming and because the sector is heavily dependent on animal feed imports. This last point raises concerns about the EU’s feed and food security. In particular, there is considerable dependency (around 75 %) on imports of plants with a high protein content. |
| --- | --- |

1.1.

| 1.2. | As well as indirectly using arable land outside the EU, the livestock sector also takes up a large part of the arable land within the EU. Around 50 % of the harvest is used as animal feed to produce animal-based products; less than 20 % is used directly by people as plant-based food. |
| --- | --- |

1.2.

| 1.3. | A European protein strategy has been under discussion for years, but there has been little progress to date on declarations to expand protein crop production in Europe. With this opinion, the European Economic and Social Committee (EESC) would like to provide guidance on what additional aspects should be taken into account. |
| --- | --- |

1.3.

| 1.4. | The EESC points out that, in the EU, there is little shortage in the protein supply in the (plant-based) food sector itself, but rather and more importantly in the feed sector. There are many good reasons to expand protein production in the EU and, in particular, to increase the role of grassland in feeding animals. However, despite the existing potential, in purely quantitative terms it will not be possible to fully substitute the high level of protein imports with European production without triggering profound consequences for other sectors of agricultural production. |
| --- | --- |

1.4.

| 1.5. | The EESC further highlights that expanding oil crop cultivation in the EU could also lead to positive impacts such as self-sufficiency in terms of tractor fuel, increased availability of oil cakes supply that have an excellent protein feed potential and increased crop rotations. |
| --- | --- |

1.5.

| 1.6. | After all, there is an absolute limiting factor: the agricultural area available. Although both conventional and organic farming are continuously taking innovative steps to increase productivity, they too are reaching their limits in terms of volume. The EESC therefore believes that there is an urgent need for the EU to carry out a study on the Europe-wide potential and land-share of protein and oil crops that could be grown within the EU. |
| --- | --- |

1.6.

| 1.7. | An important part of the European protein strategy must be to make livestock farming as a whole compatible with EU and UN objectives regarding European and global food security, supply autonomy and sustainability. Increased protein production in the EU is only part of this. Globally, a trend in which the global average per capita consumption of meat and dairy products approaches the current levels of developed economies seems incompatible with the UN SDGs. |
| --- | --- |

1.7.

| 1.8. | A European protein and oil strategy should also contribute to the sustainable development of rural areas in line with the EU long-term vision on rural areas, for example through the development of new regional value chains that are self-sustaining. |
| --- | --- |

1.8.

| 1.9. | In Germany, a ‘Commission on the Future of Agriculture (ZKL)’ set up by the federal government, in which all relevant social groups were represented, developed proposals for a sustainable agricultural and food system, including the livestock sector, using a comprehensive approach. It proposed changes in production methods to be implemented through a set of tools (remuneration through markets and payments) to enable all farmers to adapt if possible. The EESC recommends that the European Commission look more closely at the format of this process and consider whether it would also be appropriate for the development of a European protein strategy. |
| --- | --- |

1.9.

| 1.10. | A protein strategy that also meets the objectives of strategic supply autonomy will have to include the following:






  — | fostering research and innovation in the area of plant-based proteins along the entire value chain and for need-oriented and optimised use of plant-based protein sources; |
| --- | --- | --- |

1.10.

—

fostering research and innovation in the area of plant-based proteins along the entire value chain and for need-oriented and optimised use of plant-based protein sources;

| — | developing and more strongly promoting protein potential in the EU; |
| --- | --- |

—

developing and more strongly promoting protein potential in the EU;

| — | strengthening a sustainable domestic production of plant-based proteins, produced in accordance with the high European standards; |
| --- | --- |

—

strengthening a sustainable domestic production of plant-based proteins, produced in accordance with the high European standards;

| — | developing and expanding regional value chains and regional processing capacities; |
| --- | --- |

—

developing and expanding regional value chains and regional processing capacities;

| — | continuously collaborating with institutions and agricultural organisations to promote the cultivation and use of domestic plant proteins in the food and feed industry; |
| --- | --- |

—

continuously collaborating with institutions and agricultural organisations to promote the cultivation and use of domestic plant proteins in the food and feed industry;

| — | further increasing crop potential by improving and broadening breeding strategies; |
| --- | --- |

—

further increasing crop potential by improving and broadening breeding strategies;

| — | expanding education and advisory services and knowledge transfer; |
| --- | --- |

—

expanding education and advisory services and knowledge transfer;

| — | enabling and facilitating protein-crop production on ecological focus areas; |
| --- | --- |

—

enabling and facilitating protein-crop production on ecological focus areas;

| — | more strongly linking livestock farming with regional feed potential; |
| --- | --- |

—

more strongly linking livestock farming with regional feed potential;

| — | consistently complying with existing limit values for pollution caused by emissions (nitrate in surface and ground water, ammonia, etc.); internalising external costs; |
| --- | --- |

—

consistently complying with existing limit values for pollution caused by emissions (nitrate in surface and ground water, ammonia, etc.); internalising external costs;

| — | promoting particularly animal-friendly farming practices through consumer information and product labelling; |
| --- | --- |

—

promoting particularly animal-friendly farming practices through consumer information and product labelling;

| — | setting production and quality standards addressing the health and environmental impact of imports of products competing with those produced in the EU; |
| --- | --- |

—

setting production and quality standards addressing the health and environmental impact of imports of products competing with those produced in the EU;

| — | running an information campaign in parallel on the consequences that different dietary habits have on the environment and health. |
| --- | --- |

—

running an information campaign in parallel on the consequences that different dietary habits have on the environment and health.

2.   Introduction and background

| 2.1. | EU agricultural policy and practice have been successful in terms of food supply but are now focused more on sustainability issues and on achieving the objectives of the Green Deal and the SDGs, including through the Farm to Fork Strategy. The focus has also been on the goal of strategic supply autonomy, especially since the COVID-19 pandemic and the war in Ukraine. |
| --- | --- |

2.1.

| 2.2. | Livestock farming (including meat and dairy products and eggs) is an economically important sector in the EU. However, in recent years it has increasingly been the subject of public debate for a number of reasons; one aspect is its strong dependence on animal feed imports. |
| --- | --- |

2.2.

| 2.3. | The European Parliament’s resolution on A European strategy for the promotion of protein crops (1) refers to a ‘major deficit in vegetable proteins due to the needs of its livestock sector’ and states that the situation ‘has regrettably seen little improvement [...] despite the use of co-products from biofuel production in animal feed’. The EU ‘devotes only 3 % of its arable land to protein crops and imports more than 75 % of its vegetable protein supply, mainly from Brazil, Argentina and the United States’ (2), although the total European production of protein-rich matter rose from 24,2 to 36,3 million tonnes (up 50 %) between 1994 and 2014, but at the same time consumption increased from 39,7 million tonnes to 57,1 million tonnes (up 44 %) (3). Political decisions such as the Blair House Agreement have been instrumental in creating these dependencies. |
| --- | --- |

2.3.

| 2.4. | Soya meal plays an important, even a leading role in the feed industry (4) and ‘is a privileged ingredient in compound feed formulation, because of its high protein content (over 40 %), amino acid content and year-round availability, which limits the need for frequent reformulation (5)’. Soya consumption in Europe has risen from 2,4 million tonnes in 1960 to almost 36 million tonnes a year. Meeting this huge demand for soya requires an area of almost 15 million hectares, ‘13 million ha of which are in South America’ (6); this equates to more than the total area of arable land in Germany (11,7 million ha) (7). The vast majority of imported soya (around 94 %) is made up of genetically modified varieties. |
| --- | --- |

2.4.

| 2.5. | The plants with a high protein content (over 15 %) mentioned in the Commission document (8) account for ‘about 1/4 of the total crude plant protein supply in the EU. Although cereals and grassland significantly contribute to the total EU plant protein supply’, surprisingly the Commission does not include them in its strategic reflection on plant proteins ‘because of a low protein content and low market relevance, respectively’ (9). The EESC cannot accept this argument. |
| --- | --- |

2.5.

| 2.6. | The high level of imports, especially of soya, is primarily due to the fact that the natural cultivation conditions in the US and South America make it much cheaper to produce soya there; the at times significantly lower environmental and social standards also play a role, such as the deforestation of natural forests in South America, and the displacement of indigenous peoples and small-scale farmers (10). The EESC welcomes the fact that the Commission has recognised the problem and is advocating ‘deforestation-free supply chains’ (11). |
| --- | --- |

2.6.

The EU has not adopted any satisfactory initiatives that could really reduce import dependency, either in the latest common agricultural policy (CAP) reform proposals or in negotiations with the Mercosur countries.

| 2.7. | In this connection, it is worth mentioning that, under the current CAP, protein production has particularly benefitted from Ecological Focus Areas (EFAs), which will no longer exist after the reform. Nitrogen-fixing crops are the most frequently declared type of crop for EFAs, accounting for as much as 37 % of EFA usage. The submitted national strategic plans for the implementation of the new CAP are yet to be evaluated, so it is not yet possible to say whether they will improve or worsen the situation. Although the Member States have a number of options (in particular, coupled payments) for promoting cultivation, initial analyses suggest that a) not all Member States will make use of them and b) the funding levels are not attractive enough. |
| --- | --- |

2.7.

| 2.8. | The EESC’s position is clear: ‘improving the EU’s protein autonomy is desirable from all points of view. Imports of soybeans from third countries can be responsible for deforestation, forest degradation and the destruction of natural ecosystems in certain producing countries. The development of legumes and pulses with high protein content in the Union would limit the use of imports and thus have a positive impact on the climate and the environment’ (12). |
| --- | --- |

2.8.

| 2.9. | Nobody disagrees with this position. On the contrary, the need for a corresponding European protein strategy has been under discussion for a long time in the EU, but so far this has led to little more than commitments to expanding European protein production and the tools mentioned in point 2.7, so an effective European protein strategy is still a long way away. |
| --- | --- |

2.9.

| 2.10. | Since the beginning of the COVID-19 pandemic, and certainly with the war in Ukraine, it has become clear that the global division of labour and trade relations do not only have a positive impact. They can lead to problems that were not previously, or were insufficiently, considered. The new key term is strategic supply autonomy. Whether we are talking about shortages of face masks, medicines, semiconductors or fossil fuels such as gas, oil and coal, dependencies can lead to severe economic and social disruption. |
| --- | --- |

2.10.

| 2.11. | The war in Ukraine and its expected long-term consequences will have a lasting impact on both the European and the global agricultural sector and on the European food industry, requiring changes. |
| --- | --- |

2.11.

| 2.12. | The EESC resolution on The war in Ukraine and its economic, social and environmental impact (13) stresses that ‘the conflict will inevitably carry severe consequences for the EU’s agri-food sector, which will require additional support; to this end; underlines that the EU must reinforce its commitment to deliver on sustainable food systems [...] in particular, the EU must improve its food security by reducing dependencies on key imported agricultural products and inputs’. |
| --- | --- |

2.12.

| 2.13. | At the same time, the EESC stresses that ‘the impacts of the war should not come to the detriment of climate action and sustainability’ and that the UN 2030 Agenda SDGs also promote peace, security and poverty reduction. Progress would be made towards implementation of the UN 2030 Agenda and a just transition through the European Green Deal. |
| --- | --- |

2.13.

| 2.14. | The EU heads of state and government also addressed this issue in the Versailles Declaration from 11 March 2022, which states: ‘We will improve our food security by reducing our dependencies on key imported agricultural products and inputs, in particular by increasing the EU production of plant-based proteins.’ (14). |
| --- | --- |

2.14.

3.   Facts and trends

| 3.1. | The EESC believes that, when developing a comprehensive European protein strategy, systemic issues must be discussed and taken into account to a much greater extent. This includes clarifying how the current system is to be assessed from the point of view of European strategic supply autonomy and global and regional sustainability, and what advantages and disadvantages it has for farmers, consumers, the environment and livestock. Current trends that affect the protein supply sector must also be considered. |
| --- | --- |

3.1.

Food, fuel or feed — what are we growing and what becomes of harvested agricultural plants?

| 3.2. | Europe’s current high level of meat production would not be possible without high levels of protein imports, even though a large proportion of agricultural yield is already currently used as animal feed. In Germany, for example, this accounts for almost a staggering two thirds of the total harvest, namely almost all the grassland, which of course cannot be used directly to feed people, and 60 % of both maize and cereals (15). The second main use of the harvest in terms of volume is not plant-based food but rather the production of technical energy (maize for biogas, rapeseed for biodiesel, and cereals and sugar beet for bioethanol). The direct use of crops as food only comes in third place. The plant-based food consumed in Germany — mainly bread cereals, potatoes, sugar, rapeseed oil and field vegetables — accounts for only 11 % of total crop production. |
| --- | --- |

3.2.

| 3.3. | Moreover, 93 % of imported plant proteins are used as animal feed. It is these imports and the scale and intensity of meat production that have become the subject of many debates in society in recent years. |
| --- | --- |

3.3.

| 3.4. | Two findings should be anticipated: firstly, in the EU, there is little shortage in the protein supply in the (plant-based) food sector itself, but rather and more importantly in the feed sector. Secondly, it will not be possible to fully substitute the high level of protein imports with European production without triggering profound consequences for other sectors of agricultural production. |
| --- | --- |

3.4.

| 3.5. | After all, there is an absolute limiting factor: the agricultural area available. Although both conventional and organic farming are continuously taking innovative steps to increase productivity, they too are reaching their limits in terms of volume. The association for the oilseed processing industry in Germany (OVID) therefore concludes in an in-depth analysis that the supply channels of these protein sources must continue to be secured, since complete self-sufficiency with domestically produced protein remains unrealistic (16). |
| --- | --- |

3.5.

| 3.6. | These fundamental statements should not be misunderstood. There are many good reasons to actively encourage more protein and oil crops to be grown in the EU: they fix nitrogen in soil, reduce the need for mineral nitrogen, improve soil quality and fertility, and make a positive contribution to climate change mitigation (e.g. reduced transport needs, less deforestation and less use of resources). Extended crop rotations reduce the prevalence of pests and are good for biodiversity. Currently, protein crop cultivation only accounts for a very small proportion (around 3 %) of the agricultural area. As such, expanding this cultivation, while highly advisable, would inevitably come at the expense of other types of cultivation, e.g. other food or energy crops, or would conflict with, for example, other nature conservation measures. |
| --- | --- |

3.6.

Current trends

| 3.7. | It is therefore advisable to start by identifying and analysing trends that could in the future affect livestock farming and animal nutrition and thus protein needs and quality. |
| --- | --- |

3.7.

| 3.7.1. | Firstly, there is already a change in consumer behaviour and consumption patterns. More and more consumers are reducing their consumption of meat or giving it up entirely. The high consumption of meat in Europe is now also being brought into question for nutritional reasons. Meat consumption has already decreased in some Member States (17). This can clearly be seen not only in statistics, but also on supermarket shelves, where there has been a visible increase in the amount of meat substitutes produced from protein crops. |
| --- | --- |

3.7.1.

| 3.7.2. | Another trend can be described as ‘less but better quality meat’: there is an increase in premium product ranges that put more emphasis on animal welfare and local produce, which has an impact on animal feed. This is leading more and more consumers to take an interest in how animals are reared, whether they are, for example, fed locally produced and/or non-GMO feed, whether they have access to grazing, and so on. There is already a high level of differentiation in the EU in this regard. |
| --- | --- |

3.7.2.

| 3.7.3. | This trend used to be considered a small niche area, but a major shift seems to be underway: many large supermarket chains in several Member States have already gradually increased animal welfare and environmental performance requirements for their fresh meat products. More radical changes are in the pipeline: from 2030, some major discount stores will source their full range of fresh meat only from farms providing outdoor access or optimal rearing conditions. This drive is targeting all livestock groups: cattle, pigs, chickens and turkeys. |
| --- | --- |

3.7.3.

| 3.7.4. | The increase in organic farming that is planned or already underway in the EU will also have an impact on feed supply (and soya imports). Up until now, organic livestock farming has increased by 10 % a year according to the European Commission. The Farm to Fork Strategy’s goal of making 25 % of farming organic will add further impetus to this if markets evolve accordingly, to which the CAP aims to contribute. As only 6 % of soya beans worldwide are marketed as non-GMO, farmers need to look for alternatives and/or increase on-farm feed production. |
| --- | --- |

3.7.4.

| 3.7.5. | Significant changes can already be seen with milk as well: in many Member States, the food retail industry requires dairies to produce milk and dairy products without using GMO cow feed. As a result, in Germany, for example, soya meal is no longer used as feed in around 70 % of milk production. The market is starting to differentiate between products, e.g. meadow, hay and mountain milk. Nevertheless, dairy products will continue to be a vital source of protein in the future and accessible to everyone as part of a balanced diet for all age groups. |
| --- | --- |

3.7.5.

| 3.7.6. | In this regard, it is worth remembering the EESC’s information report on Benefits of extensive livestock farming and organic fertilisers in the context of the European Green Deal (18), which not only recognises the particular importance of extensive livestock farming (based on permanent meadow and pasture) for biodiversity and other environmental and agricultural services, but also states that its role ‘in providing sustainable, healthy, safe and excellent food is key, particularly with a growing world population’. Another Committee opinion points to the need to take greater account of ‘the role of pastures/clovers as an important source of protein for ruminants’ (19). |
| --- | --- |

3.7.6.

| 3.7.7. | Another, completely different development which can have disastrous economic consequences for agriculture, traditional livestock farming and the whole agri-food system of this sector, is the development of so-called ‘cultured meat’, which, however, has nothing to do with meat, but is an industrial product manufactured in reactors. This trend does not come from either consumers or farmers, but from large multinationals such as Cargill, Tyson Foods and Nestlé. They are researching or developing practices to produce cultured meat in industrial reactors. Their argument is that, what farmers have always done throughout the history of mankind by practising traditional livestock farming (namely growing cells), they can do in a reactor using much less land, while the doubt about water saving and other resources used remains, as do the unknowns relating to ‘quality’ and related production costs. The EESC calls for a broad societal debate to be launched regarding concerns about this potential development and its negative consequences for livestock farmers and the meat production chain, a potential source of damage to the economies and employment levels of all Member States, and to the European Union as a whole. |
| --- | --- |

3.7.7.

Policy responses

| 3.8. | There are now clear policy responses, some of which go even further in terms of content than the Farm to Fork Strategy and which have also been drawn up as part of a completely different social debate. In Germany, for example, the federal government set up a Commission on the Future of Agriculture (ZKL) in July 2020 consisting of 32 members from very diverse social groups, including traditional farmers’ associations and academia. The goal was to develop a vision for the future of the agricultural and food system that would be accepted by a broad range of society. The recommendations were adopted by unanimous agreement and published in June 2021. They all follow the same principle: the most effective and sustainable way of improving the agricultural sector’s environmental and ethical responsibility, including in terms of animal welfare, is to find ways to remunerate more sustainable production methods, thereby making them economically viable, by introducing new instruments. |
| --- | --- |

3.8.

| 3.9. | For the livestock farming sector, the ZKL follows the recommendations of the Commission on Improvements in Livestock Farming (Kompetenznetzwerk Nutztierhaltung), which was set up by the German Federal Ministry of Food and Agriculture. The commission’s proposals were published in February 2020 (20) and set out a transformation strategy to transform livestock farming, with a substantial increase in animal welfare levels. This includes financing by means of taxes or duties combined with higher market prices and a payment linked to a mandatory animal husbandry label with set husbandry standards, which the commission believes is crucial to open up economic opportunities for the farmers concerned. This transformation strategy should secure the livelihood of livestock farms while reducing livestock numbers. |
| --- | --- |

3.9.

| 3.10. | In conclusion, current forms of livestock farming in Europe differ, sometimes fundamentally, in terms of both demand for imports (mainly soya) and the regional impact on the environment. While more traditional or extensively environmental, land-based farming methods mostly use regional resources and feed, have a manageable environmental impact and are sometimes even indispensable for the preservation of cultural landscapes, the current and growing volume of intensive livestock farming is putting a strain on the regional environment and — despite already high demand for arable land in the EU — largely uses imported feed, which has a major impact in the countries where it is grown (e.g. contributing to global deforestation, climate change and social upheaval). |
| --- | --- |

3.10.

| 3.11. | An important part of the European protein strategy must therefore be to make livestock farming as a whole compatible with EU and UN objectives regarding European and global food security, supply autonomy and sustainability. Increased protein production in the EU is part of this but, globally, a trend in which the global average per capita consumption of meat and dairy products approaches the current levels of developed economies seems incompatible with the UN SDGs. Livestock numbers need to be reduced. |
| --- | --- |

3.11.

| 3.12. | In principle, the ZKL has already carried out such an assessment of the current agricultural and food system as part of a social discussion process that merits further analysis by other EU Member States and the European Commission itself. On the one hand, this assessment recognises the indisputable positive benefits that agriculture provides to society, but on the other hand is critical of the basis for production developments in recent years and the impact they have had: ‘The flip side of this progress is seen in overexploitation of the natural environment, and of animals and biological cycles — up to and including seriously harmful effects on the climate. Added to this is the fact that farming faces an economic crisis. Various factors, not least policy decisions in the past, have led to farming practices that are no longer sustainable in environmental, economic and social terms. [...]. Given the external costs of prevailing production forms, retaining today’s agriculture and food system is not an option on environmental, animal ethics and economic grounds.’ (21). |
| --- | --- |

3.12.

4.   Calling for a sustainable protein supply and a greater role for oil crops

| 4.1. | As Europe is increasingly recognising supply autonomy as a strategic goal, it is definitely worthwhile making comparisons to energy policy: dependence on imports should be reduced as far as possible and the focus should be on meeting needs sustainably with Europe’s own resources. |
| --- | --- |

4.1.

| 4.2. | Unlike in the energy sector, where new technologies (wind, solar, biomass, hydrogen, etc.) can offset the lack of fossil fuels, the global food sector needs to adapt production and consumption to the potential of the finite natural capital (mainly land, but also biodiversity). This must include prioritising the use of agricultural yield. Supplying people with plant products (cereals, fruits, vegetables, etc.) must be the top priority. Fortunately, there is no reason to worry about whether the EU will be able to meet this need for its own population. However, given the growing concern about world hunger, it should be borne in mind that this problem cannot be solved with meat production. On the contrary, feed production is in competition with food production, as is biomass produced for energy purposes. |
| --- | --- |

4.2.

| 4.3. | This land use conflict is intensifying because, in almost all regions of the EU, agriculture faces sometimes considerable competition for land: according to EU calculations, the loss of agricultural land to urbanisation, construction, infrastructure, and so on, will reduce usable land by almost 1 million hectares by 2030. |
| --- | --- |

4.3.

| 4.4. | Nevertheless, the EU is in a comfortable position by global standards: an EU agriculture based on the principles of the European agricultural model (22) will clearly be able to provide sufficiently high-quality plant products for all its citizens as well as large quantities of feed, though not enough to meet current demand. Moreover, given the likely breakdown in supplies of cereals from Ukraine and Russia to regions where hunger is rife, it must be considered whether we in the EU ought not use less cereal for feed (or fuel) so as to help resolve the growing global hunger problem and increase the protein supply. |
| --- | --- |

4.4.

| 4.5. | When considering a European protein strategy, it must be borne in mind that ruminants (but not only them) can do something people cannot: they can digest grass. Grassland can even make up part of the diet of monogastric animals (pigs and poultry). It should therefore also be an essential component of a sustainable protein supply and gets far too little attention in current political discussions. The decision taken last year by the EU to reauthorise the use of meat meal and insect meal in animal feed may also help to reduce the proportion of plant-based protein in feed. |
| --- | --- |

4.5.

| 4.6. | Recent studies by special bodies from Germany’s Union for the Promotion of Oil and Protein Plants (UFOP) on the potential of rapeseed and legumes in cultivation and feed give cause for optimism that there is potential in terms of cultivation techniques to grow a lot more rapeseed and legumes, while at the same time significantly increasing crop rotations. Rapeseed and legumes could account for around 10 % of arable land each, which for legumes, for example, particularly grain peas, broad beans, soya beans and sweet lupins, would mean more than double the current level. Therefore, more oil crops do not stand in the way of sustainable land use — quite the opposite. Nevertheless, this can only be done to the detriment of other types of cultivation. |
| --- | --- |

4.6.

| 4.7. | However, the study also shows that current livestock needs cannot be met independently and that livestock numbers need to be reduced in order to move closer to the objective of strategic supply autonomy. |
| --- | --- |

4.7.

| 4.8. | The EESC therefore believes that there is an urgent need for the EU to carry out a study on the Europe-wide potential of protein and oil crops that could be grown within the EU’s borders. The study must take into account the sustainability of land use (crop rotations, soil fertility, including biodiversity). The outcome of the study should then be used to identify the land required for a healthy, plant protein-based diet for Europe’s citizens. It will then be possible to determine what remains for animal feed (or for energy purposes) and thus how much still needs to be imported for a livestock farming sector that is geared towards sustainability and animal welfare while remaining within European and global ecological limits. The European protein strategy must then also determine how it will affect existing trade agreements (e.g. Mercosur) and how to protect EU farmers who produce sustainably from imports deriving from unsustainable production. |
| --- | --- |

4.8.

| 4.9. | The EESC thinks it important to stress that the oil originating from oil crop cultivation of 10 % of EU arable land could lead to self-sufficiency in terms of tractor fuel if just used for this purpose. The EESC has already pointed out in previous opinions (23) that it considers it useful to set up a specific programme for the use of non-esterified (i.e. pure) vegetable oils in agricultural machinery rather than relying on a blend with diesel. However, the use of B100 type fuels (100 % vegetable oil esterified) should also be considered. The resulting oil cake (24) makes for excellent protein feed (the same is true of waste from alcohol production). |
| --- | --- |

4.9.

| 4.10. | Some Member States — for very different reasons — are already working on reducing livestock numbers (e.g. the Netherlands). This can be regulated or organised through market-based instruments. In addition to clear environmental and animal welfare standards, the EESC primarily advocates market-based solutions that create conditions for establishing new regional value chains that are self-sustaining and do not permanently depend on support. At the same time, they should open up opportunities for all livestock farms if possible. They must also, as far as possible, enable all EU farmers to produce sustainably and have a secure livelihood. This requires protection against unfair competition and unfair trading practices, which involves boosting farmers’ market power in the transformation towards a global sustainable food system. |
| --- | --- |

4.10.

| 4.11. | All of this shows once again that a sustainable EU strategy for plant protein and oil must consider the whole agricultural and food system; an isolated cultivation strategy will not help. |
| --- | --- |

4.11.

| 4.12. | Market mechanisms must be designed in such a way that they reflect the real social and environmental costs. Market failures can be addressed by state interventions based on facts and science that aim to optimise the trade-off between costs and benefits for society, while taking into account all interests. |
| --- | --- |

4.12.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  European Parliament resolution of 17 April 2018 on a European strategy for the promotion of protein crops (OJ C 390, 18.11.2019, p. 2).

1

(2)  European Parliament resolution of 17 April 2018 (OJ C 390, 18.11.2019, p. 2), point E. Comment from the EESC: the 75 % dependency refers to protein crops with a high protein content; the importance of grass and cereals as a source of protein for animals is inexplicably overlooked in many discussions.

2

(3)  European Parliament resolution of 17 April 2018 (OJ C 390, 18.11.2019, p. 2), point L.

3

(4)  Report from the Commission to the Council and the European Parliament on the development of plant proteins in the European Union (COM(2018) 757 final), page 2.

4

(5)  COM(2018) 757 final, page 3.

5

(6)  European Parliament resolution of 17 April 2018 (OJ C 390, 18.11.2019, p. 2), point L.

6

(7)  According to Eurostat, Europe's total agricultural area (including pastures and meadows) is around 174 million ha (data before Brexit).

7

(8)  COM(2018) 757 final.

8

(9)  European Parliament resolution of 17 April 2018 (OJ C 390, 18.11.2019, p. 2).

9

(10)  EESC opinion on Minimising the risk of deforestation and forest degradation associated with products placed on the EU market (OJ C 275, 18.7.2022, p. 88).

10

(11)  EESC opinion on Minimising the risk of deforestation and forest degradation associated with products placed on the EU market (OJ C 275, 18.7.2022, p. 88).

11

(12)  EESC exploratory opinion requested by the French presidency of the Council on Food security and sustainable food systems (OJ C 194, 12.5.2022, p. 72), point 1.3.ii.

12

(13)  EESC resolution adopted at the plenary session on 24 March 2022 (OJ C 290, 29.7.2022, p. 1).

13

(14)  https://www.consilium.europa.eu/media/54773/20220311-versailles-declaration-en.pdf.

14

(15)  In 2017, the agricultural used area in the EU (27) was 178,7 million hectares: of this, 105,5 million ha were arable land, of which 63 % (i.e. 66,8 million ha) was used for animal feed (https://de.statista.com/statistik/daten/studie/1196852/umfrage/landwirtschaftliche-flaechen-in-der-eu-nach-nutzungsart/).

15

(16)  OVID, Eiweißstrategie
  2.0, 2019.

16

Eiweißstrategie

2.0

(17)  In Germany, pork consumption per inhabitant decreased from 39,8 kg to 31 kg between 1995 and 2021.

17

(18)  EESC information report on the Benefits of extensive livestock farming and organic fertilisers in the context of the European Green Deal.

18

Benefits of extensive livestock farming and organic fertilisers in the context of the European Green Deal

(19)  EESC exploratory opinion requested by the French presidency of the Council on Food security and sustainable food systems (OJ C 194, 12.5.2022, p. 72).

19

(20)  https://www.bmel.de/SharedDocs/Downloads/DE/_Tiere/Nutztiere/200211-empfehlung-kompetenznetzwerk-nutztierhaltung.html.

20

(21)  The ZKL's final report.

21

(22)  EESC own-initiative opinion on the Reform of the common agricultural policy in 2013 (OJ C 354, 28.12.2010, p. 35).

22

(23)  EESC opinion on the use of energy from renewable sources, OJ C 77, 31.3.2009, p. 43.

23

(24)  When rapeseed is pressed, around 1/3 becomes oil and the other 2/3, oil cake.

24

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/97 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/97

---

Opinion of the European Economic and Social Committee on Towards a sustainable food labelling framework to empower consumers to make sustainable food choices

(own-initiative opinion)

(2023/C 75/14)

| Rapporteur: | Andreas THURNER |
| --- | --- |

Rapporteur:

Andreas THURNER

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Section for Agriculture, Rural Development and the Environment |
| Adopted in section | 5.10.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 147/5/1 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted in section

5.10.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

147/5/1

1.   Conclusions and recommendations

The European Economic and Social Committee (EESC)

| 1.1. | welcomes the European Commission’s initiative to establish a legal framework for sustainable food systems, including rules on sustainable food labelling. There is clearly a need for rules and a certain level of standardisation and harmonisation in order to ensure credibility and a level playing-field; |
| --- | --- |

1.1.

| 1.2. | stresses that sustainability is a multidimensional concept, which should always give equal consideration to the economic, environmental and social dimension; |
| --- | --- |

1.2.

| 1.3. | points out that people’s eating habits are very diverse, depend on different factors, and are very persistent. Expectations for a sustainability labelling scheme should therefore be realistic from the outset. However, there is a general interest in changing to more sustainable consumption patterns; |
| --- | --- |

1.3.

| 1.4. | recommends, therefore, establishing a sustainable food labelling framework that is transparent, based on science and as simple and pragmatic as possible, both helping economic operators to assess and improve the sustainability of products and providing useful information to help consumers make informed choices; |
| --- | --- |

1.4.

| 1.5. | suggests, in the interests of ease and pragmatism, also making do with sub-elements of a fully defined and rated sustainability, such as animal welfare or social or environmental criteria. However, the term ‘sustainable’ should not be used in this case, as this should only be used in the context of a comprehensive rating approach; |
| --- | --- |

1.5.

| 1.6. | advocates, firstly, a voluntary approach, which should, however, impose mandatory conditions if it is applied. Sustainability labels or sustainability claims that are not based on these conditions should therefore be banned; |
| --- | --- |

1.6.

| 1.7. | takes the view that labelling systems that use a rating scale (e.g. in the form of a traffic light system) can help consumers make informed choices. At the same time, such rating systems can also promote sustainability leadership and can encourage companies to improve their processes to that end, right along the food chain; |
| --- | --- |

1.7.

| 1.8. | points out that rating algorithms are crucial for a scale model. These must be scientifically based and made transparent to consumers in an appropriate manner; |
| --- | --- |

1.8.

| 1.9. | considers that existing EU quality schemes, such as organic farming and geographical indications, already include elements that contribute to greater sustainability in the food system. This should be recognised accordingly. The EESC also recommends that the existing rules undergo a sustainability check and, where appropriate, be supplemented by adequate sustainability provisions; |
| --- | --- |

1.9.

| 1.10. | emphasises the crucial role education plays in providing a basic understanding of sustainability aspects relating to food. Awareness raising campaigns and adequate measures to support the affordability of sustainable food products can also promote the transition towards more sustainable food systems. |
| --- | --- |

1.10.

2.   Background to the opinion

| 2.1. | The Farm to Fork Strategy (1) is a key element of the European Green Deal. Its aim is to make food systems fair, healthy and environmentally friendly. The Farm to Fork Strategy’s action plan includes, among other things, measures to promote sustainable food consumption and ease the shift towards healthy and sustainable diets. In the meantime, the European Commission has already started preparing a cross-cutting framework law to accelerate and facilitate the transition towards sustainability. It also aims to ensure that food placed on the market in the EU becomes increasingly sustainable. |
| --- | --- |

2.1.

| 2.2. | The EESC has already developed a solid framework for action through the development of a strategic vision on how to promote a comprehensive food policy. The building blocks of this vision are contained in opinions such as ‘Comprehensive food policy’ (2), ‘Sustainable and healthy diets’ (3), ‘Short food supply chains/agroecology’ (4), ‘Sustainable consumption’ (5) and ‘Aligning food business strategies and operations with SDGs for a sustainable post-COVID-19 recovery’ (6). |
| --- | --- |

2.2.

| 2.3. | Companies have a great responsibility to drive, on the one hand, consumers towards healthy and less environmentally impactful choices and, on the other hand, the sustainable transformation of food systems through the adoption of sustainable farming, processing and packaging practices. Companies should be part of the entire journey towards developing the sustainable food labelling framework. |
| --- | --- |

2.3.

| 2.4. | In addition to companies and stakeholders in the area of food production, consumers also play a crucial role in the transition towards more sustainable food systems. In principle, every purchase decision triggers the next production order. Stronger demand for sustainable food products will therefore also steer the supply side towards greater sustainability. |
| --- | --- |

2.4.

| 2.5. | Against this background, the objective of this own-initiative opinion is to explore possible options for a sustainable food labelling framework and to come forward with conclusions and recommendations to support the European Commission in developing such a policy framework from an early stage. |
| --- | --- |

2.5.

3.   General comments

| 3.1. | Sustainability is a multidimensional concept which should always give equal consideration to the economic, environmental and social dimensions. According to the FAO’s definition, a sustainable food system is ‘a food system that delivers food security and nutrition for all in such a way that the economic, social and environmental bases to generate food security and nutrition for future generations are not compromised’ (7). In a nutshell: a one-sided focus on the environmental part of sustainability, as is often the case today, or a one-sided focus on the socioeconomic pillars of sustainability is by definition not sustainable. The aim should be to cover the entire value chain in all three dimensions of sustainability. |
| --- | --- |

3.1.

| 3.2. | A labelling framework should not aim at classifying food as sustainable or unsustainable, but should instead support the development towards a more sustainable food system. The labelling framework is designed to help economic operators assess and improve the sustainability of products (methodologies that incentivise improvements, for example a benchmarking system or a reference system) and to provide useful guidance to consumers. This labelling framework should be developed in an open and transparent manner with the involvement of relevant stakeholders and it should build on a clear, science-based methodology. To this end, companies should have access to indicators, methodologies and the results achieved on the basis of the labelling scheme. Above all, it must be simple. |
| --- | --- |

3.2.

| 3.3. | Clear rules are needed in order to reduce the current confusion in the market owing to the inflationary use of the term ‘sustainable’ (a form of green washing). Sustainability labels or sustainability claims that are not based on a widely recognised certification scheme should be prohibited. |
| --- | --- |

3.3.

| 3.4. | Sustainable food labelling should be based on the whole production process and should, for the moment, be voluntary. However, it is essential that any sustainable food labelling framework is based, from the outset, on a clear definition/methodology that builds equally on all three pillars of sustainability (environmental, social, and economic). This should encompass the entire food value chain from production to consumption. Further down the line, it should be evaluated whether an obligation to label sustainability may be needed. The EU framework should allow adequate scope for national and regional systems, but definitions and evaluation rules must be harmonised across the EU. |
| --- | --- |

3.4.

| 3.5. | At the same time, the role of labelling must not be overestimated. There should be a realistic and pragmatic understanding of what sustainability labelling can and cannot deliver. According to the World Health Organization, for labelling to support consumers in making informed food purchases and healthier eating choices, consumers must be aware of, and recognise the label, understand what it means, be able to use it correctly, and be motivated to use it (8). It will be important to raise awareness of EU sustainability and quality labelling schemes. This, together with public procurement and education measures, can strengthen the demand for sustainable food products. Policy-makers should also look into adequate measures to support the affordability and accessibility of sustainable food. |
| --- | --- |

3.5.

| 3.6. | Sustainability labelling is important in cases where the manufacturer cannot provide the necessary information directly. Where the manufacturer can provide the relevant information directly to the consumer (e.g. at a local farmers market or a farm shop) a labelling scheme is not necessary. This is also important to avoid bureaucratic burden for small producers. |
| --- | --- |

3.6.

| 3.7. | Education plays a crucial role in providing a basic understanding of aspects of sustainability relating to food products. It is important to invest in education on sustainable diets from an early age in order to help young people appreciate the value of food. In addition, we can expect that children will ‘educate’ their parents to become more sustainable, as was seen, for example, in the area of waste sorting and recycling. For example, the EU school scheme for fruit, vegetables and milk should also focus more on important sustainability issues. |
| --- | --- |

3.7.

| 3.8. | The EESC points to its recommendation to develop new sustainable dietary guidelines, which take into account cultural and geographical differences between and within Member States. New sustainable dietary guidelines would help give farmers, processors, retailers and food services clearer direction. The agri-food system would benefit from a new ‘framework’ for producing, processing, distributing and selling healthier and more sustainable food at a fairer price (9). |
| --- | --- |

3.8.

4.   Specific comments

| 4.1. | People’s eating habits are diverse and strongly influenced by their personal and cultural environment. Moreover, eating habits are very persistent: if people are to change their diets, this will only happen in small steps and over longer periods of time. People’s lifestyles and social environment are other relevant factors determining whether sustainability plays a role in consumption patterns. However, a large and growing percentage of consumers say that they are willing to change their consumption habits for sustainability reasons. There is an interest in sustainability information to enable informed choices. |
| --- | --- |

4.1.

| 4.2. | More generally, sustainability labelling often appeals to those who are already interested in the issue. Sustainability labelling is intended to make it easier for this core group to make sustainable consumption decisions. |
| --- | --- |

4.2.

| 4.3. | The question is therefore also whether or not to reach out to those who do not have an interest in sustainability, and, if so, how. However, the role model effect of core target groups with respect to sustainability can lead to behavioural change through imitation. It is also a step forward if target groups that are less interested in the topic make sustainable food choices, at least occasionally or in sub-areas. These are just a few aspects, to make the expectations of a sustainability label realistic from the outset. |
| --- | --- |

4.3.

| 4.4. | The key prerequisites for successful labelling of sustainable food products are to ensure proper awareness and acceptance among consumers and to have a clear message. The labelling itself must be clear, simple and trustworthy. Alongside this, accompanying measures should be put in place on the consumer side, promoting education and information on sustainable diets, increasing trust and acceptance in a labelling system, and encouraging more sustainable consumption. |
| --- | --- |

4.4.

| 4.5. | Sustainability claims should be based on the following principles: reliability, transparency, relevance, accessibility and clarity (UN guidelines for providing product sustainability information (10)). The certification system must ensure that the structural background is sufficiently taken into account so as not to penalise small structures, such as farmers, SMEs, farm gate sales, weekly markets, etc. |
| --- | --- |

4.5.

| 4.6. | Labels with a rating scale (e.g. in the form of a traffic light system) could help consumers make informed choices. At the same time, such rating systems can also promote sustainability leadership and can encourage companies to improve their processes to that end, right along the food chain. However, in order to avoid confusion, there should be a certain degree of consistency across the various labelling schemes. |
| --- | --- |

4.6.

| 4.7. | The development of an appropriate sustainability labelling framework should, as far as possible, take a holistic approach, in the interests of ‘sustainable production and consumption’ rather than just ‘sustainable food’. Consumer behaviour is an essential building block in the overall picture of a sustainable food system. Packaging and transport (origin of the product) are equally relevant areas. At the same time, it will be necessary to show some pragmatism when it comes to defining the relevant sustainability indicators (e.g. which information/data is available in a reliable form). In any case, a harmonised set of rules on sustainability labelling should be established as soon as possible. Having an ever-increasing number of different sustainability labels at national and business level only creates confusion and leads to a loss of trust. |
| --- | --- |

4.7.

| 4.8. | European food retailers are already gaining their first experience with pilot projects on sustainable food labelling. Preliminary findings include: the perception of labelled products tends to be more positive than for non-labelled products with little influence on the purchasing decision; positive feedback mainly comes from younger target groups; sometimes, when a scoring system is used, the ‘nutriscore’ causes confusion, and there is a desire to have information on the packaging, rather than only on the price tag. Key issues include the credibility of the evaluation system (independent, science-based), the clarity of the information (understandability), having an approach that is as consistent as possible across the sector, and transparency (‘clarify’ rather than ‘simplify’, for example by using a bar code storing relevant information). |
| --- | --- |

4.8.

| 4.9. | Considering the social and socioeconomic dimension is crucial, although the indicators for this may not necessarily be obvious. The Member States have different legal provisions, particularly in the social field, such as working conditions and the minimum wage, which are likely to complicate efforts to develop a harmonised approach across the EU. In spite of this, it is important to include the socioeconomic dimension in sustainability labelling. |
| --- | --- |

4.9.

| 4.10. | As part of a pragmatic approach, it seems logical to recognise existing EU certification schemes such as organic farming and the protected geographical indication (PGI), protected designation of origin (PDO) and traditional speciality guaranteed (TSG) statues, in order to promote sustainability in the food system. While these schemes may not fully cover the issue of sustainability, they include elements that contribute to greater sustainability in the food system. The existing rules should undergo a sustainability check and, where appropriate, be supplemented by adequate sustainability provisions. |
| --- | --- |

4.10.

| 4.11. | Regional/local products and short supply chains can play a role in making food systems more sustainable. Regional producers often produce in the immediate vicinity of the local population, thus gaining some ‘societal control’, which should tend to drive sustainable production methods. |
| --- | --- |

4.11.

| 4.12. | The issue of ‘seasonality’ has an impact on the level of sustainability, especially in the case of fruit and vegetables. Information and education can raise awareness to boost low-resource consumption of this highly perishable, water-intensive food category. |
| --- | --- |

4.12.

| 4.13. | The recent CAP reform and the implementation of the European Green Deal (Biodiversity Strategy, Farm to Fork Strategy) in European agriculture aim to ensure that agricultural production in Europe becomes even more sustainable. Labelling the origin of agricultural raw materials therefore also makes it possible to draw conclusions about their level of sustainability. |
| --- | --- |

4.13.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  https://ec.europa.eu/food/horizontal-topics/farm-fork-strategy_en

1

(2)  EESC own-initiative opinion on Civil society’s contribution to the development of a comprehensive food policy in the EU (OJ C 129, 11.4.2018, p. 18).

2

(3)  EESC own-initiative opinion on Promoting healthy and sustainable diets in the EU (OJ C 190, 5.6.2019, p. 9).

3

(4)  EESC own initiative opinion on Promoting short and alternative food supply chains in the EU: the role of agroecology (OJ C 353, 18.10.2019, p. 65).

4

(5)  EESC own initiative opinion on Towards an EU strategy on sustainable consumption (OJ C 429, 11.12.2020, p. 51).

5

(6)  EESC own initiative opinion on Aligning the food industry with the Sustainable Development Goals (OJ C 152, 6.4.2022, p 63).

6

(7)  https://www.fao.org/in-action/territorios-inteligentes/componentes/produccion-agricola/contexto-general/en/

7

(8)  https://apps.who.int/iris/bitstream/handle/10665/336988/WHO-EURO-2020-1569-41320-56234-eng.pdf?sequence=1&isAllowed=y

8

(9)  EESC own-initiative opinion on Promoting healthy and sustainable diets in the EU (OJ C 190, 5.6.2019, p. 9).

9

(10)  https://www.oneplanetnetwork.org/knowledge-centre/resources/guidelines-providing-product-sustainability-information

10

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/102 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/102

---

Opinion of the European Economic and Social Committee on A strategic vision on energy transition to enable the EU’s strategic autonomy

(own-initiative opinion)

(2023/C 75/15)

| Rapporteurs: | Thomas KATTNIG


  Lutz RIBBE


  Tomasz Andrzej WRÓBLEWSKI |
| --- | --- |

Rapporteurs:

Thomas KATTNIG

Lutz RIBBE

Tomasz Andrzej WRÓBLEWSKI

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 4.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 197/9/12 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted in section

4.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

197/9/12

1.   Conclusions and recommendations

| 1.1. | At the end of 2021, the EESC decided to develop a comprehensive vision for the energy transition. On 18 January 2022, the EESC decided that all sections and the CCMI should include own-initiative opinions on various aspects of the energy transition in an overarching opinion on A strategic vision for the energy transition to enable sustainable development. |
| --- | --- |

1.1.

However, the current situation in Ukraine after the military invasion by the Russian Federation moved the energy transition to the top of the priority list, as the consequences for the EU’s energy supply and energy prices are unprecedented.

In light of the current crisis and taking into account the objective of ending the EU’s dependence on Russian gas by 2030, this EESC opinion presents a comprehensive vision for the energy transition in order to build and promote the EU’s strategic autonomy in the field of energy.

In order to develop a long-term strategic vision, this framework opinion summarises:

| — | conclusions and recommendations from the sectoral own-initiative opinions (1); |
| --- | --- |

—

conclusions and recommendations from the sectoral own-initiative opinions (1);

| — | conclusions from the opinions on REPowerEU and the REPowerEU plan and the forthcoming legislative proposals; and |
| --- | --- |

—

conclusions from the opinions on REPowerEU and the REPowerEU plan and the forthcoming legislative proposals; and

| — | conclusions and recommendations from previous EESC opinions. |
| --- | --- |

—

conclusions and recommendations from previous EESC opinions.

| 1.2. | The EESC draws attention to the risk of the combined economic and social effects of the current energy crisis putting the democratic system under strain unless adequate solutions are found. Therefore, the EESC supports the implementation of immediate measures to address the most pressing issues, in particular to ensure security of supply at a cost that is ‘as affordable as possible’ for both consumers and industry, which are affected by the current dramatic price increases. |
| --- | --- |

1.2.

| 1.3. | Climate change is increasingly becoming a bitter reality in Europe. Moreover, the current energy crisis, aggravated by Russia’s aggressive invasion of Ukraine, clearly shows that both the goals and measures proposed under the ‘European Energy Union’ and the Green Deal are correct in essence, but are not ambitious enough. They are not yet sufficient to lead Europe to a secure, sustainable and competitive ‘strategic energy autonomy’. Above all, they are still being tackled far too timidly. A paradigm shift is needed in this respect. |
| --- | --- |

1.3.

| 1.4. | The potential that Europe has in the field of renewable energies must be identified as accurately as possible and communicated widely in order to promote a common understanding of the extent to which independence from energy imports can be achieved. In particular, the electrification of the heat and transport sectors and the need for domestically produced green hydrogen must be taken into account. |
| --- | --- |

1.4.

| 1.5. | In addition to exploiting this potential as quickly as possible, energy-saving potential must be exploited even more vigorously. In the current situation, saving energy is the best way to produce immediate effects. |
| --- | --- |

1.5.

| 1.6. | At the same time, short- and possibly also medium-term measures will be necessary to compensate for lost energy supplies from Russia. LNG imports are one such measure. The EESC thinks it important, however, that this does not create new long-term dependencies on fossil fuels. This must be taken into account in advance in the investment cycle. Overall, the aim is not to diversify dependencies, but to achieve the highest possible level of ‘strategic autonomy’. |
| --- | --- |

1.6.

| 1.7. | This transformation is not just a major technical challenge; it also involves structural issues. In the future, energy production will be much more decentralised than in the past. This also opens up opportunities for cities and regions and other new stakeholders, e.g. MSMEs, and individual and community prosumers. The EESC believes that political decision-makers have still not provided clear indications or measures regarding how hitherto pure energy consumers in particular can become new players. It has pointed out in many of its opinions that acceptance is a crucial prerequisite for ensuring rapid transformation. Participation rights and opportunities are the best ways of gaining this acceptance. It is therefore not only a question of where energy is produced and from which source, but also of who is allowed to earn money from it. The EESC reiterates its call for wide-ranging and targeted information and awareness-raising measures, delivered in a coordinated and complementary manner by the European Commission and the Member States, together with business organisations, chambers, social partners and other relevant stakeholders (2). |
| --- | --- |

1.7.

| 1.8. | The EESC reiterates the conviction it has expressed in previous opinions: not only must social and regional cohesion funds and reconstruction aid be used in a way that supports climate action and the energy transition, but climate and energy policy must also be designed to promote social and regional cohesion. |
| --- | --- |

1.8.

2.   General comments

| 2.1. | The EESC draws attention to the risk of the combined economic and social effects of the current energy crisis putting the democratic system under strain unless adequate solutions are found. Therefore, the EESC supports the implementation of immediate measures to address the most pressing issues, in particular to ensure security of supply at a cost that is ‘as affordable as possible’ for both consumers and industry, which are affected by the current dramatic price increases. |
| --- | --- |

2.1.

| 2.2. | The consequences of the climate crisis are having a major impact on Europe and the world. The EESC reiterates its strong support for the objectives set out in the Green Deal, for reinforcing strategic autonomy in energy provision and for the transition to a sustainable, climate-neutral economy. The ‘energy war’ initiated by Russia makes the need to massively accelerate the transformation initiated by the Green Deal even clearer. REPowerEU and other initiatives proposed by the Commission serve to adapt the Green Deal accordingly, but they are not yet sufficiently ambitious. |
| --- | --- |

2.2.

| 2.3. | The social dimension must be taken into account in any measures planned as part of the energy transition. On the one hand, this is needed so as not to jeopardise public approval for the necessary changes and to ensure a just transition. On the other hand, this transformation will also enable positive developments in the regional economy, including new jobs (3), which will promote acceptance. As a representative of civil society, the EESC has often provided guidance on how members of the public should be involved so that they can benefit from the ‘just transformation’. Unfortunately, these have mostly been ignored, which could lead to greater difficulties in gaining acceptance. |
| --- | --- |

2.3.

| 2.4. | The EESC believes that the competitiveness of the European economy, particularly the industrial sector and MSMEs as drivers of sustainable innovation, must and can be safeguarded. Intelligent concepts for energy usage — for example, virtual power plants — offer considerable growth opportunities for smaller companies. As MSMEs are an essential part of the solution for a competitive, climate-neutral, circular and inclusive economy in the EU, the right conditions must be created and maintained with targeted forms of support and framework conditions. This is necessary to secure and create economic growth and high-quality jobs. |
| --- | --- |

2.4.

| 2.5. | While the EU is a frontrunner in cutting CO2 emissions, other actors need to be involved in climate action. The European Union must step up its diplomatic efforts, enter into new forms of cooperation and use tools such as cooperation and trade agreements to persuade third countries to do more to tackle this crisis. At the same time, the EU needs to have a discourse on whether to shift industrial supply chains back to Europe in order to reduce dependence on Chinese suppliers — for example in the photovoltaic module and battery sector — and at the same time guarantee a fully sustainable supply chain, including in terms of social policy and respect for human rights. |
| --- | --- |

2.5.

| 2.6. | The current energy (price) crisis and the lack of security, stability and predictability in supply are putting a huge strain on the European Union. The crisis would be less severe if more targeted action had been taken earlier and, for example, if the EU’s own objectives (such as those of the European Energy Union) had been taken more seriously. The EESC welcomes the measures proposed in the REPowerEU communication and the REPowerEU plan to ramp up green energy production, diversify supply and reduce demand for Russian gas, as the solutions they put forward are in line with the objectives of the Green Deal and the European Energy Union. In the Committee’s view, this should not primarily be a question of diversifying dependencies but rather, as far as possible, of ‘strategic energy independence and autonomy’. When it comes to resources to replace Russian gas, the EESC warns that the EU must take particular care with regard to the impact of these resources on the environment, and to new dependencies on third countries which do not share European values. |
| --- | --- |

2.6.

| 2.7. | The situation on the energy markets in August 2022 has made it clear that no energy source is 100 % reliable at all times. For example, for months, a substantial number of France’s nuclear power plants have not been connected to the grid because of maintenance, climate change impact and other issues. Coal-fired power generation has not only had a significant impact on the climate crisis, but is also suffering directly as a result of it: due to low water levels on the Rhine as a result of drought, coal-fired power plants can no longer be supplied. For similar reasons, hydropower has also become less stable, as has been shown in Italy, for example. Moreover, natural gas, whether transported as a gas or in liquid form, is not only harmful to the climate, but also harbours massive geopolitical risks. In other words, in the diversified and secured energy mix that all Member States are currently aiming at, wind and solar energy stand out as strategic, viable sources when looking into the future energy policy of the EU. Compensating for fluctuations in these two energy sources requires, first and foremost, storage facilities and, secondly, green hydrogen, in which wind and solar power can be ‘stored’ in the long term. The decisive question for Europe’s strategic autonomy is how much green hydrogen can be produced in Europe itself and how much must be imported. Also in the time of transformation we shall point to relatively the most reliable and climate efficient source. |
| --- | --- |

2.7.

| 2.8. | The developments of the last decades and not least the events of the recent past reveal the danger of cyber attacks and acts of sabotage on critical infrastructures such as the energy grid or power plants. Failure or disruption of this infrastructure can cause devastating supply shortages and threaten public security. Critical infrastructure such as gas and electricity grids, deep-sea internet cables, offshore installations as well as onshore wind farms and LNG terminals, coal or nuclear power plants, transport and traffic, health services, finance and security could be targets for cyberattacks as well as physical attacks. It is in the interest of everyone in Europe to better protect this critical infrastructure. The EU must be better prepared for potential attacks of this kind. Therefore the EESC calls for an immediate critical evaluation of the measures taken so far and for a comprehensive strategy to protect the EU against threats such as natural disasters, physical attacks and cyber attacks. In this context the EESC recommends that any foreign investment in strategic sectors in the Union conforms with the EU’s security policy. |
| --- | --- |

2.8.

| 2.9. | The EESC welcomes the establishment of a Climate Social Fund (4). Nevertheless, the EESC is convinced that the Fund, will not provide sufficient financial support to responsibly face the socioeconomic effects. The enormous challenge of designing an effective and fair compensation mechanism in a heterogeneous economic area comprising 27 Member States requires more far-reaching accompanying measures and resources at EU and national level. |
| --- | --- |

2.9.

| 2.10. | The massive increase in energy prices has made it clear that today’s energy market is only partially sustainable. Commission President Ursula von der Leyen herself, referring to cross-border cost-based pricing on the European electricity exchanges, stated that this system would no longer function if the volume of green electricity continued to rise. Fundamental questions need to be asked about the future of energy in order to ensure a clean, affordable and reliable energy supply and the right to energy. The EESC believes that the way in which the energy market is designed and regulated must be adapted to the new realities of the predominant renewable energies, while creating the necessary conditions for industry, MSMEs and individual actors as well as for the creation of new participation opportunities for prosumers, citizen energy communities, etc. and while strengthening appropriate protection for consumers. When redesigning the market, particular attention must be paid to avoiding existing structural barriers to market access for small market participants. This applies, for example, to access to balancing energy and, if necessary, capacity markets, which may be necessary to ensure security of supply. |
| --- | --- |

2.10.

| 2.11. | In order to ensure that energy prices are socially acceptable and once again competitive while paving the way for continued EU leadership in the use of renewable energy, the EESC calls for authorisation procedures in the field of renewable energy to be streamlined and sped up, as these procedures are viewed as the main barrier to faster deployment of renewable energy sources. At the same time, the framework conditions for decentralisation measures, energy cooperatives and all forms of prosumption must be significantly improved. |
| --- | --- |

2.11.

| 2.12. | The EESC strongly supports the Commission’s proposal on gas storage and a regulation on coordinated gas demand reduction measures. It calls on the institutions to:






  — | complement this with an instrument for short-term investment to support the development of hydrogen-enabled infrastructure such as interconnectors and storage facilities; |
| --- | --- | --- |

2.12.

—

complement this with an instrument for short-term investment to support the development of hydrogen-enabled infrastructure such as interconnectors and storage facilities;

| — | consider the use of gas storage facilities in neighbouring third countries; |
| --- | --- |

—

consider the use of gas storage facilities in neighbouring third countries;

| — | establish plans for individual Member States to avoid unbalanced burden-sharing at regional level. |
| --- | --- |

—

establish plans for individual Member States to avoid unbalanced burden-sharing at regional level.

| 2.13. | The EESC points out that the parallel development of centralised and decentralised infrastructure is problematic and that there is a risk of misinvestment. For example, there are competing potential uses for a nationwide hydrogen pipeline network and the expansion of cold district heating networks. The EESC has therefore called for appropriate fundamental decisions to be taken in the interests of investment security (5). |
| --- | --- |

2.13.

3.   Energy transition as an overarching strategy in the EU and international contexts

| 3.1. | The Russian aggression has caused a global geopolitical crisis, which is having an exponentially growing impact on both the economic balance and global energy security. It has called into question decades of energy, defence and external relation policies, forcing the EU to re-evaluate both its plans and its hitherto far too hesitant actions on green and digital transformation and to consider the ramifications that the Russian invasion and the sanctions imposed will have on the world’s continued energy transition. |
| --- | --- |

3.1.

| 3.2. | The dependence on primary energy imports from third countries has become a direct threat to the security and stability of the EU. That is why the European Commission has swiftly proposed adopting a set of measures adapting European energy policy to the current geopolitical situation under RePowerEU. The proposal for a Regulation on the security of gas supply and conditions for access to natural gas transmission networks reclassifies, for example, gas storage as critical energy infrastructure and imposes both mandatory certification for gas storage facility operators and gas storage filling targets to help the EU take back control of its energy market. All these measures are welcomed by the EESC and should indeed help the EU regain control of its energy market. |
| --- | --- |

3.2.

| 3.3. | At the same time, given the current political tensions, the EESC considers it necessary to cooperate even more actively with a number of countries that are in a position to supply Europe with energy in the short term until the massive expansion of renewable energy envisaged by the Commission takes effect. These include the United States and, to varying degrees, South American and African countries, whose exports of fossil fuels, which have become necessary in the short term, need to be accompanied by the transfer of knowledge and the development of renewable energy technologies in order to accelerate climate change mitigation there too. |
| --- | --- |

3.3.

4.   Creating an enabling environment for energy transition

4.1.   Public investment

| 4.1.1. | To meet increasing demand for electricity and achieve our climate objectives, we must double investment in the electricity grid to EUR 55 billion per year and increase the budget for building clean generation capacity to EUR 75 billion per year (6). In this context, public investment in smart and renewable energy systems as well as storage infrastructure is of great importance when it comes to ensuring security of supply, tackling energy poverty, keeping prices affordable, and creating high-quality jobs. |
| --- | --- |

4.1.1.

| 4.1.2. | The EESC once again recommends the ‘golden rule’ for public investments, as adopted in opinion ECO/569 (7), provided that neither the medium-term fiscal stability nor the value of the euro is jeopardised, in order to safeguard productivity and the social and ecological base for the well-being of future generations. |
| --- | --- |

4.1.2.

| 4.1.3. | Blended finance involving private investors is only an option if it can be ensured that allocations are transparent, that there are no confidentiality clauses, and that there are no unjustified costs for the public authorities compared to public financing. There must be full transparency regarding justified additional costs. It is therefore all the more important that rights and obligations be clearly defined in such mixed financing models, that liability issues be clarified and that an efficient and rapid system for conflict resolution be provided in order to avoid long-term additional costs and unfavourable liability issues. |
| --- | --- |

4.1.3.

| 4.1.4. | With regard to the future organisation of energy systems and energy infrastructure, the EESC has repeatedly stressed the importance of the active participation of all consumers — households, businesses and energy communities — in developing smart energy systems, as well as the need to create incentives to enable civil society to participate in the energy transition. The role that individuals, farmers, cities, MSMEs and citizen energy communities play in financing measures has clearly been totally underestimated. The EESC points out, for example, that more than 90 % of installed capacity in Germany was not built by major energy suppliers. There is no strategy to exploit this clear potential and readiness. |
| --- | --- |

4.1.4.

| 4.1.5. | European energy law does not recognise climate protection as an objective of grid regulation. As a result, national regulators also find it difficult to create incentives for the transformation, expansion and modernisation of electricity distribution grids that meet the requirements of climate neutrality. European energy law should therefore explicitly mention climate neutrality as a goal of grid regulation. |
| --- | --- |

4.1.5.

| 4.1.6. | The Commission rightly points out that public investment can and must trigger private investment. However, REPowerEU does not cover the refinancing of the respective public funds. Abolishing subsidies for fossil resources would be one approach for how to organise this; taxing the enormous windfall profits originating from the major oil and gas crisis that big oil companies in particular have benefitted from, would be another. The EESC is concerned that the extremely high profits of energy companies on the one hand and the increased energy poverty caused by energy price surges on the other may have a dangerous destabilising effect on society. The EESC proposes that these profits be skimmed off with the help of taxes and passed on as financial compensation to energy consumers, e.g. financially weaker households or energy-intensive companies, and used to expand renewable energy production and develop the necessary grid infrastructure, especially as this is already being discussed or implemented in some Member States. The EESC takes the view that, to avoid discouraging energy companies from investing in low-carbon solutions, such taxation should be considered very sensitive. The EESC calls on the Commission to propose corresponding measures without any further delay. |
| --- | --- |

4.1.6.

| 4.1.7. | Supply policy must go hand-in-hand with infrastructure that enables the appropriate flow of electricity and gas on the European market and ensures grid stability. The EESC is convinced that particular attention should be paid to defining grid development as an overriding public interest, including climate protection as a regulatory objective and, more generally, synchronising the planning of renewable energies and the electricity grid more effectively. There is an urgent need for specific provisions under EU law. |
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4.1.7.

4.2.   Climate Adjustment Fund

| 4.2.1. | The EU’s current mechanism for responding to natural disasters is the European Union Solidarity Fund (EUSF). However, the EUSF’s available annual budget is dwarfed by the huge cost of damages (8) caused by recent natural disasters and needs to be drastically increased. EU funding for the green energy transition is more substantial, but does not take into account the urgency of the EU’s current needs for green energy autonomy. |
| --- | --- |

4.2.1.

| 4.2.2. | In the EESC’s view, the EU needs a new financing mechanism that can provide immediate and substantial support to Member States in the event of such emergencies. The EESC therefore proposes the creation of a new Climate Adjustment Fund. This funding should be redirected from existing EU funds, notably from the Cohesion Fund and the Recovery and Resilience Facility (RRF), but managed in a streamlined and coherent way through this new Fund. |
| --- | --- |

4.2.2.

| 4.2.3. | In modernising the funding environment, the scope of existing programmes could also be broadened, their resources increased and Next Generation EU considered as a model for a new funding instrument. The EESC points out that new resources may need to be created to address the enormous challenges we face. However, any new ‘own resources’ must be designed fairly to avoid further burdening disadvantaged groups. Moreover, they must not hinder economic development. |
| --- | --- |

4.2.3.

| 4.2.4. | It is crucial that the functioning of the Climate Adjustment Fund, more focused on swift and urgent responses, is consistent with the EU’s overarching climate, environmental and energy policies, which will in the long run reduce reliance on emergency responses and protect humanity as well as the natural world. |
| --- | --- |

4.2.4.

4.3.   Promoting technologies

| 4.3.1. | The green transition in the manufacturing industry needs a basis of a sufficient, stable, proper mix of renewable energy for electrification and for the production of green hydrogen to succeed. Storage technologies are being developed and the opportunities offered by digitalisation are being fully exploited. There is therefore still a considerable need for research and development. |
| --- | --- |

4.3.1.

| 4.3.2. | Since the beginning of liberalisation, the investment performance of electricity companies has been declining. The share of public investment in researching and developing decarbonisation technologies is lower in the EU than in all other major economies, jeopardising the EU’s competitiveness in key future technologies. The EESC calls on the Commission to draft a strategic plan for investment and encourage the Member States to use the funds optimally and efficiently for clean energy development. The same applies to investment in the electricity grid. |
| --- | --- |

4.3.2.

| 4.3.3. | Decarbonisation will require a deep transformation of industrial activities (in the next 30 years). Although many low-carbon technologies already exist, their technology readiness levels (TRLs (9)) are low. Ambitious technology roadmaps will be needed to upscale and widely deploy these breakthrough technologies, and the EU must promote innovation through the Climate and Innovation Funds. |
| --- | --- |

4.3.3.

| 4.3.4. | There is absolutely no doubt that green hydrogen will contribute in the future to a secure European energy system. The EESC refers to its opinions on the hydrogen strategy (10) and the strategy for energy system integration (11). |
| --- | --- |

4.3.4.

4.4.   Supporting MSMEs (12)

| 4.4.1. | Micro, small and medium-sized enterprises (MSMEs), be they traditional businesses, family businesses, traders, social economy enterprises, craft enterprises or liberal professions, are an essential part of the solution for a competitive, climate-neutral, circular and inclusive EU economy, provided that the right conditions are created and maintained. MSMEs benefit from improving their own environmental performance and providing expertise and solutions to other businesses, the general public and the public sector. The EESC recognises and highlights the diversity and different needs of MSMEs, but at the same time calls for special attention to be paid to the smallest and most vulnerable of them. |
| --- | --- |

4.4.1.

| 4.4.2. | The EESC stresses that there is an urgent need to support MSMEs in understanding and managing the green transition in the best possible way. The EESC calls for wide-ranging and targeted information and awareness-raising measures, delivered in a coordinated and complementary manner by the European Commission and Member States, together with business organisations, chambers, social partners and other relevant stakeholders. Conversely, the important role played by MSMEs in terms of new technologies and innovative solutions for green change in EU industry should also be highlighted and taken into account in funding programme accessibility criteria. |
| --- | --- |

4.4.2.

| 4.4.3. | The EESC calls on the EU and the Member States to accelerate green investment in MSMEs by ensuring an enabling, predictable and encouraging regulatory environment, including smooth permission procedures and avoiding burdensome administrative duties, as well as by providing fast, easy, simple and traceable access to finance, tailored to the different needs of all diverse groups of MSMEs. |
| --- | --- |

4.4.3.

| 4.4.4. | To improve the resource efficiency of MSMEs, the EESC proposes establishing ‘hubs for circularity’ (H4C) in various regions. This should enhance cooperation between companies across sectors and facilitate the development of new practices and processes, including demonstrating new technologies. Procurement procedures throughout the EU must include climate-related, social and other quality criteria. This promotes innovation by MSMEs and facilitates their access to public contracts. MSME organisations, chambers, academia, social partners and other relevant stakeholders should be an integral part of the process. |
| --- | --- |

4.4.4.

| 4.4.5. | The EESC calls for close cooperation between education providers and MSMEs in shaping training to meet the competences and skills needed in the green transition, including by upskilling and reskilling employees and entrepreneurs alike. Moreover, the EESC advocates supporting innovation activities for MSMEs by incentivising and facilitating cooperation with other businesses, their organisations, chambers, universities and research organisations. |
| --- | --- |

4.4.5.

5.   General promotion of a fair and inclusive transition

5.1.   Just transition

| 5.1.1. | A ‘just transition’ entails measures and social policy interventions that accompany the transition towards a sustainable, carbon-neutral economy and production system. The EESC underlines that the ‘just transition’ is not just a question of financing the transition. It also includes the objective of safeguarding workers’ rights, creating decent work, quality jobs and social security, strengthening democratic participation (including at company level), and maintaining and further increasing the competitiveness of European businesses, and requires specific action at all levels, particularly at regional level. |
| --- | --- |

5.1.1.

| 5.1.2. | Employment in those key sectors that are particularly affected by environmental modernisation and the industrial revolution towards a climate-neutral Europe is facing major upheaval that makes reskilling and educational investments in high-quality green jobs essential. In this context, the provision of up-to-date knowledge and educational rights are just as relevant as the continuous promotion of the acceptance of women in technical professions. |
| --- | --- |

5.1.2.

| 5.1.3. | The measures and various stages of the transition set out in the Fit for 55 package may lead to huge changes in the economy and social disruption. The EESC therefore calls on the Commission to pay more attention, when evaluating NECPs, to the adequacy of the just transition strategies and, in particular, to assess the extent to which the following objectives have been achieved:






  — | facilitating employment transitions; |
| --- | --- | --- |

5.1.3.

—

facilitating employment transitions;

| — | supporting workers who lose their jobs as a result of decarbonisation (at the very least, a lost job should be compensated for with another, equivalent job); |
| --- | --- |

—

supporting workers who lose their jobs as a result of decarbonisation (at the very least, a lost job should be compensated for with another, equivalent job);

| — | developing the regional economic potential arising from renewable energy sources and new forms of participation in electricity production; |
| --- | --- |

—

developing the regional economic potential arising from renewable energy sources and new forms of participation in electricity production;

| — | effectively combating energy poverty. |
| --- | --- |

—

effectively combating energy poverty.

| 5.1.4. | The EESC calls for close cooperation between training providers and businesses in designing training to provide the skills and competences needed for the green transformation of the economy, including through upskilling and retraining workers and entrepreneurs. |
| --- | --- |

5.1.4.

| 5.1.5. | As expressed in earlier opinions (13), the EESC is convinced that not only must the resources for social and regional cohesion and recovery be deployed so as to support climate mitigation and the energy transition, but climate and energy policies must also be configured so as to further social and regional cohesion. Such strategies already exist, such as projects for building solar farms on former lignite mining sites in Portugal and Greece, or the very strategic support for prosumers in Lithuania. But these examples are far from common practice or mainstream. |
| --- | --- |

5.1.5.

5.2.   Enabling private investment

| 5.2.1. | Individual Member States need programmes for the bottom-up development of renewable energy resources, which are indispensable for the energy transformation and significantly affect both the quality and, above all, the prices of supplied energy. As a result of the increase in energy prices (coming from national electricity networks), there is already a tendency to independently satisfy the energy needs of businesses for which green energy has become a matter of survival. Many companies are already dynamically investing in their own renewable energy and heat sources. As these sources are cheaper, they are also attractive to local companies and communities that could use the surplus energy fed into the electricity grid. Unfortunately, the systems in many parts of Europe need development and are currently unprepared to accept numerous new installations. Moreover, these private investments would very often not need to be focused only on a single company’s needs — they could provide benefits to local communities. |
| --- | --- |

5.2.1.

| 5.2.2. | The problem in the development of the renewable energy sector seems to be a dynamic increase in power in the sector over an extremely short period of time, which is a big challenge for domestic power systems in the Member States, despite significant investments in modernising the network and increasing the systems transmission capacity. Europe now needs to develop local energy communities, where local governments have a dominant investment role. These are so-called energy cooperatives, formed with the participation of residents and often financed by local investment funds. This form of involving local societies in the energy transformation ensures support for these initiatives and minimises the risk of social resistance to locating generation, distribution or transmission installations in the local area. |
| --- | --- |

5.2.2.

| 5.2.3. | Such initiatives should be included in EU regulations as soon as possible and supported by a state funding system for this type of investment. In this case, commercialising medium and low-voltage lines in the power grid is critical so that the grid infrastructure can also be built with the participation of private investors. The development of civic photovoltaics shows the great investment potential of society and entrepreneurs. Appropriate legislation in this area would solve both financing problems and problems with connecting such investments to the electricity system. |
| --- | --- |

5.2.3.

5.3.   Energy poverty

| 5.3.1. | Ensuring equal access to energy and the security of energy supply at affordable cost must be an absolute priority for the EU and its Member States. With the spike in energy prices, more and more EU citizens and consumers are being affected by energy poverty across Europe. Those who were already facing energy poverty are seeing their situations worsen, and consumers who in the past did not face issues in paying their energy bills are at risk of falling into poverty. |
| --- | --- |

5.3.1.

| 5.3.2. | Considering the importance of the issue, the EESC urges the EU to promote a common approach to energy poverty. Currently, each Member State can define the term energy poverty according to its own criteria, and the lack of a common approach could lead to a situation where the Commission is not able to assess the situation adequately and Member States do not understand the same thing by it and react differently. The definition provided in the proposal for a recast of the Energy Efficiency Directive and the indicators previously established by the European Energy Poverty Observatory (EPOV) are a good start. Given the urgency of the issue, the EESC believes that the Commission and the Member States need to promote a common approach that provides a specific common understanding of energy poverty and enables the collection of statistical data. |
| --- | --- |

5.3.2.

| 5.3.3. | The EESC stresses the importance of investing in fair and efficient energy supply in order to alleviate energy poverty in the long term. To achieve this, it is important to ensure that investments in renewable energy and energy efficiency, as well as comprehensive building renovations, support the lowest-income groups. Only by ensuring that financially weaker households have the means to make necessary investments can prosumers achieve ‘strategic autonomy’ for themselves personally or as part of a community with others — ultimately the most sustainable way of overcoming energy poverty. |
| --- | --- |

5.3.3.

| 5.3.4. | In this connection, the EESC reaffirms its position that a two-tier energy society is to be avoided at all costs. We cannot have a situation in which only affluent and technologically well-equipped households benefit from the energy transition and all the rest have to bear the costs. The EESC therefore supports the incentives and tools for implementation of the Energy Efficiency Directive to help vulnerable customers and households, and points out that ambitious targets for district heating/cooling may worsen the conditions of social housing. The Committee therefore welcomes the proposal to create the Social Climate Fund, and calls for compliance with the ‘just transition’ principle so as to take into account the different situations of Member States. |
| --- | --- |

5.3.4.

| 5.3.5. | As energy poverty is rooted in general poverty, it is also essential that the Commission and Member States continue to focus on reducing poverty overall. This crisis highlights the need to continuously improve access to employment and social inclusion, to ensure an adequate standard of living and to foster economic growth in Member States. |
| --- | --- |

5.3.5.

5.4.   Rural areas

| 5.4.1. | The EESC believes that a combined strategy for the energy transition and digitalisation in rural areas has not received the expected level of attention and support. It calls for the swift implementation of the Commission’s long-term vision for the EU’s rural areas and the mobilisation of stakeholders through the EU Rural Pact. |
| --- | --- |

5.4.1.

| 5.4.2. | The EESC has repeatedly pointed out that the energy transition (the shift away from large, centralised production facilities to more decentralised structures) offers real opportunities for new sources of income and new jobs in rural areas (14). Here, too, the Committee is very disappointed with the ideas put forward so far by the European Commission and the Member States. |
| --- | --- |

5.4.2.

| 5.4.3. | The role of local and regional energy communities therefore has to be acknowledged and leveraged to achieve a just energy transition combined with community development, through the establishment and scaling up of citizen energy communities comprising the voluntary coming together of citizens, local authorities and MSMEs to promote social and economic benefits. |
| --- | --- |

5.4.3.

| 5.4.4. | The EESC concludes that the deployment of digital technologies in rural areas is an essential requirement to support the energy transition. The rural energy system must be decentralised, which implies a huge need for more and better interconnection, which of itself requires the deployment of digital technologies to match supply and demand and ensure efficient energy flows. |
| --- | --- |

5.4.4.

6.   Specific comments

| 6.1. | Keeping a sound industrial base within the EU will secure prosperity, quality jobs and a commitment to fighting climate change for European society. European industry must invest in Europe, in both R & D&I and plants and equipment, in order to keep its competitive position. This requires a proper regulatory framework.
  The energy industry represents a very large sector of the economy. One particular feature of this sector is that it is a key lever for other economic sectors. However, all aspects of the energy sector are very stereotyped in terms of gender, with men in a dominant position, which leads to major career imbalances between men and women in both the public and private energy sectors (15).
  The EESC recommends:






  — | strengthening and enforcing existing legislation on equality at both EU and national level; |
| --- | --- | --- |

6.1.

The energy industry represents a very large sector of the economy. One particular feature of this sector is that it is a key lever for other economic sectors. However, all aspects of the energy sector are very stereotyped in terms of gender, with men in a dominant position, which leads to major career imbalances between men and women in both the public and private energy sectors (15).

The EESC recommends:

—

strengthening and enforcing existing legislation on equality at both EU and national level;

| — | creating a level playing-field for training in energy-related careers in the Member States and at European level and setting up a European STEM College; |
| --- | --- |

—

creating a level playing-field for training in energy-related careers in the Member States and at European level and setting up a European STEM College;

| — | ensuring labour market equality in the energy sector by exploring opportunities for women, while at the same time preventing the energy and digital transitions from becoming traps for women’s careers and wages, and developing social dialogue and collective agreements on equality in energy companies across Europe. |
| --- | --- |

—

ensuring labour market equality in the energy sector by exploring opportunities for women, while at the same time preventing the energy and digital transitions from becoming traps for women’s careers and wages, and developing social dialogue and collective agreements on equality in energy companies across Europe.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 486, 21.12.2022, p. 67; OJ C 486, 21.12.2022, p. 88; OJ C 486, 21.12.2022, p. 53; OJ C 486, 21.12. 2022, p. 1; OJ C 486, 21.12.2022, p. 59; OJ C 486, 21.12.2022, p. 23; OJ C 486, 21.12.2022, p. 198

1

(2)  OJ C 486, 21.12. 2022, p. 1.

2

(3)  OJ C 367, 10.10.2018, p. 1.

3

(4)  OJ C 152, 6.4.2022, p. 158.

4

(5)  See OJ C 429, 11.12.2020, p. 85.

5

(6)  This is the conclusion of the federation for the European electricity industry, Eurelectric.

6

(7)  OJ C 275, 18.7.2022, p. 50.

7

(8)  A staggering EUR 80 billion in Germany in 2021.

8

(9)  TRL: Technology Readiness Levels are different points on a scale used to measure the progress or maturity level of a technology.

9

(10)  OJ C 123, 9.4.2021, p. 30.

10

(11)  OJ C 123, 9.4.2021, p. 22.

11

(12)  OJ C 486, 21.12. 2022, p. 1.

12

(13)  See OJ C 47, 11.2.2020, p. 30 and OJ C 62, 15.2.2019, p. 269.

13

(14)  OJ C 367, 10.10.2018, p. 1.

14

(15)  UN Sustainable Development Goals 5, 7 and 8; Joy Clancy, University of Twente, Give women a chance: engendering the energy supply chain.

15

Give women a chance: engendering the energy supply chain

---

ANNEX

The following amendments, which received at least a quarter of the votes cast, was rejected during the discussion:

Point 2.6

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| The current energy (price) crisis and the lack of security, stability and predictability in supply are putting a huge strain on the European Union. The crisis would be less severe if more targeted action had been taken earlier and, for example, if the EU’s own objectives (such as those of the European Energy Union) had been taken more seriously. The EESC welcomes the measures proposed in the REPowerEU communication and the REPowerEU plan to ramp up green energy production, diversify supply and reduce demand for Russian gas, as the solutions they put forward are in line with the objectives of the Green Deal and the European Energy Union. In the Committee’s view, this should
  not primarily
  be a question of diversifying
  dependencies but rather,
  as far as possible, of ‘strategic energy independence and autonomy’. When it comes to resources to replace Russian gas, the EESC warns that the EU must take particular care with regard to the impact of these resources on the environment, and to new dependencies on third countries which do not share European values. | The current energy (price) crisis and the lack of security, stability and predictability in supply are putting a huge strain on the European Union. The crisis would be less severe if more targeted action had been taken earlier and, for example, if the EU’s own objectives (such as those of the European Energy Union) had been taken more seriously. The EESC welcomes the measures proposed in the REPowerEU communication and the REPowerEU plan to ramp up green energy production, diversify supply and reduce demand for Russian gas, as the solutions they put forward are in line with the objectives of the Green Deal and the European Energy Union. In the Committee’s view, this should be
  primarily
  a question of diversifying
  resources and ensuring
  as far as possible, of ‘
  open
  strategic energy independence and autonomy’. When it comes to resources to replace Russian gas, the EESC warns that the EU must take particular care with regard to the impact of these resources on the environment, and to new dependencies on third countries which do not share European values
  . At the same time, in the current situation, we must keep all our working energy sources, because in fact, the danger for us right now is not the possible impact of substitute sources on the environment, but the lack of energy and power outages. Energy production capacity that currently supplies the European energy market cannot be lost
  . |

Section opinion

Amendment

The current energy (price) crisis and the lack of security, stability and predictability in supply are putting a huge strain on the European Union. The crisis would be less severe if more targeted action had been taken earlier and, for example, if the EU’s own objectives (such as those of the European Energy Union) had been taken more seriously. The EESC welcomes the measures proposed in the REPowerEU communication and the REPowerEU plan to ramp up green energy production, diversify supply and reduce demand for Russian gas, as the solutions they put forward are in line with the objectives of the Green Deal and the European Energy Union. In the Committee’s view, this should
  not primarily
  be a question of diversifying
  dependencies but rather,
  as far as possible, of ‘strategic energy independence and autonomy’. When it comes to resources to replace Russian gas, the EESC warns that the EU must take particular care with regard to the impact of these resources on the environment, and to new dependencies on third countries which do not share European values.

The current energy (price) crisis and the lack of security, stability and predictability in supply are putting a huge strain on the European Union. The crisis would be less severe if more targeted action had been taken earlier and, for example, if the EU’s own objectives (such as those of the European Energy Union) had been taken more seriously. The EESC welcomes the measures proposed in the REPowerEU communication and the REPowerEU plan to ramp up green energy production, diversify supply and reduce demand for Russian gas, as the solutions they put forward are in line with the objectives of the Green Deal and the European Energy Union. In the Committee’s view, this should be
  primarily
  a question of diversifying
  resources and ensuring
  as far as possible, of ‘
  open
  strategic energy independence and autonomy’. When it comes to resources to replace Russian gas, the EESC warns that the EU must take particular care with regard to the impact of these resources on the environment, and to new dependencies on third countries which do not share European values
  . At the same time, in the current situation, we must keep all our working energy sources, because in fact, the danger for us right now is not the possible impact of substitute sources on the environment, but the lack of energy and power outages. Energy production capacity that currently supplies the European energy market cannot be lost
  .

Outcome of the vote on the amendment:

| Votes in favour: | 77 |
| --- | --- |
| Votes against: | 113 |
| Abstentions: | 14 |

Votes in favour:

77

Votes against:

113

Abstentions:

14

Point 4.3.1

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| The green transition in the manufacturing industry needs a basis of a sufficient, stable, proper mix of renewable energy for electrification and for the production of
  green
  hydrogen to succeed. Storage technologies are being developed and the opportunities offered by digitalisation are being fully exploited. There is therefore still a considerable need for research and development. | The green transition in the manufacturing industry needs a basis of a sufficient, stable, proper mix of renewable energy for electrification and for the production of hydrogen to succeed. Storage technologies are being developed and the opportunities offered by digitalisation are being fully exploited. There is therefore still a considerable need for research and development. |

Section opinion

Amendment

The green transition in the manufacturing industry needs a basis of a sufficient, stable, proper mix of renewable energy for electrification and for the production of
  green
  hydrogen to succeed. Storage technologies are being developed and the opportunities offered by digitalisation are being fully exploited. There is therefore still a considerable need for research and development.

The green transition in the manufacturing industry needs a basis of a sufficient, stable, proper mix of renewable energy for electrification and for the production of hydrogen to succeed. Storage technologies are being developed and the opportunities offered by digitalisation are being fully exploited. There is therefore still a considerable need for research and development.

Outcome of the vote on the amendment:

| Votes in favour: | 92 |
| --- | --- |
| Votes against: | 112 |
| Abstentions: | 9 |

Votes in favour:

92

Votes against:

112

Abstentions:

9

Point 4.3.4

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| There is absolutely no doubt that
  green
  hydrogen will contribute in the future to a secure European energy system. The EESC refers to its opinions on the hydrogen strategy (1) and the strategy for energy system integration (2). | There is absolutely no doubt that hydrogen will contribute in the future to a secure European energy system. The EESC refers to its opinions on the hydrogen strategy (1) and the strategy for energy system integration (2). |

Section opinion

Amendment

There is absolutely no doubt that
  green
  hydrogen will contribute in the future to a secure European energy system. The EESC refers to its opinions on the hydrogen strategy (1) and the strategy for energy system integration (2).

There is absolutely no doubt that hydrogen will contribute in the future to a secure European energy system. The EESC refers to its opinions on the hydrogen strategy (1) and the strategy for energy system integration (2).

Outcome of the vote on the amendment:

| Votes in favour: | 92 |
| --- | --- |
| Votes against: | 112 |
| Abstentions: | 9 |

Votes in favour:

92

Votes against:

112

Abstentions:

9

Point 1.4

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| The potential that Europe has in the field of renewable energies must be identified as accurately as possible and communicated widely in order to promote a common understanding of the extent to which independence from energy imports can be achieved. In particular, the electrification of the heat and transport sectors and the need for domestically produced
  green
  hydrogen must be taken into account. | The potential that Europe has in the field of renewable energies must be identified as accurately as possible and communicated widely in order to promote a common understanding of the extent to which independence from energy imports can be achieved. In particular, the electrification of the heat and transport sectors and the need for domestically produced hydrogen must be taken into account. |

Section opinion

Amendment

The potential that Europe has in the field of renewable energies must be identified as accurately as possible and communicated widely in order to promote a common understanding of the extent to which independence from energy imports can be achieved. In particular, the electrification of the heat and transport sectors and the need for domestically produced
  green
  hydrogen must be taken into account.

The potential that Europe has in the field of renewable energies must be identified as accurately as possible and communicated widely in order to promote a common understanding of the extent to which independence from energy imports can be achieved. In particular, the electrification of the heat and transport sectors and the need for domestically produced hydrogen must be taken into account.

Outcome of the vote on the amendment:

| Votes in favour: | 92 |
| --- | --- |
| Votes against: | 112 |
| Abstentions: | 9 |

Votes in favour:

92

Votes against:

112

Abstentions:

9

Point 1.6

Amend as follows:

| Section opinion | Amendment |
| --- | --- |
| At the same time, short- and possibly also medium-term measures will be necessary to compensate for lost energy supplies from Russia. LNG imports are one such measure. The EESC thinks it important, however, that this does not create new long-term dependencies on fossil fuels. This must be taken into account in advance in the investment cycle. Overall, the aim is
  not
  to diversify dependencies
  , but
  to achieve the highest possible level of ‘strategic autonomy’. | At the same time, short- and possibly also medium-term measures will be necessary to compensate for lost energy supplies from Russia. LNG imports are one such measure. The EESC thinks it important, however, that this does not create new long-term dependencies on fossil fuels. This must be taken into account in advance in the investment cycle. Overall, the aim is to diversify
  the sources and at the same time to decrease the high
  dependencies
  on one importer in order
  to achieve the highest possible level of
  open
  ‘strategic autonomy’. |

Section opinion

Amendment

At the same time, short- and possibly also medium-term measures will be necessary to compensate for lost energy supplies from Russia. LNG imports are one such measure. The EESC thinks it important, however, that this does not create new long-term dependencies on fossil fuels. This must be taken into account in advance in the investment cycle. Overall, the aim is
  not
  to diversify dependencies
  , but
  to achieve the highest possible level of ‘strategic autonomy’.

At the same time, short- and possibly also medium-term measures will be necessary to compensate for lost energy supplies from Russia. LNG imports are one such measure. The EESC thinks it important, however, that this does not create new long-term dependencies on fossil fuels. This must be taken into account in advance in the investment cycle. Overall, the aim is to diversify
  the sources and at the same time to decrease the high
  dependencies
  on one importer in order
  to achieve the highest possible level of
  open
  ‘strategic autonomy’.

Outcome of the vote on the amendment:

| Votes in favour: | 77 |
| --- | --- |
| Votes against: | 113 |
| Abstentions: | 14 |

Votes in favour:

77

Votes against:

113

Abstentions:

14

---

(1)  OJ C 123, 9.4.2021, p. 30.

(2)  OJ C 123, 9.4.2021, p. 22.

(1)  OJ C 123, 9.4.2021, p. 30.

(2)  OJ C 123, 9.4.2021, p. 22.

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/115 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/115

---

Opinion of the European Economic and Social Committee on The importance of public transport for Europe’s green recovery

(own-initiative opinion)

(2023/C 75/16)

| Rapporteur: | Kristina KRUPAVIČIENĖ |
| --- | --- |
| Co-rapporteur: | Dovilė JUODKAITĖ |

Rapporteur:

Kristina KRUPAVIČIENĖ

Co-rapporteur:

Dovilė JUODKAITĖ

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 4.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 173/1/2 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted in section

4.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

173/1/2

1.   Conclusions and recommendations

| 1.1. | The EESC acknowledges that public transport has a key role to play in Europe’s post-pandemic green recovery. The pandemic has acted as a catalyst, showing that public transport provides both a service which is in the public interest and frontline workers and vulnerable groups with access to jobs and services. The EESC calls for mobility to be recognised as an individual right and as a public good that has to be available to everyone, since it guarantees access to economic, social and cultural life. Providing sufficiently staffed, accessible, affordable, safe, quality public transport services for everyone must be a priority objective for the EU. |
| --- | --- |

1.1.

| 1.2. | Mindful of the importance of public transport for individuals, users and workers, the EESC reiterates its call for a participatory approach to public transport planning at regional, national and European level (1). This is the only way to ensure that recovery strategies and measures meet the needs and expectations of all those who run and use public transport. |
| --- | --- |

1.2.

| 1.3. | The EESC notes that developing a high-quality service is essential for the post-pandemic recovery of public transport. Good working conditions as well as motivated and well trained staff are essential for delivering this level of service. The EESC calls for local, regional and national policy makers to develop — and for EU policy makers to fully support — business models leading to better innovative and attractive transport system ensuring both high quality service and adequate conditions and social protection for employees. |
| --- | --- |

1.3.

| 1.4. | Public transport is a labour intensive service with green jobs that cannot be delocalised. Public transport operators are one of the biggest employers in urban areas, offering employment for a wide range of people and contributing to the inclusion of migrant workers in the labour market. To preserve the social character of the sector, the EESC calls for decision makers to include mandatory service quality and social criteria in public transport service contracts, such as the application of collective agreements and adequately addressing the situation of staff following a change of operator. The EESC also calls for policy makers to ensure that strong social dialogue mechanisms are in place in order to make the sector economically and socially sustainable. The EESC also calls for full compliance with public procurement procedures (Regulation (EC) No 1370/2007 of the European Parliament and of the Council (2) or Directive 2014/23/EU of the European Parliament and of the Council (3)). |
| --- | --- |

1.4.

| 1.5. | The EESC draws attention to the fact that achieving sustainable mobility needs strong political commitment from all actors and at all levels. The EU institutions must play a strong role of political leadership and guidance, setting clear goals and objectives and making the necessary funds available. The EESC therefore calls on the European Commission to set measurable and ambitious targets to shift from private car use to collective transport and active mobility. |
| --- | --- |

1.5.

| 1.6. | Sustained investment is crucial for ensuring that policies geared towards sustainable public transport and thus the green recovery are successful. Significant financial resources were made available to the EU Member States via the Recovery and Resilience Facility, and many of them undertook to invest in their public transport systems. The EESC calls on the Commission to monitor and report on how these commitments are being met and to ensure that green recovery goes hand in hand with keeping and improving jobs, quality of service and social inclusion. The EESC calls on the Member States to set up participatory mechanisms to consult users and the social partners on how these funds, vital for the recovery of public transport, are used. The EESC points out that all EU and public funds allocated to developing transport solutions should include criteria on inclusiveness, accessibility and sustainability of transport. |
| --- | --- |

1.6.

| 1.7. | The EESC therefore calls on policy makers to implement the digital transition processes meant to achieve sustainable and just transport for all, in an inclusive and participatory manner. |
| --- | --- |

1.7.

| 1.8. | The EESC invites the European Union and the Member States to contribute to the shift towards greener modes of transport by making those modes more generally attractive. Raising awareness about the environmental impact of transport and personal mobility choices is also important in promoting the shift to public and sustainable transport. The EESC therefore calls on the Commission to dedicate 2024 to public transport, its users and workers. |
| --- | --- |

1.8.

2.   Background

| 2.1. | Transport and mobility are an integral part of Europeans’ daily lives, enabling the mobility of people across all sections of society, in all corners of Europe. At the same time, to achieve climate neutrality, the European Green Deal has set the target of a 90 % reduction in transport emissions by 2050. All transport sectors have to contribute to this reduction. The Green Deal states that ‘multimodal transport needs a strong boost’, as this will increase the efficiency of the transport system. |
| --- | --- |

2.1.

| 2.2. | In its Sustainable and Smart Mobility Strategy, the Commission makes sustainable interurban and urban mobility a flagship project, emphasising the need to make ‘mobility fair and just for all’ and to increase the modal share of collective transport, improving seamless multimodality in urban and sub-urban areas. The strategy also points to the increasing demand for new and innovative solutions, including services accessible on demand and collaborative mobility. The strategy prioritises the need to improve the framework for urban mobility.






  — | In its Urban Mobility Framework (4) (UMF), the Commission points out that urban mobility contributes 23 % to the growing share of transport in the EU’s energy use and greenhouse gas emissions; cities face the biggest challenges in terms of air quality, with concentrations of NO2 and PM10 exceeding EU limit values; congestion levels in EU cities have stagnated or worsened since 2013, with considerable costs to society and negative impacts on commuting; urban areas account for 38 % of all fatalities and serious injuries in road transport in the EU; over 70 % of Europeans live in cities and expect solutions for better and safer mobility, congestion, air and noise pollution; and 30 % live in villages, small towns and peri-urban areas, and are often dependent on private cars to reach nearby urban nodes; |
| --- | --- | --- |

2.2.

—

In its Urban Mobility Framework (4) (UMF), the Commission points out that urban mobility contributes 23 % to the growing share of transport in the EU’s energy use and greenhouse gas emissions; cities face the biggest challenges in terms of air quality, with concentrations of NO2 and PM10 exceeding EU limit values; congestion levels in EU cities have stagnated or worsened since 2013, with considerable costs to society and negative impacts on commuting; urban areas account for 38 % of all fatalities and serious injuries in road transport in the EU; over 70 % of Europeans live in cities and expect solutions for better and safer mobility, congestion, air and noise pollution; and 30 % live in villages, small towns and peri-urban areas, and are often dependent on private cars to reach nearby urban nodes;

| — | urban public transport infrastructure and services need to be adapted to ensure better accessibility, including to better serve an ageing population in many cities as well as persons with disabilities or reduced mobility. |
| --- | --- |

—

urban public transport infrastructure and services need to be adapted to ensure better accessibility, including to better serve an ageing population in many cities as well as persons with disabilities or reduced mobility.

| 2.3. | The Commission also stresses the urgency of dealing with climate change, and the role it plays in social inclusion and people’s well-being, especially for disadvantaged groups. The Commission has therefore made building a stronger public transport network one of the goals of its UMF. |
| --- | --- |

2.3.

| 2.4. | Over the last few years, the pandemic has been a game changer for economic growth and its supporting rules and mechanisms. It has exposed pitfalls and brought into focus values in the development of the EU single market. However, it has also created opportunities for faster implementation of policies such as the Green Deal, revealed the importance of placing people at the heart of the recovery process as reflected in the Just Transition concept, and prompted the Commission to adopt its largest financial aid programme, aimed at mitigating the social and economic impacts of COVID-19, the Recovery and Resilience Facility (RRF), with the green transition and digital transformation as two of its six pillars. |
| --- | --- |

2.4.

| 2.5. | In public transport, the pandemic has impacted jobs, public transport users, operators and public authorities. In its Conclusions on the Sustainable and Smart Mobility Strategy, the Council of Ministers pointed out that public transport was seriously affected by the COVID-19 crisis and that the policy response to the crisis should aim to restore confidence in and improve the resilience of public transport, accelerating its sustainable transformation and modernisation, while ensuring affordability given the essential role of public transport in social and territorial cohesion. |
| --- | --- |

2.5.

| 2.6. | The EESC highlights the hugely important fact that throughout the pandemic, public transport demonstrated its value by providing much-needed mobility for frontline workers and disadvantaged groups. Migrant workers and women account for a high proportion of these groups and are known to be heavily reliant on public transport to access workplaces and basic services. Eurobarometer data for 2020 show that significantly more women use public transport than men. A European Parliament study on Women and transport, while pointing to the lack of gender segregated data on gender mobility patterns, provides interesting insights into this type of choice (5). |
| --- | --- |

2.6.

| 2.7. | The EESC also acknowledges the increased costs and decreased resources faced by providers of transport services and public authorities due to the pandemic. Although COVID-19 prevention measures led to increased costs, and the significant drop in numbers of users left companies with greatly reduced revenue, local, public and government authorities understood that keeping public transport functioning was part of their duty to serve communities, and particularly to serve the people who serve others. |
| --- | --- |

2.7.

| 2.8. | This own-initiative opinion aims to provide key recommendations on the recovery and future development of sustainable, robust, inclusive, accessible and resilient public transport after the COVID-19 crisis, ready to serve generations to come, in view of the ageing demographic in the EU (6). It will focus on the issues of financing, attractiveness and its role in the green recovery of the EU, centred around public transport workers’ social conditions. The shortage of personnel in all transport sectors shows a clear need for this approach. |
| --- | --- |

2.8.

3.   General comments

| 3.1. | The EESC recognises that public transport is a significant part of the answer to Europe’s green post-pandemic recovery. Not only does it provide an answer to climate concerns, it also contributes to quality of life by addressing congestion. ‘Up to 2020, public transport in urban areas counted almost 60 billion passenger journeys per year in Europe, with numbers on the rise. (...) Congestion already costs the European economy 1 % of its GDP, EUR 100 billion per year’ (7). |
| --- | --- |

3.1.

| 3.2. | The EESC notes that the pandemic has reshaped people’s behaviour, and re-focused public and local authorities’ attention on the societal value of public transport. However, public transport was one of the sectors that was hit hardest by a drastic drop in the number of users, and has taken the longest time to recover. This happened while people turned towards active mobility and private car journeys as a way of avoiding infection. While increased active mobility is a salutary trend and needs to be encouraged, the question of the increased use of private cars needs to be seriously considered by European policy makers, and by national, local and regional authorities. |
| --- | --- |

3.2.

| 3.3. | The EESC acknowledges that despite maintaining the continuity of public transport during the pandemic, employment in the sector has been hard hit. In Europe, before the first lockdown, the sector provided direct jobs for two million people (8). Importantly, public transport provides secure local jobs, of a wide variety, from less qualified to highly qualified profiles, and employs staff with very diverse backgrounds (9). However, a considerable proportion had to be placed on governmental temporary unemployment schemes and many chose not to return to their jobs. This is particularly the case in Member States with low social security benefits and collective bargaining coverage. |
| --- | --- |

3.3.

| 3.4. | Consequently, the EESC warns that there is a critical shortage of staff across all transport sectors in Europe, public transport included. Job quality and job security have become key criteria for jobseekers, and social security and collective bargaining coverage are key guarantees in this respect. |
| --- | --- |

3.4.

| 3.5. | The EESC welcomes the efforts by public, regional and government authorities to maintain the necessary level of public transport service throughout the pandemic in complex circumstances that required financial support and investment in COVID-safety protocols. We acknowledge that the relevant authorities had to resort to drastic limitations in vehicle capacity (10), introduce digital solutions to reduce direct contact between users and workers, increase spending on health and hygiene equipment, and offset the fall in revenue caused by the sudden and persistent reduction in the number of public transport users. |
| --- | --- |

3.5.

| 3.6. | At the same time, the EESC regrets that COVID-safety protocols in the transport sector were not always adopted in an inclusive manner, with consideration for all affected persons. For example, in certain cases, public transport became unavailable to persons with disabilities and older persons due to the reduction or suspension of assistance provided to passengers with reduced mobility (11), and the fact that digital solutions failed to take account of people with lower digital skills, those unable to afford digital devices or electronic communication services, and were not developed in line with EU accessibility policies and supporting standards. |
| --- | --- |

3.6.

| 3.7. | The EESC points out that post-pandemic strategies are now needed to make public transport attractive and enable more people to make use of it. As highlighted by EESC opinion INT/909: ‘we now have the opportunity to ensure a fair recovery and rebuild our economies rapidly in order to make them greener, fairer and more resilient to future shocks (12).’ This call is reiterated in EESC opinion TEN/728, which notes that ‘a green transition must both be socially just and preserve the competitiveness of European transport, including through full implementation of the European Transport Area, with full implementation of the Single Market (13).’ |
| --- | --- |

3.7.

| 3.8. | In the light of the above reasoning, the following key ingredients are needed to make public transport more attractive:






  — | Availability, translated into sufficient capacity of public transport modes to cope with increased demand, especially in rural, peripheral areas where there are often fewer options for people; |
| --- | --- | --- |

3.8.

—

Availability, translated into sufficient capacity of public transport modes to cope with increased demand, especially in rural, peripheral areas where there are often fewer options for people;

| — | Sufficient staff benefiting from proper conditions and training, stable, quality jobs and a full range of rights and benefits; |
| --- | --- |

—

Sufficient staff benefiting from proper conditions and training, stable, quality jobs and a full range of rights and benefits;

| — | Connectivity — increased and effective — with different transport modes, within and between urban and non-urban areas, to provide all passengers with seamless intermodal travel, including between different geographical regions; |
| --- | --- |

—

Connectivity — increased and effective — with different transport modes, within and between urban and non-urban areas, to provide all passengers with seamless intermodal travel, including between different geographical regions;

| — | Affordability, for all members of society. To ensure this, cost calculations of public transport should take into account affordability for persons experiencing socioeconomic poverty and exclusion. Targeted schemes to support the most socioeconomically disadvantaged groups should be explored in close consultation with relevant communities; |
| --- | --- |

—

Affordability, for all members of society. To ensure this, cost calculations of public transport should take into account affordability for persons experiencing socioeconomic poverty and exclusion. Targeted schemes to support the most socioeconomically disadvantaged groups should be explored in close consultation with relevant communities;

| — | Accessibility, allowing for seamless and independent use by everyone, including persons with disabilities, older persons and people with (temporary) reduced mobility; |
| --- | --- |

—

Accessibility, allowing for seamless and independent use by everyone, including persons with disabilities, older persons and people with (temporary) reduced mobility;

| — | Safety of users and workers, centred around gender and intersectional dimensions. Inclusive public health measures are equally relevant for safe travel, as demonstrated in the past years. Public transport workers require a safe working environment, free from violence and harassment. |
| --- | --- |

—

Safety of users and workers, centred around gender and intersectional dimensions. Inclusive public health measures are equally relevant for safe travel, as demonstrated in the past years. Public transport workers require a safe working environment, free from violence and harassment.

| — | Quality in terms of convenience, journey times, assistance from sufficient levels of staff, accessible digital solutions, information about transport options and schedules. |
| --- | --- |

—

Quality in terms of convenience, journey times, assistance from sufficient levels of staff, accessible digital solutions, information about transport options and schedules.

| 3.9. | The EESC points out that in the pre-pandemic years the PSO Regulation (EC) No 1370/2007 introduced possibilities to open public transport services to private operators via competitive tendering and public service contracts, concluded under the general EU public procurement rules. As the pandemic proved the strategic role played by public transport as regards society and mobility and since public transport is facing an unprecedented shortage of staff, the EESC stresses the need for public service contracts to offer protection in terms of social and employment conditions, in order to retain skills in the sector. |
| --- | --- |

3.9.

| 3.10. | Public transport is a service from which society as a whole, in all its diversity, has to benefit. With this in mind, it is crucial to keep procurement processes transparent and ensure participation of workers and users alike in procurement decisions. |
| --- | --- |

3.10.

| 3.11. | The EESC appreciates that, in order to mitigate the social and economic impact of COVID-19, the Commission launched the Recovery and Resilience Facility (RRF). Regulation (EU) 2021/241 of the European Parliament and of the Council (14) lays down conditions under which the Member States can access EU RRF grants. They have had to submit national plans, and commit to spending 37 % of the EU grants on climate investments and reform, and 20 % on digital transition. Clean mobility stays at the core of these plans. The EESC points out, however, that the implementation of these measures will have an impact on both society and workers, and hence, it cannot be done behind closed doors. All social stakeholders should be involved in the development of policies for greener and more sustainable public transport (15). Likewise, public stakeholders should be able to effectively monitor implementation of public policies and the spending of relevant public funds. |
| --- | --- |

3.11.

| 3.12. | Inclusive participation in public transport development solutions should be promoted to enable all stakeholders including public authorities, services providers, public transport users and accessibility and urban planning experts to play a role (16). Best practices of co-creating public transport solutions should be promoted (17). A ‘universal design’ approach according to the UN CRPD (18) to developing services should enable use of such services by the widest diversity of users, including persons with disabilities, older persons, and persons with reduced mobility. |
| --- | --- |

3.12.

| 3.13. | The Commission Communication on Fit for 55 notes that ‘Many citizens, especially younger people, are ready to change their consumption and mobility patterns when empowered by relevant information in order to limit their carbon footprint and to live in a greener, healthier environment’ (19). Making these modes more attractive to everyone will contribute to the shift towards greener and more sustainable modes of transport. Raising awareness about the environmental impact of transport and personal mobility choices is important. However, promotional measures alone will not have the necessary impact unless these challenges to available, affordable, accessible and safe public transport are addressed properly. Although many people are aware of the urgent environmental need to use greener transport, they will not be able to make a valuable contribution to the green transition if they simply cannot afford or access greener transport. This will be a huge lost opportunity for the EU. |
| --- | --- |

3.13.

| 3.14. | The EESC would like to highlight the fact that COVID-19 triggered a more rapid integration of digital technologies into public transport. It is more than likely that these trends will be maintained and encouraged via the deployment of the EU RRF and the NRRPs. While digitalisation can contribute to the efficiency and sustainability of public transport, as well as benefit transport users (e.g. digital journey planners, real-time transport information), care should be taken to ensure that the digital transition does not come at the cost of labour opportunities for transport staff and in-person support services for users, or increase the mobility gap between transport users who can and cannot benefit from digitalisation due to inaccessibility and unaffordability of digital services and lower digital skills. The EESC therefore calls on policy makers to implement the digital transition processes meant to achieve sustainable and just transport for all, in an inclusive and participatory manner. |
| --- | --- |

3.14.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  EESC opinion TEN/766 on New EU Urban Mobility Framework (OJ C 323, 26.8.2022, p. 107).

1

(2)  Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (OJ L 315, 3.12.2007, p. 1).

2

(3)  Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ L 94, 28.3.2014, p. 1).

3

(4)  Urban Mobility Framework (COM(2021) 811 final).

4

(5)  Women and transport, European Parliament, FEMM Committee, December 2021 https://www.europarl.europa.eu/RegData/etudes/STUD/2021/701004/IPOL_STU(2021)701004_EN.pdf, p. 34–35 ‘Evidence should be considered in the context of women’s mobility needs. As mentioned in previous sections, women more often work part-time, care for children and relatives, live longer, are less likely to have a driving licence and to own a car, and use public transport and walk more frequently than men. They have more complex daily mobility patterns compared to men. At the same time, women often exercise limited control over household finances as they are more likely to be the second earners in a household (Borgato et al., 2021; Rastrigina and Verashchagina, 2015). In general, women are more likely to be at risk of poverty and social exclusion (EIGE, 2020) as they are more likely to belong to vulnerable groups and affordability is a crucial element for their mobility’.

5

Women and transport

(6)  Ageing Europe — statistics on population developments — Eurostat.

6

(7)  ETF & UITP Joint Statement for COP 26: Tackling climate action with public transport is one of the EU's largest economic opportunities of the 21st century.

7

Tackling climate action with public transport is one of the EU's largest economic opportunities of the 21st century

(8)  Relaunching Transport and Tourism in the EU after COVID-19, May 2021, research commissioned by the TRAN Committee of the European Parliament and carried out by the Policy Department for Structural and Cohesion Policies, Directorate-General for Internal Policies.

8

Relaunching Transport and Tourism in the EU after COVID-19

(9)  ETF & UITP Joint Statement for COP 26: Tackling climate action with public transport is one of the EU's largest economic opportunities of the 21st century.

9

Tackling climate action with public transport is one of the EU's largest economic opportunities of the 21st century

(10)  In 2020, in the first lockdown, Milan and Barcelona reduced vehicle occupancy to 25 % and 50 % respectively, Ireland to 20 % and Portugal to two thirds — COVID-19 and urban mobility: impacts and perspectives, September 2020, research for the European Parliament TRAN Committee, Policy Department for Structural and Cohesion Policies, Directorate-General for Internal Policies PE 652.213.

10

COVID-19 and urban mobility: impacts and perspectives

(11)  EDF Recommendations on exit measures for transport services in light of Covid-19.

11

(12)  OJ C 429, 11.12.2020, p. 219.

12

(13)  OJ C 341, 24.8.2021, p. 100.

13

(14)  Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17).

14

(15)  The UN Convention on the Rights of Persons with Disability requires that ‘In the development and implementation of legislation and policies to implement the present Convention, and in other decision-making processes concerning issues relating to persons with disabilities, States Parties shall closely consult with and actively involve persons with disabilities, including children with disabilities, through their representative organizations.’ — Article 4.3 CRPD. Additionally, the EESC opinion ‘Towards a competitive and resource-efficient transport system’ notes that ‘The EESC, as already stated in its 2012 opinion, would like to encourage an open, continuous and transparent exchange of views on the implementation of the White Paper between civil society (business, employers, employees, users, NGOs and academia, etc.), the Commission and other relevant players such as national authorities at different levels. This will improve civil society buy-in and understanding, as will useful feedback to policy makers and those carrying out implementation.’ (OJ C 341, 24.8.2021, p. 100).

15

(16)  In line with the recommendations made in the EESC opinion on The social challenges of greening maritime and inland waterway transport ‘The EESC believes that it is necessary to involve all stakeholders, including social partners, in order to find both significant and viable solutions in the field of maritime transport greening.’ (OJ C 275, 18.7.2022, p. 18).

16

(17)  See for example, TRIPS ‘TRansport Innovation for disabled People needs Satisfaction’ project.

17

(18)  Article 2, CRPD.

18

(19)  Fit for 55 (COM(2021) 550 final).

19

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/122 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/122

---

Opinion of the European Economic and Social Committee on ‘Cultural diplomacy as a vector of EU external relations – new partnerships and role of CSOs’

(own-initiative opinion)

(2023/C 75/17)

| Rapporteur: | Luca JAHIER |
| --- | --- |

Rapporteur:

Luca JAHIER

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 32(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | External Relations |
| Adopted in section | 14.10.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 178/1/1 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 32(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

External Relations

Adopted in section

14.10.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

178/1/1

1.   Conclusions and recommendations

| 1.1. | Culture is inclusive. Culture is a form of capital that enables us to illuminate both our path in Europe and the image we project across the world. At a time when war has returned to the European continent, with devastating destruction, tearing apart human lives and places, we need cultural relations to be more than ever a tool for dialogue, peace and the future. Making it a key and strategic vehicle of the European Union’s foreign policy, as repeatedly called for in many documents and important initiatives over the last 17 years, must now become a real priority. |
| --- | --- |

1.1.

| 1.2. | On the basis of the European Commission’s 2016 communication, the many decisions and guidelines of the Council and the recommendations of the European Parliament, it is now time to adopt a fully-fledged multiannual strategic action plan which, under the coordination of the EU External Action Service, will create real synergy with the different policies and structures of the European Commission and the Member States, and provide a platform for effective interconnection with wider entities in terms of both the territorial authorities involved and the many private and institutional players, which are already productively engaged. A plan backed up by the necessary funding. |
| --- | --- |

1.2.

| 1.3. | In the meantime, action needs to be stepped up immediately to protect, restore and rebuild heritage in areas hit by natural disasters, crises and conflicts, increasing the training of local players and the capacity-building of local institutions and civil society organisations. More ambitious measures should be undertaken in the field of the creative industries. Significant pilot projects should be launched in areas such as the Western Balkans, the Mediterranean and the Middle East, Africa and Ukraine. |
| --- | --- |

1.3.

| 1.4. | A mapping exercise is also needed, covering the wide range of actions and initiatives already in place led by the European institutions and organisations, individual States, and the many civil society organisations in the Member States, as well as those established by the various international partnerships, with a view to creating an EU platform for international cultural relations. |
| --- | --- |

1.4.

| 1.5. | A significant dedicated structure within the EEAS is needed, centred around an ‘EU Special Envoy for Cultural Relations’, which would develop an overall political direction, be equipped with the necessary budget and be capable of networking with the Member States and different organisations, as well as providing instruments and small-scale financial allocations to the EU delegations, for developing initiatives in their respective countries. |
| --- | --- |

1.5.

2.   General context

| 2.1. | Culture as an instrument of the European Union’s foreign policy, with the aim of increasing the interplay between cultural diversity, human rights and social and economic cohesion, and based on the cultural and creative industries as a driving force for growth, has long been on the agenda of the European institutions. The specific brand of cultural diplomacy favoured by the EU as a tool to be used in its foreign policy is based on not placing conditions on cultural cooperation and on an approach that goes beyond the mere promotion of Member States’ cultural output and favours sharing a cultural co-production space with partner countries at civil society level. |
| --- | --- |

2.1.

| 2.2. | Back in 2007, the European Commission adopted a Communication on a European Agenda for Culture in a Globalizing World (1), which also aimed to give culture a more significant role in the EU’s external relations. This approach was strongly backed by the European Parliament in resolutions issued in 2008 and 2011, with a specific budget of EUR 500 000 made available the following year for implementing preparatory measures for harnessing culture in international relations, which produced an important framework study (2) in 2014. |
| --- | --- |

2.2.

| 2.3. | The European Council has repeatedly asserted the diplomatic potential of cultural relations, in particular in its conclusions of 2007, 2008, 2014 and 2015, and this approach has also featured in the Commission’s action plans since 2014. |
| --- | --- |

2.3.

| 2.4. | The preparatory work of that decade fed into the June 2016 Joint Communication (3)

  Towards an EU Strategy for International Cultural Relations
  , issued by the Commission and the High Representative for Foreign Affairs and Security Policy. The Communication set out three areas of work for the development of this strategy:






  — | driving socioeconomic development through cultural policies; the role of local authorities in cultural initiatives and of the cultural and creative industries in partner countries; |
| --- | --- | --- |

2.4.

—

driving socioeconomic development through cultural policies; the role of local authorities in cultural initiatives and of the cultural and creative industries in partner countries;

| — | intercultural dialogue for peace and stability; |
| --- | --- |

—

intercultural dialogue for peace and stability;

| — | protecting cultural heritage from the threats posed by natural disasters, armed conflicts and the trafficking of artefacts, which can be a source of funding for terrorist activities. |
| --- | --- |

—

protecting cultural heritage from the threats posed by natural disasters, armed conflicts and the trafficking of artefacts, which can be a source of funding for terrorist activities.

| 2.5. | The Communication also pointed to the need to move towards coordination of Member States’ action, so as to overcome the considerable fragmentation that currently exists, give EU delegations in third countries an enhanced role as hubs, strengthen cooperation with the EUNIC network (European Union National Institutes for Culture) as the guarantor of the Member States’ prerogative in the field of culture, and make use of existing instruments and funding lines in the various fields. It also set up a Cultural Diplomacy Platform (4), to facilitate the establishment of suitable programmes and proper resources, as well as the coordination of different stakeholders. |
| --- | --- |

2.5.

| 2.6. | In May 2017, the EESC gave its views on this Communication (5), expressing its strong support, but also pointing to the need to take a step forward from a document entitled Towards an EU strategy to the adoption and subsequent implementation of a fully-fledged strategy and action plan. The opinion advocated that the action plan should fulfil four structural requirements: providing clarity of governance at EU level; seeking to coordinate and offer subsidiary support at Member State level; clarifying financial aspects; and promoting networks of interrelated cultural players, representing a thriving cultural civil society. The EESC also called for culture to become the fourth pillar of the sustainable development strategy and for suitable networks to be developed to involve organised civil society and other organisations at various levels already active in this field. |
| --- | --- |

2.6.

| 2.7. | The European Parliament, in its resolution (6) adopted in July 2017, stressed that the Communication was not sufficiently structured to enable the development of a genuine EU cultural diplomacy strategy equipped with suitable funding. The CoR also put forward a strong opinion (7) in June 2017, pointing to the key role that cities and local levels of government can play in developing cultural cooperation networks at neighbourhood level. This topic was largely taken up in a comprehensive study in 2020 (8), which set out a multilevel strategy for international cultural relations. |
| --- | --- |

2.7.

| 2.8. | The Council, in its conclusions of May 2017, took up and revived the Commission’s proposals, and also recommended setting up a ‘Friends of the Presidency’ group as a cross-cutting platform to facilitate the implementation of the strategy. The Council then returned once again to the topic of cultural diplomacy in its significant conclusions of June 2019 on an EU strategic approach to international cultural relations and a framework for action (9), its conclusions of September 2019 on the cultural dimension of sustainable development (10), its conclusions of May 2020 on risk management in the area of cultural heritage (11) and finally its conclusions of June 2021 (12) on an EU approach to cultural heritage in conflicts and crises. |
| --- | --- |

2.8.

| 2.9. | Finally, in the European Framework for Action (13), published following the European Year of Cultural Heritage (2018), the Commission specified ‘Cultural heritage for stronger global partnerships: reinforcing international cooperation’ as one of five pillars of EU action in this area. |
| --- | --- |

2.9.

3.   Comments and proposals

| 3.1. | The picture set out above thus illustrates the scale of policy development and the wide range of guidelines, proposals and decisions that have built up over the years, as well as the consensus that is now well established, which recognises culture as a vehicle of identity- and cohesion-building, a driver of socioeconomic development and a substantial factor in peace-building, including people-to-people cooperation (involving civil society organisations, as well as universities, cultural centres, museums, cities and other intermediary organisations).
  On top of this, there is a growing consensus that this emphasis on the cultural dimension is significant in terms of implementing the 2030 Agenda for Sustainable Development. |
| --- | --- |

3.1.

On top of this, there is a growing consensus that this emphasis on the cultural dimension is significant in terms of implementing the 2030 Agenda for Sustainable Development.

| 3.2. | Moreover, culture is now part of the EU’s main cooperation instruments, and of its bilateral agreements with third countries, and a wide variety of cultural projects have been implemented for many years as part of the EU’s financial and technical assistance.
  These actions have the following objectives: the preservation and restoration of cultural heritage sites, the production and circulation of works of art, the creation or restoration of museums, local capacity-building of cultural operators and artists, the promotion of their free movement between countries, the organisation of major cultural events, raising public awareness as regards protecting cultural heritage, and the development of a new model of sustainable tourism. The Commission also supports the emergence and strengthening of cultural industries, in particular the cinema and audiovisual sector, in partner countries, as well as the promotion of local access to culture. |
| --- | --- |

3.2.

These actions have the following objectives: the preservation and restoration of cultural heritage sites, the production and circulation of works of art, the creation or restoration of museums, local capacity-building of cultural operators and artists, the promotion of their free movement between countries, the organisation of major cultural events, raising public awareness as regards protecting cultural heritage, and the development of a new model of sustainable tourism. The Commission also supports the emergence and strengthening of cultural industries, in particular the cinema and audiovisual sector, in partner countries, as well as the promotion of local access to culture.

| 3.3. | However, this action is very fragmented, has no overall visibility, and lacks a tangible strategic vision
  . Therefore, it is in no real position to realise its true potential as an increasingly substantial ‘vector’ of EU foreign policy and a driver of partnership in many parts of the world. A veritable hidden treasure, the huge capital that comprises both the ongoing and possible initiatives at Member State level, as well as a very large list of local players and institutions, and civil society organisations, constitutes a critical mass that should be unlocked. |
| --- | --- |

3.3.

| 3.4. | It should also be borne in mind that, in order for it to be meaningful, the EU’s cultural diplomacy should be conceived and developed as an instrument of the EU’s foreign policy, and thus equipped with the necessary sphere of influence, which, in the case of the EU, materialises in promoting across the world its model of peaceful coexistence and integration of peoples, with respect for fundamental rights and freedom of artistic expression in accordance with the principles of democracy and the rule of law. |
| --- | --- |

3.4.

| 3.5. | Moreover, culture is a product of work, which represents the pillar on which Europe is built. Work has allowed the development of industry, has put Europe at the core of trade, has shaped the history of European cities, allowing for the emancipation of its populations and at the same time has guaranteed the affirmation of social rights and the European social model. The culture of work must continue to be at the heart of European action. |
| --- | --- |

3.5.

| 3.6. | Cultural heritage, in its tangible and intangible dimensions, is inherently politically sensitive, highly complex and considerably imbued with symbolic and emotional meanings. It therefore involves a high risk of political manipulation, concerning its history, whether it belongs to one or other component of society and its use, especially when it comes to minorities and in the case of conflict. Cultural heritage can therefore become a vehicle of conflict but also a driver of peace, reconciliation and shared development. This clearly points to it being a powerful and complementary diplomatic component of the EU’s approach to peace, security and sustainable development. |
| --- | --- |

3.6.

| 3.7. | The EU Council conclusions of 21 June 2021, which focus primarily on the protection of heritage in conflicts and crises, reiterate the ambition to make ‘cultural diplomacy’ an important vehicle for peace and development within the framework of European Common Foreign and Security Policy. They instruct the EEAS, the Commission and all relevant EU agencies and bodies to prepare specific measures to this end, including through the establishment of a dedicated task force led by the EEAS, and request an annual report to the Council on the progress achieved. Point 8 of the conclusions stresses the importance of strengthening all of the necessary partnerships with relevant international and regional organisations, as well as intergovernmental and non-governmental organisations (CSOs). |
| --- | --- |

3.7.

| 3.8. | We therefore need to make a strong case once again for what we called for in our 2017 opinion, as also advocated in the EP’s 2017 resolution, namely the adoption of a fully-fledged action plan, as has been done recently in a number of other areas of EU action, and the establishment of a flexible governance structure and the necessary funding, including dedicated funds and funds in other existing programmes that can be tapped.
  This plan should focus in particular: on the reinforcement of the coherence of EU external policies and instruments; on the complementarity between the tangible and intangible heritage; on the link with climate change as a source of crisis; on the inclusion and empowerment of local actors, women and youth; on training and knowledge exchange; on the creation of networks and linking up with existing networks such as Erasmus Plus; on the various possibilities for developing concrete cooperation and partnership between EU cultural institutions and CSO actors in that field and their counterparts in third countries; and on stepping up cooperation with existing regional and international bodies, making culture an important strand of those synergies.
  Above all, it should develop the interconnections between the following areas:






  — | cultural relations and sustainable development; |
| --- | --- | --- |

3.8.

This plan should focus in particular: on the reinforcement of the coherence of EU external policies and instruments; on the complementarity between the tangible and intangible heritage; on the link with climate change as a source of crisis; on the inclusion and empowerment of local actors, women and youth; on training and knowledge exchange; on the creation of networks and linking up with existing networks such as Erasmus Plus; on the various possibilities for developing concrete cooperation and partnership between EU cultural institutions and CSO actors in that field and their counterparts in third countries; and on stepping up cooperation with existing regional and international bodies, making culture an important strand of those synergies.

Above all, it should develop the interconnections between the following areas:

—

cultural relations and sustainable development;

| — | cultural relations and the circular economy; |
| --- | --- |

—

cultural relations and the circular economy;

| — | cultural relations and the digital transition; |
| --- | --- |

—

cultural relations and the digital transition;

| — | cultural relations, peace and stability; |
| --- | --- |

—

cultural relations, peace and stability;

| — | cultural relations and the promotion of fundamental rights and freedom of expression; |
| --- | --- |

—

cultural relations and the promotion of fundamental rights and freedom of expression;

| — | cultural relations and minorities; the protection and promotion of minority cultures and languages; and |
| --- | --- |

—

cultural relations and minorities; the protection and promotion of minority cultures and languages; and

| — | cultural relations and the promotion of gender equality. |
| --- | --- |

—

cultural relations and the promotion of gender equality.

| 3.9. | In parallel with the drafting of this plan, with the widest possible involvement as is now customary, and with the same emphasis and significance given to various recent plans, there is also a set of specific measures that need to be launched immediately, in order to finally give substance to the Council’s mandate and to the numerous recommendations and proposals from the other institutions referred to above, and enable this process to come to the fore. Examples of such measures are set out below. |
| --- | --- |

3.9.

| 3.9.1. | Protection, restoration and reconstruction of heritage in areas hit by natural disaster and in crisis and conflict areas, building on existing CSDP missions — Afghanistan, Ukraine, Georgia, Kosovo, Libya, Palestinian Territories (Ramallah and Rafah), Niger, Mali and the Horn of Africa (Somalia & Somaliland) — and adapting their mandate where necessary. To this end: invest in intra-community and inter-ethnic dialogue (and where relevant inter-faith dialogue); turn the reconstruction and preservation of cultural heritage into a tool for rebuilding shared memory and reconciliation, but also into an opportunity for job creation, sustainable economic activities and tourism; develop local capacity-building and the necessary training activities; increase the use of satellite mapping and digital images for the development of preventive actions. |
| --- | --- |

3.9.1.

| 3.9.2. | Stepping up the fight against illicit trafficking in cultural goods — which is also used to finance international terrorism and is very significant in conflict areas — in coordination with Europol and Interpol, and increasing the training of border police. |
| --- | --- |

3.9.2.

| 3.9.3. | Developing a specific initiative on the creative industries, especially with regard to contemporary art and new technologies, with a special focus on the younger generations. This area, in which some significant initiatives have already been developed in cooperation with the WTO, is certainly one of the most promising avenues for creating sustainable development; it has already been deemed important in the framework of the new partnership agreement with ACP countries. The expected creation of an ACP Cultural Foundation and the proposal for a first meeting of ACP-EU culture ministers open up the prospect of a very interesting political framework, which must take on the priority it deserves. In the same vein, we draw attention to the 2021 Creative Forum (14) in Ljubljana, which brings together creative businesses from the entire Mediterranean area, contributing to the green transition, social innovation and economic growth. |
| --- | --- |

3.9.3.

| 3.9.4. | Systematic mapping of the variety and breadth of initiatives already in place, at all levels, including by creating an interactive site open to the exchange of best practices and the development of new synergies between players at different levels and across borders. The objective here is to establish an EU platform for international cultural relations, along the lines of other successful initiatives launched in other fields (see the Circular Economy Platform; Festival of the New European Bauhaus, etc.). In this field, the EESC, in cooperation with the major European cultural organisations concerned, can certainly be a valuable and stable institutional forum. |
| --- | --- |

3.9.4.

| 3.9.5. | Launch of pilot projects in certain specific areas, linked to the political priorities already identified in each area. Some examples, where coordinated EU action can make a difference. |
| --- | --- |

3.9.5.

| 3.9.5.1. | The Western Balkans, not least because of their prospects for integration into the European Union, are an area where the cultural dimension merits being strongly developed, for example by providing support to a regional network of civil society organisations across the Western Balkan countries dedicated to the preservation of cultural and natural heritage as a shared heritage. Thus, in the framework of the Belgrade-Pristina dialogue for the normalisation of relations between Serbia and Kosovo, the topic of cultural and religious heritage should be raised to a much higher level of priority, given its major relevance for the identity of the various communities. Support should also be given to regional collaborative projects involving historians and art historians in the wider region of South East Europe to help overcome the growing trends of revising or rewriting history, with the related distortion of the (multifaceted) identity of historical monuments and heritage sites. This should also include: building the capacity of civil society organisations and local institutions, for example through twinning programmes with museums, foundations, etc. in EU Member States; the launch of an EU-Western Balkans Heritage Champions programme, inspired by the set-up of the existing ‘ILUCIDARE Champions’ programme, which enables European and Western Balkan heritage professionals to exchange experiences and best practices; using the European Solidarity Corps programme to encourage young people to participate in heritage restoration ‘work sites’; moreover, a specific Cultural Heritage Volunteering scheme at regional level (open to both EU and non-EU citizens) could greatly contribute to building a renewed spirit of solidarity in the area. |
| --- | --- |

3.9.5.1.

| 3.9.5.2. | The Mediterranean and the Middle East. This is certainly an area of priority, where there are many situations of ongoing conflict, and where there is no shortage of sites and priceless cultural heritage riches, which can play an important role in promoting reconciliation, peace, reconstruction and even sustainable development, as well as in preventing new crises, bringing the valuable energies of local communities and traditions back into circulation. There is certainly a strong case for resuming and bolstering the project previously promoted by DG DEVCO
  in the Mosul area
  to salvage gravely damaged identities and heritage at risk of dispersion, by training local cultural operators and professionals and developing related economic activities. A similar project should also take place
  in Syria to rebuild Palmyra
  . In the context of the complex process in
  Libya
  , the immense value of that country’s cultural heritage cannot be underestimated. The sites of Sabratha, Leptis Magna, Cyrene, Apollonia and Ghadames
  have long been identified as most at risk since the beginning of the conflict, with assets of immense value that are at grave risk of being dispersed in illegal trafficking networks.
  Since 2015, the Union for the Mediterranean has promoted an
  independent network of Mediterranean experts on climate change
   (15), which has drawn up important conclusions, and also of significance is the
  Strategic Urban Development Action Plan 2040
   (16). A specific project with the UfM on a shared strategy for securing the various sites of tangible heritage would be of great political value, thus also preserving all related tourism and economic activities.
  The main reference is now the Final Declaration from the Conference of the Ministers of Culture of the Mediterranean, held in Naples on 16 and 17 June 2022, with the aim of developing joint strategies and actions to protect and enhance culture as a common good of the region and to launch a ‘Naples Process’ for cultural collaboration in the Mediterranean (17). |
| --- | --- |

3.9.5.2.

Since 2015, the Union for the Mediterranean has promoted an
  independent network of Mediterranean experts on climate change
   (15), which has drawn up important conclusions, and also of significance is the
  Strategic Urban Development Action Plan 2040
   (16). A specific project with the UfM on a shared strategy for securing the various sites of tangible heritage would be of great political value, thus also preserving all related tourism and economic activities.

The main reference is now the Final Declaration from the Conference of the Ministers of Culture of the Mediterranean, held in Naples on 16 and 17 June 2022, with the aim of developing joint strategies and actions to protect and enhance culture as a common good of the region and to launch a ‘Naples Process’ for cultural collaboration in the Mediterranean (17).

| 3.9.5.3. | The importance of culture on the African continent is certainly well known, but has often been very marginal, both in political relations and in terms of specific projects and investments. However, there are many examples of good practice; it is a growing priority within the ACP community; and there is considerable potential here in terms of relations with the African Union. One focal point is the Museum of Black Civilisations in Dakar, a project that was the vision of Senegal’s first president, Léopold Sédar Senghor, inaugurated at the end of 2018, and the main hub for cultural exchange on the whole continent, tying in with the prospect of the African Renaissance. Tigray should also be included here, an area now of conflict and extreme humanitarian emergency, and the home of a huge cultural heritage, being the cradle of the Coptic religion, with its important monasteries and churches.
  Africa is also the continent with the largest number of refugees and displaced persons in the world: there needs to be investment in the cultural dimension of these population masses, inter alia, to foster the ability to preserve traditions and make them a basis for re-starting and rebuilding. Similarly, another issue is the cultural dimension of relations with the respective diasporas, which are numerous and can be drivers of development.
  Lastly, the fashion industry, especially at craft and SME level, is really exploding on the continent, and it is not only a driver of economic well-being and work, but also a creator of identity and pride in the continent’s creativity. Specific projects, both in terms of training and partnerships between economic operators from the two continents, need to be significantly strengthened. |
| --- | --- |

3.9.5.3.

Africa is also the continent with the largest number of refugees and displaced persons in the world: there needs to be investment in the cultural dimension of these population masses, inter alia, to foster the ability to preserve traditions and make them a basis for re-starting and rebuilding. Similarly, another issue is the cultural dimension of relations with the respective diasporas, which are numerous and can be drivers of development.

Lastly, the fashion industry, especially at craft and SME level, is really exploding on the continent, and it is not only a driver of economic well-being and work, but also a creator of identity and pride in the continent’s creativity. Specific projects, both in terms of training and partnerships between economic operators from the two continents, need to be significantly strengthened.

| 3.9.5.4. | A special initiative shall be developed for Ukraine, in consideration of the huge destruction of cultural heritage in many regions of the country that has already been reported. European museums could organise fundraising in support of Ukrainian cultural heritage and Member States could encourage public-private partnerships in order to fund restoration projects. The EP pilot project European places of culture could be focused on Ukraine with the establishment in Kyiv of a European House of Culture in the form of a library or other cultural space organised by EUNIC in cooperation with the EEAS. |
| --- | --- |

3.9.5.4.

| 3.9.5.5. | Specific actions shall also be launched in order to bring a Western positive message of peace and respect to the Russian and Belarussian populations and to Russian culture with the aim of disrupting Putin’s propaganda. |
| --- | --- |

3.9.5.5.

| 3.9.6. | Coordination with the Council of Europe, which already operates European cultural policies, such as the ‘cultural heritage routes’ programme, with Unesco, ICCROM and the ICOM, strengthening the multilateral cooperation in view of the Unesco World Conference on Cultural Policies and Sustainable Development — MONDIACULT 2022, planned to take place in Mexico from 28 to 30 September 2022. |
| --- | --- |

3.9.6.

| 3.9.7. | Development of guidelines for a looted artwork restitution policy and for the development of support capacity for countries and museums hosting those works, with a view to rebuilding plundered and defrauded cultures. The necessity for repatriation is heightened in the case of antiquities of special importance for humanity that have been removed from the territory of a State in a manner that adversely impacts the monument or the broader archaeological environment, on the grounds of both the fundamental principles of cultural heritage law and the need to restore the integrity of the monument in its historical, cultural and natural context. This principle is expressed also by the 1970 Unesco Convention on Cultural Property which facilitates international repatriation by combating archaeological looting, illicit trade in antiquities and smuggling of art treasures. The Native American Graves, the Benin Bronzes, the Master Zhang Gong statue and the Parthenon Sculptures are some examples. |
| --- | --- |

3.9.7.

| 3.9.8. | Strengthening the capacity-building of civil society active in the cultural sector and international cultural relations in each country, supporting the development of independent and especially grassroots organisations. |
| --- | --- |

3.9.8.

| 3.10. | Such an undertaking cannot take off without the creation of a significant dedicated structure within the EEAS, forming a network with the other relevant Commission DGs. A structure centred around an ‘EU Special Envoy for Cultural Relations’, which would develop a comprehensive, recognised and powerful political direction, build networks and have overall responsibility for steering the above-mentioned action plan.
  The budget to be allocated to this structure must, above all, guarantee this function.
  This must be accompanied by a network of ‘cultural’ focal points in the different EU delegations, based on the different political priorities, but always with a recognisable key pillar for a peacemaking Europe. The EU delegations should then be allocated specific funds for cultural actions on the ground. |
| --- | --- |

3.10.

The budget to be allocated to this structure must, above all, guarantee this function.

This must be accompanied by a network of ‘cultural’ focal points in the different EU delegations, based on the different political priorities, but always with a recognisable key pillar for a peacemaking Europe. The EU delegations should then be allocated specific funds for cultural actions on the ground.

| 3.11. | Finally, in order to link the cultural dimension of the EU’s international relations to the digital and sustainable transition, clear principles of quality in cultural investment need to be incorporated into any action developed in partner countries. For example, in the case of investments in tangible heritage, these must include the principles of the New European Bauhaus (sustainability, aesthetics, inclusion) and the Davos Baukultur Quality System. |
| --- | --- |

3.11.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  COM(2007) 242 final.

1

(2)  Engaging the World: Towards Global Cultural Citizenship (europa.eu).

2

(3)  JOIN(2016) 29 final.

3

(4)  Cultural Relations Platform (cultureinexternalrelations.eu).

4

(5)  Towards an EU strategy for international cultural relations (OJ C 288, 31.8.2017, p. 120).

5

(6)  European Parliament resolution of 5 July 2017 — Towards an EU strategy for international cultural relations (2016/2240(INI)) (OJ C 334, 19.9.2018, p. 112).

6

(7)  Opinion of the European Committee of the Regions — Towards an EU strategy for international cultural relations (OJ C 207, 30.6.2017, p. 95).

7

(8)  Towards a multi-level strategy for EU external cultural relations (available at the Publications Office of the European Union, europa.eu).

8

Towards a multi-level strategy for EU external cultural relations

(9)  Council conclusions on an EU strategic approach to international cultural relations and a framework for action (OJ C 192, 7.6.2019, p. 6).

9

(10)  Council resolution on the Cultural Dimension of Sustainable Development (OJ C 410, 6.12.2019, p. 1).

10

(11)  Council conclusions on risk management in the area of cultural heritage (OJ C 186, 5.6.2020, p. 1).

11

(12)  Council Conclusions on the EU Approach to Cultural Heritage in conflicts and crises (21.6.2021).

12

(13)  Commission Staff Working Document, European Framework for Action on Cultural Heritage (SWD(2018) 491 final, 5.12.2018), p. 29.

13

European Framework for Action on Cultural Heritage

(14)  Future Unlocked! — Cultural and Creative Sectors as Agents of Change (creativeforum.si).

14

Future Unlocked! — Cultural and Creative Sectors as Agents of Change (creativeforum.si)

(15)  https://www.medecc.org/.

15

(16)  Towards a new UfM Strategic Urban Development Action Plan 2040 — Union for the Mediterranean — UfM (ufmsecretariat.org).

16

Towards a new UfM Strategic Urban Development Action Plan 2040 — Union for the Mediterranean

(17)  https://cultura.gov.it/medculture

17

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/130 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/130

---

Opinion of the European Economic and Social Committee on Multilateral investor-State arbitration court: assessment of the UNCITRAL process and its achievements in light of civil society recommendations

(own-initiative opinion)

(2023/C 75/18)

| Rapporteur: | Christophe QUAREZ |
| --- | --- |

Rapporteur:

Christophe QUAREZ

| Plenary Assembly decision | 20.1.2022 |
| --- | --- |
| Legal basis | Rule 52(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | Section for External Relations |
| Adopted in section | 14.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 176/0/0 |

Plenary Assembly decision

20.1.2022

Legal basis

Rule 52(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Section for External Relations

Adopted in section

14.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

176/0/0

1.   Conclusions and recommendations

| 1.1. | Effective and functioning international investment protection system with dispute resolution is in the interest of the EESC. However, the EESC has backed the criticism of the investor-State dispute settlement (ISDS) provided for in trade and investment agreements. This criticism, raised by civil society, mainly concerns questions about the legitimacy, consistency and transparency of this arbitration system. |
| --- | --- |

1.1.

| 1.2. | The EESC takes note of the European Commission’s mandate to negotiate, under the auspices of the United Nations Commission on International Trade Law (UNCITRAL), the possible establishment of a multilateral investment court (MIC). However, it regrets that the ongoing negotiations are focusing more on procedural issues rather than substantive ones. |
| --- | --- |

1.2.

| 1.3. | Five years into this first multilateral process of reforming ISDS, material progress has been limited, except with regard to the drafting of a code of conduct for arbitrators, the details of which still need to be determined. The strand of discussions on the structural reform of the ISDS system, of which the creation of a permanent court is proposed as a key element, is struggling to find a solution shared by all UNCITRAL Member States. |
| --- | --- |

1.3.

| 1.4. | Since no consensus has been reached amongst Member States in the relevant international organisations, no revision of the substantive law is currently envisaged. The EESC therefore urges the European Commission to continue pursuing the reform of substantive law issues along with the procedural rules. Among the substantive issues, vague or too far-reaching provisions of fair and equitable treatment (FET) should be limited to non-discrimination and direct expropriation as essential elements of investment protection. |
| --- | --- |

1.4.

| 1.5. | Furthermore, it calls to ensure that some of the more crosscutting issues are kept on the negotiating table, including the chilling effect of ISDS, the exhaustion of local remedies, and access of third parties, such as local communities impacted by investments. Outcomes of this process have to be real and make a difference. The process must not stop at tweaks with the current ISDS arbitration system, being hailed as a success. |
| --- | --- |

1.5.

| 1.6. | The EESC notes that the reform of the rules of procedure (particularly those on transparency, ethical rules, access to and the cost of arbitration) nevertheless paves the way for a debate on the reform of substantive rules. |
| --- | --- |

1.6.

| 1.7. | The EESC would like for the amicus curiae model (1) to include third party interventions by all stakeholders (such as local residents, workers, unions, environmental groups or consumers) and to ensure their due consideration by judges. |
| --- | --- |

1.7.

| 1.8. | The EESC welcomes the OECD’s work aimed at taking into account the challenges of sustainable development in investment agreements, but urges that it will complete its work by taking social issues into consideration, particularly making due diligence an eligibility criteria for foreign investors. |
| --- | --- |

1.8.

| 1.9. | The EESC has always stressed (particularly in opinion REX/501 on a Multilateral Investment Court (2)), that the MIC must in no way affect the ability of the EU and its Member States to fulfil their obligations under international agreements on the environment, human rights, labour rights and, of course, consumer protection. Procedural safeguards against claims that target domestic public interest legislation must also be provided for; the EESC considers that this objective could be achieved by introducing a hierarchy clause (3) and a public interest carve-out. |
| --- | --- |

1.9.

| 1.10. | The EESC notes that while UNCITRAL WG-III is centred on procedural elements, this may lead to benefits in the future towards a clearer and more stable case law, which would also facilitate reforming applicable substantive law in investment treaties. |
| --- | --- |

1.10.

| 1.11. | The EESC stresses that under both customary international law and international human rights law, individuals are required to seek redress before domestic courts before being able to bring international proceedings against a State, and regrets, however, that international investment law does not generally require the exhaustion of domestic remedies. The EESC notes that this system discriminates against SMEs, given their limited financial resources. The EESC therefore encourages the Commission to pursue in the UNCITRAL process the issue of exhaustion of local remedies before any international referral. ISDS should be recognized as an extraordinary remedy. |
| --- | --- |

1.11.

| 1.12. | The EESC reminds the Commission of its request to be more closely involved in its UNCITRAL’s work. |
| --- | --- |

1.12.

| 1.13. | The EESC reiterates the need to achieve consistency between the EU’s ambitious sustainable development goals, and the framework for reforming the ISDS model. Poorly designed investment treaties can hinder progress, whereas well designed ones can help societies front current challenges. We need to develop a new model for international investment governance that fills the significant gap between the investment system on the one hand and human and labour rights and the environment on the other. |
| --- | --- |

1.13.

2.   Introduction

| 2.1. | Investor-State dispute settlement (ISDS) is a mechanism in numerous free trade agreements and international investment agreements (IIA) for settling disputes concerning the implementation of investment protection agreements. |
| --- | --- |

2.1.

| 2.2. | It is a means for redress before a private arbitration tribunal initiated by a foreign investor from a contracting State against a State that has infringed the provisions of the treaty in question. |
| --- | --- |

2.2.

| 2.3. | One arbitrator is nominated by the company, a second by the State, and a third by the Secretary-General of the Permanent Court of Arbitration. |
| --- | --- |

2.3.

| 2.4. | The EESC has already addressed ISDS issues on several occasions (4). The purpose of this opinion is therefore not to analyse all the flaws and challenges of ISDS arbitration, but to explore and take a position on the reform and modernisation processes of this dispute settlement method — in which the European Commission plays a central role — currently under discussion at UNCITRAL. |
| --- | --- |

2.4.

3.   General comments

| 3.1. | The ISDS model has been frequently criticised in recent years, with interest in reforming investment treaties steadily increasing, in terms of undermining States’ right to regulate and challenging democratic legitimacy, the breach of European regulatory standards (whether they be health, phytosanitary, social or environmental standards), or the neutrality and independence of the arbitrators. |
| --- | --- |

3.1.

| 3.2. | The most frequently identified problems concern the lack of transparency in investment disputes, the lack of consistency and predictability of arbitration outcomes, the role and independence of arbitrators, doubts about their legitimacy, and the deterrent effect of rulings on the State’s regulatory powers. The deterrent effect refers in particular to the fact that States could be deterred from adopting legislation that is by definition in the public interest, for fear of being exposed, to the detriment of their citizens and taxpayers, to liability under an investment treaty, and to the possibility of having to pay large sums to foreign investors in the event of litigation. |
| --- | --- |

3.2.

| 3.3. | Criticism often also concerns ISDS clauses that contain vague and too far-reaching concepts such as ‘fair and equitable treatment’ and ‘indirect expropriation’, which can create legal uncertainty and potential misuse. |
| --- | --- |

3.3.

| 3.4. | Similarly, the principle of no appeal or recourse for annulment or review, unless otherwise agreed, affects the right to effective judicial remedy. Investors have been exploiting flaws in these traditional ISDS systems in recent years, leading to an unprecedented increase in investor-State disputes, as well as a significant increase in investor claims and higher litigation costs. |
| --- | --- |

3.4.

| 3.5. | It is imperative that investor-State dispute settlement mechanisms be fundamentally reformed, as current challenges, such as climate change (for which a just transition for workers towards a low-carbon economy will need to be implemented), COVID-19 responses, the digital transition and achieving sustainable development goals (including the concept of decent work), can only be addressed through national and international investments. |
| --- | --- |

3.5.

| 3.6. | The EESC reiterates the need to have a modern, effective and functioning international investment protection system with dispute resolution but also to achieve consistency between the EU’s ambitious sustainable development goals, and the framework for reforming the ISDS model. Poorly designed investment treaties can hinder progress, whereas well designed ones can help societies front current challenges. |
| --- | --- |

3.6.

4.   Issues at stake in the EU

| 4.1. | Criticism of the ISDS model prompted the European Commission to replace it through the creation in 2015 of a permanent investment dispute settlement body, specifically designed to address the above-mentioned concerns. |
| --- | --- |

4.1.

| 4.2. | It should be clarified that through the creation of a MIC, the Commission only aims to address procedural issues related to dispute settlements, and does not fully respond to the substantive criticism of the ISDS. |
| --- | --- |

4.2.

| 4.3. | Under this current reform approach, substantive issues such as applicable law or rules of interpretation, including ensuring consistency with other international obligations (for example from the International Labour Organization and the United Nations Conventions) can only be addressed in the underlying investment agreements to be applied to the MIC. |
| --- | --- |

4.3.

| 4.4. | The EESC is therefore concerned that even if a new dispute settlement system were agreed at multilateral level, it would not resolve the substantive issue of the bilateral investment protection agreements, which contain vague or too far reaching provisions that leave room for abuse (such as those on fair and equitable treatment, including indirect expropriation outlined above). The EESC therefore advocates to limit FET provisions exclusively to non-discrimination and direct expropriation and urges the European Commission to not only take into account procedural elements but to also address these applicable substantive law issues. |
| --- | --- |

4.4.

| 4.5. | The exact features of the MIC (such as its composition, its budget, the possibility of receiving support from a secretariat, etc.) will depend on the outcome of the upcoming negotiations between the countries joining the new system. |
| --- | --- |

4.5.

5.   The need for an approach that is consistent with sustainable development and social justice goals

| 5.1. | The current public and even expert perception is that there is a significant gap between the protection of investments, which is legally binding with binding legal instruments for its enforcement, and the protection of human, social, environmental and health rights, whose international schemes are either partially binding or not binding at all, or if binding, lack instruments for their proper enforcement. |
| --- | --- |

5.1.

| 5.2. | The debate on ISDS system reform must also take into account the European Commission’s new approach on the implementation and enforcement of trade and sustainable development chapters in the EU free trade agreements that reviews the 2018 15-point action plan (5). |
| --- | --- |

5.2.

| 5.3. | The EESC welcomes the launch of the Organisation for Economic Cooperation and Development’s (OECD) initiative (6) on the future of investment treaties, which explores how the treaties of tomorrow could help address the challenges identified above, as well as any ideas for reform. The urgent need to tackle the climate crisis is at the heart of this initiative. However, it urges to complement its work by taking social issues into consideration, particularly making due diligence an eligibility criteria for foreign investors. |
| --- | --- |

5.3.

| 5.4. | The OECD’s work includes important milestones of a Council Recommendation on FDI Qualities for Sustainable Development (7) that was adopted by OECD ministers in June 2022. It is the first multilateral instrument to help policy makers enhance the positive contribution of international investment to the SDGs. It is supplemented by the FDI Qualities Policy Toolkit (8) and the FDI Qualities Indicators 2022 (9). |
| --- | --- |

5.4.

| 5.5. | Like the European Parliament (10), the EESC believes that EU investment policy should not only meet investor and recipient State expectations, but also the EU’s wider economic interests, its external policy objectives, as well as its priorities, particularly those on environmental protection and the protection of human and fundamental rights. |
| --- | --- |

5.5.

| 5.6. | The EESC stresses that under both customary international law and international human rights law, individuals are required to seek redress before domestic courts before being able to bring international proceedings against a State, and regrets that by contrast, international investment law does not generally require the exhaustion of domestic remedies before any international referral. |
| --- | --- |

5.6.

| 5.7. | The EESC therefore encourages the Commission to further investigate the issue of the exhaustion of local remedies. |
| --- | --- |

5.7.

6.   The role of Working Group III (WG-III) of the UN Commission on International Trade Law (UNCITRAL)

| 6.1. | On the basis of the mandate provided by the Council, the Commission started negotiations with UN Member States under the auspices of UNCITRAL, in WG-III. |
| --- | --- |

6.1.

| 6.2. | The EESC reminds the Commission of its request to be more involved in UNCITRAL’s work. |
| --- | --- |

6.2.

| 6.3. | In November 2017, UNCITRAL has entrusted Working Group III with ‘a broad mandate to work on the possible reform of investor-State dispute settlement (ISDS)’. During the first phase of its deliberations, WG-III identified a number of concerns.
  Related to the global costs and duration of ISDS (11):






  — | The Working Group took note of analyses based on limited available information suggesting that 80 to 90 % of costs in ISDS were associated with fees for legal representation and for experts, and that the costs per proceeding averaged USD 8 million. |
| --- | --- | --- |

6.3.

Related to the global costs and duration of ISDS (11):

—

The Working Group took note of analyses based on limited available information suggesting that 80 to 90 % of costs in ISDS were associated with fees for legal representation and for experts, and that the costs per proceeding averaged USD 8 million.

| — | Particular attention was drawn to the fact that the high costs of ISDS paid with public funds were difficult to justify for developing States, whose financial resources were scarce. |
| --- | --- |

—

Particular attention was drawn to the fact that the high costs of ISDS paid with public funds were difficult to justify for developing States, whose financial resources were scarce.

| — | It was pointed out that the implications of the duration and cost of the procedures were also derived from the fact that the ISDS regime did not follow the rule of binding precedent, resulting in a lack of predictability. |
| --- | --- |

—

It was pointed out that the implications of the duration and cost of the procedures were also derived from the fact that the ISDS regime did not follow the rule of binding precedent, resulting in a lack of predictability.

| — | It was further stated that the high costs of ISDS under some approaches could limit the access of small and medium-sized enterprises to the ISDS mechanism, thus depriving them of the protection provided to them under investment treaties. |
| --- | --- |

—

It was further stated that the high costs of ISDS under some approaches could limit the access of small and medium-sized enterprises to the ISDS mechanism, thus depriving them of the protection provided to them under investment treaties.

| — | It was also stated, however, that excess costs could be attributed under some approaches in part to abusive practices, parallel proceedings, the absence of clear procedural rules, and the absence of a mechanism to dismiss frivolous claims at an early stage. |
| --- | --- |

—

It was also stated, however, that excess costs could be attributed under some approaches in part to abusive practices, parallel proceedings, the absence of clear procedural rules, and the absence of a mechanism to dismiss frivolous claims at an early stage.

| — | In addition, it was pointed out that the increase in costs was related to systemic issues and the structure of the ISDS regime, or even the lack of a system. These issues, it was added, had led to a lack of consistency and, importantly for States as respondents in particular, a lack of predictability of outcome. |
| --- | --- |

—

In addition, it was pointed out that the increase in costs was related to systemic issues and the structure of the ISDS regime, or even the lack of a system. These issues, it was added, had led to a lack of consistency and, importantly for States as respondents in particular, a lack of predictability of outcome.

Related to existing substantive concerns taking due note of the interaction with underlying substantive standards (12):

| — | Means other than arbitration to resolve investment disputes as well as dispute prevention methods |
| --- | --- |

—

Means other than arbitration to resolve investment disputes as well as dispute prevention methods

| — | Exhaustion of local remedies |
| --- | --- |

—

Exhaustion of local remedies

| — | Third-party participation |
| --- | --- |

—

Third-party participation

| — | Counterclaims |
| --- | --- |

—

Counterclaims

| — | Regulatory chill |
| --- | --- |

—

Regulatory chill

| — | Calculation of damages |
| --- | --- |

—

Calculation of damages

| 6.4. | From the outset of its work, WG-III has worked on two main ways forward; the first being a possible structural reform, covering the creation of a permanent court and an appeals system, the appointment of judges and the scope of appeals. The second parallel track concerns non-structural and incremental reform elements, such as the creation of a code of conduct for arbitrators and judges (to increase transparency and avoid conflicts of interest), a methodology for assessing damages and interest, and ways to foster mediation between the parties. No major progress has been made, however, on structural reform and cross-cutting issues. For example, the permanent court’s jurisdiction, composition and members’ appointments procedure are still under discussion in the delegations. |
| --- | --- |

6.4.

| 6.5. | In turn, the European Commission introduces to the debate clear requirements on ethics and impartiality, non-renewable appointments, the full-time employment of arbitrators and mechanisms for the appointment of independent judges. The EESC supports this approach, as strict rules are needed to avoid conflicts of interest. |
| --- | --- |

6.5.

| 6.6. | Initially raised more crosscutting issues such as the chilling effect of ISDS, the exhaustion of local remedies, and access of third parties, such as local communities impacted by investments received less attention to the frustration of many observing civil society groups. Fully in line with its own recommendations of REX/501, the EESC encourages the Commission to ensure these fundamental questions are kept on the table and satisfactorily addressed. |
| --- | --- |

6.6.

| 6.7. | The EESC regrets the lack of clarity on the WG-III website and in its meeting minutes, which prevents interested parties from properly informing themselves on the progress of work. |
| --- | --- |

6.7.

| 6.8. | The EESC notes that while WG-III’s work is centred on procedural elements, this may lead to benefits in the future, such as clearer and more stable case law, which would also facilitate reforming applicable substantive law in investment treaties. However, for a multilateral ISDS reform process to make a real difference, the EESC considers it essential for an institutional reform to move away from ad-hoc arbitration, to take a more holistic approach to international investment governance, and not to just replace ISDS arbitration with an investor-state court. |
| --- | --- |

6.8.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  The amicus curiae (friend of the court) procedure refers to an entity or person who is not party to a dispute but who wishes to submit legal arguments to the court. The admission of any amicus curiae is carried out on the basis of strict conditions in order to ensure that the balance of rights between the parties is respected during the trial. However, it also contains the promise of legitimacy, brought by the amicus curiae to the investment arbitration process, https://www.iisd.org/itn/fr/2019/04/23/protecting-social-rights-using-the-amicus-curiae-procedure-in-investment-arbitration-a-smokescreen-against-third-parties-maxime-somda/.

1

amicus curiae

amicus curiae

amicus curiae

(2)  OJ C 110, 22.3.2019, p. 145.

2

(3)  When States that have participated in negotiations wish to determine the ranking of subsequent treaties on the same subject, the final clauses contain provisions governing the relationship between the new treaty and existing treaties, or future treaties, on the same subject.

3

(4)  OJ C 110, 22.3.2019, p. 145, OJ C 487, 28.12.2016, p. 30, OJ C 332, 8.10.2015, p. 45.

4

(5)  The EESC addressed this issue with its opinion on Next Generation Trade and Sustainable Development — Reviewing the 15-point action plan (OJ C 105, 4.3.2022, p. 40).

5

(6)  https://www.oecd.org/investment/investment-policy/investment-treaties.htm.

6

(7)  https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0476.

7

(8)  https://www.oecd-ilibrary.org/finance-and-investment/fdi-qualities-policy-toolkit_7ba74100-en.

8

(9)  https://read.oecd-ilibrary.org/view/?ref=1144_1144750-u5ks4jvtnl&title=FDI-Qualities-Indicators-2022.

9

(10)  European Parliament resolution of 23 June 2022 on the future of the EU’s international investment policy (2021/2176 (INI)).

10

(11)  Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its thirty-fourth session (Vienna, 27 November-1 December 2017).

11

(12)  Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its thirty-seventh session (New York, 1-5 April 2019).

12

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III Preparatory acts

European Economic and Social Committee

573rd plenary session of the European Economic and Social Committee, 26.10.2022-27.10.2022

| 28.2.2023 | EN | Official Journal of the European Union | C 75/136 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/136

---

Opinion of the European Economic and Social Committee on Proposal for a directive of the European Parliament and of the Council concerning the status of third-country nationals who are long-term residents

(COM(2022) 650 – final)

Proposal for a directive of the European Parliament and of the Council on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State

(COM(2022) 655 – final)

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Attracting skills and talent to the EU

(COM(2022) 657 – final)

(2023/C 75/19)

| Rapporteur: | José Antonio MORENO DÍAZ |
| --- | --- |
| Co-rapporteur: | Milena ANGELOVA |

Rapporteur:

José Antonio MORENO DÍAZ

Co-rapporteur:

Milena ANGELOVA

| Referral | European Commission, 26.7.2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 179/0/6 |

Referral

European Commission, 26.7.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

179/0/6

1.   Introduction

| 1.1. | In April 2022, the European Commission presented the Skills and Talent package following the work agenda of the new Pact on Migration and Asylum adopted in September 2020. The aim of the new package is to promote orderly migration to the Union, encouraging the attraction of talent and skills in a way that benefits countries of both origin and destination. The revisions also aim to promote a more efficient and coherent system of rights and employment opportunities for non-EU nationals residing in the Union, while helping to improve the attractiveness of the Union as a destination for skilled third-country nationals. |
| --- | --- |

1.1.

| 1.2. | The EESC welcomes this package which takes a constructive and coherent approach to migration and responds to the need to improve the Union’s instruments for regular migration. With the digital and green transitions gathering pace and at a time when labour and skills shortages are evident across all sectors of economic activity, the EESC emphasises the role that legal migration can play in helping to address labour and skills shortages in areas where there is a proven need. |
| --- | --- |

1.2.

| 1.3. | The EESC has already expressed its concern at the fact that the New Pact on Migration and Asylum focuses on border management and migration control, and therefore considers the progress made in the governance of organised and regular immigration to be positive. |
| --- | --- |

1.3.

| 1.4. | The EESC appreciates the Commission’s recognition of the crucial role that migrants already play in the European economy and society, as they help to meet the needs of the evolving labour market and — where necessary — overcome labour and skills shortages: a change of perspective with a normalising and positive discourse is very important. |
| --- | --- |

1.4.

| 1.5. | The EESC therefore welcomes the fact that the inflow of talent from third countries is being facilitated in order to help meet these growing needs, particularly in sectors with structural shortages. |
| --- | --- |

1.5.

| 1.6. | Without undermining its importance, the EESC suggests that the narrative linking the arrival of non-EU workers to the needs of the Member States’ labour markets should be examined in order to prevent under-employment of and poor working conditions for newly arrived non-EU workers. |
| --- | --- |

1.6.

| 1.7. | The EESC considers it necessary to make progress on new channels for attracting talent to the Union, but also points out that there are other needs in the Member States’ labour markets; these needs require measures to be designed to meet them alongside those envisaged in the proposed package. In particular, it is important to strengthen efforts to support the labour market integration of the unemployed and inactive through targeted support measures. |
| --- | --- |

1.7.

| 1.8. | The EESC believes that the Commission should be more ambitious in seeking legal and organised labour migration channels that also take account of people in need of international protection. |
| --- | --- |

1.8.

| 1.9. | The EESC welcomes the communication on attracting skills and talent to the EU, as it sees this as a step forward in the field of labour migration, which requires appropriate, realistic and effective instruments in the new contexts. |
| --- | --- |

1.9.

| 1.10. | The EESC considers it necessary to make progress on the Talent Pool (1), starting with the initial pilot and the full version to be launched next year, and points out that the success and outreach of the Talent Pool will depend on the deployment of adequate resources to make the tool accessible and operational. It also welcomes the Talent Partnerships and considers that they need to be developed in cooperation with third countries. The EESC calls for adequate evaluation mechanisms to be put in place, ensuring visibility and transparency in the implementation of the Talent Partnerships, not only for the instruments themselves, but also for identifying the countries with which to cooperate: respect for the rule of law and human rights must always be present in the external relations of the Union’s immigration and asylum policy. |
| --- | --- |

1.10.

| 1.11. | While women make up a significant part of some crucial sectors, mobile and migrant women can be subject to insecure jobs and the informal economy and are often particularly vulnerable to discrimination, social exclusion and lack of job and training opportunities, as well as being exposed to abuse, violence and harassment. The EESC believes that the protection of women’s rights and the gender perspective need to be more strongly mainstreamed. |
| --- | --- |

1.11.

| 1.12. | The EESC welcomes the proposed revision of the Directive on long-term residence in the European Union. The EESC is pleased that the proposal facilitates the process of attaining this status through the accumulation of qualifying years from periods of stay in different Member States, fosters intra-EU mobility and aims to extend equal access to social protection for EU nationals who are long-term residents in another Member State. |
| --- | --- |

1.12.

| 1.13. | The EESC welcomes the revision of the Single Permit Directive, including the aim to facilitate and simplify the application process and to ensure that the single permit is not tied to one specific employer, although it considers that an attempt could have been made to extend the set of rights, in line with the content of the first proposal for a directive presented in 2011. |
| --- | --- |

1.13.

| 1.14. | The EESC considers it essential that the revision emphasises the need to strengthen equal treatment of workers who are third-country nationals, particularly with regard to working conditions, freedom of association and affiliation and social security benefits. |
| --- | --- |

1.14.

| 1.15. | The EESC also underlines the importance of involving the social partners and other relevant stakeholders in discussion on improving the governance of labour migration at EU level. To this effect we welcome the creation of the proposed platform for dialogue at EU level. |
| --- | --- |

1.15.

2.   General comments

| 2.1. | In April 2022, the European Commission presented the Skills and Talent Package following the work agenda of the New Pact on Migration and Asylum adopted in September 2020. The package includes the revision of Directive 2003/109/EC on long-term residence (2), the revision of Directive 2011/98/EU on the single permit (3) and Communication on attracting skills and talent to the Union (4). |
| --- | --- |

2.1.

| 2.2. | The aim of the new package is to promote orderly migration to the Union, encouraging the attraction of talent and skills in a way that benefits countries of both origin and destination. The revisions also aim to foster a more efficient and coherent system of rights and employment opportunities for non-EU nationals residing in the Union, while helping to improve the attractiveness of the Union as a destination for skilled third-country nationals. |
| --- | --- |

2.2.

| 2.3. | The Communication on attracting talent and skills aims to put in order the principles governing legal migration for economic reasons to the Union. It reflects the will to improve the legislative pillar with the two revision proposals, to develop Talent Partnerships and the Union Talent Pool, and to advance legal migration policy in the areas of care, youth and innovation. |
| --- | --- |

2.3.

| 2.4. | The EESC points out that there is no analysis and evaluation exercise in the proposal exploring why the current directives on single permit or long-term authorisations have not worked properly. The Commission should analyse and share the causes of these dysfunctions, identifying whether it is a lack of will to implement them on the part of the Member States or excessive red tape, among other causes, in order to prevent the same problems recurring in the future. |
| --- | --- |

2.4.

| 2.5. | The proposal for the revision of the Directive on the single permit offers an opportunity to broaden access to this instrument and facilitate labour market participation of non-EU workers, while consolidating the rights inherent in it, making progress on harmonising its application between Member States. |
| --- | --- |

2.5.

| 2.6. | The proposed revision of the EU Long-Term Residence Directive also aims to improve its application in the different Member States, while facilitating intra-EU mobility by simplifying the process and reducing the time requirements for acquiring long-term residence permits. |
| --- | --- |

2.6.

| 2.7. | In general terms, the EESC welcomes this package which takes a constructive and coherent approach to migration, responds to the need to improve the Union’s instruments for regular migration and emphasises the role that legal migration can play in helping to address labour shortages — in areas where there is a proven need — and skills shortages. The EESC has already expressed its concern that the focus of the New Pact on Migration and Asylum is on border management and migration control, and therefore welcomes the progress made in the governance of organised and regular migration. |
| --- | --- |

2.7.

| 2.8. | The EESC appreciates the crucial role that migrants already play in the European economy and society, helping to meet labour market needs and to overcome — where necessary — labour and skills shortages. The EESC therefore welcomes the facilitation of the inflow of talent from third countries to help meet these growing needs, particularly in sectors with structural shortages. The EESC also welcomes moves to attract innovative and scalable businesses that bring significant added value to the EU economy and society. International research projects remain another effective way of promoting, attracting and retaining world-class talent. To this end, it is necessary to speed up and simplify access to the EU labour market for professionals from third countries who are in demand, in order to make Europe more attractive to other parts of the world. The EESC also encourages and welcomes the development and implementation of practical tools to connect and match talent from third countries more easily with potential employers in the Member States. |
| --- | --- |

2.8.

| 2.9. | There is a need to reflect on the narrative linking the inflow of foreign labour to the needs of Member States’ labour markets. In some EU countries, there is structural unemployment in certain employment sectors and occupations that can arise from skill mismatches, a lack of attractiveness of certain sectors/occupations and concerns about working conditions. In those countries, it is important to try to improve the attractiveness of such sectors and occupations to workers in the domestic markets (nationals of that country, EU and third-country workers with work permits) in order to prevent under-employment of and poor working conditions for newly arrived non-EU workers. In parallel, the EU Talent Pool can help to facilitate targeted matching of non-EU workers with jobs in the EU so as to avoid the underemployment of these workers. |
| --- | --- |

2.9.

| 2.10. | Although the EESC considers it necessary to make progress on new channels for attracting talent to the EU, it also points out that there are other needs in the Member States’ labour markets; these needs require measures to be designed to meet them alongside those envisaged in the proposed package. |
| --- | --- |

2.10.

| 2.11. | In this regard, the EESC hopes that progress can be made (as planned with the follow-up reports) on improving the Seasonal Workers Directive and the Intra-corporate Transferee Directive, scheduled for 2023. In this regard, it stresses the need, in line with the European Parliament’s and its own resolutions, to work to ensure the protection of seasonal workers and, in particular, to combat labour exploitation where it is detected, reinforcing and increasing labour inspections for this purpose, in line with the work of the European Labour Authority. |
| --- | --- |

2.11.

| 2.12. | Considering the adoption of the European Skills Agenda (5) on 1 July 2020, the EESC believes that migrants, refugees and international protection seekers should be treated equally, irrespective of their skills and qualifications level. Therefore, all workers should be able to validate their skills and competences and take part in good quality and effective apprenticeships, reskilling and upskilling, so that they can be integrated into the labour market based on flexible learning pathways matching their specific needs and with due regard for their different age-cohorts. |
| --- | --- |

2.12.

| 2.13. | The EESC believes that the Commission should be more ambitious in seeking legal and organised labour migration channels that also take account of people in need of international protection. |
| --- | --- |

2.13.

| 2.14. | With regard to students from third countries who come to the EU for study purposes, due consideration should be given to their smooth incorporation into the EU labour market while at the same time mitigating the brain drain: it would be positive to incorporate preventive measures such as ethical recruitment clauses (6), assisted return mechanisms to and reintegration into their countries of origin or introduce specific clauses in this regard in bilateral labour migration agreements. |
| --- | --- |

2.14.

3.   On the communication on attracting skills and talent to the EU

| 3.1. | The communication presented in April 2022 takes up the recommendations of the 2020 Pact on Migration and Asylum on legal migration, with the aim of promoting legislative and operational initiatives in this area. |
| --- | --- |

3.1.

| 3.2. | The EESC welcomes this communication, which it sees as a step forward in the area of labour migration which requires appropriate instruments in the new contexts. In this regard, the EESC considers the inclusion of a series of specific actions for Ukrainian refugees to be timely, and also regrets that these actions were not implemented earlier for people in need of international protection in general, especially during the crisis generated by the war in Syria in 2015. The EESC is convinced that the action and initiative taken with people fleeing Ukraine is a turning point and should be the standard for EU action in similar cases in the future. |
| --- | --- |

3.2.

| 3.3. | The EESC considers it necessary to make progress on Talent Partnerships in cooperation with third countries. However, it calls for adequate evaluation mechanisms to be put in place, not only for the instruments themselves, but also for identifying the countries with which to cooperate. Respect for the rule of law and human rights must always be present in the external relations of the Union’s immigration and asylum policy. The EESC also finds it necessary to check and evaluate the procedures and results of the already finalised pilot projects, to be considered and made use of when launching new projects. |
| --- | --- |

3.3.

| 3.4. | In presenting the proposal for the EU Talent Pool, it is important that the European Commission works with Member States and the social partners to develop the pool in a way that minimises bureaucracy and avoids unnecessary complexity, in order to get it up and running as quickly as possible. The aim of the Pool should be to help meet current and future skills needs; it should tap the opportunities offered by AI and other advanced technologies, in a way that makes full use of the skills and talents of third-country nationals and complements the role of Member State nationals and labour mobility within the Union. |
| --- | --- |

3.4.

| 3.5. | Taking into account the acute labour and skills shortages felt by employers, which in many cases are structural in nature, a relevant starting point for the launch of the full version of the Pool would be to base a targeted approach to matching on shortage occupation lists. Given the importance of ensuring that national shortage occupation lists are up to date, the Commission should identify opportunities for mutual learning and peer review on this topic. |
| --- | --- |

3.5.

| 3.6. | Hand in hand with developing the Talent Pool concept, it is necessary to further develop, with the involvement of employers and trade unions, real-time information on the labour market and skills which will enable the Pool to function successfully. At the same time, it is important to improve the Union’s capacity to collect and interpret comparable and credible data on the need for migration from third countries. |
| --- | --- |

3.6.

| 3.7. | The EESC welcomes the introduction of a matching tool to facilitate connections between supply and demand. It believes that these steps are necessary for the recruitment of talent, but reiterates the real need to address other sectors of Member States’ labour markets in parallel. |
| --- | --- |

3.7.

| 3.8. | The EESC agrees with the Commission that the success of these initiatives requires the cooperation and participation of the social and economic players, and considers it essential to make progress in creating opportunities for dialogue between them at European level. The EESC is a privileged forum for discussing operational and practical issues related to labour migration. In this respect, the EESC should participate in the high-level conference that the Commission has planned for the end of 2022 on the new labour migration platform. The EESC also underlines the importance of involving the social partners and other relevant stakeholders in discussion on improving the governance of labour migration at EU level. To this effect we welcome the creation of the proposed platform for dialogue at EU level. |
| --- | --- |

3.8.

| 3.9. | The EESC considers that exploring future avenues for labour migration in a sector such as the care sector is a step forward, although it regrets that progress on these issues is structured around specific procedures that fragment the integrity of the common European immigration and asylum policy, thus preventing an integral vision. In any event, the EESC agrees that progress needs to be made in these areas by raising issues such as ethical recruitment and labour rights protection standards. |
| --- | --- |

3.9.

| 3.10. | While women make up a significant part of most crucial sectors, mobile and migrant women can be subject to insecure jobs and the informal economy and are often particularly vulnerable to discrimination, social exclusion and lack of job and training opportunities, as well as being exposed to abuse, violence and harassment. The EESC believes that the protection of women’s rights and the gender perspective need to be more strongly mainstreamed. |
| --- | --- |

3.10.

| 3.11. | The EESC also welcomes the promotion of mobility schemes for young people, but would again point out the need to ensure mobility and labour market integration that protects the labour rights of younger workers, who sometimes face poorer working conditions (temporary employment, low wages, etc.). In the same vein, specific measures should be established for workers with disabilities to facilitate their proper integration. |
| --- | --- |

3.11.

| 3.12. | The EESC welcomes the initiative to explore admission schemes for non-EU innovative entrepreneurship. In this regard, the EESC considers it positive that these admission schemes are being explored in the context of the digital and sustainable economy, but believes that, if properly structured, they can also have a wide scope for facilitating the entry of various other professional profiles into EU countries. |
| --- | --- |

3.12.

4.   On the revision of the Directive on long-term residence in the Union

| 4.1. | The EESC welcomes this proposal for a directive which aims to strengthen the status of long-term residence in the Union by improving the way in which long-term residence is acquired, especially in the case of residence in a second Member State. It also welcomes the fact that the proposal seeks to extend equal access to social protection for EU nationals who are long-term residents in another Member State. The EESC also welcomes the attempt to ensure equal treatment and to facilitate access to information on family reunification in relation to this directive. |
| --- | --- |

4.1.

| 4.2. | Long-term residence in the Union is one of the main instruments of European immigration and asylum policy. The procedures for acquiring long-term residence in the Union, adopted in 2003, have developed unevenly across the Union, and the revision proposed by the Commission aims to create a more coherent system. |
| --- | --- |

4.2.

| 4.3. | Union nationals can apply for long-term residence after five years’ residence in a second Member State, a provision which is retained in the proposed revised Directive. The proposal aims to facilitate mobility within the Union for persons with this type of residence by reducing the residence period requirement to three years. In addition, the proposal includes cumulative periods of residence in different Member States. |
| --- | --- |

4.3.

| 4.4. | The EESC considers that allowing applicants to accumulate periods of residence in different Member States in order to meet the requirements for long-term residence in the Union is a step forward, although it believes that the mechanisms for monitoring and coordinating this provision in the different Member States need to be improved. |
| --- | --- |

4.4.

| 4.5. | The EESC welcomes the inclusion of different residence models, such as residence for study purposes, international protection and temporary residence. Short-term visas are exempted, although they could be considered under the provision if the applicant can prove a regular employment relationship or similar. |
| --- | --- |

4.5.

| 4.6. | The EESC also welcomes the strengthening of the rights attached to long-term residence in the Union and to family members, including the right to work and move to another Member State, or to change jobs and move to another Member State. The EESC finds it particularly interesting that, under the proposed new article, the national labour market situation need not be taken into account for applications for long-term residence in a second Member State (i.e. where long-term residence in the Union has already been obtained) for both employed and self-employed work. |
| --- | --- |

4.6.

| 4.7. | The EESC welcomes the simplification of the possibility to work and study within 30 days of submitting an application for long-term residence in a second Member State. It also welcomes the recognition of the right to exercise a regular profession (of a long-term resident in a second Member State) under the same conditions as EU citizens. |
| --- | --- |

4.7.

| 4.8. | The EESC recognises the importance of Member States guaranteeing the same freedoms and rights to long-term residents in the Union (and their family members) as to those with permanent national residence. Furthermore, it is positive that Member States also ensure that applicants for a long-term residence permit in the Union do not have to pay higher fees for the processing of their application than applicants for national residence permits. |
| --- | --- |

4.8.

| 4.9. | The EESC considers the right to live as a family a fundamental issue that facilitates social integration: it therefore welcomes the removal of administrative and bureaucratic obstacles, in particular the conditions for integration in the case of long-term residents. It also welcomes the automatic acquisition of long-term residence for children born (or adopted) in the EU of long-term residents. |
| --- | --- |

4.9.

5.   On the revision of the Single Permit Directive

| 5.1. | The EESC welcomes the revision of the Single Permit Directive, which brings several improvements to the current one:






  — | the reduction of the period for the permitting procedure to four months; |
| --- | --- | --- |

5.1.

—

the reduction of the period for the permitting procedure to four months;

| — | the fact that the procedure can be launched either from the country of origin or from a Member State of destination; |
| --- | --- |

—

the fact that the procedure can be launched either from the country of origin or from a Member State of destination;

| — | the Directive also covers foreign nationals working through temporary employment agencies; |
| --- | --- |

—

the Directive also covers foreign nationals working through temporary employment agencies;

| — | the possibility to change employer during the permit’s period of validity, although the possibility of refusal by the government is maintained; |
| --- | --- |

—

the possibility to change employer during the permit’s period of validity, although the possibility of refusal by the government is maintained;

| — | the fact that the single permit may not be withdrawn for at least three months after the permit holder’s loss of employment, which provides stability and improves the quality of employment and working conditions of migrant workers; |
| --- | --- |

—

the fact that the single permit may not be withdrawn for at least three months after the permit holder’s loss of employment, which provides stability and improves the quality of employment and working conditions of migrant workers;

| — | the extension of the Single Permit Directive to those under temporary protection; |
| --- | --- |

—

the extension of the Single Permit Directive to those under temporary protection;

| — | the fact that ways are being sought to provide information on the rights attached to the single permit. |
| --- | --- |

—

the fact that ways are being sought to provide information on the rights attached to the single permit.

| 5.2. | Nevertheless, the EESC considers it is a missed opportunity not to extend the set of rights in line with the content of the first proposal for a directive presented in 2011. This applies to issues such as access to unemployment benefits, while the EESC still underlines the importance of allowing Member States to have some flexibility on this as provided for in the current Directive. Moreover, the EESC regrets that the possibility of extending the Directive to migrants in temporary work situations has not been explored. |
| --- | --- |

5.2.

| 5.3. | The EESC considers it essential that the review emphasises the need to strengthen equal treatment of workers who are third-country nationals, particularly in relation to advice on social rights and working conditions, freedom of association and affiliation and social security benefits to facilitate labour integration under equal conditions. |
| --- | --- |

5.3.

| 5.4. | The EESC supports the call for Member States to develop appropriate mechanisms for risk assessment, inspections and sanctions as well as for monitoring employers. However, it notes that since labour inspections are a national competence, the messages and monitoring tools that can be developed at EU level should be strengthened in line with the mandate of the European Labour Authority (7). |
| --- | --- |

5.4.

| 5.5. | The EESC believes that further progress should be made in protecting migrant workers who make use of the labour inspectorate’s complaints mechanisms. Without mechanisms to prevent labour complaints being used for migration control purposes, there is a risk that employers will punish those who report exploitative working conditions, with negative repercussions for their residency status. In this regard, measures to combat labour exploitation need to be further developed and better enforced. |
| --- | --- |

5.5.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  The EU Talent Pool will be an EU-wide pool of candidates from non-EU countries, who will be selected on the basis of specific skills levels, criteria and migration requirements, following screening of candidates’ credentials. It will be the first EU-wide platform and matching tool for this purpose (COM(2022) 657 final).

1

(2)  COM(2022) 650 final.

2

(3)  COM(2022) 655 final.

3

(4)  COM(2022) 657 final.

4

(5)  https://ec.europa.eu/social/main.jsp?langId=en&catId=89&furtherNews=yes&newsId=9723

5

(6)  General principles and operational guidelines for fair recruitment and definition of recruitment fees and related costs

6

(7)  https://www.ela.europa.eu/en/what-we-do

7

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/143 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/143

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Directive of the European Parliament and of the Council on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (“Strategic lawsuits against public participation”)’

(COM(2022) 177 final – 2022/0117 COD)

(2023/C 75/20)

| Rapporteur: | Tomasz Andrzej WRÓBLEWSKI |
| --- | --- |
| Co-rapporteur: | Christian MOOS |

Rapporteur:

Tomasz Andrzej WRÓBLEWSKI

Co-rapporteur:

Christian MOOS

| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| --- | --- |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 143/2/6 |

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

143/2/6

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes the Commission’s initiative; it is a step forward in combating gagging procedures, the number of which has been growing in Europe since 2015 (1). Countering strategic lawsuits against public participation (SLAPP), which are proceedings brought in relation to public participation that are fully or partially unfounded and have as their main purpose to prevent, restrict or penalize public participation, is key to building an informed civil society and transparency in public life. As SLAPP cases are also brought forward by parties from outside the EU, anti-SLAPP measures are a contribution to protect European democracy against external threats. |
| --- | --- |

1.1.

| 1.2. | There is often a significant imbalance of power in SLAPP proceedings — plaintiffs have greater financial or institutional resources, making it relatively easy for them to initiate proceedings. In this context, it is important to ensure that defendants are provided with the right tools to defend themselves in this currently uneven fight. |
| --- | --- |

1.2.

| 1.3. | It should be stressed that SLAPP actions constitute an abuse of the law and cannot be accepted in democratic states governed by the rule of law. Journalists, especially independent journalists, are the most vulnerable to this threat, but the problem can also affect all other participants in public debate. |
| --- | --- |

1.3.

| 1.4. | It is also important to separate SLAPP actions from the protection of personal rights and the possibility to defend one’s good name in cases of defamation. SLAPP covers conduct that is groundless and aimed at suppressing public debate and silencing its participants. Thus, SLAPP counterclaims do not compromise the exercise of the right to a court of law and do not protect those who disseminate false or defamatory content. |
| --- | --- |

1.4.

| 1.5. | The EESC welcomes the proposed mechanisms, but in the course of the legislative work it would be worth considering expanding the list. Among the proposals, one could point to the introduction of a preliminary ruling terminating proceedings found to be non-compliant, consolidation of proceedings at the request of the defendant in his/her designated jurisdiction, setting a time limit for the procedure or introducing a fast track or exclusion of the possibility for a person other than the plaintiff to fund the action. |
| --- | --- |

1.5.

| 1.6. | In addition to the implementation of new legislation, which with the whole legislative process may take several years, it is worth reviewing national legislation in order to identify mechanisms that could currently serve to counter SLAPPs. Identifying the reasons why existing mechanisms are not being used effectively may help to provide better protection for participants in the public debate. |
| --- | --- |

1.6.

| 1.7. | The monitoring of SLAPP actions and the effectiveness of implemented solutions is also an important issue. Consideration should be given to who should carry out such assessments, particularly bearing in mind that SLAPP actions may also be brought by public institutions. Thus, delegating this competence to Member States may not adequately achieve the intended objectives. |
| --- | --- |

1.7.

| 1.8. | At the same time, in order to ensure that the objective of the Directive is achieved as effectively as possible, its application should be evaluated over as short a period as possible. In the EESC’s view, a shorter period is more appropriate than the currently proposed five-year period. |
| --- | --- |

1.8.

| 1.9. | Given the application of the planned Directive only to cross-border proceedings, it is also important to work towards the introduction by individual Member States of analogous initiatives for national proceedings. The restriction to cross-border proceedings will only provide protection for selected participants in the public debate, overlooking in particular local journalists, activists or whistleblowers. Comprehensive action against SLAPPs requires a unified approach in both cross-border and national cases. |
| --- | --- |

1.9.

| 1.10. | Member States should also be urged to review their national laws with a view to decriminalising defamation. Any proceedings concerning personal rights should be of a civil law nature. Possible criminal liability leads to a situation where participants in the public debate may be more afraid to present their opinions or to denounce wrongdoing. |
| --- | --- |

1.10.

| 1.11. | The EESC stresses that in addition to legal regulations, it is extremely important to implement appropriate educational measures and training, both for legal professionals (in particular judges and party attorneys) and participants in the public debate — journalists, social activists, human rights defenders, whistleblowers or ordinary citizens. |
| --- | --- |

1.11.

2.   General comments

| 2.1. | Freedom of expression, as well as the freedom of the media derived from it, is one of the fundamental values that should be guaranteed by democratic states under the rule of law. |
| --- | --- |

2.1.

| 2.2. | The right to freedom of expression, as expressed in Article 11 of the Charter of Fundamental Rights of the European Union, includes the freedom to hold opinions and to communicate information and ideas without interference by public authorities and regardless of frontiers. At the same time, respect for media freedom and pluralism is emphasised. Similar guarantees are included in many other pieces of legislation, such as the Universal Declaration of Human Rights, the European Convention on Human Rights, the Directive (EU) 2019/1937 of the European Parliament and of the Council (2) on the protection of persons who report breaches of Union law (‘Whistleblowers Directive’), and legal acts adopted by the individual Member States, which indicates their universal character and important role. |
| --- | --- |

2.2.

| 2.3. | Over the past few decades, the development of technology has dramatically changed the form of public debate. Until recently, the main media for conducting this debate were television, radio, and newspapers, created mainly by professional journalists, and whistleblowers. Nowadays, an important role has been taken over by online media, which enables anyone to present their opinions and address them to a wide audience, including anonymously. |
| --- | --- |

2.3.

| 2.4. | In the context of media development and technological changes, it is crucial to introduce mechanisms that will ensure real protection of freedom of expression for all participants in public debate, not only professional journalists but also environmental (3) and social activists, human rights defenders, non-governmental organisations, whistleblowers (4) in the broad sense, engaged citizens, trade unions and all other individuals and organisations that publicly speak out on socially significant issues. |
| --- | --- |

2.4.

| 2.5. | It is important to stress not only the importance of media freedom but also the need to ensure media pluralism. The EESC reiterates its conclusions on ‘securing media freedom and diversity in Europe’ (5). Open debate, not restricted in any way, is the foundation of a participatory society, without which democracy cannot function properly (6). The exclusion of any voice from the public debate can lead, and has in the past led, to social tension and violence. The media should not be understood narrowly as a specialised group of entities engaged in media activities on a professional basis, but also as the active participation of individuals who share opinions or make their positions available, regardless of their source: internet, forums, blogs, or podcasts. This is particularly important in countries with public media controlled by ruling political parties or countries with private media controlled by few owners, which try to dominate the message and limit the diversity of public debates. |
| --- | --- |

2.5.

| 2.6. | Within the EU, shrinking civil spaces undermine the ability of civil society organisations to play a vital role in the functioning and protection of democracy and the rule of law. Strategic Litigation against Public Participation (SLAPP) is one instrument that is used to silence critical civil society. The EESC welcomes the European Parliament’s resolution on measures to fight the shrinking of civil spaces (7) and considers the proposed Directive not only as one measure in the EU’s toolbox but also as a decisive step to end these practices. |
| --- | --- |

2.6.

| 2.7. | Wider opportunities for publication of statements, alerts and increased social activism make it possible not only to broaden the public debate but also to overcome socially worrying phenomena by revealing abuses of power by state or private institutions, including corruption or the misappropriation of public funds. The EESC points out that the media (broadly defined, including professional and amateur activities by participants in public debates), as the ‘fourth estate’, have the task not only of shaping opinion but also of monitoring the activities of public authorities and private actors. Thus, the protection of the ‘fourth power’ is extremely important to ensure democratic standards and the rule of law. |
| --- | --- |

2.7.

| 2.8. | The abuse of legal proceedings to stifle public debate is an increasingly common phenomenon in the Member States. Influential individuals, institutions and companies with wide financial and organisational resources use their powers to silence critics, using innovative instruments like abusing GDPR laws, or demanding disclosure of journalists’ sources of information, while these critics, including individual journalists and civil society actors acting as whistleblowers, often lack the financial or organisational resources to defend themselves against unjustified litigation. Some of the natural and legal persons using SLAPP against citizens and civil society actors in the EU are from outside the Union. In times of increasing geopolitical tensions, the EU must be equipped with a toolbox of measures to protect its democracy against external threats, including anti-SLAPP measures. |
| --- | --- |

2.8.

| 2.9. | SLAPP proceedings do not come under the right to a court; their aim is not to enforce the rights of the plaintiff but to intimidate and weaken the opposition and drain the resources of the defendant. Lawsuits are often brought without merit, in a repeated way, and their actual effect is to intimidate and silence the accused organisations, individuals or even their relatives in public debate and discourage further activity. The consequence of failing to counteract such chilling effects on activity may be the emergence of monopolisation or oligopolisation of the media, which is incompatible with the ideals of the democratic rule of law. |
| --- | --- |

2.9.

| 2.10. | Given the key role of the media, non-governmental organisations, other entities and whistleblowers involved in building civil society and acting in the public interest, it is extremely important to ensure that they are adequately protected in the event of violations or attempted violations of freedom of expression, especially in a situation of an obvious imbalance of power and resources. The latter may lead to negative effects in terms of the defendant’s refusal to continue to participate in the public debate and to denounce any abuse or corruption or human rights violation. The high costs of litigation, further increased by strategic behaviour to prolong proceedings, constitutes a significant problem for those who are obvious targets of SLAPP. |
| --- | --- |

2.10.

| 2.11. | Sometimes, strategic actions aimed at stifling public debate are accompanied by other reprehensible activities, such as intimidation, harassment, and threats against the defendant. These actions, too, are destructive to civil society and public interest and should be met with a harsh and immediate response, regardless of the financial resources or privilege of the actors involved. |
| --- | --- |

2.11.

| 2.12. | At the same time, we cannot ignore the problem of false information or obvious hate speech, which should be subject to verification and, if found to be violations, removed from the public space. However, the EESC demands the strict and correct use of the existing protocols, derived from the application of the Directive 2012/29/EU of the European Parliament and of the Council (8), because the actions related to this must not lead to restrictions on freedom of speech in a situation where the information and opinions conveyed do not constitute fake news and do not incite hatred (9). In any case, these practices cannot serve as an excuse to limit the right to freedom of expression. |
| --- | --- |

2.12.

| 2.13. | The EESC welcomes the European Commission’s proposal for a Directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (10) and the Commission Recommendation (EU) 2022/758 (11) on protecting journalists and human rights defenders who engage in public participation from manifestly unfounded or abusive court proceedings. |
| --- | --- |

2.13.

| 2.14. | The EESC calls on the European Parliament and the Council to adopt the Directive without delay, as the implementation of measures to protect journalists, civil society actors and other persons engaged in public participation is a matter of urgency. |
| --- | --- |

2.14.

| 2.15. | The EESC welcomes the decision of the Government of Ireland to take part in the adoption and application of the proposed Directive. In accordance with Article 3 and Article 4a(1) of Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Ireland can decide to notify and take part in the adoption and application of this Directive. |
| --- | --- |

2.15.

| 2.16. | In addition to the recommendations of the Commission’s regulation on SLAPP, the EESC encourages the Government of the Kingdom of Denmark to adopt national legislation which ensures the same level of protection of persons engaged in public participation against strategic litigation as provided by the proposed Directive. In accordance with Articles 1 and 2 of Protocol No 22 on the position of Denmark, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Denmark will not take part in the adoption of this Directive and will not be bound by it or subject to its application. |
| --- | --- |

2.16.

| 2.17. | In the EESC’s view, the adopted measures may not unduly restrict the right to justice and should only be used in cases of abuse and misuse. |
| --- | --- |

2.17.

| 2.18. | In the EESC’s view legal measures inhibiting the use of unfounded and abusive court proceedings should be complemented with educational measures and a network of organisations providing legal support for persons and institutions against which such actions are brought. In particular, for their important role, legal professionals — both judges and lawyers acting as defence counsel in proceedings — need appropriate training because their decisions and actions are crucial for the objective and guarantee freedom of expression. |
| --- | --- |

2.18.

3.   Specific comments

| 3.1. | The spread of the negative phenomenon of strategic actions aimed at stifling public debate (SLAPPs) is a serious problem — hence the great importance of the action taken by the European Commission and the European Parliament to combat this phenomenon, which is essential to provide adequate protection for participants in public debates where the right to legal proceedings has been abused to create a chilling effect that silences defendants and discourages them from continuing their activities. |
| --- | --- |

3.1.

| 3.2. | The protection against SLAPP actions should be provided to all participants in the public debate regardless of whether the SLAPP actions are domestic or cross-border in nature. The EESC agrees that litigation brought in one Member State’s jurisdiction against a person resident in another Member State is usually more complex and costly for the defendant. However, the same problem can also apply to suing in another city or using procedural tactics to make proceedings in the same country longer and more costly. Restricting regulation only to cases with cross-border effects may lead to unjustified differentiation in the rights of individuals and organisations whose actions have a local impact, thus usually involving limited financial, personnel, and organisational resources. |
| --- | --- |

3.2.

| 3.3. | In order for the Directive to function properly, it is necessary to define an appropriate and unambiguous legal basis for the action to be taken. It should be noted that the main purpose of the anti-SLAPP mechanisms is not to ensure the proper conduct of the proceedings (which can take place properly in accordance with national procedures), but to protect the rights of defendants who may not have adequate legal and financial means. The EESC’s view is to equip defendants, who are usually in a weaker position than plaintiffs, with mechanisms that will allow them to defend themselves in the face of unmeritorious claims that constitute an abuse of the right to a court. |
| --- | --- |

3.3.

| 3.4. | The EESC points out that the introduction of a cross-border condition makes it necessary to examine on a case-by-case basis (1) whether both parties to the proceedings are domiciled or established in the other Member State, (2) whether the act of participating in a public debate on a matter of public interest is relevant to more than one state, or (3) whether parallel or previous legal proceedings have been brought by the claimant or related entities against the same or related defendants in another Member State. In particular, the second condition may lead to a discretionary assessment and limitation of the protection afforded to the defendant. |
| --- | --- |

3.4.

| 3.5. | The EESC shares the view that SLAPP protection should not be directed solely at civil matters. Particular attention should be paid to the positions of international organisations (UN Human Rights Committee, Organisation for Security and Cooperation in Europe, Council of Europe) on the removal of defamation from criminal law. The measures taken to date have not had the expected results, because in some Member States defamation is still an offence, punishable by both a fine and imprisonment. It is impossible to take part freely in public debate on pain of criminal prosecution. The EESC recommends that effective and efficient measures be taken to ensure that the Member States remove criminal defamation as a relic of a shameful past that threatens freedom of speech and expression. |
| --- | --- |

3.5.

| 3.6. | Criminal law sanctions, regardless of their ultimate application, have a deterrent purpose. As such, they are even more likely to curb public debate than civil proceedings. The abandonment of protection under the criminal law regime may result in a deliberate shift of actions from civil to criminal actions in the absence of additional protection for the defendant in the latter case. |
| --- | --- |

3.6.

| 3.7. | The EESC points out that SLAPP actions can be taken not only by private law bodies or institutions but also by state bodies, such as the public prosecution service and that consequently the scope of the Directive must apply to all of these institutions. The EESC calls for the protection of natural and legal persons engaged in public debate and their sources to be applied accordingly in such cases too. In this connection, particular attention should be paid to the monitoring of SLAPP actions. Delegating this task to the Member States, when public authorities can also be plaintiffs in SLAPP proceedings, raises legitimate questions. Consideration should be given to involving independent organisations in these activities or to introducing a monitoring procedure at supranational level. |
| --- | --- |

3.7.

| 3.8. | It is important that people considered at risk of SLAPP lawsuits cannot comprise only journalists or human rights defenders, although these professions should be considered particularly vulnerable to such actions. The target group should be defined functionally (based on the activities undertaken) rather than by education or occupation. In this way, it is also possible to protect not only people who are not directly involved in media activities but also, for example, committed citizens who publicise abuses in their local communities or other types of whistleblowers in a broader context. |
| --- | --- |

3.8.

| 3.9. | The procedural guarantees proposed in the draft Directive — safeguards, early dismissal of manifestly unfounded claims in court proceedings, remedies for abusive litigation, protection against judgments given in third countries — are to be welcomed. However, consideration should be given to the possibility of introducing further measures that would complement and facilitate the work of the judiciary, e.g. facilitating or ordering the consolidation of different actions against the same defendant in the case of actions brought by the same or related plaintiffs. |
| --- | --- |

3.9.

| 3.10. | In the EESC’s view, it would also be valuable to introduce a degree of automaticity, in the form of a ‘preliminary ruling’, in which court cases are deemed to be non-compliant if they evidently fulfil the criteria of SLAPP. This would even make it possible not to initiate legal proceedings in obvious cases. This would reduce costs (not only private but also public costs) and limit the number of cases that could be taken further. |
| --- | --- |

3.10.

| 3.11. | It is also worth considering additional solutions, modelled on existing mechanisms, such as:






  — | consolidation of proceedings at the request of the defendant in his/her designated jurisdiction; |
| --- | --- | --- |

3.11.

—

consolidation of proceedings at the request of the defendant in his/her designated jurisdiction;

| — | setting a time limit for the procedure or introducing a fast track (along the lines of electoral proceedings); |
| --- | --- |

—

setting a time limit for the procedure or introducing a fast track (along the lines of electoral proceedings);

| — | exclusion of the possibility for a person other than the plaintiff to fund the action (third party funding). |
| --- | --- |

—

exclusion of the possibility for a person other than the plaintiff to fund the action (third party funding).

| 3.12. | In view of the growing number of SLAPPs, the EESC recommends that the temporal application of the new anti-SLAPP rules contained in the Directive be applied by the Member States to cases in progress or initiated when the new rules come into force. |
| --- | --- |

3.12.

| 3.13. | At the same time, it is necessary to review national legislation on current measures to counter SLAPP actions. The effectiveness of the mechanisms in place may make it possible to improve the planned measures and actually provide protection for those at risk. If there are already tools in national legislation that could at least partially address the problem concerned, it would be necessary to identify the reasons why they are not adequately applied. Such an analysis could, on the one hand, irrespective of the planned Directive, improve the situation of the participants in the social debate who are threatened by SLAPP actions and could be an interesting study in the drafting and implementation of new legislation. |
| --- | --- |

3.13.

| 3.14. | As the proposed Directive does not cover domestic cases, the EESC welcomes the Recommendation (EU) 2022/758 on protecting journalists and human rights defenders who engage in public participation from manifestly unfounded or abusive court proceedings and urges the Member States to provide the same level of protection as set out in the proposed Directive. However, EU activities should not be limited to recommendations but require the Member States to harmonise their legislation in this area to provide an equal level of protection against SLAPP in all Member States. This applies in particular to legal definitions and the scope of protection in the case of SLAPPs, to avoid differing interpretations and different levels of protection in the Member States. |
| --- | --- |

3.14.

| 3.15. | Given the dynamics of the problem of strategic actions aimed at stifling public debate, the EESC recommends that the application of the Directive be reviewed after a maximum of three years, instead of the five years currently provided for. Member States should thus provide the Commission with information regarding the application of the Directive two years after its transposition. The Commission should submit the report on the application of the Directive one year after that, that is to say three years after its transposition. |
| --- | --- |

3.15.

| 3.16. | The EESC calls on the Commission to consult journalists and all stakeholders, social partners, and civil society organisations when preparing the review in order to complement the information provided by Member States with independent assessments of the application of the Directive. |
| --- | --- |

3.16.

| 3.17. | It is crucial to implement the educational measures indicated in Recommendation (EU) 2022/758. In particular, there is a need for appropriate training for legal professionals (both judges and lawyers acting as defence counsel in proceedings), as well as broader educational activities aimed at the general public of the Member States, any member of which may become a participant in the public debate threatened by a SLAPP action. These educational measures should pay sufficient attention to SLAPP with a transnational dimension, which is covered by the proposed Directive. In addition, general campaigns must be organised in all Member States, for the dissemination and promotion of the rights and freedoms of expression, as a complement to and reinforcement of the Directive. |
| --- | --- |

3.17.

| 3.18. | An important element of the system for countering strategic actions aimed at stifling public debate should also be the provision of free legal assistance to individuals and organisations at risk. The EESC supports the establishment and development of legal institutions at universities and by legal professional associations as well as other entities that can provide such support. However, it must be ensured that the bodies recommended by the Member States to carry out these activities are credible, independent, and professional, and that their activities are subject to appropriate independent verification by the authorities of the Member State concerned. |
| --- | --- |

3.18.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  CASE Report (https://www.the-case.eu/slapps-in-europe).

1

(2)  Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).

2

(3)  NAT/824 — Information report of the European Economic and Social Committee on Environmental protection as a prerequisite for respect for fundamental rights.

3

(4)  SOC/593 — Opinion of the European Economic and Social Committee on Strengthening whistleblower protection at EU level (OJ C 62, 15.2.2019, p. 155).

4

(5)  SOC/635 — Opinion of the European Economic and Social Committee on Securing media freedom and diversity in Europe (own-initiative opinion) (EESC 2021/01539) (OJ C 517, 22.12.2021, p. 9).

5

(6)  REX/545 — Information report of the European Economic and Social Committee: Supporting the independent media sector in Belarus.

6

(7)  EP Resolution on the shrinking space for civil society in Europe (2021/2103(INI)) (OJ C 347, 9.9.2022, p. 2).

7

(8)  Directive 2012/29/EU of the European Parliament and of the Council of 25 October 2012 establishing minimum standards on the rights, support and protection of victims of crime, and replacing Council Framework Decision 2001/220/JHA (OJ L 315, 14.11.2012, p. 57).

8

(9)  SOC/712 — Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament and the Council — A more inclusive and protective Europe: extending the list of EU crimes to hate speech and hate crime (EESC 2022/00299) (OJ C 323, 26.8.2022, p. 83).

9

(10)  COM(2022) 177.

10

(11)  Commission Recommendation (EU) 2022/758 of 27 April 2022 on protecting journalists and human rights defenders who engage in public participation from manifestly unfounded or abusive court proceedings (‘Strategic lawsuits against public participation’) (OJ L 138, 17.5.2022, p. 30).

11

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/150 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/150

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EC) No 767/2008, (EC) No 810/2009 and (EU) 2017/2226 of the European Parliament and of the Council, Council Regulations (EC) No 1683/95, (EC) No 333/2002, (EC) No 693/2003 and (EC) No 694/2003 and Convention implementing the Schengen Agreement, as regards the digitalisation of the visa procedure’

(COM(2022) 658 final)

(2023/C 75/21)

| Rapporteur: | Ionuţ SIBIAN |
| --- | --- |

Rapporteur:

Ionuţ SIBIAN

| Referral | European Commission, 28.6.2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Employment, Social Affairs and Citizenship |
| Adopted in section | 29.9.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 187/0/0 |

Referral

European Commission, 28.6.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Employment, Social Affairs and Citizenship

Adopted in section

29.9.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

187/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC strongly supports the initiative to introduce a fully digital visa procedure. An accessible, quick and reliable digital visa, and a less paper-based immigration system in general, would significantly reduce the immigration-related administrative burden. |
| --- | --- |

1.1.

| 1.2. | The EESC welcomes the digitalisation initiative as it is in line with the general EU approach of encouraging the modernisation and digitalisation of public services and with the Commission communication on the 2030 Digital compass: the European way for the digital decade. |
| --- | --- |

1.2.

| 1.3. | The EESC considers that the current proposal is an opportunity to effectively improve the visa application process by reducing the costs and the burden on the Member States as well as on the applicants, and to ensure legal certainty, while also improving the security of the Schengen area. |
| --- | --- |

1.3.

| 1.4. | The EESC welcomes the fact that the proposed digitalisation of the application procedure will minimise the limitation to mobility of third country nationals that apply for a visa (as they will not have to submit their travel document in person anymore). |
| --- | --- |

1.4.

| 1.5. | The digitalisation of the visa application procedure must avoid any (unintended) discrimination: it must respect the rights of persons with disabilities and of persons who are not computer/digital literate or do not have internet access. The digitalisation of the visa procedure must meet the accessibility requirements set out in the European Web Accessibility Directive (1) and the European Accessibility Act (2). |
| --- | --- |

1.5.

| 1.6. | The EESC strongly recommends that the IT solutions used in the EU application platform provide tools/means to safeguard the rights of the child and prevent human trafficking. |
| --- | --- |

1.6.

| 1.7. | The EU digital visa application platform should be fully connected with the national visa systems managed by each Member State. |
| --- | --- |

1.7.

| 1.8. | The EESC considers that there should be a single EU-level ‘EU digital embassy’ setting harmonised EU-level requirements for supporting documents and providing information and guidance on the application process for travellers. |
| --- | --- |

1.8.

| 1.9. | The EESC considers that digitalisation of the visa procedure will increase the attractiveness of and incentivise travel to the EU as a destination. |
| --- | --- |

1.9.

| 1.10. | The EESC acknowledges that the digitalisation of the visa procedure could have a positive impact on the environment and that the centralised application platform is an energy-efficient solution. |
| --- | --- |

1.10.

| 1.11. | The EESC recommends that the Commission make a solid commitment to working with third-country governments, Member State embassies/consulates and organised civil society in order to inform, prepare and assist the applicants throughout the visa application procedure. |
| --- | --- |

1.11.

2.   General comments

2.1.   Background to the opinion, including the legislative proposal concerned

| 2.1.1. | The idea of a digitalised Schengen visa dates back to 2018. That year, the European Commission proposed amending the Visa Code and stressed that digital visas were the way forward in the long term. The European Parliament and the Council then began revising the EU Visa Code in 2019. They stated that the aim was to make full use of recent legal and technological developments to develop a common solution to allow Schengen visa applications to be lodged online. |
| --- | --- |

2.1.1.

| 2.1.2. | In 2020, the COVID-19 pandemic caused a slowdown of Schengen visa operations worldwide, due to the difficulty of receiving applications in embassies and consulates. This led to new calls from Member States for digitalisation of the process. |
| --- | --- |

2.1.2.

| 2.1.3. | In its 2021 Work Programme, the European Commission announced a legislative proposal on the digitalisation of visa procedures, which was scheduled for the fourth quarter of 2021. The new Pact on Migration and Asylum, presented in September 2020, sets the objective of making the visa procedure fully digitalised by 2025, with a digital visa and the ability to submit visa applications online. |
| --- | --- |

2.1.3.

| 2.1.4. | The Commission presented a proposal on the digitalisation of EU visas on 27 April 2022. The proposal aims to:






  — | modernise, simplify and harmonise the visa application process by digitalising the visa procedure; and |
| --- | --- | --- |

2.1.4.

—

modernise, simplify and harmonise the visa application process by digitalising the visa procedure; and

| — | reduce risks of (identity) fraud and forgery and facilitate the verification process at the border through digitalisation. |
| --- | --- |

—

reduce risks of (identity) fraud and forgery and facilitate the verification process at the border through digitalisation.

| 2.1.5. | The proposal establishes a single online platform, and the system will have the following advantages:






  — | visa applicants will be able to apply for a visa online, including paying the visa fee through a single EU platform, regardless of the Schengen country they want to visit; |
| --- | --- | --- |

2.1.5.

—

visa applicants will be able to apply for a visa online, including paying the visa fee through a single EU platform, regardless of the Schengen country they want to visit;

| — | the platform will automatically determine which Schengen country is responsible for examining an application, in particular when the applicant intends to visit several Schengen countries; |
| --- | --- |

—

the platform will automatically determine which Schengen country is responsible for examining an application, in particular when the applicant intends to visit several Schengen countries;

| — | the platform will provide applicants with up-to-date information on Schengen short-stay visas, as well as all necessary information regarding the requirements and procedures (such as supporting documents, visa fee and the need for an appointment to collect biometric identifiers); |
| --- | --- |

—

the platform will provide applicants with up-to-date information on Schengen short-stay visas, as well as all necessary information regarding the requirements and procedures (such as supporting documents, visa fee and the need for an appointment to collect biometric identifiers);

| — | appearing in person at the consulate would only be mandatory for first-time applicants, for the collection of biometric identifiers, for applicants whose biometric data are no longer valid, and for those who have acquired a new travel document; |
| --- | --- |

—

appearing in person at the consulate would only be mandatory for first-time applicants, for the collection of biometric identifiers, for applicants whose biometric data are no longer valid, and for those who have acquired a new travel document;

| — | the visa will include state-of-the-art security features, which will be more secure than the current visa sticker. |
| --- | --- |

—

the visa will include state-of-the-art security features, which will be more secure than the current visa sticker.

| 2.1.6. | The proposed regulation underlines that the new system will ensure that fundamental rights are always protected. |
| --- | --- |

2.1.6.

| 2.1.7. | The European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA) will be responsible for the technical development and operational management of the EU application platform and its components as part of the VIS. |
| --- | --- |

2.1.7.

| 2.1.8. | All foreign citizens who require a visa for any of the 26 Schengen countries will be able to use the digital Schengen visa application platform once it is implemented. The platform will not be applied to the remaining five non-Schengen EU countries, as they do not yet have the power to issue Schengen visas. |
| --- | --- |

2.1.8.

| 2.1.9. | Travellers from countries that are visa-exempt for the Schengen Area will not be required to use the platform. Instead, these travellers will be required to submit an ETIAS authorisation application to travel to Europe starting November 2023 (3). |
| --- | --- |

2.1.9.

2.2.   General comments

| 2.2.1. | The EESC strongly supports the initiative to introduce a fully digital visa system. An accessible, quick and reliable digital visa, and a more paperless immigration system in general, would significantly reduce the immigration-related administrative burden. Managing, processing and archiving (as well as destroying) paper documents is a lengthy and costly process for the consulates, and Member States, as well as the third country nationals applying for a visa would greatly benefit from the digitalisation of the visa procedure. |
| --- | --- |

2.2.1.

| 2.2.2. | The proposed online system must be designed to be quick, user-friendly, secure (offer sufficient guarantees that the data entered are safe) and predictable (comply with the principle of legal certainty). The system must work reliably, and applicants must be able to count on the online application process not taking longer than a few days. |
| --- | --- |

2.2.2.

| 2.2.3. | Harmonising and unifying visa application procedures within the Schengen area will help to prevent so called visa shopping by applicants who may be tempted to lodge an application with a Schengen country that offers faster and more convenient visa application processing than with a country that is actually their destination (for example, visa shopping by Russian citizens, in the event that a general agreement on suspension of the EU’s Visa Facilitation Agreement is not reached). The digitalisation of the visa process will also reduce the security risks posed by the physical visa stickers, which could still be prone to falsification, fraud and theft. The proposal is also in line with the general EU approach to encourage the modernisation and digitalisation of public services. |
| --- | --- |

2.2.3.

| 2.2.4. | The EESC considers that the current proposal is an opportunity to effectively improve the visa application process by reducing the costs and the burden on the Member States as well as on the applicants, while also improving the security of the Schengen area. |
| --- | --- |

2.2.4.

| 2.2.5. | The EESC welcomes the fact that the proposed digitalisation of the application procedure will minimise the limitation to mobility of third country nationals that apply for a visa. As the applicant will no longer have to present their travel document at the consulate/visa application centre, the applicant is free to travel abroad during the period when their visa application is being processed. The EESC considers that this will be beneficial for people who travel regularly (4) in connection with their work, as well as for activists and members of minority groups (e.g. LGBTQI+, Roma) for whom it opens more possibilities of finding a safe place for themselves, where necessary. |
| --- | --- |

2.2.5.

| 2.2.6. | The digital visa application platform should be fully connected with the national visa systems managed by each Member State. This would ensure that the new digital visa system, including the digital visa itself, is integrated from the outset into the Member States’ digital visa systems and designed in a way that is completely interoperable between the Member States. |
| --- | --- |

2.2.6.

| 2.2.7. | However, there should be a single EU-level ‘EU digital embassy’ setting harmonised EU-level requirements for supporting documents and providing information and guidance on the application process for travellers. |
| --- | --- |

2.2.7.

| 2.2.8. | The EESC supports the idea that the digitalisation of the visa procedure will increase the attractiveness of and incentivise travel to the EU as a destination. |
| --- | --- |

2.2.8.

| 2.2.9. | The EESC recommends that the Commission make a solid commitment to work with third-country governments and organised civil society in order to inform, prepare and assist their nationals throughout the visa application procedure. |
| --- | --- |

2.2.9.

2.3.   Specific comments

| 2.3.1. | The digitalisation of the visa application procedure will reduce Member States’ dependence on external service providers, thus reducing the risk of exposure of personal data to third parties. |
| --- | --- |

2.3.1.

| 2.3.2. | The digital visa will make forging visa stickers more difficult (as the visa will not be ‘physical’). In addition, the high operating costs of the visa sticker would disappear. |
| --- | --- |

2.3.2.

| 2.3.3. | One advantage of the digital visa would be seen when a travel document is stolen or lost, as the new travel document could be easily linked to the existing visa, without it being necessary to apply for a new visa, as is the current procedure (due to the physical link between the visa sticker and the travel document). Therefore, additional costs for Member States generated by the issuing of a new visa and the additional costs for the applicant are eliminated in the proposed new system of digitalisation. |
| --- | --- |

2.3.3.

| 2.3.4. | The digitalisation of the visa procedure must ensure specific needs are met and respect the rights of persons with disabilities and allow them to apply without discrimination, including by meeting the accessibility requirements set out in the European Web Accessibility Directive (the Directive on the accessibility of websites and mobile applications) and the European Accessibility Act. |
| --- | --- |

2.3.4.

| 2.3.5. | The EESC strongly recommends that the IT solutions used in the EU application platform provide tools/means to safeguard the rights of the child and prevent human trafficking. |
| --- | --- |

2.3.5.

| 2.3.6. | Digitalisation must not be a synonym for automation and the mere use of artificial intelligence; therefore, the number of staff employed must not diminish simply because of the digitalisation of the visa procedure. |
| --- | --- |

2.3.6.

| 2.3.7. | Administrative staff responsible for visa handling also need appropriate training to be able to make use of the positive features of the digitalisation of the procedure and to avoid mistakes. |
| --- | --- |

2.3.7.

| 2.3.8. | Additional support must be offered to EU Member States’ embassies (consulates) and civil society to overcome the possible challenges related to internet accessibility and computer literacy for applicants in third countries, in order to prevent them being discriminated against as regards their access to the visa application system. |
| --- | --- |

2.3.8.

| 2.3.9. | The EESC considers that the digitalisation of the visa procedure could have a positive impact on the environment due to the reduced use and waste of paper related to the visa application system and issuing of the visa sticker and due to the fact that the visa applicants are no longer required to travel to apply and to collect the travel documents after the application and examination process is completed. While the EESC is aware that digitalisation (storing and managing data) requires energy which generates CO2 emissions, it considers that a centralised application platform is a more energy-efficient solution than having one application platform for each Member State. |
| --- | --- |

2.3.9.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  Directive (EU) 2016/2102 of the European Parliament and of the Council of 26 October 2016 on the accessibility of the websites and mobile applications of public sector bodies (OJ L 327, 2.12.2016, p. 1).

1

(2)  Directive (EU) 2019/882 of the European Parliament and of the Council of 17 April 2019 on the accessibility requirements for products and services (OJ L 151, 7.6.2019, p. 70).

2

(3)  https://www.etiasvisa.com/etias-form-application

3

(4)  Such as representatives of business, trade unions or organised civil society.

4

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/154 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/154

---

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on standards of quality and safety for substances of human origin intended for human application and repealing Directives 2002/98/EC and 2004/23/EC

(COM(2022) 338 – 2022/0216 (COD))

(2023/C 75/22)

| Rapporteur-general: | Tymoteusz Adam ZYCH |
| --- | --- |

Rapporteur-general:

Tymoteusz Adam ZYCH

| Referral | European Parliament, 12.9.2022
  Council of the European Union, 22.7.2022 |
| --- | --- |
| Legal basis | Articles 168(4) and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Section for Employment, Social Affairs and Citizenship |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 151/0/0 |

Referral

European Parliament, 12.9.2022

Council of the European Union, 22.7.2022

Legal basis

Articles 168(4) and 304 of the Treaty on the Functioning of the European Union

Section responsible

Section for Employment, Social Affairs and Citizenship

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

151/0/0

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee supports the European Commission’s proposal for a regulation of the European Parliament and of the Council on standards of quality and safety of substances of human origin intended for human use and repealing Directives 2002/98/EC and 2004/23/EC (1), given its vital importance for the protection of public health, the well-being of patients in European Union countries and the innovation potential of the EU. |
| --- | --- |

1.1.

| 1.2. | The definition of common basic quality and safety standards for substances of human origin (SoHO) in line with the current level of medical science is useful, and the EESC agrees that new coherent rules are needed in this area. |
| --- | --- |

1.2.

| 1.3. | The EESC considers it appropriate to define the scope of the regulation in such a way that it will take into account not only SoHOs not yet regulated at European level (e.g. breast milk) but also any SoHO that may be used in the future. |
| --- | --- |

1.3.

| 1.4. | The Committee supports legislative changes that will reduce the costs for the EU institutions, Member States and citizens, in particular by removing outdated tests and systematic screening tests from legislation. The effectiveness of the regulation’s provisions should be continuously monitored, taking into account the need to preserve the safety and quality of SoHOs and to respect the standards deriving from the Charter of Fundamental Rights of the European Union. |
| --- | --- |

1.4.

| 1.5. | The EESC welcomes the introduction of uniform basic standards for keeping registers of SoHO entities. These will be reinforced by the creation of an EU SoHO Platform, which will help improve the EU’s public health security through the continuous and rapid exchange of information. |
| --- | --- |

1.5.

| 1.6. | The Committee supports the adoption of solutions which strengthen the rights of SoHO donors and address shortcomings in the existing rules. In this regard, the EESC stresses that the reaffirmation in the draft of the principle of free SoHO donation is essential for the elimination of abuse and the safety of SoHO sourcing. The Committee would point out that strict compliance with this principle is a requirement under Article 3(2)(c) of the Charter of Fundamental Rights of the EU, according to which the fields of medicine and biology must respect ‘the prohibition on making the human body and its parts as such a source of financial gain’. |
| --- | --- |

1.6.

| 1.7. | In the EESC’s view, particular attention should be paid to the need for reliable and systematic monitoring of SoHO entities in relation to safety, quality and the way in which SoHOs are sourced. Of particular importance is the continuous monitoring and control of the correct operation of entities that import SoHOs. SoHOs imported from outside the European Union should meet the same quality and safety standards as those sourced within the EU. |
| --- | --- |

1.7.

2.   Introduction

| 2.1. | This opinion concerns the European Commission’s proposal for a Regulation of the European Parliament and of the Council on standards of quality and safety for substances of human origin intended for human application and repealing Directives 2002/98/EC and 2004/23/EC (‘the SoHO Regulation’). |
| --- | --- |

2.1.

| 2.2. | As indicated in the explanatory memorandum, the SoHO Regulation will provide for the following safeguards and benefits: (1) ensuring safety and quality for patients treated with SoHO therapies and their full protection from avoidable risks linked to SoHOs; (2) ensuring safety and quality for SoHO donors and for children born from donated eggs, sperm or embryos; (3) strengthening and allowing for harmonisation of surveillance practices among Member States; (4) facilitating the development of safe and effective innovative SoHO therapies; and (5) improving the resilience of the sector and mitigating the risk of shortages. The proposed solutions respond to the incomplete protection of patients, donors of blood, tissues and cells, and offspring born from donated cells or embryos from avoidable risks associated with outdated technical rules, divergent approaches to oversight between Member States that hamper the cross-border exchange of blood, tissues and cells, exposure of patients to disruptions in the supply of blood, tissues and cells, and failure to use the full potential of blood, tissues and cells that are processed or used in new ways. |
| --- | --- |

2.2.

3.   General comments

| 3.1. | The EESC is aware of the demands of new developments in medical science, in particular biotechnology, which offer new opportunities for the use of SoHOs in many forms of patient therapy across the EU. At the same time, the Committee notes that, due to the development of new treatments, some of the existing standards are no longer valid. |
| --- | --- |

3.1.

| 3.2. | The EESC therefore welcomes the European Commission’s proposal for a SoHO Regulation. This is because the proposed Regulation covers SoHOs in a blanket form as ‘blood, tissues and cells’. This is an appropriate and far-sighted approach, as substances of which we currently have no knowledge and which may be applied therapeutically in the future will be covered by the existing safety and quality provisions in law. |
| --- | --- |

3.2.

| 3.3. | The EESC welcomes the alignment of the legal framework with the principle of financial neutrality recommended by the Council of Europe’s Committee on Bioethics. The proposal also harmonises the current legal framework and, in particular, strengthens the provisions on the protection and monitoring of donors and the reporting of genetic conditions in children born from medically assisted reproduction. |
| --- | --- |

3.3.

| 3.4. | The EESC considers appropriate and supports the proposal for a single regulatory approach to be applied in all Member States. This will directly help ensure that SoHO quality and safety standards are respected in all EU countries. |
| --- | --- |

3.4.

| 3.5. | The EESC welcomes the expected effects of the entry into force of the regulation, including the definition of common general safety and quality standards; the inclusion within the scope of the regulation of all SoHOs that are currently not regulated; facilitation of the exchange of SoHOs between Member States; the introduction of obligations to ensure crisis-preparedness measures at entity and national level and to monitor supply; and the creation of a regulatory environment that is innovation-friendly, improves the safety, accessibility and effectiveness of SoHOs and is future-proof. |
| --- | --- |

3.5.

| 3.6. | The EESC particularly welcomes the fact that the technical guidelines are based on the findings of European expert bodies. This is the most effective way to ensure that legislation remains up-to-date, in line with the evidence-based medical approach. |
| --- | --- |

3.6.

| 3.7. | The EESC welcomes the fact that the principle of voluntary and unpaid donations, as clearly expressed in the current standards on blood donations, has been extended to all other SoHOs currently in use (e.g. breast milk) and to SoHOs which cannot currently be defined but might be used in the future. It should be noted that the regulation allows for compensation to ensure that donors are not financially disadvantaged by their donation, while stating that this compensation should never constitute an incentive that might induce potential donors to provide false information or donate more frequently than allowed. In this context, it should be recalled that the principle of free SoHO donation is essential for the elimination of abuse and the safety of SoHO sourcing. The Committee would point out that strict compliance with this principle is a requirement under Article 3(2)(c) of the Charter of Fundamental Rights of the EU, according to which the fields of medicine and biology must respect ‘the prohibition on making the human body and its parts as such a source of financial gain’. Member States should take this into account when defining the rules on granting such benefits in their national legislation. |
| --- | --- |

3.7.

| 3.8. | The EESC supports the introduction of uniform basic standards for the keeping of registers of SoHO entities by the Member States. These will be reinforced by the creation of an EU SoHO Platform, which will help improve the EU’s public health security through the continuous and rapid exchange of information. The establishment of a SoHO Coordination Board is also to be welcomed, as this can be an effective instrument to effectively implement the quality and safety standards arising from the regulation. |
| --- | --- |

3.8.

| 3.9. | The proposal indicates that the responsibility for ethical and organisational decisions lies with the Member States. This position should be considered appropriate in light of the Treaty-based scope of the competences of the EU and of the Member States, and logical in the context of the scope of the proposed regulation, which is of an organisational and technical nature. The aim of the SoHO Regulation is to ensure the quality, safety and availability of SoHOs and control of their manufacturing and transport processes. However, the EESC would like to point out that, as with safety and quality controls, the development of biotechnology needs to be assessed in light of the standards laid down in the EU Charter of Fundamental Rights. |
| --- | --- |

3.9.

| 3.10. | The proposed regulation defines the competences of the staff of the competent authorities and the persons carrying out supervisory activities. The regulation refers to an appropriate professional background and regular training, including at EU level. However, the regulation does not set out details relating to staff training and experience (with the exception of Article 51, which defines the qualifications of physicians appointed by SoHO establishments). However, the specific nature of work with SoHOs requires the collaboration of many specialists within a team; in some cases the relevant competences will be held by a biotechnologist, in others by a doctor of the appropriate specialisation, and sometimes the support of an ethicist or lawyer may be required. The EESC therefore proposes that the composition of the competent authorities be required to include an interdisciplinary team of specialists. |
| --- | --- |

3.10.

4.   Level and scope of regulation

| 4.1. | The EESC is pleased to note that the regulation properly respects the principle of subsidiarity. Indeed, the objectives set by the regulation would be much more difficult for Member States to achieve themselves or could not be achieved in a comparably efficient way. The regulation therefore brings clear added value. The benefits include, in particular, basing the implementation of standards and guidelines on the work of expert bodies such as the ECDC or EDQM and the sharing of data through the EU SoHO Platform. |
| --- | --- |

4.1.

| 4.2. | The proposed definition of ‘medically assisted reproduction’ is ‘the facilitation of conception by intra-uterine insemination of sperm, in vitro fertilisation or any other laboratory or medical intervention that promotes conception’. In the EESC’s view, this could be clarified. It seems logical that the scope of the regulation should cover procedures in which SoHOs are used or during which SoHOs are created. However, the use of the phrase ‘any other [...] medical intervention that promotes conception’ in the above definition leads to the inclusion in its scope of other methods not related to the use of SoHOs and not linked to the standards of the regulation. |
| --- | --- |

4.2.

5.   Safety of preparations and control of SoHO entities

| 5.1. | The EESC welcomes the clarification of SoHO quality and safety standards and the introduction of effective control mechanisms in relation to SoHO entities. The proposed solutions will improve patients’ access to quality treatment and will have a positive impact on the state of public health in the European Union. |
| --- | --- |

5.1.

| 5.2. | In this connection, the Committee points out that quality and safety standards should apply to all SoHOs used in the European Union, including SoHOs imported from outside the EU. The EESC draws attention to the need for effective and systematic application of the control mechanisms provided for in the regulation in relation to entities importing SoHOs, particularly as regards the quality and safety of preparations. This is particularly important in view of facilitating imports of SoHOs from outside the EU. The EESC calls on the EU authorities to take all necessary steps to prevent the development of a paid cell and tissue donation industry, such as is developing in some parts of the world. |
| --- | --- |

5.2.

| 5.3. | According to the provisions of the draft regulation, where a Member State chooses to allow a new practice, the safety and quality of this practice is governed by the EU rules on quality and safety contained in the SoHO Regulation. The EESC points out that new practices implemented outside the EU should also be subject to ongoing assessment by the competent expert bodies at European Union level. |
| --- | --- |

5.3.

| 5.4. | Article 7 of the proposed regulation requires the competent authorities to ensure the impartiality of their personnel in order to avoid situations of conflict of interest. In order to achieve this objective effectively, the EESC proposes that this requirement be extended to cover the period immediately prior to the personnel taking up the position. |
| --- | --- |

5.4.

| 5.5. | Article 29(7) of the proposed regulation lays down the powers of inspectors to verify that SoHO entities meet the standards on donor and recipient protection, information provision and the voluntary and unpaid nature of donation. In the EESC’s view the powers of inspectors should be strengthened, and should entail a comprehensive inspection procedure. |
| --- | --- |

5.5.

6.   SoHO donors’ rights

| 6.1. | The EESC commends the inclusion in the draft SoHO Regulation of solutions that systematically strengthen the rights of SoHO donors and fill gaps in the existing legislation. |
| --- | --- |

6.1.

| 6.2. | In Article 53, which lays down standards for the protection of donors, point 1(b) states that information provided to donors or persons acting on their behalf should be communicated in a manner adequate in view of their ability to understand it. In order to avoid any doubts as to interpretation, the EESC believes that the information provided must be complete and clearly communicated in order to enable the condition of informed consent to be met, as generally accepted in medicine. |
| --- | --- |

6.2.

| 6.3. | Article 55(3)(c) lays down an obligation for operators to provide information to donors on the right to withdraw consent and any restrictions on the right to withdraw consent. In the EESC’s view, the right to withdraw consent can only be limited by factual circumstances, e.g. in the case of an already initiated procedure. In order to prevent violations of one of the fundamental rights of the patient, namely the right to autonomy, it seems reasonable to set out an exhaustive list of situations in which the right to withdraw consent may be restricted. |
| --- | --- |

6.3.

7.   Data protection

| 7.1. | The EESC welcomes the fact that the regulation reaffirms the need to maintain strict confidentiality requirements arising from the General Data Protection Regulation (2) (GDPR) in relation to the processing of personal data of SoHO donors and recipients, including limiting the purpose of processing personal data and data minimisation. |
| --- | --- |

7.1.

| 7.2. | In the EESC’s view, it is reasonable to distinguish between the requirement on free and informed consent for donation contained in the draft regulation and the separate requirement on consent for the processing of personal data concerning the health of the donor within the meaning of the GDPR. The two requirements are not identical. |
| --- | --- |

7.2.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  COM(2022) 338.

1

(2)  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

2

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/159 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/159

---

Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council laying down harmonised conditions for the marketing of construction products, amending Regulation (EU) 2019/1020 and repealing Regulation (EU) No 305/2011

(COM(2022) 144 final)

(2023/C 75/23)

| Rapporteur: | Manuel GARCÍA SALGADO |
| --- | --- |
| Co-rapporteur: | Domenico CAMPOGRANDE |

Rapporteur:

Manuel GARCÍA SALGADO

Co-rapporteur:

Domenico CAMPOGRANDE

| Referral | European Parliament, 18.5.2022 |
| --- | --- |
| | Council of the European Union, 30.5.2022 |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Consultative Commission on Industrial Change (CCMI) |
| Adopted in section | 13.9.2022 |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 139/0/0 |

Referral

European Parliament, 18.5.2022

Council of the European Union, 30.5.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Consultative Commission on Industrial Change (CCMI)

Adopted in section

13.9.2022

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

139/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC believes that the EC does not offer any short-term solutions to resolve the current delay in the publication of new standards in the Official Journal of the European Union. Its objective is to amend the Construction Products Regulation (1) (CPR) which, even if successful, will only yield results within 10 years. |
| --- | --- |

1.1.

| 1.2. | The EESC notes with concern that the proposed transition period between the current Regulation and the revised Regulation is 20 years, which may cause practical problems, since the progressive introduction of harmonised technical specifications over a period of 20 years is too long. Currently, the standardisation system is unworkable, as it does not have the means to react to the issues raised by the EC and to respond to political priorities that have been set. |
| --- | --- |

1.2.

| 1.3. | The EESC notes with concern that, although the EC has presented several political options to the Member States, it returns to the old approach in which technical standards are written by regulators at European level, which is especially worrying, since such a centralised process would restrict the ability of smaller members of the industry to voice their opinions and see their views included. |
| --- | --- |

1.3.

| 1.4. | The EESC, in agreement with the construction sector, supports the development of an alternative option to the one presented by the EC, keeping standardisation at its core. It will be necessary to continue the discussions and invite all the interested parties, (the Member States, the CEN, the EC, etc.) to work together to propose a viable solution in which harmonised standards play a fundamental role in the system. The objective is to involve all interested parties in a dialogue, aimed at finding an adequate system that allows the free movement of construction products. In this process, social dialogue with the employers and workers, and participation of societal stakeholders in standardisation is a key tool. |
| --- | --- |

1.4.

| 1.5. | While the EESC acknowledges that standardisation is often seen as an industry-driven, bottom-up process, it is of utmost importance to ensure that all stakeholders work together cooperatively and flexibly to have up-to-date standards that are crucial to enable sustainability and digitisation while facilitating innovation in the construction sector. This process should also be supported by social dialogue and ensure the participation of employers, workers, and societal stakeholders in standardisation. |
| --- | --- |

1.5.

| 1.6. | For the EESC, a well-functioning European regulatory framework for construction products, integrated into the standardisation system, will not only meet the needs of the industry, but will also serve society in general, which explains the importance of the involvement of the social partners. It will allow the EU to achieve the digital internal market, the economic recovery post-COVID-19, the strategic plans of the European Green Deal and the objectives of the circular economy. |
| --- | --- |

1.6.

| 1.7. | The EESC notes that the proposed new CPR refers to the mandatory use of European evaluation methods, classification and criteria by all players in the construction sector. This affects more than three million companies in the EU, most of which are SMEs. The requirements must be justified and proportionate and not involve unnecessary bureaucratic and administrative burdens, especially if their added value is limited. The EESC considers that this problem has been underestimated in the proposed revised CPR. |
| --- | --- |

1.7.

| 1.8. | The EESC believes that a complete declaration of performance would be desirable, as well as an adaptation of Article 6 and Annex III with respect to the requirements listed in Annex I, since construction products with CE marking do not guarantee compliance with the basic requirements for construction works. This prevents a single European internal market for construction products, since Member States may be obliged under Article 8 to prevent the marketing and use of such construction products, which may endanger the safety of construction sites. |
| --- | --- |

1.8.

| 1.9. | The EESC stresses that the procedures associated with the CPR need to be improved or further developed, in particular as regards standardisation and the definition of interfaces with national implementing standards. It should be ensured that the European Commission introduces all test requirements/performance/characteristics as harmonised standards. If this is not done, national requirements for construction products should be possible where there are special national concerns regarding the use of construction products. This would mean that national requirements and annexes would have to be approved for a certain period of time. In the event the declaration of performance is made more complete, the necessary steps need to be taken to ensure that correspondence is achieved at the level of the works (design, installation, ...), both with regard to the content of the information and to its credibility. |
| --- | --- |

1.9.

| 1.10. | The EESC notes the problem that the proposed revised CPR does not specify the mechanism to collect information on the products referred to in public contracting specifications, due to its inclusion in the new Article 7. It will be a huge and endless task to gather the properties and characteristics that correspond to the needs of all public buyers, for all uses. |
| --- | --- |

1.10.

| 1.11. | The EESC considers it essential that the efforts that construction companies are making to implement circularity be delayed, hindered or even stopped due to the lack of regulatory clarity in the new CPR. Therefore, a clarifying regulation is necessary to prevent circularity from being stopped. |
| --- | --- |

1.11.

| 1.12. | The EESC believes that the proposed revised CPR must include clear and proportionate provisions that take into account the fact that for reused or remanufactured products, products introduced 20, 50 or 150 years ago, there is no information, since for these CE-marked products, performance information is only available locally. |
| --- | --- |

1.12.

| 1.13. | The EESC is convinced that it is important for the sector's competitiveness that the revised CPR proposal constitute a tool that not only allows the innovative product to be placed on the market, but also facilitates its use. This requires the ETA to also include information that mitigates users’ reluctance to start using the innovation. |
| --- | --- |

1.13.

| 1.14. | The EESC emphasises that it must be clear that the term ‘construction product’ continues to correspond only to the definition of Article 2.1 of the current CPR and that there is no extension. It is not clear what is meant by the term ‘service’ in the new CPR draft. It must be ensured that custom-made products remain excluded from the scope of the CPR. |
| --- | --- |

1.14.

| 1.15. | The EESC agrees with EU-OSHA’s positive assessment of the EC proposal as regards the additional criteria to the functional and safety requirements for construction products, in particular environmental and occupational health and safety criteria, often related to the circular economy and sustainability. All of this reinforces the evidence of the positive impact of good management of health and safety at work. |
| --- | --- |

1.15.

| 1.16. | The EESC expresses concern because, in general, national regulations allow the use of contaminated waste under roads (contaminated with old tar, PCB, PCP, asbestos, old mineral wool up to a certain percentage); or they are placed in special landfills. Construction and demolition waste accounts for more than a third of all waste generated in the EU (2). There are some areas where there are different conflicting concerns, for example, if the subsoil from road construction and other infrastructure is not used as a large repository for construction waste. |
| --- | --- |

1.16.

| 1.17. | The EESC expresses its concern at the fact that preparation for reuse, re-manufacturing and recycling require design, facilitating the separation of components and materials in the recycling phase and avoiding mixed or intricate materials and that all of this will massively expose workers to these substances. EU-OSHA encourages companies that have proposed innovative solutions to such problems, for example, ‘Remove hazardous solvents from the analysis of reclaimed material in the road construction and repair sector’. That is why the EESC considers that these essential aspects for safety and health at work must be taken into account in the new regulation. The EESC believes that it must ensure not only jobs and economic progress, but also socio-economic and environmental improvements on the basis of Corporate Social Responsibility (CSR) principles and the relevant regulation. |
| --- | --- |

1.17.

| 1.18. | The EESC considers that the proposal needs to be significantly revised if it is to achieve its main objectives. |
| --- | --- |

1.18.

2.   General comments

| 2.1. | The Commission’s 2016 implementation report on the CPR identified certain deficiencies in its implementation. The CPR evaluation, the opinions of the REFIT platform and the feedback from Member States and stakeholders clearly pointed out the shortcomings of the framework, which hampers the functioning of the single market for construction products and therefore does not achieves the objectives of the CPR. |
| --- | --- |

2.1.

| 2.2. | The European Green Deal Communication (3), the Circular Economy Action Plan and the Renovation Wave Communication (4) highlighted the role of CPR as part of efforts towards energy and resource efficient buildings and renovations, and to address the sustainability of construction products and the shift towards a circular economy. The proposal for a revised Directive on the energy performance of buildings (5) highlighted the importance of GHG emissions from the lifecycle of buildings and construction materials in calculating the global warming potential of new buildings after 2030. |
| --- | --- |

2.2.

| 2.3. | The EU Forestry Strategy and the Communication on the sustainable carbon cycle (6) announced, in the context of the revision of the Construction Products Regulation, the development of a methodology and robust and transparent standard for quantifying the climate benefits of building products and carbon capture and utilisation. |
| --- | --- |

2.3.

| 2.4. | Both the European Parliament and the Council have called for action to promote the circularity of construction products, address barriers in the single market for construction products and contribute to the objectives of the European Green Deal and the Circular Economy action plan. |
| --- | --- |

2.4.

| 2.5. | The two broad objectives of the CPR review are (1) to achieve a well-functioning single market for construction products and (2) to contribute to the goals of the green and digital transition, in particular the modern, efficient market in the use of resources and competition. |
| --- | --- |

2.5.

| 2.6. | The CPR significantly limits the possibilities of the sector to declare, in a consistent and harmonised way, the performance of its products and to differentiate products with respect to climate, environmental and sustainability performance. It also significantly limits the possibilities for Member States to set national requirements for buildings or to include criteria in public procurement on sustainability objectives without jeopardising the functioning of the single market. |
| --- | --- |

2.6.

| 2.7. | The Communication on A New Industrial Strategy for Europe (7) of March 2020 sets out a plan for EU industry to lead the dual green and digital transition. The Communication updating the New Industrial Strategy 2020 identified construction as one of the priority ecosystems that faces the most important challenges to meet climate and sustainability objectives and embrace digital transformation, and its competitiveness depends on it. |
| --- | --- |

2.7.

| 2.8. | The proposal for a regulation that repeals the current CPR, aims to address the identified deficiencies of the CPR and the objectives of the European Green Deal and the circular economy action plan in relation to construction products. Improving the core workings of the CPR framework, in particular the standardisation process, is imperative to achieving the policy goals. However, it does not take into account the necessary aspects related to health and safety at work and other EU-OSHA recommendations. |
| --- | --- |

2.8.

| 2.9. | The EESC believes that education, training, retraining life-long learning, and certification are extremely important and it is important for the future of the industry that they take place through social dialogue. The EESC also notes that acquiring the necessary skills requires time and financing. |
| --- | --- |

2.9.

3.   Specific comments

| 3.1. | Standardisation plays a crucial role for the European construction sector. It is the main pillar of the Internal Market (IM), it facilitates the free movement of construction products in the EU and stimulates construction activities. This important role is recognised in European legislation, in particular the Construction Products Regulation and the European Standardisation Regulation (8). |
| --- | --- |

3.1.

| 3.2. | The goal of standardisation work in sustainability of construction works, should include the equal assessment of the environmental, economic and social aspects of the sustainability of products, buildings and services, and its communication to the consumer (preferably by labelling). |
| --- | --- |

3.2.

| 3.3. | Without up-to-date standards, the internal market for construction products could neither be achieved nor maintained. However, in recent years the integration of standards into the regulatory system has often failed, leading to lower efficiency in the construction sector and damage to the internal market, including increased direct or indirect costs for companies (especially for small and medium-sized ones). |
| --- | --- |

3.3.

| 3.4. | The EC can set the standards for the development of harmonised standards using standardisation applications. However, the EC has been passive in not using this approach and consequently the European Committee for Standardization (CEN) has been forced to continue working with outdated mandates and discouraging experts from working on standards, which are often blocked for reasons beyond their control. |
| --- | --- |

3.4.

| 3.5. | The EC notes problems in the current standardisation procedure through CEN (which could certainly be improved) and which led the EC to block many standards. The EESC believes that the solution proposed by the EC, that is, the use of more and more ‘delegated acts’, cannot be satisfactory because it leaves employers, workers and societal stakeholders in standardisation out of the standardisation process. Also, there are many standards blocked by the EC and therefore a short-term solution has to be found on how to unblock them. The EESC critically questions whether this form of extension, ultimately, does not lead to the overlapping of powers with the Member States. We consider that this should only be applied in exceptional cases, where its implementation is duly justified, and a clear set of enabling conditions should be established. |
| --- | --- |

3.5.

| 3.6. | The proposal for a new EC regulation refers to the influence of supply chain management and public procurement practices on the environment, safety and health at work, in order to stimulate the use and commercialisation of quality products and materials. EU-OSHA has also identified this fact as an important influencing factor that can lead to the greater use of products that respect the environment and are safer for workers. |
| --- | --- |

3.6.

| 3.7. | The new EU-OSHA project LIFT-OSH (Leveraging Instruments for Health and Safety at work) reinforces the evidence of the positive impact of good management of health and safety at work. |
| --- | --- |

3.7.

| 3.8. | The EESC expresses its concern at the fact that preparation for reuse, re-manufacturing and recycling require design, facilitating the separation of components and materials in the recycling phase and avoiding mixed or intricate materials and that all of this will massively expose workers to these substances. EU-OSHA encourages companies that have proposed innovative solutions to such problems, for example, ‘Remove hazardous solvents from the analysis of reclaimed material in the road construction and repair sector’. That is why the EESC considers that these essential aspects for safety and health at work must be taken into account in the new regulation. The EESC believes that it must ensure not only jobs and economic progress, but also socio-economic and environmental improvements on the basis of CSR principles and the relevant regulation. |
| --- | --- |

3.8.

| 3.9. | The proposed revised CPR mentions that, in order to ensure the safety and protection of the environment and to close a possible regulatory loophole, construction ‘products’ manufactured on the construction site for immediate incorporation into the construction works would be subject to the same rules as other construction products placed on the market by manufacturers. The Committee does not consider that any such regulatory loophole exists when these products are not placed in the market. Contractors manufacturing ‘products’ on site for immediate incorporation into the works (e.g. a concrete lintel, sprayed polyurethane foam, windows and door frames, etc.) are subjected to regulatory requirements applicable for the (parts of) works and these are mostly, if not always, based on exactly the same technical requirements as manufacturers. i.e. operating a factory production control system, establishing technical documentation, evaluating ‘products’, declaring performances and conformity and affixing CE marking. This unnecessary provision would be particularly detrimental to SMEs. |
| --- | --- |

3.9.

| 3.10. | Article 7 of the proposed revised CPR widens the scope to all product requirements referred to in public procurement specifications. However, it does not specify the mechanism to collect such information, which may relate to a broad and diverse set of construction works, such as dog compounds for police dogs, administrative buildings of the authorities, highways and nuclear facilities, etc. The EESC is concerned about the feasibility of collecting all information concerning the properties and characteristics, as well as how to determine appropriate evaluation methods that correspond to the needs of all public procurers, for all uses. Moreover, depending on the intended use, the credibility sought by public procurers will also be very different (the credibility of the performance of waterproofing membranes intended to be used on a dog compound will be different compared with the same product used on the roof of a museum of fine arts) and may not correspond with the assessment and verification systems specified in the proposed revised CPR. The EESC questions whether this approach is realistic. |
| --- | --- |

3.10.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  Regulation (EU) No 305/2011 of the European Parliament and of the Council of 9 March 2011 laying down harmonised conditions for the marketing of construction products and repealing Council Directive 89/106/EEC (OJ L 88, 4.4.2011, p. 5).

1

(2)  https://ec.europa.eu/environment/topics/waste-and-recycling/construction-and-demolition-waste_en

2

(3)  COM(2019) 640 final.

3

(4)  COM(2020) 662 final.

4

(5)  COM(2021) 802 final.

5

(6)  COM(2021) 800 final.

6

(7)  COM(2020) 102 final.

7

(8)  Regulation (EU) No 1025/2012 of the European Parliament and of the Council of 25 October 2012 on European standardisation, amending Council Directives 89/686/EEC and 93/15/EEC and Directives 94/9/EC, 94/25/EC, 95/16/EC, 97/23/EC, 98/34/EC, 2004/22/EC, 2007/23/EC, 2009/23/EC and 2009/105/EC of the European Parliament and of the Council and repealing Council Decision 87/95/EEC and Decision No 1673/2006/EC of the European Parliament and of the Council (OJ L 316, 14.11.2012, p. 12).

8

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/164 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/164

---

Opinion of the European Economic and Social Committee on Conversion to a Farm Sustainability Data Network (FSDN)

(COM(2022) 296 final – 2022/0192 (COD))

(2023/C 75/24)

| Rapporteur: | Florian MARIN |
| --- | --- |

Rapporteur:

Florian MARIN

| Referral | European Parliament, 4.7.2022
  Council, 11.7.2022 |
| --- | --- |
| Plenary Assembly decision | 17.5.2022 |
| Legal basis | Article 43(2) and Article 304 of Treaty on the Functioning of the European Union |
| Section responsible | Section for Agriculture, Rural Development and the Environment |
| Adopted in section | 5.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 188/0/1 |

Referral

European Parliament, 4.7.2022

Council, 11.7.2022

Plenary Assembly decision

17.5.2022

Legal basis

Article 43(2) and Article 304 of Treaty on the Functioning of the European Union

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted in section

5.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

188/0/1

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes and supports the conversion of the Farm Accountancy Data Network (FADN) into a Farm Sustainability Data Network (FSDN), as provided for in the Farm to Fork strategy, with the task of collecting sustainability data, improving advisory services and providing feedback to farmers. |
| --- | --- |

1.1.

| 1.2. | The EESC considers the FSDN to be an important tool for evidenced-based policies and recommends the following:






  — | data on climate change, soil quality and carbon sequestration, pesticide used, water and air quality, energy, and biodiversity should be treated as environmental data to be collected by farmers or by other instruments interoperable with the FSDN. The data collected should be broken down according to the type of product (organic, etc.); Data variables on sustainability must be thoroughly evaluated on validity, quality and comparability to be included in the network if they are to be used as a tool for policies. |
| --- | --- | --- |

1.2.

—

data on climate change, soil quality and carbon sequestration, pesticide used, water and air quality, energy, and biodiversity should be treated as environmental data to be collected by farmers or by other instruments interoperable with the FSDN. The data collected should be broken down according to the type of product (organic, etc.); Data variables on sustainability must be thoroughly evaluated on validity, quality and comparability to be included in the network if they are to be used as a tool for policies.

| — | data on working conditions, types of contracts, health and safety (existence of health and safety plan at the farm level, number of accidents including self-employed workers), skills and wages, social conditionality link to Common Agriculture Policy, number of self-employed workers, number of temporary/seasonal workers should be treated as social data to be collected by farmers or by other instruments interoperable with the FSDN. There should be special focus on women and young people. |
| --- | --- |

—

data on working conditions, types of contracts, health and safety (existence of health and safety plan at the farm level, number of accidents including self-employed workers), skills and wages, social conditionality link to Common Agriculture Policy, number of self-employed workers, number of temporary/seasonal workers should be treated as social data to be collected by farmers or by other instruments interoperable with the FSDN. There should be special focus on women and young people.

| — | environmental and social data should be given the same level of importance as economic data; Considering that for the past decades the FADN has mainly assessed the economic situation of farmers, the economic dimension is key alongside with the environmental and social challenges. |
| --- | --- |

—

environmental and social data should be given the same level of importance as economic data; Considering that for the past decades the FADN has mainly assessed the economic situation of farmers, the economic dimension is key alongside with the environmental and social challenges.

| — | an approach cross-linking with the Integrated Administration and Control System (IACS) and data resulting from the implementation of the common agricultural policy (CAP) and also Eurostat, especially for environmental and social data. |
| --- | --- |

—

an approach cross-linking with the Integrated Administration and Control System (IACS) and data resulting from the implementation of the common agricultural policy (CAP) and also Eurostat, especially for environmental and social data.

| — | the possibility of all the farmers to contribute to the FSDN, where they are willing and able, on the basis of a specific methodology and taking into account the representativeness and budget constraints; no sanction should exist if they are part of the sample group but do not want to contribute; Data provision by farmers must remain voluntary. However, Member States should identify adequate ways and incentives to encourage farmers to take part in the FSDN. |
| --- | --- |

—

the possibility of all the farmers to contribute to the FSDN, where they are willing and able, on the basis of a specific methodology and taking into account the representativeness and budget constraints; no sanction should exist if they are part of the sample group but do not want to contribute; Data provision by farmers must remain voluntary. However, Member States should identify adequate ways and incentives to encourage farmers to take part in the FSDN.

| — | there should be constant focus on reducing bureaucracy: modern data technologies such as artificial intelligence, internet of things, automatic validation or remote collection infrastructure should also be used. |
| --- | --- |

—

there should be constant focus on reducing bureaucracy: modern data technologies such as artificial intelligence, internet of things, automatic validation or remote collection infrastructure should also be used.

| — | the FSDN should help to increase understanding of the entire ecosystem of the farm, and for this interoperability with other databases; analysing together separate datasets which are covering other parts of the supply chain should also be provided for. |
| --- | --- |

—

the FSDN should help to increase understanding of the entire ecosystem of the farm, and for this interoperability with other databases; analysing together separate datasets which are covering other parts of the supply chain should also be provided for.

| — | providing for subsistence farms and semi-subsistence farms to be included in FSDN sampling. |
| --- | --- |

—

providing for subsistence farms and semi-subsistence farms to be included in FSDN sampling.

| — | including different characteristics, sources, formats, dimensions and levels of granularity of data due to the different situations among Member States (MS). |
| --- | --- |

—

including different characteristics, sources, formats, dimensions and levels of granularity of data due to the different situations among Member States (MS).

| — | providing for constant exchange of farming best practices between the MS and farmers; special instruments should be developed in this regard. |
| --- | --- |

—

providing for constant exchange of farming best practices between the MS and farmers; special instruments should be developed in this regard.

| — | more should be done to consolidate the capacity for collecting, sharing, managing and using data to improve the efficiency and the decision-making process at farm level, especially for small farms. |
| --- | --- |

—

more should be done to consolidate the capacity for collecting, sharing, managing and using data to improve the efficiency and the decision-making process at farm level, especially for small farms.

| — | the FSDN should contribute to improving farm management, and customised advisory services should also be delivered by creating a clear link with data on the exogenous variables of the agriculture production process such as weather forecasts, etc. |
| --- | --- |

—

the FSDN should contribute to improving farm management, and customised advisory services should also be delivered by creating a clear link with data on the exogenous variables of the agriculture production process such as weather forecasts, etc.

| — | specific criteria linked to the sustainability of the processes required by the FSDN and working conditions criteria for data collectors should be established. |
| --- | --- |

—

specific criteria linked to the sustainability of the processes required by the FSDN and working conditions criteria for data collectors should be established.

| 1.3. | The EESC considers that data protection, ownership, privacy and confidentiality should always be ensured (guarantee of complete anonymisation) and that the farmers should have permanent control of their data. Moreover, the farmers’ interests should be protected and their consent should be obtained when their data is to be shared, whatever the destination and use of the data. |
| --- | --- |

1.3.

| 1.4. | The EESC recommends that the farmers be provided with incentives to contribute and they have clear and direct benefits for sharing their data in addition to advisory services, such as financial benefits or access to dedicated calls for proposals financed by EU funds. |
| --- | --- |

1.4.

| 1.5. | Data collected for the FSDN must under no circumstances be used for controlling and sanctioning farmers. If this principle is compromised the farmers should have the option to refrain from providing the data, but this will significantly impair the use of the FSDN as a policy tool. |
| --- | --- |

1.5.

| 1.6. | The general approach of the FSDN is to use digital technologies, and for this reason the EESC recommends that more be done to build a common data space for agriculture, promoting co-ownership of data and data cooperatives. The EESC considers that a common methodology for ensuring comparability and common use of data is lacking in the agrifood sector. |
| --- | --- |

1.6.

| 1.7. | The EESC suggests that a dedicated integrated programme for digitalisation of the agrifood sector should be set up, since some farmers are already obliged to collect environmental data in order to sell their products and autonomous and smart machines or sensors are data generators. Digital inclusiveness and literacy alongside with facilitating access to data, hardware and software technologies should be considered. |
| --- | --- |

1.7.

| 1.8. | The EESC is suggesting that more efforts should be delivered in reducing white zones and providing phone connectivity and broadband in rural areas. |
| --- | --- |

1.8.

| 1.9. | Finally, the EESC recommends that the funds for implementing the FSDN should be secured by the Commission and MS and that the data collected should take into account the price volatility and different crises in the agrifood supply chain. |
| --- | --- |

1.9.

2.   Introduction

| 2.1. | In the Farm to Fork Strategy (1), the European Commission planned to transform the Farm Accountancy Data Network (FADN) into a Farm Sustainability Data Network (FSDN) for collecting sustainability data, improving advisory services and providing feedback to farmers. The data will be collected at farm level, according to specific criteria and periodicity in all Member States (MS). The FADN will be adapted to ensure an efficient data collection process with the FSDN. |
| --- | --- |

2.1.

| 2.2. | Each MS will draw up a dedicated plan for the selection of returning holdings that ensures a representative sample of data. Agricultural holdings will be classified in a uniform manner and data collectors such as accountancy offices will be involved in the process, coordinated by a liaison office at MS level. |
| --- | --- |

2.2.

| 2.3. | The data provided by the farms will be used to characterise the returning of the holding, to assess the income and the economic, environmental and social sustainability of the holding and to test, by means of on-the-spot checks, the veracity of the information given. |
| --- | --- |

2.3.

3.   Functionality of the FSDN

| 3.1. | The EESC supports the conversion of the FADN into the FSDN and considers that the same data should not be collected multiple times since some Member States are already collecting some social and environmental data, and that a cross-linking approach with the Integrated Administration and Control System (IACS) and data resulting from the implementation of the common agricultural policy (CAP) and also Eurostat should be ensured, especially for the social and environmental data. |
| --- | --- |

3.1.

| 3.2. | Data sharing between the FSDN and various actors such as administrations, statistical authorities and private bodies should be effected in a controlled and adapted way. Promoting the digital technologies already developed and financed by EU (FAIRshare (2), Horizon projects, etc.) can contribute to improving farm management and use of digital technologies at farm level. |
| --- | --- |

3.2.

| 3.3. | The lagging period between data collection and data processing should not affect the quality of the FSDN and the advisory services delivered to the farmers. The farmers should be aware if their data is being used for additional purposes linked to FSDN such as research, innovation, training, etc., and give their consent to this. |
| --- | --- |

3.3.

| 3.4. | Data protection, respective General Data Protection Regulation (3) (GDPR) rules and data for sensors, trust in data use, check and balance procedures, ownership, privacy and producing rights or transparency should integrate farmers’ interests and farmers should benefit from the collected data. Reducing bureaucracy should be a constant priority. Clear methodology is needed at EU level for encouraging farmers in this regard. Involving farmers’ associations should be considered. |
| --- | --- |

3.4.

| 3.5. | The EESC considers that the sustainability of the system implementation and the working conditions of the people involved in implementing the FSDN in the areas of data collection, management, storage and data processing should be taken into account. The EESC points to its opinion on digitalisation and sustainability (4): the most energy-efficient data centres should become the norm and new data centres should be run by 100 % renewable energies. Specific criteria linked to the sustainability of the process and working conditions for data collectors should be established by the Commission and taken into account in all Member States. |
| --- | --- |

3.5.

| 3.6. | The FSDN should not be an instrument only for public authorities to use in drafting public policies, and should also integrate the needs of social partners, research entities, universities, farmers and NGOs. The FSDN could help to increase the inclusion of farmers in the financial system (credit, etc.). Overviews of farming at European, national and regional levels, and of the different types of farming, should be provided periodically by the FSDN. |
| --- | --- |

3.6.

| 3.7. | All farmers of the EU should have the possibility to contribute to the FSDN where they are willing to do so taking into account the representativeness, budget constraints and the objectives of the FSDN. The possibility of a voluntary contribution to the FSDN based on adapted, specific criteria and methodologies for farms which are not in the sampling should be possible. The farmers should not be obliged to deliver data for the FSDN and no sanction should be added. Subsistence and semi-subsistence farms should also be taken into account. Data collected should be broken down according to type of product (organic, etc.). |
| --- | --- |

3.7.

| 3.8. | Modern and innovative data collection and processing based on artificial intelligence, internet of things, automatic validation, OCR software or remotely collecting infrastructures should be taken into account in order to make the FSDN more efficient, alongside geospatial data generated through the European Space programme. A clear link between the FSDN, the CAP and the European Open Science Cloud should be created. |
| --- | --- |

3.8.

| 3.9. | The FSDN should take into account the different legislations across the MS, particularly concerning environmental and social aspects and should be flexible enough to integrate new indicators. Cooperation between liaison offices, MS offices and the Commission’s DG Agriculture needs to be effective for the FSDN to succeed. The same level of importance should be attached to environmental and social data as it is to economic data, to small and large farmers and to different regions. The openness and willingness to contribute to the FSDN varies across the MS, and the level of sensitivity and precise value of some elements should be taken into account. |
| --- | --- |

3.9.

| 3.10. | The EESC is suggesting making a clear distinction between the data needing to be collected yearly and that needed periodically. Different characteristics, sources, formats, dimensions and levels of granularity of data are a challenge for the FSDN, given that the same data should not be collected multiple times. There are big differences across MS in terms of cost structures for data collection, so more flexibility is needed. |
| --- | --- |

3.10.

| 3.11. | The data collection should take into account the different crises and the increased price volatility that is becoming a constant variable in the agrifood chains. The war in Ukraine is helping to fuel this volatility, and food speculation is putting pressure on the supply chains. The financial resources allocated to the FSDN should be secured by the Commission and the MS. |
| --- | --- |

3.11.

| 3.12. | The EESC suggests developing a European advisory body, with the involvement of civil society, selected on the basis of transparent criteria for monitoring the data collection and for deciding on data use and strategic changes in data requirements, considering the societal challenges and the dynamics of data demand. |
| --- | --- |

3.12.

| 3.13. | The EESC further suggests that data concerning farming practices should be integrated into the FSDN, more precisely regarding land management, plant protection, plant nutrition, animal health and welfare. Farming best practices should be collected and disseminated as a result of the FSDN especially in the environmental and social fields (training, model tools, good practices, exchanges between advisors, etc.). |
| --- | --- |

3.13.

| 3.14. | Data on climate change, soil quality, and carbon sequestration, pesticide use, water quality, air quality, energy, and biodiversity should be treated as environmental data to be collected by farmers or by other instruments which are interoperable with the FSDN. |
| --- | --- |

3.14.

| 3.15. | Working conditions, types of contracts, health and safety (existence of health and safety plan at the farm level, number of accidents including self-employed workers), social conditionality link to Common Agriculture Policy, number of self-employed workers, the number of temporary/seasonal workers, skills and wages should be considered as social data to be collected by farmers or by other instruments which are interoperable with the FSDN. Constant care should also be taken to ensure that the data collected is used to help monitor the progress towards achieving the SDGs. |
| --- | --- |

3.15.

| 3.16. | The EESC suggests that special attention be given to women and young people as a core focus point for the future of rural development. Facilitating access to opportunities, stable working contracts, adapted public services and high quality of life are aspects that can indirectly be motivated by the FSDN. Also, special attention should be given to data of farms that operate internationally since the organisation of farms is becoming more complex and some of them are also producing outside the EU. |
| --- | --- |

3.16.

| 3.17. | As regards the implementation of the FSDN legislation, the EESC is concerned about the proposed power granted to the EC to adopt a substantial number of delegated acts (for example on data management, regarding farm ID, use of data or access to and transmission of primary data). This should be limited to a minimum extent and rather be done via implementing acts. |
| --- | --- |

3.17.

4.   FSDN contribution to improving the environmental, economic and social performance of the farms and the transparency and fairness of the agrifood supply chain

| 4.1. | The FSDN could be an instrument that contributes to improving farm management by developing decision support tools for better farm performance (including by promoting precision agriculture) through collecting and analysing farm data and the Member States should be guided in this direction. The advisory services resulting from the FSDN could benefit from improved integration of datasets in order to deliver informed advice across sustainability dimensions (economic, environmental, social). |
| --- | --- |

4.1.

| 4.2. | Data collected at farm level is partially used to increase the potential and sustainable performance of the farm. The farmers must have control over their data and should be assisted and advised to use their data to work more precisely, efficiently, and sustainably in order to foster sustainable farming practices. The data should be used for the specific purpose for which it has been collected. MS should engage properly in this regard and the Commission should deliver clear recommendations and open software solutions adapted to the ecosystem of the farms. |
| --- | --- |

4.2.

| 4.3. | The EESC suggests that a common data space based on a public data trust label for agrifood in the EU should be developed for a better and more efficient approach to the supply chains. Concrete targets should be established in each MS. Co-ownership of data, data cooperatives for agriculture and development of partnerships for data farming require dedicated financial resources and a dedicated strategy. |
| --- | --- |

4.3.

| 4.4. | The development of standards and a common methodology for ensuring comparability and common use of data are lacking in the agrifood sector. Concrete steps should be implemented in this regard with the involvement of the MS, since some farmers are obliged to collect data in order to sell their products to retailers. |
| --- | --- |

4.4.

| 4.5. | The EESC suggests that the FSDN should help increase understanding of the entire ecosystem of the farm and should be interoperable with other databases covering data on the supply chain or analysing separate datasets together in order to be able to monitor the distribution of the added value and ensure fair treatment for all the actors in the food chain. The FSDN should deliver basic key performance indicators linked to farms’ performance but also linked to the regional and product situation. |
| --- | --- |

4.5.

| 4.6. | The FSDN should contribute to delivering smart, innovative and sustainable farm management, improving farm management and production and connecting with the exogenous variables of farming production (weather, etc.). Farmers and cooperatives should be more involved in the research projects, and EU funds could be specifically allocated to the digitalisation of the agrifood sector. Due to the specific nature of the sector, a dedicated call for proposals should be launched with the involvement of the MS. |
| --- | --- |

4.6.

5.   FSDN contribution to digitalisation of the agriculture and agrifood sector

| 5.1. | The internalisation of IT technologies is a slow process since agriculture is still one of the least digitalised sectors and there are significant differences between countries, regions and farms in this regard. Digital inclusiveness is a huge problem and should be focused on in order to reduce inequalities. A more digitalised agrifood sector will contribute to more transparency in the supply chain and minimise the risk of food speculation. The EESC proposes that a dedicated integrated programme for digitalisation of the agrifood sector should be put in place by the Commission, MS and civil society working in partnership. Facilitating access to hardware and software technologies for MS, and especially for small farmers, should be covered by dedicated programmes, since digital transition is a priority. Renewal of the software licenses used to collect and share data should be periodically covered. EU funds can be used in this regard, while the involvement of the MS is an important factor. |
| --- | --- |

5.1.

| 5.2. | Autonomous and smart machines or sensors are data generators that can help in the decision-making process at farm level and can consolidate data management at the supply chain level. Interconnectivity and interoperability between supply chain actors together with geospatial data should help to ensure connection to the market for small farmers and the consolidation of the supply chains. |
| --- | --- |

5.2.

| 5.3. | Consolidating the capacity for collecting, sharing, managing and using data at farm level, especially for small farms, is important for better integration of farmers into the supply chains and for increasing the farms’ efficiency. These costs should be covered by the CAP and special measures should be incorporated into the strategic plans by the MS. The poor knowledge of small farmers in the digital processes must be carefully managed and there should be clear, constant focus on increasing digital knowledge across the CAP and other relevant policies. |
| --- | --- |

5.3.

| 5.4. | Collecting social and environmental data should not be an isolated process or an additional activity, but rather an ongoing activity at farm level, regardless of the size or type, and MS should support this continuous activity. |
| --- | --- |

5.4.

| 5.5. | The EESC is concerned about the fact that the demand for data and for digitalisation in the agrifood sector could generate price discrimination and speculation on the commodity markets. The concentration of the data market in a small number of companies must be managed in a way in which data sovereignty is assured. Moreover, data sharing between actors of the supply chain must be effected in a fair, transparent and non-discriminatory way, allowing the FSDN to help deliver a fairer supply chain and reducing indirect emissions. |
| --- | --- |

5.5.

| 5.6. | There should be constant focus on creating a framework for data democracy and balanced bargaining power concerning data benefits in the agrifood sectors. The EESC welcomes the introduction of an ID for farms and suggests that more clarity regarding data privacy, ownership, liability and portability in agriculture is needed. Equitable sharing of data benefits based on reciprocity between data contributors and data aggregators should be catered for alongside easy discoverability of FSDN data. |
| --- | --- |

5.6.

| 5.7. | Awareness-raising campaigns highlighting the importance of data for the economic, social and environmental performance of farms, especially for small farmers, are needed to consolidate trust and to increase understanding of the contribution of data to the relevance and efficiency of future public policies. Actors in the agrifood supply chains should have access to open data platforms in order to ensure comparability and transparency within the product supply chains. The FSDN could motivate farmers to use digital platforms to integrate into the supply chains more easily and to transfer best practices. |
| --- | --- |

5.7.

| 5.8. | Digital literacy should be constantly delivered, especially to small farms and older farmers, alongside trainings for data collectors. Cybersecurity training, practices and campaigns should be ongoing. Despite the progress noted in the digitalisation and data sector, more user-friendly systems are needed. The EESC stresses the need to ensure broadband coverage and digitalisation as a precondition for precision farming and robotics, and to support investment in sustainable techniques. A clear link should be considered between the FSDN and the Connecting Europe Facility, but also with the Connecting Europe Broadband Fund. |
| --- | --- |

5.8.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  EESC opinion on ‘From farm to fork’: a sustainable food strategy (OJ C 429, 11.12.2020, p. 268).

1

(2)  https://www.h2020fairshare.eu/.

2

(3)  Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1).

3

(4)  EESC exploratory opinion on Digitalisation and Sustainability — status quo and need for action in civil society perspective (OJ C 429, 11.12.2020, p. 187).

4

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/171 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/171

---

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – An action plan for EU-Ukraine Solidarity Lanes to facilitate Ukraine’s agricultural export and bilateral trade with the EU

(COM(2022) 217 final)

(2023/C 75/25)

| Rapporteur: | Marcin NOWACKI |
| --- | --- |

Rapporteur:

Marcin NOWACKI

| Referral | European Commission, 28.6.2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 4.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 156/12/17 |

Referral

European Commission, 28.6.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted in section

4.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

156/12/17

1.   Conclusions and recommendations

| 1.1. | The EESC points out that the Russian Federation’s unprovoked military aggression of Ukraine has led to the destruction of a significant part of the infrastructure and the blockade of seaports and sea roads, resulting in the collapse of Ukraine’s foreign trade. Therefore, alternative trade lanes using road and rail transport between the EU and Ukraine need to be explored. |
| --- | --- |

1.1.

| 1.2. | The EESC calls on the Member States, the Commission and the Council to take action to improve customs clearance at border crossing points by increasing both the number of officials and cooperation between EU and Ukrainian officials. These measures should continue a trend already developing in some EU countries. For example, Poland has opened dedicated lanes for freight traffic at the Korczowa-Krakovets and the Dorohusk-Yahodyn border crossing points. It should also be pointed out that there is a need for cooperation between the EU countries and Ukraine to improve customs clearance, among other things through simultaneous customs clearance by all the relevant services, while respecting all the procedures of both the EU Member States and Ukraine. |
| --- | --- |

1.2.

| 1.3. | It is worth noting that one of the latest key efforts to increase trade by land is the signing of two agreements between the EU, Ukraine and Moldova to liberalise road transport of Ukrainian goods to the EU via Moldova. The road transport agreements will contribute to this effort by facilitating the transport of goods by road between the EU and Ukraine and Moldova, allowing Ukrainian, Moldovan and EU carriers to transit through and operate between their territories without having to obtain permits for these operations. The EU-Ukraine agreement also provides for the recognition of Ukrainian driving licenses and professional qualification certificates (1). |
| --- | --- |

1.3.

| 1.4. | The EESC points out the need for urgent infrastructure investment to increase border crossings and enable trade by rail. These investments can only be made with the support of European funds. Support for the investment process, payment guarantees and insurance for entrepreneurs involved in the transport of goods between the EU and Ukraine are necessary to increase the volume of transportation. |
| --- | --- |

1.4.

| 1.5. | The EESC highlights the need for close cooperation with Ukrainian partners, not only in implementing the investment process and improving procedures for the transport of goods, but also in enabling Ukrainian workers to work in the EU. That concerns both, governmental partners as well as social partners. |
| --- | --- |

1.5.

| 1.6. | The EESC notes that the European Commission’s communication accurately identifies significant burdens and their causes in trade between the EU and Ukraine. The ongoing armed conflict on Ukrainian territory caused by Russia’s completely unjustified invasion has led to the large-scale destruction of Ukraine’s infrastructure and the blockade of its Black Sea seaports, hence cutting it off from its international trade channel. |
| --- | --- |

1.6.

2.   Background

| 2.1. | This opinion is a response to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on An action plan for EU-Ukraine Solidarity Lanes to facilitate Ukraine’s agricultural export and bilateral trade with the EU (2) of 12 May 2022. |
| --- | --- |

2.1.

| 2.2. | One of the main commodities produced by Ukraine and exported to the EU as well as numerous African and Asian countries is food, and above all, grain. Ukraine is one of the largest food producers. The blockade of its foreign trade means a significant decrease in the supply of many food products in the EU and worldwide. Together, Ukraine and Russia produce 10 % of the world’s wheat, and account for 30 % of the global wheat trade. |
| --- | --- |

2.2.

| 2.3. | The EESC welcomes the European Commission’s proposal to create alternative and optimised logistic routes — new ‘EU-Ukraine solidarity lanes’ — to facilitate trade in Ukrainian agricultural products and bilateral foreign trade. The lanes will also give Ukraine access to European trade routes via seaports, which will enable our eastern neighbour to participate in global trade. However, it is generally agreed that exports over land may only compensate for between one third and one half of what Ukraine normally exports via the Black Sea. Besides, the costs of transport over land to Europe are much higher than exporting by ship via the Black Sea. Moreover, Ukrainian exports are limited within the EU’s internal market. This removes opportunities from farmers while failing to help with urgently needed food supplies in many African and Asian countries. |
| --- | --- |

2.3.

| 2.4. | The opening of a safe grain corridor in the Black Sea may be good news for food importing countries and Ukrainian farmers. However, the real test is yet to come as trust in Russia is low. On top of that, we are facing a period of high fuel and fertiliser prices. Much of Ukraine’s agricultural land is controlled by Russia or at risk of Russian attacks. Suppose farmers cannot farm anymore because of high costs and low security. In that case, they may give up farming, putting more strain on international food security while taking away jobs from workers. There is an urgent need to find solutions. There is no time to lose. |
| --- | --- |

2.4.

| 2.5. | The EESC notes that the Commission correctly identifies the bottlenecks, i.e. the most problematic areas hampering trade between the EU and Ukraine, and proposes several measures to address the problems identified. |
| --- | --- |

2.5.

| 2.6. | The main burdens in the development of trade between the EU and Ukraine concern infrastructure issues. Therefore, urgent investment is needed to keep border crossings clear and facilitate rail transport between Ukraine and EU Member States. Cooperation should be established and expanded between EU institutions, Member States, Ukraine and Moldova, which can play an active part in the transport of goods. |
| --- | --- |

2.6.

3.   General comments

| 3.1. | It is difficult to estimate the damage caused by Russia’s invasion of Ukraine, especially since we do not know how long the war will last. Nevertheless, thought should already be given to planning for Ukraine’s reconstruction, its economic development and integration into the economic ecosystem of the European Union. An important step toward Ukraine’s reconstruction was the Lugano Conference, held on 4-5 July 2022. It is even more important as EU leaders decided on 23 June 2022 to grant Ukraine candidate status to join the European Union. The Plan proposed by the European Commission to create ‘solidarity lanes’ in order to increase trade between the European Union and Ukraine is certainly an essential step towards this goal. |
| --- | --- |

3.1.

| 3.2. | Ukraine has 18 ports from which goods can be exported to European countries and other parts of the world. According to recent information from Ukraine, 15 of them have been blocked. Only three ports are operational: Reni, Izmail and Ust-Donaisk. Russia also prevented the departure of nearly 80 foreign ships with their crews. Ukrainian sources say that only 400 000 tonnes of cargo left the ports in March. In May, port output rose to 1,3 million tonnes (3). However, this is only a drop in the ocean of what is needed. Hope for increased sea trade has been placed in an agreement under which Russia is to allow merchant ships to sail out of Ukrainian ports. The first ships with Ukrainian grain have already left the port of Odessa. It should be stressed that the agreement with Russia is fragile, and the ports could be completely blocked again at any moment (4). |
| --- | --- |

3.2.

| 3.3. | After all, Ukraine is one of the largest food producers in the world. Around half of the world’s exports of sunflower oil, 16 % of maize and 10 % of wheat come from the country. Ukraine is also an important producer and exporter of other cereals and food products (5). Food exports are a key source of revenue for Ukraine, generating USD 27,7 billion in 2021 (6). Ukrainian agricultural products are sold in Southeast Asia, the Middle East and Africa. EU countries such as Spain, the Netherlands and Italy are also among the largest importers of these goods. |
| --- | --- |

3.3.

| 3.4. | Prior to Russia’s invasion of Ukraine, around two-thirds of Ukrainian goods exports were by sea. At that time, cereals were exported almost exclusively by sea; for vegetable oils, the figure was more than 90 % (7). The blockade of commercial seaports in the Black Sea directly impacts international food security and the economic situation in many countries around the globe. The limited food supply from Ukraine is certainly an important factor in price inflation across the EU and will continue to be so. The harvest was hampered by the war as Russian troops were stealing crops in the occupied territories. In addition, they have mined the area and burned crop fields. Under these conditions, Ukraine’s harvest is lower than in previous years. This combined with difficulties in exporting could lead to hunger in many regions of the world. Furthermore, it is estimated that about 30 % of the wheat-producing areas of Ukraine are now controlled by Russia (August 2022). The production status in occupied areas is unclear: who controls those supplies, and can these still reach world markets? Also, when the war broke out, it was estimated that between 20 and 25 million tonnes of grain from the 2021 harvest had been held up in Ukraine. |
| --- | --- |

3.4.

| 3.5. | These problems fully justify the Commission’s proposals to create ‘solidarity lanes’. However, the EESC points out that the Commission’s proposal should include measures to increase investment security, in addition to measures expanding border crossing capacity. |
| --- | --- |

3.5.

4.   Specific comments

4.1.   Work coordination of the EU Member States and Ukraine customs services

| 4.1.1. | Joint customs controls at the EU border with Ukraine are not a new development. A similar mechanism was employed during UEFA Euro 2012. Over a million people crossed the Polish-Ukrainian border during the European Championship. However, the special procedures at the time only covered the movement of persons, not goods. Nevertheless, the coordination of customs services has made it possible to increase the capacity of border crossings. The special circumstances triggered by Russia’s invasion of Ukraine certainly justify considering similar measures for the movement of goods. There is no doubt that customs controls are necessary at the border crossings with Ukraine. Nonetheless, we recommend carrying them with full cooperation and coordination in one place and at the same time by officials of both the EU Member State and Ukraine. |
| --- | --- |

4.1.1.

4.2.   Increasing the capacity of border crossing points. Road transport solutions. The opening of new border crossings and lanes for the clearance of goods, in particular agri-food products

| 4.2.1. | Opening border crossings and increasing their capacity is crucial to enable the free exchange of goods between EU Member States and Ukraine. This trend is emerging in countries bordering Ukraine and should be supported, also financially, through investments in the necessary infrastructure. It is necessary both to expand the capacity of currently existing border crossings, e.g. by increasing the number of customs staff and to open new border crossings, in locations where this is possible, especially for goods clearance. It is worth citing the example of Poland, which has increased the capacity of goods exchange at the Korczowa-Krakovets and Dorohusk- Yahodyn border crossings. Thanks to the expansion and use of existing infrastructure, Poland has, in a short time, reduced waiting times for goods to be cleared at other border crossing points. |
| --- | --- |

4.2.1.

| 4.2.2. | It is worth noting that there is the possibility of using seaports not only in Poland but also in the Baltic countries for the trade in Ukrainian grain. It is necessary to use the rail network in Poland effectively and allow Ukrainian authorities and businesses to use ports in Poland, Lithuania, Latvia and Estonia. It is important to mention that a significant amount of Ukrainian grain is stored in warehouses on the Polish-Ukrainian border. This means there are still barriers to trade logistics that need to be eliminated. |
| --- | --- |

4.2.2.

| 4.2.3. | It should be noted that the Commission is also proposing to open negotiations to conclude an agreement between the European Union and Ukraine on road freight transport. After its initial period of validity, it could stay in force for as long as the serious effects of Russia’s military aggression against Ukraine on transport infrastructure and operations remain. However, it should be emphasised that the Ukrainian and European business environments differ considerably. It is therefore essential that any agreement between the EU and Ukraine include a roadmap for regulatory changes in Ukraine so that domestic regulations converge with European standards, including the Mobility Package. Otherwise, Ukrainian transport companies may gain a significant competitive advantage over their European counterparts, leading to serious economic consequences for the European transport industry. |
| --- | --- |

4.2.3.

| 4.2.4. | In Action 4, the Commission calls for Ukrainian agricultural export shipments to be channelled as a priority towards freight corridors with the best available capacity. This is important from the administrative point of view. However, it should be stressed that without additional economic incentives and adequate insurance, private transport operators may not be willing to take risks associated with transporting agricultural products. Private companies will follow the principle of maximising profit and minimising risk, so they may choose other commodities or completely different courses of action instead of transporting agricultural products from Ukraine. |
| --- | --- |

4.2.4.

| 4.2.5. | The EESC welcomes the fact that the Commission rightly identifies the need to eliminate the numerous barriers for Ukrainian drivers to work in the EU. Joint action should be taken with the Ukrainian partners to allow Ukrainians to work in European transport companies and cross borders freely. After all, European transport companies operating in the region are contending with a significant shortage of workers. Many Ukrainian citizens had worked in EU countries before the war, but were forced to return to their homeland after the war had broken out. They are currently unable to leave Ukraine and work in the EU, which impacts the situation of European companies. |
| --- | --- |

4.2.5.

4.3.   Rail links between the EU and Ukraine

| 4.3.1. | The EESC notes that the European Commission rightly identifies problems in the area of rail freight transport. The rail gauge used in the EU is 1 435 mm and 1 520 mm in Ukraine. This makes it impossible for European freight trains to run on Ukrainian tracks and vice versa. However, the Commission points out the practice of changing wagon bogies, which may not be sufficient in every case. It is worth noting that Ukrainian wagons are sometimes wider than those used in Europe, which may prevent them from running on European tracks. |
| --- | --- |

4.3.1.

| 4.3.2. | In Action 5, the Commission commits itself to work with Member States and industry to identify the key transhipment/gauge changing centres at and beyond EU-Ukraine borders in order to determine the volumes that could be transhipped on a daily basis, for bulk and through container transport. It should be pointed out that EU coordination assistance should go beyond transport and should also cover freight forwarding. Ukrainian companies are currently facing great difficulty in establishing new logistics chains (booking border terminals and organising rail freight, booking terminals at ports, contracts with shipping companies). They often deliver grain only to the border, which creates bottlenecks. The problem could be solved by large-scale matchmaking events and mechanisms (also online), such as connecting Ukrainian exporters with European freight forwarders, logistics companies, etc. |
| --- | --- |

4.3.2.

| 4.3.3. | The implementation of solidarity lanes requires several investments in infrastructure, especially railways. A notable example is the extension of the European railway infrastructure within the proposed Poland-Ukraine-Romania corridor, on the Gdańsk-Lublin/Przemyśl-Lviv-Chernivtsi-Suceava-Constanța line. The project could be an eastern branch of the new TEN-T Baltic-Black Sea-Aegean corridor, which is being discussed as part of the cyclical revision of the TEN-T network. Once the necessary investments in Poland have been made, such as the Solidarity Transport Hub and the adaptation of the high-speed railways to cargo transport, this will likely be the fastest route for transporting goods from Ukraine to the Baltic seaports. Carrying out rail investments as part of the TEN-T network will enable Moldova to better connect with the EU and open more freight transport routes to Odessa and Chișinău. |
| --- | --- |

4.3.3.

4.4.   Financial support and risk reduction for entrepreneurs

| 4.4.1. | The reconstruction of Ukraine requires very significant investment. A significant part of the country’s infrastructure and agriculture has been destroyed by military action. These investments require sources of funding and payment guarantees to provide certainty in cases where the investor is unable to pay the contractor. Therefore, European funds to support entrepreneurs who make investments in Ukraine need to be included. With high fuel, fertiliser and insurance costs, many farmers will not risk investments. Many farms in occupied areas will be left abandoned, meaning no employment for the population and no food production. |
| --- | --- |

4.4.1.

| 4.4.2. | The Commission correctly points out that EU wagon owners are reluctant to send their rolling stock and vehicles to Ukraine. Ukraine’s response to these concerns is a government decree in which Ukraine committed to cover costs arising from losses of wagons or barges. However, the decree does not offset insurance risks, and does not apply to road transport. European rolling stock is already partially entering Ukraine, but still in limited numbers. It makes sense to support the EU, in cooperation with Ukraine, and to allocate specific funds to this instrument. The risk related to military activity on Ukrainian territory significantly affects the willingness of businesses (also in the road transport sector) to engage in freight trade between the EU and Ukraine. |
| --- | --- |

4.4.2.

| 4.4.3. | The Commission refers in a number of points to the need for significant investment, e.g. in the construction of rail links, freight transhipment infrastructure or storage infrastructure. It should be noted that a key challenge for private investments in grain infrastructure (terminals, elevators, purchases of wagons and rolling stock, development of port piers, etc.) is the uncertainty throughout the war and thus the risk of over-scaling investments. Given the global dimension of the problem, there are good grounds for the calls for support from states and international organisations to create financial instruments to cover the risk of key investments in grain transport and storage infrastructure for private companies. Potential stakeholders include the European Investment Bank or other development banks of the countries in the region. |
| --- | --- |

4.4.3.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  Supporting Ukrainian exports and improving connections to the EU: EU strengthens cooperation with Ukraine and Moldova (europa.eu)

1

(2)  COM(2022) 217 final.

2

(3)  https://ubn.news/russian-invaders-have-seized-and-blocked-15-ukrainian-ports/

3

(4)  https://www.business-standard.com/article/international/ukraine-russia-sign-un-deal-to-export-grain-and-fertiliser-on-black-sea-122072201213_1.html

4

(5)  https://www.bbc.com/news/world-europe-61583492; https://www.apk-inform.com/en/news/1526701; see also The importance of Ukraine and the Russian Federation for global agricultural markets and the risks associated with the war in Ukraine, Food and Agriculture Organization of the United Nations.

5

The importance of Ukraine and the Russian Federation for global agricultural markets and the risks associated with the war in Ukraine

(6)  https://www.weforum.org/agenda/2022/07/ukraine-s-food-exports-by-the-numbers/

6

(7)  https://www.bbc.com/news/world-europe-61583492

7

---

ANNEX

The following amendment, which received at least a quarter of the votes cast, was rejected during the discussion:

AMENDMENT

Tabled by:

CAÑO AGUILAR Isabel

HAJNOŠ Miroslav

QUAREZ Christophe

SZYMAŃSKI Mateusz

TEN/781 — EU-Ukraine Solidarity Lanes

Point 4.5

Insert a new point after the point 4.4.3

| Section opinion | Amendment |
| --- | --- |
| | 4.5. | The protection of workers’ rights in the new draft Labour Code |

Section opinion

Amendment

4.5.

The Ukrainian Parliament has recently abandoned its long-held principle of consulting trade unions and employers’ associations over policies related to changes in labour legislation. As a result, the Ukrainian Parliament has passed Law 2434-IX, which entered into force in August 2022, discriminating against workers in organisations with fewer than 250 employees and with wages higher than eight times the minimum wage level by enabling their employer to propose that they sign individual labour contracts, which, if accepted, may impose on such an employee additional responsibilities and obligations not foreseen by labour legislation or collective agreements. The law was adopted for martial law, however, it is obviously part of a broader agenda of deregulation and stripping back of workers’ rights. Its adoption and inclusion of its provisions into new labour legislation in peacetime would be contrary to the EU acquis, including the freedom to provide services, working and living conditions of workers, sustainable employment conditions and the principle of non-discrimination, but also the obligations under ratified Conventions of the International Labour Organization and the European Pillar of Social Rights on secure and adaptable employment, adequate minimum wages and minimum income.

Outcome of the vote on the amendment:

| Votes in favour: | 81 |
| --- | --- |
| Votes against: | 97 |
| Abstentions: | 17 |

Votes in favour:

81

Votes against:

97

Abstentions:

17

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/178 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/178

---

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — EU Solar Energy Strategy

(COM(2022) 221 final)

and

Commission recommendation on speeding up permit-granting procedures for renewable energy projects and facilitating Power Purchase Agreements

(C(2022) 3219 final)

(2023/C 75/26)

| Rapporteur: | Kęstutis KUPŠYS |
| --- | --- |
| Co-rapporteur: | Alena MASTANTUONO |

Rapporteur:

Kęstutis KUPŠYS

Co-rapporteur:

Alena MASTANTUONO

| Referral | European Commission, 28.6.2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 4.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 171/1/3 |

Referral

European Commission, 28.6.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted in section

4.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

171/1/3

1.   Conclusions and recommendations

| 1.1. | The EESC highlights the need for the EU to boost solar energy and further European capacities in this field as a matter of urgency for several reasons: to achieve the climate goals, to increase the EU’s strategic energy autonomy, to promote public and private investment and the creation of decent jobs, to strengthen the industrial base and foster business opportunities, and to contribute to access to affordable energy by households. |
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1.1.

| 1.2. | At the same time, the EESC points out the need to recognise the differences between Member States in terms of their energy mix, which reflects their geographic and climate conditions and the availability of various renewable energy sources. The enhancement of solar energy must comply with technical conditions and environmental sustainability. Grasping the full potential of solar energy in Europe requires greater cooperation among Member States. |
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1.2.

| 1.3. | The EESC welcomes the EU Solar Energy Strategy (1) (hereinafter referred to as ‘the Strategy’), but regrets that its results will come so late. It calls on Member States not to wait for the adoption of the new EU rules and to already start facilitating administrative procedures and shortening the permit-granting process. The EESC calls on the Member States to enhance one-stop-shop, integrated and single permit-granting procedures and to immediately speed up the designation of ‘go-to areas’, limiting the full implementation process to a maximum of two years. It also stresses that the solar strategy requires a robust deployment of storage capacities, and that the transmission and distribution networks be ready. |
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1.3.

The EESC calls on policy-makers to encourage, support and enable people to become solar energy prosumers and to build up energy communities. The EESC recommends that local authorities launch projects to tackle energy poverty in areas where people cannot afford to invest via energy communities. The EESC calls for a stronger emphasis to be placed on agricultural photovoltaics (agri-PVs), to offer farmers new opportunities and benefits.

| 1.4. | The Committee notes that the expansion of the use of heat pumps should be seen in tandem with the increase in the installation of solar PVs, as a combination of a (rooftop) solar PV system and a heat pump provides the most energy-efficient and economically accessible solution for cooling where climate conditions allow. The EESC also sees the need to promote utility-scale solar thermal systems. |
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1.4.

| 1.5. | To ensure a large-scale solar PV rollout, it is necessary to strengthen the European industrial base and ensure smooth and reliable supply chains in the solar field. The EESC thus finds it imperative for the EU to find ways of producing solar PVs in Europe, improving the environment for public and private investment and creating business friendly conditions, including proper access to finance and a strong focus on research and innovation. |
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1.5.

| 1.6. | There are major obstacles to the installation of solar energy due to a huge lack of skilled workers, as well as regulatory and even technical barriers. The EESC urges intensive promotion of training and skills development in cooperation between relevant stakeholders. |
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1.6.

| 1.7. | The EESC underscores the importance of building a domestic EU industrial capacity for sustainable and reasonably priced solar energy products and calls for solid support for the Solar PV Industry Alliance. It highlights the clear need to mobilise all stakeholders concerned, with the support of public authorities and the social partners, to ensure the necessary practical knowledge and expertise, as well as broad support for the deployment of solar PVs. |
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1.7.

2.   Background

| 2.1. | On 18 May 2022, against the backdrop of the war in Ukraine, the introduction of EU sanctions against Russia, and efforts to address the issue of energy sovereignty, the European Commission proposed the REPowerEU plan (2), aimed at ‘rapidly reducing our dependence on Russian fossil fuels by fast-forwarding the clean transition and joining forces to achieve a more resilient energy system and a true Energy Union’. |
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2.1.

| 2.2. | In relation to clean energy production, REPowerEU proposes ways in which the EU can speed up the green transition and spur on massive investment in renewable energy (3). As part of the REPowerEU plan, the European Commission adopted an EU Solar Energy Strategy (hereinafter referred to as ‘the Strategy’). This strategy focuses on four initiatives:






  a) | a European solar rooftops initiative; |
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2.2.

a)

a European solar rooftops initiative;

| b) | a permitting procedures package; |
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b)

a permitting procedures package;

| c) | an EU large-scale skills partnership; |
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c)

an EU large-scale skills partnership;

| d) | an EU Solar PV Industry Alliance. |
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d)

an EU Solar PV Industry Alliance.

| 2.3. | The Strategy builds on the proposed EU initiatives on renewable sources, energy performance of buildings, and energy efficiency (hereinafter referred to as ‘COM(2022) 222 final’ (4)). COM(2022) 222 final envisages the adoption of a maximum duration for the permit-granting process applicable to renewable energy plants. The Commission has put forward an initiative for raising the targets set in earlier proposals for revisions to the Renewable Energy Directive (5) (RED II) and Energy Efficiency Directive (6) (EED). |
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2.3.

| 2.4. | This opinion is one of the several energy-related EESC opinions and needs to be seen in this overall context, covering opinions on the REPowerEU Plan (7), energy markets, energy security and energy prices, among others. |
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2.4.

3.   General comments

| 3.1. | The EESC welcomes the proposed Strategy, in particular the fact that it tackles the need to take action across the entire field of solar energy: investments, innovation, energy production, electricity, market design, incentives, infrastructure, skilled workers, awareness raising, sustainability, and value chains. |
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3.1.

| 3.2. | Boosting solar energy and furthering European capacities in this field is a matter of urgency for several reasons. It is necessary to achieve the climate goals as well as to increase the EU’s strategic autonomy in energy. It also enhances public and private investment and the creation of decent jobs, provides business opportunities and contributes to access to affordable energy by households. |
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3.2.

| 3.3. | For a coherent and sustainable EU Solar Energy Strategy, the EU needs to ensure:






  1. | suitable regulatory frameworks that save time and reduce costs; |
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3.3.

1.

suitable regulatory frameworks that save time and reduce costs;

| 2. | the active contribution of consumers to solar energy production; |
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2.

the active contribution of consumers to solar energy production;

| 3. | use of economies of scale; |
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3.

use of economies of scale;

| 4. | robust public and private investment in infrastructure; |
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4.

robust public and private investment in infrastructure;

| 5. | incentives for research, development and innovation; |
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5.

incentives for research, development and innovation;

| 6. | skilled people and the quality jobs needed to attract them; |
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6.

skilled people and the quality jobs needed to attract them;

| 7. | raw material sufficiency; |
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7.

raw material sufficiency;

| 8. | circularity and energy-efficiency in the whole solar PV sector; and |
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8.

circularity and energy-efficiency in the whole solar PV sector; and

| 9. | adequate funding. |
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9.

adequate funding.

| 3.4. | The EESC also points out that the Strategy needs to recognise the differences between Member States in terms of their energy mix, which reflects their geographic and climate conditions and the availability of various renewable energy sources. Moreover, the enhancement of solar energy must comply with technical conditions and the environmental framework. |
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3.4.

| 3.5. | The Committee hopes to see the Solar Energy Strategy becoming a cornerstone of the transition to a climate-neutral energy system where renewable energy plays a central role. To this end, strong emphasis needs to be put on the development of storage technology, demand-side management, and the integration of the overall energy system. |
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3.5.

| 3.6. | The EESC draws attention to the urgent need to create favourable conditions for research, product development and creation of EU industrial capacity for production of sustainable and competitively priced solar energy equipment. To that end, the EESC strongly supports the Solar PV Industry Alliance, which is expected to come up with solutions to the persistent problem of dwindling industrial capacity in the EU. Here, one should make use of the experience of, and possible synergies with, other alliances such as the European Battery Alliance. Civil society actors should be involved from the very beginning, as they play a vital role in providing practical knowledge and expertise, as well as in reaching out to the wider audience and ensuring societal support and consultation. |
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3.6.

Enhancing the uptake of solar energy

| 3.7. | To enhance the adoption of solar energy, we need a policy that will motivate consumers and all energy system stakeholders to respond to this ambition when procuring their energy. At the same time, they need to be encouraged to commit to energy efficiency and energy-saving measures. This could be achieved by making them aware of the expected benefits, e.g. reduction of energy bills, improvement of daily well-being and increased value of their property, and by designing appropriate financial instruments. |
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3.7.

| 3.8. | The EESC calls for policy-makers to encourage, support and enable people to become not only conscious energy consumers but also energy prosumers and to build up local energy communities. This would help them to be more aware and independent of common market prices. The EESC recommends that local authorities launch collective solar energy projects, taking advantage of public buildings such as offices, schools and hospitals, so as to be able to tackle energy poverty in areas where people cannot afford to invest via energy communities. |
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3.8.

| 3.9. | Given the priority role of energy efficiency and saving, Member States should facilitate the deployment of smart meters in order to allow energy users to have a better picture of their consumption and a better understanding of how to manage it. The EESC calls for consideration to be given to the link between improving energy efficiency and increasing the role of solar energy in the renovation of buildings. Member States are encouraged to guide energy users to spread out their energy needs wisely over 24 hour periods in order to reduce peak demands. |
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3.9.

| 3.10. | The Committee notes that the increase in the installation of solar PVs should be seen in tandem with the expansion of the use of heat pumps, given that solar energy production peaks coincide with the increase in electricity demand to cool buildings. The combination of a (rooftop) solar PV system and a heat pump therefore provides the most energy-efficient and the cheapest solution for cooling (at certain times of the day) where climate conditions allow. The rest of the time production is linked to the volatility in solar intensity, which means that another energy source must be used in order to satisfy the demand for energy. The volatility can be partially mitigated by the deployment of robust storage capacity which is still not available today in sufficient quantities and better transmission connections, which calls for better cooperation among Member States. |
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3.10.

| 3.11. | Solar thermal energy has been largely underrated in the majority of the Member States. The EESC calls for greater use of solar thermal systems, where possible, at utility scale in energy transition plans at Member State, regional and municipal level. With the current gas supply crisis and the need to replace natural gas, mainly used for heating and industrial needs, solar thermal energy will be an important factor in the energy system. |
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3.11.

| 3.12. | The EESC sees the need to further assess and increase the potential for the uptake of rooftop solar PVs by creating permanent consultation and collaboration mechanisms involving a wide range of relevant stakeholders. This would require the establishment and proper funding of local and regional renewable agencies and entities to support citizens, SMEs and local authorities, while setting up training initiatives and promoting new, decent jobs. |
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3.12.

| 3.13. | Building-integrated solar PV (BIPV) systems have an important role to play in maximising solar energy production. If not only the roof but also parts of the façade of a building are covered in solar electricity generating surfaces, the user enjoys the possibility of ‘milking the sun’ for a much longer portion of the day. This approach is good for the whole energy system, because it means that solar PV production peaks can be smoothed. The Committee recommends encouraging further research into BIPV systems and also adding an additional layer to the Rooftop PV initiative, with an extra emphasis on support to east-west solar PV installation orientation. |
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3.13.

Speeding up permit-granting procedures and ensuring financial resources

| 3.14. | The EESC stresses that there will be an imminent need to speed up permit-granting procedures in order to facilitate the deployment of renewable energy, including its production, storage, distribution and transmission. While permit-granting is a matter for the Member States, the EESC supports the general lines set out in COM(2022) 222 final and Commission Recommendation C(2022) 3219 final (8) and encourages the Member States to focus their efforts on developing their procedures. |
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3.14.

| 3.15. | According to industry analysis (9), solar PV installation permit-granting times range from 12 months in Lithuania to 48 months in Croatia. Of the 12 countries with available information, only three had permit-granting times less than the EU limit of 24 months. The EESC therefore calls on the Member States to set defined, shorter deadlines for administrative and permit-granting procedures and to simplify processes by enhancing one-stop-shop, integrated and single permit-granting procedures. In the Committee’s view, Member States should not wait for the adoption of the proposal but already start shortening the procedures. Moreover, the Committee emphasises the need to digitalise as many procedures as possible throughout the various stages of the permit-granting process. |
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3.15.

| 3.16. | The EESC fully endorses the ‘Facilitating citizen and community participation’ section of the Commission’s Recommendation (10). The participation of citizens and energy communities in renewable energy projects is essential for citizens’ involvement in and their support for the energy transition. The EESC stress that deployment of solar energy should not be a privilege for some consumers, and that energy poor and vulnerable consumers must have access to solar energy, e.g. through social housing installations, energy communities, or financial support for individual installations. |
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3.16.

| 3.17. | According to COM(2022) 222 final, the Member States should adopt a plan or plans designating ‘go-to areas’ for one or more types of renewable energy sources within two years after the entry into force of the amendments to the Directive. The Committee underscores the urgency of getting those plans in place as early as possible, limiting the full implementation process to a maximum of two years. Roofs comprise a homogenous area, except of course in culturally protected areas. The EESC advocates shorter periods for kick-starting initiatives where technical solutions are well known, such as in the case of rooftop PVs. |
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3.17.

| 3.18. | The EECS also notes that PV modules floating on lakes and reservoirs’ surfaces reduce water loss by evaporation while improving PV power conversion efficiency due to the inherent cooling provided by the water. In the case of dams, daytime electricity can be supplied by floating PV, and night-time power can be generated by water released from the dam, all using the existing grid connection. |
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3.18.

| 3.19. | However, a careful approach is necessary in cases where technical solutions are less advanced and implications for biodiversity loss have not been fully examined. One such example could be floating PV projects, especially in non-artificial water bodies. This lack of a more granular approach is one of the rare shortcomings of the aforementioned proposal. |
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3.19.

| 3.20. | The EESC calls for a stronger emphasis to be placed on agricultural photovoltaics (agri-PVs), possibly in the form of an additional Commission Recommendation. The actions of the Member States in this field should not distort the use of productive farmland or harm food production (hence the need to incentivise solar energy production on less valuable land). At the same time, the opportunities associated with extra income from energy production for farmers and better protection of crops and animals (shading and cooling effect, reduction of heat stress, protection against hail, frost) should be emphasised in the agricultural policy field. The latter factor should also be viewed through the lens of improved adaptation to climate change. The installation of large-scale solar parks should be prioritised on marginal and brownfield land. |
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3.20.

| 3.21. | Boosting solar energy is a matter of urgency and it is therefore necessary that the respective projects enshrined in national Recovery and Resilience Plans are a priority. As the capacity to produce green energy, and in particular solar energy, varies substantially between regions, cohesion policy could and should contribute decisively to the EU’s overall energy supply; InvestEU or a similar programme should also play a major role. The EESC welcomes the Strategy’s focus on the repurposing of former industrial or mining land, as such land represents an opportunity for the deployment of solar energy systems. In this regard, the EESC supports the use of the Modernisation Fund and the Just Transition Fund for go-to areas. |
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3.21.

Strengthening production and installation capacities

| 3.22. | The current EU solar PV target of 320 GW by 2025 and 600 GW by 2030 (Germany alone wants 215 GW) is very ambitious but necessary to meet the EU’s climate targets. According to the REPowerEU plan, 42 GW needs to be deployed each year until 2025, with the pace speeding up to 53 GW per year after 2025. Following this plan, the EU has to double the pace of solar installation it recorded in 2021: a leap from 21 GW per year to 42 GW per year is required immediately. |
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3.22.

| 3.23. | Currently, the European economy is not ready to deliver the requisite components for such a large-scale solar PV rollout due to lack of manufacturing capacities. There are also major obstacles to installation owing to a huge shortage of skilled workers, as well as regulatory and even technical barriers. In comparison, and in sharp contrast to the EU, China is expected to install another 100 GW of PV capacity in 2022, almost doubling its installation pace (11), while covering the entire value chain of its PV industry. |
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3.23.

| 3.24. | The Committee therefore stresses the need to strengthen the European industrial base and economy, safeguard strategic autonomy (in particular autonomy of energy supply), and ensure smooth and reliable supply chains. The EESC points out that the EU can only play a leading role in the solar industry if the conditions allow for a business case, and highlights the clear need to mobilise all stakeholders concerned, with the support of public authorities and the social partners. |
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3.24.

| 3.25. | The EESC calls on the Commission and the Member States to create all the necessary conditions for commercialising European PV innovative solutions through the Important Projects of Common European Interest (IPCEI) along the whole solar value chain. Such a framework would ensure long-term sustainably competitive conditions for European PV manufacturing, including EU leadership in PV technologies, sustainability, recycling and integrated PV solutions. |
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3.25.

| 3.26. | The EESC finds it imperative for the EU to enhance public and private investment and create favourable conditions for the solar energy sector, for example by furthering training in that field and by ensuring proper access to finance, including via the ‘EU taxonomy for sustainable activities’ tools. In line with the presumed transformation of the European Investment Bank into Europe’s climate bank, the EESC calls for an emphasis on solar PV manufacturing support in the financing programmes provided by this bank. |
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3.26.

| 3.27. | The EESC calls for incentivises for research into new PV technologies, e.g., based on alternative materials. To overcome the problem of the lack of skilled labour, it is crucial to promote training and skills development, in cooperation between relevant stakeholders. Therefore, the EESC urges competent institutions to find ways to develop a workforce that possesses the knowledge, skills and competences needed to render operational all the energy efficiency and renewable technology options available. |
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3.27.

4.   Specific comments on manufacturing supply chains

| 4.1. | There are significant strategic dependencies in the upstream manufacturing segments which could hinder the rapid expansion of solar energy. The biggest hurdle of all remains the limited capacity to supply the necessary materials for the Strategy’s ambitious targets. In almost all parts of the PV value chain, Europe — a former leader in solar PV production — is not playing a visible role, despite still being among the leaders in solar PV research, with important research facilities. |
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4.1.

| 4.2. | Along the industry value chain, the EU has limited capacity to source the underlying raw material, polysilicon. The issues with sourcing this raw material are exacerbated by the fact that the four largest solar-grade polysilicon factories, comprising nearly half of worldwide production, are located in the Xinjiang region in China. |
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4.2.

| 4.3. | The EESC welcomes the Commission’s legislative initiative (12) banning products made by forced labour from the single market. This is a similar measure to the US Uyghur Forced Labor Prevention Act, which had direct impacts on polysilicon market distribution, as the price of this primary material, mainly produced in China, is set to increase for the whole PV industry. However, the EESC notes that such a measure, enforced on a global scale, contributes to the achievement of Sustainable Development Goal 8 on decent work. |
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4.3.

| 4.4. | A possible, albeit simplistic, response to the challenge is to build capacity in Europe; however, the current technologies for producing ‘raw’ polysilicon and the ingots from it are, paradoxically, highly energy-intensive. It is indeed feasible and might be done where there is access to cheap and reliable energy, including energy from RES (e.g. via hybrid power stations, combining wind, solar and storage). Overall, the lack of raw materials and components and strict EU rules, including on energy efficiency, make it a rather less appealing business case for European industry, which is also having difficulties accessing finance. |
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4.4.

| 4.5. | The EESC is firmly convinced that European cooperation in innovation aimed at developing fully recyclable PV systems is necessary in order to build a thriving domestic European solar energy industry. Efforts should be made to examine the use of more promising raw materials than silicon for, among other things, the application of solar cells on foil or solar cells that can be made translucent, for instance in power-producing windows. |
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4.5.

| 4.6. | In relation to the further phases in the value chain, i.e. solar wafers and cells, the European Union is in an even worse position. Just 1 % of solar wafers and only 0,4 % of cells are produced in Europe. According to the industry association SolarPower Europe, we face a ‘critical lack of ingots and wafer manufacturing capacity’. |
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4.6.

| 4.7. | According to data from the European Solar Manufacturing Council (ESMC) only 3 % of solar PV modules are produced in Europe, by 29 different companies. This means that only one in roughly 30 modules assembled in Europe are of European origin. In 2020, the trade deficit in solar energy products amounted to USD 8,7 bn. |
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4.7.

| 4.8. | Other inputs for PV plants are also scarce; however, the critical shortages we face with them are less severe. The mounting structures are low-complexity products and can be imported with fewer critical dependencies or produced locally if demand is high. |
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4.8.

| 4.9. | The case with solar glass, an essential element for locally produced PV panels, is a perfect showcase of the short-sightedness of EU trade policy, whereby the defensive trade tariffs for the final products (solar PV panels) coming to Europe from China were lifted, exposing European producers to harsh competition from overseas, but similar defensive measures for the intermediate products, like solar glass, remained in place. That made solar glass sourced from Europe by European PV producers disproportionately overpriced compared to peer producers in other regions of the world. That in turn also led to pricing pressures for imported solar glass. |
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4.9.

| 4.10. | Solar panels can efficiently contribute to sustainability if the whole cycle is not overly demanding in terms of energy, including recycling and re-use. The manufacturing, transportation and disposal of any technology generates emissions. How a panel is manufactured and recycled helps determine how helpful it really is in decreasing overall emissions. Moreover, the EESC believes it is important that the Sustainable Development Goals are adhered to all along the supply chain. |
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4.10.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  Proposal COM(2022) 221.

1

(2)  COM(2022) 230 final.

2

(3)  Opinion EESC on — REPowerEU Joint European Action for more affordable, secure and sustainable energy (OJ C 323, 26.8.2022, p. 123) and opinion EESC on RePowerEU Plan (OJ C 486, 21.12.2022, p. 185).

3

(4)  COM(2022) 222 final.

4

(5)  Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82).

5

(6)  Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ L 315, 14.11.2012, p. 1).

6

(7)  Opinion EESC on RePowerEU Plan (OJ C 486, 21.12.2022, p. 185).

7

(8)  Commission Recommendation of 18 May 2022 on speeding up permit-granting procedures for renewable energy projects and facilitating Power Purchase Agreements (C(2022) 3219 final).

8

(9)  https://ember-climate.org/insights/research/europes-race-for-wind-and-solar/

9

(10)  C(2022) 3219 final.

10

(11)  https://www.pv-magazine.com/2022/05/31/chinese-pv-industry-brief-chinas-nea-predicts-108-gw-of-solar-in-2022/

11

(12)  COM(2022) 71, COM(2022) 66 and COM(2022) 453.

12

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/185 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/185

---

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Short-Term Energy Market Interventions and Long-Term Improvement to the Electricity Market Design — a course for action

(COM(2022) 236 final)

(2023/C 75/27)

| Rapporteur: | Alena MASTANTUONO |
| --- | --- |

Rapporteur:

Alena MASTANTUONO

| Referral | European Commission, 28.6.2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted in section | 4.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 179/3/1 |

Referral

European Commission, 28.6.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted in section

4.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

179/3/1

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) is very concerned about developments in the energy markets and therefore welcomes the fact that the Commission’s Communication is considering short-term energy market interventions and long-term improvements to the electricity market design. The EESC underlines therefore the conclusion of the Commission that ‘there are areas where adjustments to the EU electricity market design are necessary to take into account the future energy landscape and generation mix, new emerging technologies, geopolitical developments as well as the lessons learnt from the current crisis. Such adjustments should contribute to optimising the functioning of the electricity market design and make it better fit to drive a cost-effective decarbonisation of the electricity sector, deliver affordable prices for consumers and increase its ability to withstand price volatility’. |
| --- | --- |

1.1.

| 1.2. | Because well-functioning energy markets play a crucial role in pursuing all the basic objectives of a sustainable energy system, i.e. security of supply, reasonable costs and prices, and climate-neutrality, the EESC also believes it is important to facilitate and maintain the right conditions for the future. Any future measures should not undermine these prerequisites and should allow for climate efforts in the medium and long term. |
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1.2.

| 1.3. | At the same time, however, the EESC points out that the current energy price crisis is having a negative impact on European households and businesses. Extreme energy prices are fuelling inflation and contributing to economic uncertainty. The EESC therefore supports the Commission’s approach of taking short-term measures to ensure affordable prices and reducing costs for European citizens and businesses, including direct financial support for vulnerable consumers, as well as for those SMEs and energy-intensive industries suffering the most. However, the EESC deems that the temporary interventions should be followed by an adjustment of the market design in the areas where adjustments to the EU electricity market design are necessary, as the Commission states.
  Instead of relying on continuous compensation, the EESC calls for policymakers to encourage, support and enable people to become energy prosumers and build up local energy communities, thus helping them to be more independent of common market prices. The EESC calls on Member States and the European Commission to help vulnerable consumers via specific programmes to become prosumers. |
| --- | --- |

1.3.

Instead of relying on continuous compensation, the EESC calls for policymakers to encourage, support and enable people to become energy prosumers and build up local energy communities, thus helping them to be more independent of common market prices. The EESC calls on Member States and the European Commission to help vulnerable consumers via specific programmes to become prosumers.

| 1.4. | In the EESC’s view, the primary problem is the high price of natural gas and any measures at both European and national level should therefore aim to eliminate this root cause of rising electricity prices, facilitate increased production and use non-fossil energy to the extent that meets the energy demand. The Committee therefore welcomes the action on the demand side proposed by the European Commission on 14 September 2022 and calls for a joint effort by households, public sector and businesses. Reducing demand is the easiest way to cope with energy bills and to lower emissions. The EESC also calls for greater investment in a more rapid transition to a non-fossil and climate-neutral energy system. |
| --- | --- |

1.4.

| 1.5. | The EESC points out that any follow-up action must be preceded by a rigorous debate and impact analysis. The EESC wishes to be part of this debate. The Commission and Member States should avoid short-term proposals that would jeopardise the basic objectives of a sustainable energy system. |
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1.5.

2.   General comments

| 2.1. | The Commission Communication on the Short-Term Energy Market Interventions and Long-Term Improvements to the Electricity Market Design builds on several recent documents addressing the rapid increase in energy prices and the concerns about the security of energy supply raised by the Russian invasion of Ukraine. It is also intrinsically related to the initiatives regarding the energy transition towards climate neutrality. The EESC stresses that the Communication needs to be considered in this overall context and refers to its previous opinions on these topics (1). |
| --- | --- |

2.1.

| 2.2. | Well-functioning energy markets play a crucial role in pursuing all the basic objectives of a sustainable energy system, i.e. security of supply, affordable costs and prices and climate-neutrality. Considering that all these objectives are currently at stake, the EU should focus on measures that bring about benefits in terms of the entirety of the objectives and take into account the needs of the European economic and social model. The EESC therefore finds it important to get ‘back to basics’ and focus on creating efficient conditions for -better integrated energy markets. |
| --- | --- |

2.2.

| 2.3. | Energy markets are increasingly inter-connected through sectoral integration, which helps decarbonise the energy system in a cost-efficient way and tackle the increased volatility of the energy system. The current market design is to motivate actors to achieve decarbonisation, which is necessary to set Europe on the path towards climate neutrality. On the other hand, the current market design setting the electricity prices on the merit order basis suffers extremely these days from the enormously high gas prices. |
| --- | --- |

2.3.

| 2.4. | The internal market is key for the EU to ensure the efficient allocation of resources, and this also applies to energy. At the same time, international markets also have a significant impact on the EU's energy system, especially through fuel markets. Geopolitical developments have highlighted the need for the EU to strive for improved strategic autonomy in energy and energy-related raw materials. Achieving the objective of reducing the EU’s dependence on unreliable third countries requires closer cooperation and highlights the interdependence between Member States. While it is important for the EU to make maximum use of its own available resources and existing capacity, it is not realistic or useful to act in isolation from international markets; instead, valuable cooperation with reliable partners should be sought. |
| --- | --- |

2.4.

| 2.5. | Well-functioning markets can only be achieved if the fundamentals are in order: The EESC stresses that proper energy infrastructure is a necessary basis for any energy system and contributes to the overall functioning of the energy markets, including energy availability and affordability. Removing obstacles to energy flow is thus a key measure for better-functioning markets. Appropriate market rules are another fundamental of market functioning, by setting the rules of competition, among other things, thus increasing transparency and creating and strengthening a level playing field. |
| --- | --- |

2.5.

| 2.6. | Investment in energy infrastructure is inevitable if the energy systems and market are to develop and respond efficiently to current trends, including electrification, localisation, digitalisation and an increase in the production and use of renewable energy. To facilitate these investments, policymakers and the competent authorities need to accelerate permit-giving and administrative procedures, while ensuring appropriate consultation with the relevant stakeholders. In addition to transmission and distribution connections, modern and future-proof infrastructure must also include electricity storage capacity, as well as the digital systems needed to make energy systems ‘smart’. At the same time, lock-ins resulting in stranded assets must be avoided. |
| --- | --- |

2.6.

| 2.7. | The EESC believes it makes sense to distinguish between short- and long-term measures when seeking solutions and improvements to the current situation. It needs to be recognised that many measures, especially major investments, take longer to become a reality. For some measures, more time is needed to enable their proper planning and to ensure their feasibility and compatibility with the basic energy objectives and to avoid short-term measures that may turn out to be counterproductive in the longer term. |
| --- | --- |

2.7.

| 2.8. | The need for long-term thinking also applies to ensuring the security of energy supply and preparedness for exceptional situations and disruptions in the markets. This highlights the role of foresight activities in identifying risks and paving the way for improving resilience and tackling risks, including through contingency plans. |
| --- | --- |

2.8.

| 2.9. | Moreover, the EESC believes that some form of capacity mechanisms have the potential to help ensure security of supply, especially in peak consumption situations, while avoiding undue market distortions, in line with the design principles of the regulation on the internal market for electricity. |
| --- | --- |

2.9.

| 2.10. | While the EESC calls on policymakers to constantly and consistently adhere to all the basic objectives of a sustainable energy system, it also calls for focus on the root causes of problems. Without this kind of approach, there is a great risk of addressing acute symptoms with measures that are either inefficient or, in the worst-case scenario, work against the basic objectives. In this case, policymakers should firmly state the timeframe for this kind of emergency scenario. |
| --- | --- |

2.10.

| 2.11. | The EESC emphasises that any measures, whether at Member State or EU level, should be based on sound science, solid evidence and thorough impact assessments. With regard to policies and measures, in-depth consultation should be carried out with the relevant stakeholders, including civil society. |
| --- | --- |

2.11.

| 2.12. | All in all, the development of the post-crisis energy markets should increasingly rely on innovation and competition, rather than on subsidies and trade barriers. Moreover, it needs to be recognised that, in the case of the EU energy market, intervention anywhere could have consequences for the rest of the market. Therefore, measures in Member States must be properly targeted and temporary, with the least distorting effects on the EU market. |
| --- | --- |

2.12.

3.   Specific comments

| 3.1. | Any possible intervention in energy markets should be assessed against the basic objectives to ensure that they do not undermine the integrity of the Single Market and the level playing field or cause uncertainties that weaken the investment environment. Moreover, they must not jeopardise decarbonisation and energy-efficiency efforts. |
| --- | --- |

3.1.

| 3.2. | This is a tough requirement, as any intervention in the energy market could have negative consequences. In many cases, these could be market distortions, fiscal costs, supply disruption, or a negative impact on investments or on consumer behaviour. The EESC therefore highlights that any intervention must be based on a careful analysis of their economic, social and environmental consequences. |
| --- | --- |

3.2.

| 3.3. | The EESC believes that direct financial support to mitigate the impact of increased energy prices to those in need is no doubt the most realistic option as an emergency measure in a crisis situation. Possible support measures aimed at mitigating the crisis should, however, be temporary and targeted at those suffering most, be they citizens, SMEs or energy-intensive industries. |
| --- | --- |

3.3.

| 3.4. | Instead of relying on continuous compensation, the EESC calls for policymakers to encourage, support and enable people to become energy prosumers and build up local energy communities, thus helping them to be more independent of common market prices. Increasing efforts should also be focused on guiding and supporting citizens and small businesses in their energy saving and energy efficiency activities, as well as in responding to variable production by means of flexible demand. As extensively analysed by the EESC, especially vulnerable consumers who suffer most from high energy prices have the worst chances, and in many cases no chances at all, of becoming prosumers. Both the European Commission and the Member States, at the national, regional and local levels, must initiative programmes to help those consumers overcome the various barriers they face (e.g. information and activation campaigns, financial resources, access to capital, access to ground and roof tops for installing solar and wind energy installations, etc.). |
| --- | --- |

3.4.

| 3.5. | The EESC agreed in its previous opinion (2) with the conclusions of the recent ACER report (3) in that, during the crises, the electricity market proved that it was working well, managing to avoid electricity cuts or even blackouts in certain areas. The ACER assessment also indicates that price volatility would have been much worse in any single country that acted in isolation. However, the Committee is well aware that gas prices are pushing energy prices up, given the current market design, where the merit order determines the price. The EESC points to the Union’s shared values regarding services of general economic interest within the meaning of Article 14 of the Treaty on the Functioning of the European Union (TFEU), which are set out in Protocol No. 26 on services of general interest annexed to the Treaty on European Union (TEU) (4). |
| --- | --- |

3.5.

| 3.6. | On a more general level, it must also be recognised that a great deal has been achieved in the integration of the EU energy markets in recent decades. It has brought about remarkable benefits in terms of the availability and affordability of energy, which are often taken for granted. Without the cooperation and integration of the markets, the costs of ensuring the security of energy supply and the greening of the energy system would be much higher. |
| --- | --- |

3.6.

| 3.7. | This positive development of energy market integration should be continued. The interest in and benefits of connecting electricity markets across national borders are becoming ever more prominent with the increased reliance on renewables. The increase in intra-country and cross-border connections contributes to the security of supply but also equalises prices. In the short-term, it may be a drawback to those enjoying lower prices within the range of different prices, but in the longer term, it helps lower and stabilise prices. |
| --- | --- |

3.7.

| 3.8. | According to the ACER’s assessment, the current market design is worth keeping. But the EESC agrees with the Commission that there are areas where adjustments to the EU electricity market design are necessary to achieve the EU’s decarbonisation objectives at a lower cost and ensuring security of supply, especially due to the increase in the production and use of renewable energy and ensuring the stability and affordability of prices. |
| --- | --- |

3.8.

| 3.9. | The EESC suggests that it should be examined, for example, whether the existing market design, including its regulatory framework offers sufficient incentives to invest in flexibility options (such as storage, load shifting and green hydrogen). Without changing the bidding process, which would entail considerable risks, there are many opportunities that might incentivise system-friendly technologies, including a grid fee scheme that rewards load-accurate generation and consumption of electricity. |
| --- | --- |

3.9.

| 3.10. | Moreover, the EESC also believes it necessary to start without delay the political discussion on how to ensure, in a future market design, investment in and refinancing of renewable energy capacity in the distant future when covering all the electricity demand by renewable energies would be the norm and the market price could regularly be zero or even negative. |
| --- | --- |

3.10.

| 3.11. | In the debate on high electricity prices, it has been expressed very clearly that it is necessary to replace the current marginal pricing with a different kind of system, as gas is often in the marginal position, thus determining the price of electricity as a whole. In that context, the Committee refers to the statement of 8 September 2022 of EESC President and EESC TEN Section President that ‘[t]he EESC calls for joint European action to ensure the stability of electricity prices and to urgently reform the energy market, while also calling for faster completion of the single market and the enhancement of infrastructure’. |
| --- | --- |

3.11.

| 3.12. | The price hikes have basically been generated by unexpected external factors such as the war and hand in hand with merit order pushed the market electricity prices to their record levels. Considering that the root cause of the current high energy prices is gas, the ideal solution to the problem would be to minimise the use of gas and increase the production and use of non-fossil energy to the extent that meets the energy demand. |
| --- | --- |

3.12.

| 3.13. | Fossil energy also affects electricity prices via emissions allowances, the price of which has increased significantly, although it still has a limited impact compared to gas prices. Moreover, a high share of the electricity price for consumers still consists of various taxes. |
| --- | --- |

3.13.

| 3.14. | A distinction should be made between price shocks caused by exceptional situations such as the war and more regular price fluctuations. Fluctuations depend on many factors related to the supply and demand of energy. Due to the massive increase in the production of intermittent renewable electricity, price volatility in the electricity system is likely to increase. The market must therefore send adequate price signals to meet the need for flexibility. |
| --- | --- |

3.14.

| 3.15. | The EESC emphasises that price caps or other interventions in the wholesale energy markets are often necessary in the current overstrained energy market but can affect the security of supply, the investment environment and energy savings. In doing so, the EESC is aware that market-based price signals are needed to encourage investment in energy production, price is also an incentive for energy saving and energy efficiency. However, temporary well-targeted compensation for those who suffer the most from energy prices, be it households or companies, is needed to soften the effect of the spike in energy prices. |
| --- | --- |

3.15.

| 3.16. | The EESC welcomes the proposal to explore the review of the REMIT framework, in order to mitigate the risks of market abuse by means of improved market transparency and enhanced market data quality. To avoid a negative impact on businesses, households and society, the EESC also calls for measures to be explored to address the distortive effects on gas price-setting through possible market abuse and speculation. |
| --- | --- |

3.16.

| 3.17. | The EESC draws attention to the fact that the National Climate and Energy Plans must be reviewed in the changed conditions in order to provide a coordinated response to cover long-term electricity needs. |
| --- | --- |

3.17.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 275, 18.7.2022, p. 80, OJ C 323, 26.8.2022, p. 123, OJ C 443, 22.11.2022, p. 140.

1

(2)  OJ C 443, 22.11.2022, p. 140.

2

(3)  The ACER’s final assessment of the EU wholesale electricity market design.

3

(4)  OJ C 275, 18.7.2022, p. 80.

4

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/190 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/190

---

Opinion of the European Economic and Social Committee on Amended proposal for a Regulation of the European Parliament and of the Council on Union guidelines for the development of the trans-European transport network, amending Regulation (EU) 2021/1153 and Regulation (EU) No 913/2010 and repealing Regulation (EU) No 1315/2013

(COM(2022) 384 final/2 — 2021/0420 (COD))

(2023/C 75/28)

| Rapporteur-General: | Stefan BACK |
| --- | --- |

Rapporteur-General:

Stefan BACK

| Referral | European Parliament, 3.10.2022
  Council of the European Union, 6.10.2022 |
| --- | --- |
| Legal basis | Articles 172 and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 155/0/0 |

Referral

European Parliament, 3.10.2022

Council of the European Union, 6.10.2022

Legal basis

Articles 172 and 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

155/0/0

1.   Conclusions and recommendations

| 1.1. | The EESC points out that, in its opinion on the proposal for a revision of the TEN-T and Rail Freight Corridor Regulation (1) (referred to below as the TEN-T Proposal (2)), it welcomed the increased focus on links to neighbouring countries, including partner countries and accession countries. |
| --- | --- |

1.1.

| 1.2. | The TEN-T Proposal was published in December 2021; the Russian attack on Ukraine subsequently started in February 2022. The EESC agrees with the assessment made in the amended proposal that this has redefined the geopolitical landscape, brought to the surface the EU’s vulnerability to unforeseen disruptive events beyond its borders and highlighted the fact that the EU internal market and its transport network cannot be viewed in isolation when shaping EU policy. |
| --- | --- |

1.2.

| 1.3. | This situation has rightly brought attention to the urgent need to assist Ukraine, including by improving transport connectivity with the EU in order to maintain and improve mobility and freight flows between Ukraine and the EU. In particular, there is an acute need to help transport cereal crops out of Ukraine due to the unavailability of Black Sea ports, which are being blockaded by Russia. |
| --- | --- |

1.3.

| 1.4. | The EESC agrees that the rapid establishment of alternative logistics routes using all transport modes linking the EU to Ukraine is vital for Ukraine’s economy and economic recovery and for stabilising world food markets and food security. |
| --- | --- |

1.4.

| 1.5. | The EESC also supports the action plan set out in the Solidarity Lanes communication to upgrade the cross-border connections (road-road, rail-road and rail-rail) between the EU and Ukraine, including additional border-crossing points, and to assess the extension of TEN-T core network corridors in Ukraine. |
| --- | --- |

1.5.

| 1.6. | The EESC also takes positive note of the fact that the action plan also provides for ‘CEF calls for proposals’ that will make it possible to focus support in particular on projects aimed at improving the interoperability and connectivity of the EU’s transport network with Ukraine. |
| --- | --- |

1.6.

| 1.7. | The EESC therefore fully supports the extension of TEN-T to Ukraine and Moldova, through indicative maps included in Annex IV to the amended proposal; this is a timely suggestion and over time could bring added value, in particular by improving the opportunities for establishing smooth and seamless transport flows between Ukraine and EU. |
| --- | --- |

1.7.

| 1.8. | The EESC fully supports the strong political message being sent by including the links in Ukraine within the top TEN-T priority, i.e. the European Transport Corridors, with their strong implementation system in the form of coordinators, work plans, various working groups and, under to the TEN-T Proposal, an obligation to give the work plans legal force through an implementing act. |
| --- | --- |

1.8.

| 1.9. | The EESC finds it regrettable, however, that neither the general provisions on cooperation with third countries, nor the provisions on implementation of the instrument of European Transport Corridors and Horizontal Priorities, seems to provide a legal basis for extending application of the corridor priorities or their implementation system, including coordinators, governance, the work plan of the European coordinator or the implementing act, to third countries. |
| --- | --- |

1.9.

| 1.10. | The EESC therefore asks for a strong and credible implementation system for those links that are to be considered part of the European Transport Corridors, possibly by strengthening and multiplying the working groups on cooperation with third countries. |
| --- | --- |

1.10.

| 1.11. | Given the current political context it also seems appropriate, and in line with the sanctions imposed, to eliminate indicative TEN-T links in Russia and Belarus. |
| --- | --- |

1.11.

| 1.12. | The EESC is surprised to note that the amended proposal includes an express commitment to consider re-establishing links in Belarus, and links between Belarus and EU Member States, if the country develops towards democracy, whereas no similar commitment is made with respect to Russia. The EESC takes the view that commitments for the future of this kind should be avoided. |
| --- | --- |

1.12.

| 1.13. | The EESC takes note that the elimination of Member States’ links to Russia appears to have posed problems to some Member States, since some of these links remain important for connectivity in the Member State concerned. The EESC recommends that due attention should be given to the possible internal EU significance of such links. |
| --- | --- |

1.13.

| 1.14. | The EESC agrees that there is obviously also a need to deal with the issue of the different rail gauges in the EU and Ukraine, although changes in that regard may require some time to put in place and hence are unlikely to provide solutions for immediate and urgent efficiency problems. |
| --- | --- |

1.14.

| 1.15. | The EESC would suggest that the migration requirement to the EU standard 1 435 mm gauge should be limited to the European Transport Corridors in order to ensure consistent and well-coordinated migration, given that the obligation on Member States to establish migration plans is limited to those corridors. |
| --- | --- |

1.15.

| 1.16. | The EESC warns that the proposal that any new rail infrastructure on the core or comprehensive TEN-T should be constructed with the EU standard 1 435 mm gauge could create extremely complicated internal consistency problems in Member States with different track gauges. |
| --- | --- |

1.16.

2.   General comments — Background

2.1.   Links with Ukraine and Moldova and eliminating/downgrading links in and with Russia and Belarus

| 2.1.1. | The 27 July 2022 proposal for amending the TEN-T proposal, submitted by the Commission in December 2021 (3), referred to below as the amended proposal) was triggered by the Russian war on Ukraine and its effects on supply chains, which has highlighted the importance of TEN-T links with neighbouring partner countries. |
| --- | --- |

2.1.1.

| 2.1.2. | Article 9 of the Commission’s December proposal (the TEN-T Proposal) provides for cooperation with third countries to connect the TEN-T with their infrastructure, and to enhance sustainable economic growth and competitiveness. Points highlighted include extension of TEN-T policy to third countries, border control procedures and surveillance enabling seamless traffic flows, completion of relevant infrastructure links, interoperability, facilitation of waterborne transport and development of ICT systems. The associated maps specify core and comprehensive network status according to the criteria of the TEN-T Regulation (4). |
| --- | --- |

2.1.2.

| 2.1.3. | Specific criteria are established for the European Transport Corridors, distinct from those applicable to the core and comprehensive network. Corridors are the most strategically important parts of the TEN-T (TEN-T Proposal Article 7), with specific general priorities, distinct from the core and comprehensive networks (Articles 12 and 13), and dedicated implementation rules (Chapter V, Articles 50-54). |
| --- | --- |

2.1.3.

| 2.1.4. | The Commission communication on EU-Ukraine Solidarity Lanes (5) identifies a number of infrastructure challenges that the EU and its neighbouring countries need to address to support Ukraine’s economy and recovery and to address supply and connectivity issues between the EU, Ukraine and world markets. It proposes assessing the extension of the European Transport Corridors to Ukraine and Moldova to safeguard imports and exports, including export of crops out of Ukraine. A High-Level Understanding on indicative maps of the TEN-T in Ukraine was signed in May 2022. |
| --- | --- |

2.1.4.

| 2.1.5. | On 14 July 2022 the Commission adopted a delegated Regulation with indicative maps for the TEN-T network in Ukraine and Moldova, to extend TEN-T standards to neighbouring countries to enable seamless connections. These maps are now part of the amended proposal, which also includes maps extending several of the TEN-T Corridors to Ukraine and Moldova. |
| --- | --- |

2.1.5.

| 2.1.6. | The amended proposal also takes out the indicative TEN-T links in Russia and Belarus. |
| --- | --- |

2.1.6.

| 2.1.7. | Furthermore, the links connecting the network of Member States to the indicative TEN-T links in Russia and Belarus have been downgraded to form part of the comprehensive network. |
| --- | --- |

2.1.7.

2.2.   The rail gauge

| 2.2.1. | The Ukraine Solidarity Lanes communication also identifies bottlenecks due to the divergence between the Ukrainian rail gauge of 1 520 mm and the EU gauge of 1 435 mm. This causes a problem due to the currently insufficient transhipment capacity. |
| --- | --- |

2.2.1.

| 2.2.2. | The amended proposal seeks to harmonise the rail gauge on the core and comprehensive network in the EU to eventually reach a common gauge of 1 435 mm. New rail infrastructure must be constructed with that gauge and Member States with a different gauge, entirely or in part, shall, within two years of the entry into force of the regulation, make a plan for migrating existing railway lines on the European Transport Corridors to the 1 435 mm gauge. Plans shall be coordinated with neighbouring Member States concerned. |
| --- | --- |

2.2.2.

| 2.2.3. | Migration plans shall identify those railway lines that will not migrate and include a cost-benefit analysis justifying that decision, including the impact on interoperability. |
| --- | --- |

2.2.3.

| 2.2.4. | The priorities for infrastructure and investment planning related to migration plans should be part of the first work plan of European Coordinators for those European Transport Corridors that include freight railway lines with a gauge that is not European standard. |
| --- | --- |

2.2.4.

| 2.2.5. | Ireland is exempt from the obligation to harmonise the gauge (Articles 15 and 16 of the TEN-T Proposal). |
| --- | --- |

2.2.5.

3.   General comments

| 3.1. | The EESC points out that, in its opinion on the TEN-T Proposal) it welcomed the increased focus on links to neighbouring countries, including partner countries and accession countries. |
| --- | --- |

3.1.

| 3.2. | The TEN-T Proposal was published in December 2021; the Russian attack on Ukraine subsequently started in February 2022. The EESC agrees with the assessment made in the amended proposal that this has redefined the geopolitical landscape, brought to the surface the EU’s vulnerability to unforeseen disruptive events beyond its borders, and highlighted the fact that the EU internal market and its transport network cannot be viewed in isolation when shaping EU policy. |
| --- | --- |

3.2.

| 3.3. | This situation has rightly brought attention to the urgent need to assist Ukraine including by improving transport connectivity with the EU in order to maintain and improve mobility and freight flows between Ukraine and the EU. In particular, there is an acute need to help transport cereal crops out of Ukraine due to the unavailability of Black Sea ports, which are being blockaded by Russia. |
| --- | --- |

3.3.

| 3.4. | The need to take measures to ensure adequate mobility and transport flows between the EU and Ukraine was first raised in the abovementioned communication on EU-Ukraine Solidarity Lanes and has since been addressed through a number of measures, including by promoting adequate infrastructure development through, and indicative extensions of TEN-T links to, Ukraine, in accordance with the provisions of the TEN-T Proposal regarding cooperation with third countries. |
| --- | --- |

3.4.

| 3.5. | The EESC agrees that the rapid establishment of alternative logistics routes using all transport modes linking the EU to Ukraine is vital for Ukraine’s economy and economic recovery and for stabilising world food markets and food security. |
| --- | --- |

3.5.

| 3.6. | The EESC also takes note that the capacity of relevant terminals and border crossings, for instance at points with double gauge, needs to be improved urgently, as pointed out in the Solidarity Lanes communication. |
| --- | --- |

3.6.

| 3.7. | The EESC also supports the action plan set out in the Solidarity Lanes communication to upgrade the cross-border (road-road, rail-road and rail-rail) connections between the EU and Ukraine, including additional border-crossing points, to assess the extension of TEN-T core network corridors in Ukraine to offer increased connectivity through the development of EU standard-gauge rail lines into Ukraine and Moldova, and to improve connectivity and navigability on the Rhine-Danube corridor to ensure more efficient traffic. |
| --- | --- |

3.7.

| 3.8. | The EESC also takes positive note of the fact that the action plan also provides for ‘CEF calls for proposals’ that will make it possible to focus support in particular on projects aimed at improving the interoperability and connectivity of the EU’s transport network with Ukraine. |
| --- | --- |

3.8.

| 3.9. | The EESC therefore fully supports the extension of TEN-T to Ukraine and Moldova, through indicative maps included in Annex IV to the amended proposal; this is a timely suggestion and over time could bring added value, in particular by improving the opportunities for establishing smooth and seamless transport flows between Ukraine and the EU. |
| --- | --- |

3.9.

| 3.10. | The EESC takes note that the indicative maps of Ukraine’s TEN-T infrastructure in Annex IV to the amended proposal classify links, terminals, ports and airports as belonging to the core or the comprehensive network, in accordance with Article 9(2) of the TEN-T Proposal. |
| --- | --- |

3.10.

| 3.11. | The indicative links inside Ukraine are also made part of European Transport Corridors, extending the North Sea-Baltic Corridor, the Scandinavian-Mediterranean Corridor, the Baltic-Adriatic Corridor, the Rhine-Danube Corridor and the Baltic-Black Sea Corridor into Ukraine through maps included in Annex III to the amended proposal. |
| --- | --- |

3.11.

| 3.12. | The EESC fully supports the strong political message being sent by including the links in Ukraine within the top TEN-T priority, i.e. the European Transport Corridors, with their strong implementation system in the form of coordinators, work plans, various working groups and, under the TEN-T Proposal, an obligation to give the work plans legal force through an implementing act. |
| --- | --- |

3.12.

| 3.13. | The EESC finds it regrettable, however, that neither the general provisions on cooperation with third countries, nor the provisions on implementation of the instrument of European Transport Corridors and Horizontal Priorities, seems to provide a legal basis for extending application of the corridor priorities or their implementation system, including coordinators, governance, the work plan of the European coordinator or the implementing act, to third countries. Only Article 52(3)(f) on governance of the corridors allows for working groups on cooperation with third countries, but that does not seem to change the scope of the provisions on Trans-European Corridors. |
| --- | --- |

3.13.

| 3.14. | The EESC therefore asks for a strong and credible implementation system for those links that are to be considered an extension of the European Transport Corridors, possibly by strengthening and multiplying the working groups on cooperation with third countries. |
| --- | --- |

3.14.

| 3.15. | Given the current political context it also appears appropriate, and in line with the sanctions imposed, to eliminate indicative TEN-T links in Russia and Belarus. |
| --- | --- |

3.15.

| 3.16. | The EESC is, however, surprised to note that the amended proposal includes an express commitment to consider re-establishing links in Belarus, and links between Belarus and EU Member States, if the country develops towards democracy in line with an EU plan to that end, while no similar prospects are indicated with respect to Russia. Even though there may be no specific EU plan with respect to democracy in Russia, the different approaches are difficult to understand. EESC would therefore recommend avoiding making this kind of commitment for the future. |
| --- | --- |

3.16.

| 3.17. | The EESC takes note that the elimination of Member States’ links to Russia appears to have posed problems to some Member States. For instance, the Finnish transport minister has criticised the general character of this measures, since some of these links remain important for connectivity in the Member State concerned. The EESC recommends that due attention should be given to the possible internal EU significance of such links. |
| --- | --- |

3.17.

| 3.18. | The EESC agrees that there is obviously also a need to deal with the issue of the different rail gauges in the EU and Ukraine, although changes in that regard may require some time to put in place and hence are unlikely to provide solutions for immediate and urgent efficiency problems. |
| --- | --- |

3.18.

| 3.19. | The EESC takes note that the requirement to migrate to a 1 435 mm railway gauge has been broadened and the possibility of retaining other gauges reduced, through proposed amendments to Articles 15 and 16 and the new Article 16a. Given that the focus of implementation of migration to the 1 435 mm gauge is on the European Transport Corridors — since the migration plans to be drawn up by all Member States are limited to those corridors — a general obligation to construct all new lines with the 1 435 mm gauge seems inconsistent with the main thrust of Article 16a, which is to ensure consistency and seamless rail transport on the Trans-European Corridors. |
| --- | --- |

3.19.

| 3.20. | The EESC would therefore suggest that the migration requirement should be limited to the European Transport Corridors in order to ensure consistent and well-coordinated migration. |
| --- | --- |

3.20.

| 3.21. | The EESC is surprised at the general obligation set out in the proposed Article 16a(1) that any new rail infrastructure should be constructed with the European standard nominal 1 435 mm track gauge, apparently irrespective of the configuration of the surrounding network, since this obligation could create extremely complicated internal consistency and bottleneck problems in Member States with different track gauges. |
| --- | --- |

3.21.

| 3.22. | It is worth noting that the reduction of exemption possibilities for diverging gauges has caused concern, for instance in Finland, where the proportionality of the proposal in this regard has been questioned. |
| --- | --- |

3.22.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  OJ C 290, 29.7.2022, p. 120.

1

(2)  COM(2021) 812 final.

2

(3)  COM(2022) 384 final.

3

(4)  Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU (OJ L 348, 20.12.2013, p. 1).

4

(5)  COM(2022) 217 final.

5

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/195 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/195

---

Opinion of the European Economic and Social Committee on Specific provisions for the 2014-2020 cooperation programmes supported by the European Neighbourhood Instrument and under the European territorial cooperation goal, following programme implementation disruption

(COM(2022) 362 — 2022/0227 (COD))

(2023/C 75/29)

| Rapporteur-General: | Andris GOBIŅŠ |
| --- | --- |

Rapporteur-General:

Andris GOBIŅŠ

| Referral | European Parliament, 27.9.2022
  Council of the European Union, 17.8.2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | External Relations |
| Adopted at plenary | 27.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 117/1/3 |

Referral

European Parliament, 27.9.2022

Council of the European Union, 17.8.2022

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

External Relations

Adopted at plenary

27.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

117/1/3

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) supports the approach by the European Commission, Parliament and Council to do everything necessary for approving the foreseen regulation as soon as possible and urges getting it into force no later than in the beginning of November 2022. |
| --- | --- |

1.1.

| 1.2. | As due to the need of a rapid approval it is likely that in a first step the regulation might be adopted without changes, the EESC suggests to consider a review in a second step with the below proposed improvements. The proposed changes should also enrich the debate and preparations of changes in the follow up regulations and programmes. |
| --- | --- |

1.2.

| 1.3. | The EESC welcomes the fast action of the EU institutions and the needed flexibility in relation to running projects right after Russia’s unprovoked and unjustified war against Ukraine. Fast action was the only way to stay in line with EU values and principles. |
| --- | --- |

1.3.

| 1.4. | The EESC supports the aim to provide flexibility in amending the purpose of ongoing projects in order to reflect on the emerging needs by giving necessary flexibility to managing authorities and providing them with legal certainty that the projects are ran and pursued according to the rules and there will not be a lot of limitations as far as the audit is concerned. This is of special importance as the regulation will be applied retroactively from the beginning of the full scale war. |
| --- | --- |

1.4.

| 1.5. | The EESC reminds of the new realities in the last months of the war against Ukraine. With Ukraine’s EU candidate status and the growing need for reconstruction and preparation for the winter in Ukraine, even more flexibility in eligible activities and wider definition of cross-border/regional cooperation activities for ongoing and planned projects should be granted as foreseen in the proposed changes in the regulation (see suggestions beneath). |
| --- | --- |

1.5.

| 1.6. | Considering the suspension of funding to authorities of the Russian Federation and Belarus and related suspension of cross-border cooperation with the Russian Federation and Belarus, the EESC advances the idea of doing everything possible for transferring funds initially intended for these cooperation programmes for cooperation with Ukraine. |
| --- | --- |

1.6.

| 1.7. | With civil society in the frontline of the reconstruction of Ukraine and country’s preparation for the EU accession, special attention should be given to allocating funds to the work of civil society organisations including re-granting of funds. |
| --- | --- |

1.7.

2.   General comments

| 2.1. | The EESC supports the objectives of the proposal and welcomes the intention to provide a flexible approach in the cooperation programmes under the European Neighbourhood Instrument (ENI) to reflect the needs emerging as a result Russia’s unprovoked and unjustified military aggression against Ukraine and the resulting impact on the European Union (EU) and several of its eastern regions in particular and the extended impact of the COVID-19 pandemic on the EU. |
| --- | --- |

2.1.

| 2.2. | The EESC recognises the immense efforts taken by the national governments, local authorities and civil society of the neighbouring EU Member States, Moldova and Ukraine to accommodate the Ukrainian displaced persons fleeing in mass from the Russian invasion and welcomes the support of the tailor-made use of cross-border cooperation programmes to cover the respective humanitarian assistance needs. |
| --- | --- |

2.2.

| 2.3. | The EESC recognises the particular challenges experienced by Ukrainian authorities on all levels, which have to deal simultaneously with ensuring military defence of the country and sustaining economy, as Ukraine suffers the large numbers of casualties, destruction of homes and infrastructure, displacement of a significant share of its population, disrupted production and transportation, unprecedented pressure on the budget and many other problems caused by the Russian aggression. The cross-border cooperation programmes with Ukraine should help lessen this burden, providing beneficiaries with opportunities to respond to the war-time needs. |
| --- | --- |

2.3.

| 2.4. | The EESC welcomes the recent granting of the EU candidate status to Ukraine and Moldova and emphasises the need for the EU to provide comprehensive support to these countries in their EU integration reforms, which they implement while carrying the burden of the full-scale war in Ukraine. Cross-border cooperation programmes should, where relevant, streamline the strengthened EU integration objectives of Ukraine and Moldova into programme activities, including through passing of relevant reform experience of the neighbouring EU countries. This should incorporate the preparations at local and regional level and a strong role for civil society organisations including social partners. |
| --- | --- |

2.4.

| 2.5. | Considering the suspension of funding to authorities of the Russian Federation and Belarus and related suspension of cross-border cooperation with the Russian Federation and Belarus, the EESC advances the idea of doing everything possible for transferring funds initially intended for these cooperation programmes for cooperation with Ukraine. Due to the great symbolism and increased needs, it is worth investing time and competence in finding and preparing legal ground for it. The strong emotional and value-based boundaries can be seen as a way of ‘neighbourhood’ with Ukraine and via interpretation well suiting to the aims of the programme in the current extraordinary times. |
| --- | --- |

2.5.

| 2.6. | The EESC emphasises the extraordinary financial burden carried by the neighbouring communities receiving numerous Ukrainian displaced persons and therefore welcomes the intention to remove the obligation of national co-financing for five ENI cross-border programmes with the Republic of Moldova and Ukraine. |
| --- | --- |

2.6.

| 2.7. | The EESC stresses that the Russian aggression and the resulting influx of displaced persons have proven, once again, the key role of civil society and have significantly boosted civil society activism both in Ukraine and the neighbouring EU countries, with hundreds of nationwide but also grass-roots volunteer initiatives arising to provide food and shelter and ensure other humanitarian needs and, therefore, the support of civil society’s work should be in particular focus of the cross-border programmes. The importance of organised civil society will prevail also during the reconstruction of Ukraine and its regions and the preparations of EU accession. |
| --- | --- |

2.7.

| 2.8. | In the light of the ongoing energy crisis, the EESC reminds of the need to speed up transition to green energy and further strengthen energy efficiency. The cross-border cooperation programmes should provide an opportunity for their beneficiaries to mitigate the forthcoming challenges of the winter season, while allowing them to stay on the sustainability path. |
| --- | --- |

2.8.

| 2.9. | The EESC regrets that no stakeholder consultations took place while drafting the proposed changes. If implemented properly, these do not lead to loss of time but in most cases improve the quality of the drafted decision. |
| --- | --- |

2.9.

| 2.10. | Using the best practice from the European Code of Conduct on the partnership principle can contribute to the success of the projects implemented within the amended regulation. |
| --- | --- |

2.10.

3.   Specific comments

| 3.1. | The EESC stresses that the EU provides wide action aiming at supporting displaced persons from Ukraine e.g. via CARE, Fast-Care, changes in Cohesion policy etc. Double funding risks should be mitigated. The specificity of the European Neighbourhood Initiative should be kept to its main aim, which is the cooperation between the EU and Eastern partners. Expecting longer disruptions of the programmes involving Russia and Belarus and the growing need and interest in cooperation in Ukraine and Moldova, the legal base towards shifts and cooperation with these states should be prepared e.g. in Article 9, but also in Articles 5, 6, 8. |
| --- | --- |

3.1.

| 3.2. | The EESC draws attention to the fact that, in addition to arrival of displaced persons, the Russian invasion in Ukraine has had other profound impact on the cooperation between the EU, Ukraine and its neighbouring countries. Due to the Russian naval blockade of Ukrainian sea ports and disruption of transport routes in eastern Ukraine, a large share of Ukrainian trade, including grains, has been redirected through the country’s borders with the EU, thus creating significant pressure on cross-border infrastructure. Considering that Ukraine’s export of grains and other products is of critical importance to prevent the global food crisis, the cross-border programmes should address the emerging logistic problems to ensure the maximum capacity of goods flow, including through improvement of cross-border management, construction of storage facilities close to border and other relevant measures. These projects might ask for bigger deadline flexibility than currently foreseen in Article 6 part 2. |
| --- | --- |

3.2.

| 3.3. | The higher costs based on extraordinary inflation rates boosted by Russia’s war should be eligible in all projects, not only those mentioned under Article 6 part 3. |
| --- | --- |

3.3.

| 3.4. | The EESC supports the proposal to facilitate the management of the cross-border programmes, including changes in their programme activities, given the extraordinary circumstances. However, it emphasizes that there is a need for safeguards against the possible misuse of funds and suggests strengthening the involvement of civil society (including social partners) in decision-making and monitoring regarding cross-border programme activities. These aspects might be stressed in Article 7 and/or 15. |
| --- | --- |

3.4.

| 3.5. | The unilateral suspension as foreseen in Article 10 part 2 should be accompanied by a justification referring to this regulation. |
| --- | --- |

3.5.

| 3.6. | As indicated in 1.7 and 2.5, the EESC suggests allowing taking on board new partners from civil society (including re-granting possibilities) and from Ukraine where suspended partners were foreseen. Article 10 part 3 should be changed accordingly. In addition, the pro-democratic Belarusian or Russian diaspora might be considered as partners in exceptional cases. |
| --- | --- |

3.6.

| 3.7. | Additional measures must be taken into account to prevent fraud or manage irregularities that may appear in the implementation process. Civil society and social partners should have a strengthened role also in relation of these processes and in the monitoring committees. (Article 14 part 3). |
| --- | --- |

3.7.

Brussels, 27 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/198 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/198

---

Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council repealing Council Directive 89/629/EEC

(COM(2022)465 final – 2022/0282(COD))

(2023/C 75/30)

| Referral | European Parliament, 3.10.2022
  Council of the European Union, 26.9.2022
  European Commission, 16.9.2022 |
| --- | --- |
| Legal basis | Article 100.2 and 304 of the Treaty on the Functioning of the European Union |
| Plenary Assembly decision | 26.10.2022 |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 169/0/03 |

Referral

European Parliament, 3.10.2022

Council of the European Union, 26.9.2022

European Commission, 16.9.2022

Legal basis

Article 100.2 and 304 of the Treaty on the Functioning of the European Union

Plenary Assembly decision

26.10.2022

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

169/0/03

Since the Committee endorses the content of the proposal and feels that it requires no comment on its part, it decided to issue an opinion endorsing the proposed text.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

| 28.2.2023 | EN | Official Journal of the European Union | C 75/199 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/199

---

Opinion of the European Economic and Social Committee on Proposal for a Council Directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes

(COM(2022) 216 final – 2022/0154 (CNS))

(2023/C 75/31)

| Rapporteur: | Petru Sorin DANDEA |
| --- | --- |
| Co-rapporteur: | Krister ANDERSSON |

Rapporteur:

Petru Sorin DANDEA

Co-rapporteur:

Krister ANDERSSON

| Referral | Council of the European Union, 8.6.2022 |
| --- | --- |
| Legal basis | Article 115 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 6.10.2022 |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 187/0/0 |

Referral

Council of the European Union, 8.6.2022

Legal basis

Article 115 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

6.10.2022

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

187/0/0

1.   Conclusions and recommendations

| 1.1. | The Commission proposal on the debt-equity bias reduction allowance (DEBRA) aims to address the tax-induced debt/equity bias for companies in the EU, by implementing rules on the deductibility of the notional interest on increases in equity and by introducing specific limitations to the tax deductibility of net borrowing costs. |
| --- | --- |

1.1.

| 1.2. | The Commission has to this end developed targeted rules concerning both an allowance on equity and a limitation of interest deductions. Financial undertakings are excluded from the measures, since they are subject to regulatory equity obligations preventing under-equitisation. |
| --- | --- |

1.2.

| 1.3. | The allowance on equity devised by the Commission is calculated as Allowance base x Notional Interest Rates. The allowance base is given by the difference between equity at the end of the tax year and equity at the end of the previous tax year, in other words, the year-on-year change in equity. On the debt side, a proportional restriction will limit the deductibility of interest to 85 % of net borrowing costs, meaning interests paid minus interests received. |
| --- | --- |

1.3.

| 1.4. | The EESC supports the objectives pursued by the Commission, insofar as they are aimed at addressing a relevant and long debated issue in corporate taxation, such as the tax-induced bias in favour of debt over equity. However, the actual structure and content of the proposal are crucial for effectively achieving such objectives. |
| --- | --- |

1.4.

| 1.5. | In this respect, the EESC deems that the Commission decision to favour equity over debt not only by granting an allowance on the equity capital increased by companies over time, but also by reducing the deductibility of debt weighing on companies by 15 %, might harm European businesses, especially SMEs. |
| --- | --- |

1.5.

| 1.6. | The EESC is concerned that the Commission proposal could make SMEs and micro-businesses, the backbone of the European economy, financially weaker. Such companies do not have easy access to capital markets and, therefore, limiting the deductibility of their interest costs could hamper investment, growth and job creation across Europe. |
| --- | --- |

1.6.

| 1.7. | The EESC maintains that, in the case of small and micro-enterprises, the encouragement towards equity should be pursued mainly, if not only, by tax allowances on equity without penalising the deductibility of interest on debt. |
| --- | --- |

1.7.

| 1.8. | The EESC considers the risk premium of 1 to 1,5 % contained in the Commission proposal to be both disconnected from the market reality and insufficient to compensate for the loss of interest costs’ deductibility. In 2021, the Market Risk Premium (MRP) was above 5 per cent in all Member States and currently remains at those levels. |
| --- | --- |

1.8.

| 1.9. | The EESC fears that not allowing deduction for legitimate costs of doing business in the form of interest charges might put European companies at a competitive disadvantage compared to businesses in other major trading blocs. |
| --- | --- |

1.9.

| 1.10. | The EESC notes that disallowing deducibility of interest charges for European companies would create incentives to use leasing arrangements rather than having companies directly investing in machinery and equipment. Furthermore, intragroup financing within large groups of companies in centralized Treasury functions would become more difficult and be undermined making financing of investments more costly, resulting in less investments. |
| --- | --- |

1.10.

| 1.11. | In order to make a constructive contribution and to fully voice its concerns, the EESC therefore suggests that the Commission substantially reconsider its proposal, including a total or partial exemption from the limitations to debt interest deductibility especially in favour of SMEs and micro-enterprises. |
| --- | --- |

1.11.

2.   Commission proposal

| 2.1. | The Commission Directive’s proposal (1) DEBRA aims at addressing the tax-induced debt/equity bias for companies in the EU by providing rules concerning the deductibility of the notional interest on increases in equity and by introducing specific limitations to the tax deductibility of net borrowing costs. |
| --- | --- |

2.1.

| 2.2. | The proposal is in line with the Commission Communication Business Taxation for the 21st Century (2), which singles out the pro debt bias of tax rules as a relevant issue to be tackled by the European institutions to achieve a fair and efficient tax system. |
| --- | --- |

2.2.

| 2.3. | In its Communication, the Commission points out that a company can currently ‘deduct interests attached to a debt financing, but not the costs related to an equity financing, such as the payment of dividends, thus incentivising it to finance investments through debt rather than equity. This can contribute to an excessive accumulation of debts, with possible negative spill-over effects for the EU as a whole, should some countries face high waves of insolvency. The debt bias also penalises the financing of innovation through equity’. |
| --- | --- |

2.3.

| 2.4. | The Commission proposal also follows a specific request by the European Parliament to deal with the debt/equity bias ensuring, at the same time, effective anti-avoidance provisions to prevent any allowance on equity being used as a new tool for base erosion (3). |
| --- | --- |

2.4.

| 2.5. | The Commission proposal has been preceded by an extensive consultation, in which stakeholders, ranging from academics to public authorities, NGOs, business associations and companies, participated. The consultation showed an overwhelming majority of stakeholders maintaining that an initiative to reduce the bias toward debt over equity was necessary. |
| --- | --- |

2.5.

| 2.6. | The Commission has also worked with the six Member States that have already implemented rules on the debt/equity bias in order to gather specific expertise on the functioning of such rules based on their first-hand experience (4). |
| --- | --- |

2.6.

| 2.7. | Developing its proposal, the Commission has considered five possible regulatory options: i) option 1: introducing an allowance on the stocks of corporate equity indefinitely; ii) option 2: introducing an allowance but only for new equity and for 10 years; iii) option 3: introducing an allowance on corporate capital, while disallowing current deductibility of interest payments; iv) option 4: disallowing completely the deductibility of interest expenses; v) option 5: developing an allowance for notional interest on new corporate equity for 10 years with a partial limitation of tax deductibility on debt for all companies. |
| --- | --- |

2.7.

| 2.8. | Option 5 has been singled out as the preferable one and, therefore, targeted rules concerning both an allowance on equity and a limitation of interest deductions on debt have been specifically developed within the Commission proposal. Financial undertakings are explicitly excluded by the measures, since they are already bound by regulatory equity obligations preventing under-equitisation. |
| --- | --- |

2.8.

| 2.9. | More specifically, the allowance on equity devised by the Commission proposal is computed as follows: Allowance base x Notional Interest Rates. In its turn, the allowance base is equal to the difference between equity at the end of the tax year and equity at the end of the previous tax year, that is the year-on-year increase in equity. |
| --- | --- |

2.9.

| 2.10. | In case the allowance base of a taxpayer already benefiting from an allowance on equity is negative in a given tax period (equity decrease), a proportionate amount will become taxable for ten consecutive tax periods and up to the total increase of net equity for which the allowance has been obtained, unless the taxpayer can provide evidence that this is linked to losses incurred during the tax period or due to a legal obligation. |
| --- | --- |

2.10.

| 2.11. | The proposal sets forth specific rules on the relevant notional interest to be applied and, considering their difficulties in accessing financing, provides for the application of the higher rate in favour of SMEs, without the possibility of derogations by Member States. In order to prevent abuses, the deductibility of the allowance is already, through the BEPS project and EU implementation through the ATAD Directive (5), limited to a maximum of 30 % of the taxpayer EBITDA (6) for each tax year. Coordination of the two limitations is proposed. |
| --- | --- |

2.11.

| 2.12. | On the debt side, a proportional restriction will limit the deductibility of interest to 85 % of net borrowing costs, meaning interests paid minus interests received. According to the Commission, this approach makes it possible to address the debt equity bias working, at the same time, from both the equity and debt side. No equity increases due to intercompany transactions or revaluations of assets are however included. |
| --- | --- |

2.12.

| 2.13. | The legal ground of the proposal is Article 115 TFEU on the measures of approximation in the form of a directive and the Commission considers the directive proposal in line with the proportionality and subsidiarity principles. The transposition deadline is set for the beginning of 2024, while Member States with rules on the debt equity bias already in place will be allowed to keep the allowances currently in place for the remaining duration of such allowances under domestic law and with a maximum permitted period of 10 years. |
| --- | --- |

2.13.

3.   General Comments

| 3.1. | The EESC supports the objectives pursued by the Commission proposal, since they are aimed at addressing a relevant and long-debated issue in corporate taxation, such as the tax-induced bias in favour of debt over equity. The EESC believes that European companies of all sizes might greatly benefit from appropriate and soundly devised rules in this respect, bringing more competitiveness to the internal market. |
| --- | --- |

3.1.

| 3.2. | The EESC recalls its opinion The role of corporate taxes in corporate governance (7), which urged a solution to the debt-equity bias, underlining the risks related to undue leverage and pointing out that ‘the debt/equity bias in the corporate tax systems affects socioeconomic costs, as well as firms’ leverage and corporate governance’ (8).
  The EESC has also highlighted the contribution that addressing the debt/equity bias could bring to the ambitious Commission agenda of making the European economy more sustainable and more digitalised (9), noting that ‘excessive reliance on debt financing can undermine the achievement of the European Commission’s objectives as companies become financially vulnerable, and the possibility of undertaking new, risky green and digital investment projects will be adversely affected’. However, the rules to be applied must properly address the DEBRA issue. In particular, the Committee believes that the proposals put forward by the Commission would harm SMEs and especially micro-businesses, making them financially weaker. |
| --- | --- |

3.2.

The EESC has also highlighted the contribution that addressing the debt/equity bias could bring to the ambitious Commission agenda of making the European economy more sustainable and more digitalised (9), noting that ‘excessive reliance on debt financing can undermine the achievement of the European Commission’s objectives as companies become financially vulnerable, and the possibility of undertaking new, risky green and digital investment projects will be adversely affected’. However, the rules to be applied must properly address the DEBRA issue. In particular, the Committee believes that the proposals put forward by the Commission would harm SMEs and especially micro-businesses, making them financially weaker.

| 3.3. | A limitation on the deductibility of interest costs hampers investment, growth and job creation. Such adverse outcomes are even more likely in the current economic situation with interest rate increases. |
| --- | --- |

3.3.

| 3.4. | The EESC notes that an EU action is preferable compared to several uncoordinated initiatives by Member States. Nevertheless, since six Member States are already applying domestic rules concerning allowances on equity financing, it is worth noting that the net effect of allowance for equity and disallowance of interest costs will not fully harmonize investment costs across the EU, even in case of approval of the directive’s hereby examined. |
| --- | --- |

3.4.

| 3.5. | The EESC appreciates the broad and detailed consultation opened by the Commission on the DEBRA proposal, which has given many different stakeholders — business associations, companies, public authorities and academics — the opportunity to voice their positions on a crucial matter for corporate taxation and corporate governance in the EU. |
| --- | --- |

3.5.

| 3.6. | The EESC also values the targeted consultation the Commission has performed alongside the six Member States which have already approved rules on the debt/equity bias, since it allows the regulator to consider the experience already gained in the field by the national legislators and tax authorities. |
| --- | --- |

3.6.

4.   Specific comments

| 4.1. | The EESC deems that the Commission decision to favour equity over debt not only by granting an allowance on the equity capital increased by companies over time, but also by reducing the deductibility of debt weighing on companies by 15 %, will harm European businesses and especially SMEs and micro enterprises. For such companies, the encouragement towards equity should indeed be pursued mainly, if not only, by tax allowances on equity without penalising the deductibility of interest on debt. |
| --- | --- |

4.1.

| 4.2. | The EESC considers it risky to limit the deductibility of the interest on debt, especially for SMEs and micro-enterprises, in the current economic scenario, which is characterised by the double adverse influence of sustained inflation coupled with rising interest rates implemented by central banks to keep inflation under control. Debt levels have furthermore increased in many businesses during the pandemic. A limitation on tax deductibility could indeed make debts weighing on small and micro-companies more difficult to manage. |
| --- | --- |

4.2.

| 4.3. | The EESC observes that the proportionality principle as developed by the Court of Justice would require the European institutions to develop rules fit to achieve the regulatory objectives pursued with the least possible sacrifice on the regulated subjects. As to this matter, the EESC points out that a substantial reduction of deductibility for debt-financing could trigger unintended consequences on SMEs, and especially micro enterprises, such as a weakened sustainability of corporate debts, layoffs and overall loss of financial stability across the internal market. |
| --- | --- |

4.3.

| 4.4. | The EESC notes that disallowing deducibility of interest charges would create incentives to use leasing arrangements rather that companies investing in machinery and equipment themselves. This is not a suitable incentive to introduce, at least not without a thorough analysis. |
| --- | --- |

4.4.

| 4.5. | Many companies use intra group financing and centralised Treasury functions in order to finance investments in a cost efficient way. The proposed rules would basically require each company in the group to finance its investments. This will increase financing costs and therefore decrease investments in an unfortunate way. The EESC considers it necessary to address this issue, enabling continued efficient financing of investments. |
| --- | --- |

4.5.

| 4.6. | The EESC recommends limiting compliance costs for the European enterprises interested in benefiting from the new allowance on equity by achieving a sufficient level of legal certainty and predictability of the new rules in order to prevent uncertainties and interpretative issues, possibly resulting in extended negotiations or even litigations between tax authorities and companies. |
| --- | --- |

4.6.

| 4.7. | In light of the previous arguments and to put forward a constructive contribution, the EESC therefore suggests a substantial reconsideration of the Commission proposal, including a total or at least partial exemption from the DEBRA rules for SMEs and micro-enterprises. |
| --- | --- |

4.7.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

---

(1)  Proposal for a Council Directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes (COM(2022) 216 final).

1

on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes

(2)  Communication from The Commission to the European Parliament and the Council, Business Taxation for the 21st Century (COM(2021) 251 final).

2

Business Taxation for the 21st Century

(3)  European Parliament resolution of 15 February 2022 on the impact of national tax reforms on the EU economy (2021/2074(INI)) (OJ C 342, 6.9.2022, p. 14).

3

(4)  Member States that have rules in place providing for an allowance on equity increases may defer the application of the provisions of this directive for the duration of rights already established under domestic rules (grandfathering). Taxpayers that, on [1 January 2024] benefit from an allowance on equity, under domestic law (in Belgium, Cyprus, Italy, Malta, Poland and Portugal) will be able to continue to benefit from such allowance under national law for a period of up to 10 years.

4

(5)  Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (OJ L 193, 19.7.2016, p. 1).

5

(6)  EBITDA: earnings before interest, taxes, depreciation, and amortization.

6

(7)  OJ C 152, 6.4.2022, p. 13.

7

(8)  OJ C 152, 6.4.2022, p. 13, points 4.1 to 4.7.

8

(9)  OJ C 152, 6.4.2022, p. 13.

9

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| 28.2.2023 | EN | Official Journal of the European Union | C 75/204 |
| --- | --- | --- | --- |

28.2.2023

EN

Official Journal of the European Union

C 75/204

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Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council on repealing Regulation (EEC) No 1108/70 of the Council introducing an accounting system for expenditure on infrastructure in respect of transport by rail, road and inland waterway, and Commission Regulation (EC) No 851/2006 specifying the items to be included under the various headings in the forms of accounts shown in Annex I to Council Regulation (EEC) No 1108/70

(COM (2022) 381 final)

(2023/C 75/32)

| Referral | European Parliament, 12.9.2022
  Council of the European Union, 12.8.2022 |
| --- | --- |
| Legal basis | Article 91 and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Transport, Energy, Infrastructure and the Information Society |
| Adopted at plenary | 26.10.2022 |
| Plenary session No | 573 |
| Outcome of vote
  (for/against/abstentions) | 170/0/0 |

Referral

European Parliament, 12.9.2022

Council of the European Union, 12.8.2022

Legal basis

Article 91 and 304 of the Treaty on the Functioning of the European Union

Section responsible

Transport, Energy, Infrastructure and the Information Society

Adopted at plenary

26.10.2022

Plenary session No

573

Outcome of vote

(for/against/abstentions)

170/0/0

Since the Committee endorses unreservedly the content of the proposal and feels that it requires no comment on its part, it decided to issue an opinion endorsing the proposed text.

Brussels, 26 October 2022.

The President of the European Economic and Social Committee

Christa SCHWENG

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