# Official Journal C 47/2020

| | ISSN 1977-091X |
| --- | --- |
| Official Journal
  of the European Union | C 47 |
| | |
| English edition | Information and Notices | Volume 6311 February 2020 |

ISSN 1977-091X

Official Journal

of the European Union

C 47

English edition

Information and Notices

Volume 6311 February 2020

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| Contents | page |
| --- | --- |
| | I   Resolutions, recommendations and opinions |
| | RESOLUTIONS |
| | European Economic and Social Committee |
| 2020/C 47/01 | Resolution on The European Economic and Social Committee’s contribution to the 2020 Commission’s work programme and beyond | 1 |
| 2020/C 47/02 | Resolution on Opening accession negotiations with North Macedonia and Albania: EU credibility and geostrategic interests should be upheld | 15 |
| | OPINIONS |
| | European Economic and Social Committee |
| 2020/C 47/03 | Opinion of the European Economic and Social Committee on Blockchain and the EU single market: what next?  (own-initiative opinion) | 17 |
| 2020/C 47/04 | Opinion of the European Economic and Social Committee on Ensuring an inclusive sectoral transition to a digitalised rail sector (own-initiative opinion) | 23 |
| 2020/C 47/05 | Opinion of the European Economic and Social Committee on Leaving no one behind when implementing the 2030 Sustainable Development Agenda  (own-initiative opinion) | 30 |
| 2020/C 47/06 | Opinion of the European Economic and Social Committee on The role of the EU’s trade and investment policies in enhancing the EU’s economic performance (own-initiative opinion) | 38 |
| 2020/C 47/07 | Opinion of the European Economic and Social Committee on A more constructive role for civil society in implementing environmental law (exploratory opinion) | 50 |
| 2020/C 47/08 | Opinion of the European Economic and Social Committee on Blue bio-economy (exploratory opinion) | 58 |

Contents

page

I   Resolutions, recommendations and opinions

RESOLUTIONS

European Economic and Social Committee

2020/C 47/01

Resolution on The European Economic and Social Committee’s contribution to the 2020 Commission’s work programme and beyond

1

2020/C 47/02

Resolution on Opening accession negotiations with North Macedonia and Albania: EU credibility and geostrategic interests should be upheld

15

OPINIONS

European Economic and Social Committee

2020/C 47/03

Opinion of the European Economic and Social Committee on Blockchain and the EU single market: what next?  (own-initiative opinion)

17

2020/C 47/04

Opinion of the European Economic and Social Committee on Ensuring an inclusive sectoral transition to a digitalised rail sector (own-initiative opinion)

23

2020/C 47/05

Opinion of the European Economic and Social Committee on Leaving no one behind when implementing the 2030 Sustainable Development Agenda  (own-initiative opinion)

30

2020/C 47/06

Opinion of the European Economic and Social Committee on The role of the EU’s trade and investment policies in enhancing the EU’s economic performance (own-initiative opinion)

38

2020/C 47/07

Opinion of the European Economic and Social Committee on A more constructive role for civil society in implementing environmental law (exploratory opinion)

50

2020/C 47/08

Opinion of the European Economic and Social Committee on Blue bio-economy (exploratory opinion)

58

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| | III   Preparatory acts |
| --- | --- |
| | European Economic and Social Committee |
| 2020/C 47/09 | 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 — Building trust in human-centric artificial intelligence (COM(2019) 168 final) | 64 |
| 2020/C 47/10 | Opinion of the European Economic and Social Committee on  Proposal for a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe (COM(2019) 330 final — 2019/00152 (COD)) and Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast) (COM(2019) 331 final — 2019/00151 (COD)) | 69 |
| 2020/C 47/11 | Opinion of the European Economic and Social Committee on Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence effort within the Union framework (COM(2019) 192 final — 2019/0096 (CNS)) | 76 |
| 2020/C 47/12 | Opinion of the European Economic and Social Committee on Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Investor Citizenship and Residence Schemes in the European Union (COM(2019) 12 final) | 81 |
| 2020/C 47/13 | Opinion of the European Economic and Social Committee on Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Progress in the implementation of the EU Forest Strategy A new EU Forest Strategy: for forests and the forest sector (COM(2018) 811 final) | 87 |
| 2020/C 47/14 | Opinion of the European Economic and Social Committee on Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the implementation of the Circular Economy Action Plan (COM(2019) 190 final) | 92 |
| 2020/C 47/15 | 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 United in delivering the Energy Union and climate action — Setting the foundations for a successful clean energy transition (COM(2019) 285 final) | 98 |
| 2020/C 47/16 | Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council amending Decision No 573/2014/EU on enhanced cooperation between Public Employment Services (PES) (COM(2019) 620 final) | 105 |
| 2020/C 47/17 | Opinion of the European Economic and Social Committee on Euro area economic policy 2019 (additional opinion)  (COM(2018) 759 final) | 106 |
| 2020/C 47/18 | Opinion of the European Economic and Social Committee on Annual Growth Survey 2019 (additional opinion)  (COM(2018) 770 final) | 113 |

III   Preparatory acts

European Economic and Social Committee

2020/C 47/09

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 — Building trust in human-centric artificial intelligence (COM(2019) 168 final)

64

2020/C 47/10

Opinion of the European Economic and Social Committee on  Proposal for a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe (COM(2019) 330 final — 2019/00152 (COD)) and Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast) (COM(2019) 331 final — 2019/00151 (COD))

69

2020/C 47/11

Opinion of the European Economic and Social Committee on Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence effort within the Union framework (COM(2019) 192 final — 2019/0096 (CNS))

76

2020/C 47/12

Opinion of the European Economic and Social Committee on Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Investor Citizenship and Residence Schemes in the European Union (COM(2019) 12 final)

81

2020/C 47/13

Opinion of the European Economic and Social Committee on Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Progress in the implementation of the EU Forest Strategy A new EU Forest Strategy: for forests and the forest sector (COM(2018) 811 final)

87

2020/C 47/14

Opinion of the European Economic and Social Committee on Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the implementation of the Circular Economy Action Plan (COM(2019) 190 final)

92

2020/C 47/15

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 United in delivering the Energy Union and climate action — Setting the foundations for a successful clean energy transition (COM(2019) 285 final)

98

2020/C 47/16

Opinion of the European Economic and Social Committee on Proposal for a Decision of the European Parliament and of the Council amending Decision No 573/2014/EU on enhanced cooperation between Public Employment Services (PES) (COM(2019) 620 final)

105

2020/C 47/17

Opinion of the European Economic and Social Committee on Euro area economic policy 2019 (additional opinion)  (COM(2018) 759 final)

106

2020/C 47/18

Opinion of the European Economic and Social Committee on Annual Growth Survey 2019 (additional opinion)  (COM(2018) 770 final)

113

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| EN | |
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EN

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I Resolutions, recommendations and opinions

RESOLUTIONS

European Economic and Social Committee

| 11.2.2020 | EN | Official Journal of the European Union | C 47/1 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/1

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Resolution on ‘The European Economic and Social Committee’s contribution to the 2020 Commission’s work programme and beyond’

(2020/C 47/01)

At its plenary session of 30 and 31 October 2019 (meeting of 30 October), the European Economic and Social Committee adopted the following resolution by 170 votes to 5 with 9 abstentions.

1.   Introduction

| 1.1. | In general terms, there are four megatrends that need to be at the heart of the political priorities in the new political legislature: digitalisation, climate change and biodiversity loss, demography and globalisation. These megatrends are changing the way we live and work and offering huge opportunities, but also creating new challenges (1). Nevertheless, the main issue is the scale and speed of the change. |
| --- | --- |

1.1.

| 1.2. | The EU and its Member States are firmly committed to implementing the UN 2030 Agenda for Sustainable Development and the Paris Agreement (2) and to advancing their implementation globally through their full range of external actions. Moreover, in December 2018, on the sidelines of COP24, the EU and 20 Member States signed the Silesia Declaration on Solidarity and Just Transition (3). In it, they underlined that considering the social aspect of the transition towards a low-carbon economy is crucial to gaining social approval for the changes taking place. |
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1.2.

| 1.3. | The single market remains a key instrument for European integration. Its rejuvenation would benefit Europe, making it more sustainable and cohesive. For instance, the Digital Single Market offers opportunities and needs to be developed to ensure EU competitiveness, through the creation of an enabling environment for new forms of enterprise that are emerging on this market. Meanwhile, the EU must ensure that these new forms of enterprise are sustainable and that they scale up and remain in Europe. |
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1.3.

| 1.4. | We need to act at all levels simultaneously and create a dynamic of action to address urgent economic, social and environmental challenges. The EESC believes that sustainable development must therefore be at the heart of Europe’s future (4) and calls for an overarching EU 2050 strategy on sustainability in order to implement the UN 2030 Agenda (5). This paradigm shift requires changes in (a) governance, i.e. dedicated governance mechanisms are needed to address urgent problems faster and tackle complex issues. The role of such mechanisms would be to link the EU and the Member State levels, not to replace action at either; (b) integrating the SDGs into the EU’s economic and social monitoring and budgeting processes. In this respect, the European Semester could be equipped with new, improved, measurable and complementary social, economic and environmental indicators to monitor and keep track of all aspects of the European Pillar of Social Rights and its principles as well as the 17 SDGs. |
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1.4.

| 1.5. | As regards the social dimension, the EU can be proud of its social model compared to other parts of the world. However, social achievements and progress in Europe cannot be taken for granted. In 2017, the EU confirmed its commitment to the European Pillar of Social Rights (EPSR). EPSR implementation and the way forward are key to achieving coherent and mutually reinforcing EU and national policy-making with a view to building renewed consensus on a sustainable economic and social strategy in order to deliver its promise to work for balanced economic growth and social progress leading to the increased wellbeing of its citizens (6). |
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1.5.

| 1.6. | The EU must improve its policies and action to ensure gender equality and other forms of equality, in addition to guaranteeing that all people facing multiple forms of discrimination have equal opportunities in society. |
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1.6.

| 1.7. | To face new as well as ongoing social, economic and environmental priorities, the EESC calls for an ambitious and better-targeted EU budget that reflects the will to respond to EU challenges that could be turned into opportunities, giving the EU a new project. Therefore, the EESC calls for a fitness check of the Multiannual Financial Framework (MFF). |
| --- | --- |

1.7.

| 1.8. | Structured and regular involvement of civil society and civil dialogue play a central role in promoting sustainability in all its dimensions, economic, social and environmental and a clear mandate for civil society’s participation in the development, implementation and monitoring of the strategy should be provided. The EESC welcomes the new impetus for European democracy proposed by the Commission’s president-elect, Ursula von der Leyen, and is ready to play its full role in the proposed conference on the Future of Europe. |
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1.8.

| 1.9. | Social dialogue must continue to have a central role in designing and implementing labour market policies and measures that effectively help companies and workers. Given the substantial challenges related to a just transition to a green economy and sustainable growth, engaging social partners is crucial in order to take into account relevant information and to reach consensus on action. Social dialogue and collective bargaining are a prerequisite for achieving just transitions, better jobs and decent income and for combating social dumping. |
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1.9.

| 1.10. | The EESC supports fair taxation and the fight against fraud, tax evasion, money laundering and the financial practices of tax havens; a common objective of EU institutions, governments and business must be to work together in order to put in place efficient mechanisms such as the two anti-tax avoidance directives. |
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1.10.

| 1.11. | The 2020 Commission’s work programme and the proposed priorities and activities will therefore require that adjustments be made to the Commission’s objectives, positions and working methods. All of its internal and external policies must be coherent and aligned with the SDGs, so that the principles of efficiency, subsidiarity, proportionality and sustainability are duly considered. |
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1.11.

| 1.12. | In order to make concrete proposals for the 2020 Commission’s work programme, the EESC has taken into account the political guidelines for the next European Commission 2019-2024 as presented by the Commission President-elect in July 2019 (7). |
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1.12.

| 1.13. | The new line-up of the Commission, as presented on 10 September, reflects the priorities and ambitions set out in these political guidelines and is structured around the need to address the changes in climate, technology and demography that are transforming our way of living and working. |
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1.13.

2.   Developing our economic base: the European model for the future — promoting sustained, inclusive and sustainable economic development, a revitalised single market, full and productive employment and decent work for all

| 2.1. | There is a clear need for a new European economic strategy: a positive narrative for the future development of the EU economy in the wider world that would help increase the resilience of the EU to economic shocks and enhance the sustainability — economic, social and environmental — of its economic model, thus bringing back confidence, stability and shared prosperity to all Europeans. Building on the progress achieved in recent years, this strategy could lay the ground work for the further economic, fiscal, financial, social and political integration that is necessary to achieve the objectives of Europe’s single market and economic and monetary union, as set out in Article 3 TEU. |
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2.1.

| 2.2. | The EU can only be based on a strategy that is sound economically and robust in terms of its social and environmental sustainability. The environmental dimension must ensure that ‘planetary limits’ are respected and natural resources not overused, so that long-term sustainable use of these resources remains possible and biodiversity is efficiently protected (8). Business is an enabler for societal and environmental development, and sustainable competitiveness. European companies are ready to play their role and assume their responsibilities, together with workers and stakeholders. Europe needs a business environment that helps prepare for the future where social and environmental aspects are part of its definition, and that provides enabling and supportive conditions for doing business so that companies can effectively grow sustainably and thus generate wealth for subsequent redistribution. This can also take the form of more quality employment, better job opportunities and enforceable rights. |
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2.2.

| 2.3. | The single market in all its economic, social and environmental dimensions is at the core of European integration and is a strong contributor to the European social market economy. However, it must be fully completed, revitalised and updated with a view to becoming a Digital Single Market. Focus should be put on creating enabling conditions for the development of diverse forms of enterprise (including new economic models), digitalisation and innovation, and cross-border opportunities. Its functioning should be enhanced and a full commitment to its further integration should be guaranteed. The single market should therefore be able to generate sustainable economic development and innovation, attract investment, support entrepreneurs, and foster the sustainable competitiveness of its companies on globalised markets. However, it is also important to recognise that the positive impact of the single market has not spread evenly and that not all citizens are in a position to benefit from its wealth (9). |
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2.3.

| 2.4. | As regards the macroeconomic outlook, uncertainty has not decreased. The expected exit of the United Kingdom from the European Union and global tensions between the US and China remain firmly on the table as downside risks to economic development and employment in the near future. According to the European Commission’s Summer Economic Forecast, it was observed that despite a low aggregate unemployment rate when viewed against the last two decades, several countries have not reached pre-crisis employment levels. The GDP growth rate in the European Union is expected to be a meagre 1,4 % in the EU this year and 1,2 % in the euro area (10). The EESC is concerned that the downside risks to the economic outlook for the euro area could well evolve into another socioeconomic crisis in the not too distant future, which would pose major challenges for adjustment (11). To avoid the risk of a new recession, an expansive budgetary orientation (positive fiscal stance) that accompanies a monetary policy of similar approach is needed. Budget expansion must be particularly significant in the Member States that have significant surpluses in their balance of payments and a stable or surplus fiscal balance. |
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2.4.

| 2.5. | GDP growth does not reflect the wellbeing of most citizens and does not reflect the degradation of the environment and the depletion of natural resources. For this reason, there is a need to develop measures of societal wellbeing and of sustainability with a more suitable set of indicators reflecting the true depth of the long-term economic impact. Referring solely to GDP will shape policies that take into account only their economic impact. Therefore, it is necessary to enlarge the reference framework by including social and environmental indicators in order to design truly sustainable reforms. It is essential that these indicators are also compatible with the UNSDGs (12). |
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2.5.

| 2.6. | Massive social disparities within and between Member States and within regions, and territorial imbalances between rural and urban areas remain important concerns. Significant inequality is also obvious when we look at wealth. In this context, the EESC welcomes the Finnish Council Presidency’s priority theme of ‘the economy of wellbeing’, and agrees that that reducing inequalities and disparities must be a policy priority. It also agrees that the concept of an economy of wellbeing needs to be integrated into future EU policies and deserves to have a more central place in sustainable and economic decision-making. |
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2.6.

| 2.7. | The EU is facing a fast-changing geopolitical and economic situation, growing social and societal polarisation, the increasing role of digitisation and technology in all aspects of life, as well as climate change and other environmental challenges. To address these issues, the EU’s industrial transformation is crucial and must take full account of the global SGDs, which provide a key global framework for fair and sustainable economic development. |
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2.7.

| 2.8. | In this context, more attention should be given to social and employment issues affecting young people, particularly in terms of the discussion on the future of work. These include, inter alia, digitalisation, platform work, fragmentation and casualisation of the labour market, which are particularly affecting young people. |
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2.8.

| 2.9. | The effects of demographic change will be the root cause for some of the most predictable challenges our Union and its Member States will face in the medium term. Demographic developments show that Europe will need to improve the labour integration of women, young and older workers, people with disabilities and migrants. More dynamic, efficient and effective labour market policies are needed to benefit from their talent, skills and entrepreneurial potential as well as to deliver quality jobs. Adequate social protection systems should be part of that equation, as well as ensuing rapid transitions from unemployment to stable working contracts and employment conditions. |
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2.9.

| 2.10. | Investing in people and social sustainability can help to address these common challenges. Improvements in labour market institutions (i.e. active labour market policies, a more efficient role for PES (13) should in principle translate into better economic and social conditions for more Europeans. In order to address the above-mentioned challenges, the EESC calls, among other things, for more effective, efficient and sustainable social protection systems. In this respect, there is scope for more effective policy action by the European Union and its Member States. |
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2.10.

| 2.11. | Such action could focus on a commitment to implement the Pillar of Social Rights. That commitment, as set out in the Interinstitutional Proclamation, is based, among others, on the principles of sustainable growth and the promotion of economic and social progress, as well as cohesion and convergence, the diversity of national systems and the key role of the social partners (14). |
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2.11.

| 2.12. | Furthermore, the EU must be a frontrunner in implementing the UN Sustainable Development Goals (SDGs), recognising, firstly, that domestic resources are first and foremost generated by economic growth, supported by an enabling environment at all levels; and secondly, that private business activity, employees’ experience and creativity, investment and innovation are major development drivers (15). |
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2.12.

| 2.13. | Social dialogue has proven to be an indispensable instrument for improving EU policy- and law-making, for anticipating legislation or providing an alternative to it and for strengthening its social legitimacy. Social dialogue may also be a tool for implementing the sustainable development agenda. |
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2.13.

| 2.14. | During the financial and economic crises, the ECB played a stabilising role. The EESC recommends that the ECB’s role as the lender of last resort should be consolidated. Nevertheless, we are still confronted with worrying economic phenomena such as a modest investment level in spite of a relatively expansive monetary policy or the fact that banks are depositing funds with the ECB even if they incur negative interest rates. As we still cannot exclude further financial or economic crises, the upcoming Commission must implement measures to make the EU economy less vulnerable to them and more resilient. Furthermore, to prevent future crises, the upcoming Commission must introduce measures to stabilise financial markets and to strengthen the demand side of the economy in particular. Rigid application of fiscal rules weakens economic development especially in the current ambiguous situation. Once again, the EESC recommends the implementation of the golden rule (16). |
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2.14.

Proposals:

| — | The UN 2030 Agenda puts forward 17 Sustainable Development Goals (SDGs) that the EU has committed to achieving by 2030. The EESC calls for an overarching EU 2050 strategy for sustainability in order to implement the UN Agenda 2030, guaranteed by an ambitious EU budget, and believes that the implementation of the EPRS will contribute to this (17):






  — | A new European single market and industrial policy strategy with a view to developing a sustainable social market economy model must ensure that Europe is a leader in technology, in innovation and in sustainability, by: |
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—

The UN 2030 Agenda puts forward 17 Sustainable Development Goals (SDGs) that the EU has committed to achieving by 2030. The EESC calls for an overarching EU 2050 strategy for sustainability in order to implement the UN Agenda 2030, guaranteed by an ambitious EU budget, and believes that the implementation of the EPRS will contribute to this (17):

—

A new European single market and industrial policy strategy with a view to developing a sustainable social market economy model must ensure that Europe is a leader in technology, in innovation and in sustainability, by:

| — | Revitalising, reforming and completing the single market by reviewing key directives to ensure favourable conditions for companies, SMEs and diverse forms of enterprise (such as new economic models and the social economy), as well as for innovation and the development of skills. This includes reviewing mobility schemes and other cross-border opportunities, and, in particular, the single market for services. |
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Revitalising, reforming and completing the single market by reviewing key directives to ensure favourable conditions for companies, SMEs and diverse forms of enterprise (such as new economic models and the social economy), as well as for innovation and the development of skills. This includes reviewing mobility schemes and other cross-border opportunities, and, in particular, the single market for services.

| — | Taking into account the growing role of the social economy in fostering inclusive and sustainable economic development, as well as the social dimension of the EU, the EESC considers that a favourable ecosystem — with appropriate EU funding — for the social economy is an important objective to be addressed in the Commission’s work programme (18). |
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—

Taking into account the growing role of the social economy in fostering inclusive and sustainable economic development, as well as the social dimension of the EU, the EESC considers that a favourable ecosystem — with appropriate EU funding — for the social economy is an important objective to be addressed in the Commission’s work programme (18).

| — | Creating the framework conditions for a true digital transformation and a Digital Single Market to regain global sustainable competitiveness and deliver sustainable growth and jobs, while developing a European vision in areas such as the development of ethical AI and robotics. Europe needs an overarching shift to become the most dynamic digital region in the world — taking into account the opportunities in the new technologies transforming society, such as blockchain technology, the digital economy’s global nature and business integration in global value chains (19) — so that it can provide a favourable environment for innovation, entrepreneurship, creating high-quality, well-paid and productive jobs that respect the environment as well as a real economy which benefits all (20). Special attention should be given to the acquisition of digital skills in relation to the further support of STEM and apprenticeship. Education systems should be reformed where needed to make them fit for purpose in the digital area, among other aspects, and investment in education systems should be improved (21). |
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—

Creating the framework conditions for a true digital transformation and a Digital Single Market to regain global sustainable competitiveness and deliver sustainable growth and jobs, while developing a European vision in areas such as the development of ethical AI and robotics. Europe needs an overarching shift to become the most dynamic digital region in the world — taking into account the opportunities in the new technologies transforming society, such as blockchain technology, the digital economy’s global nature and business integration in global value chains (19) — so that it can provide a favourable environment for innovation, entrepreneurship, creating high-quality, well-paid and productive jobs that respect the environment as well as a real economy which benefits all (20). Special attention should be given to the acquisition of digital skills in relation to the further support of STEM and apprenticeship. Education systems should be reformed where needed to make them fit for purpose in the digital area, among other aspects, and investment in education systems should be improved (21).

| — | Continuing to support the transformation of the European labour market whilst ensuring its proper functioning, fairness and safety (22). The EESC recommends taking action to ensure that all workers in the EU, including those in the new forms of work, come under the protection of occupational health and safety legislation in every aspect related to their work (23)
  and can benefit from the best technologies to improve health and safety in the workplace and prevent accidents, taking into due account the impact this can have on privacy and performance control (24); |
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—

Continuing to support the transformation of the European labour market whilst ensuring its proper functioning, fairness and safety (22). The EESC recommends taking action to ensure that all workers in the EU, including those in the new forms of work, come under the protection of occupational health and safety legislation in every aspect related to their work (23)
  and can benefit from the best technologies to improve health and safety in the workplace and prevent accidents, taking into due account the impact this can have on privacy and performance control (24);

| — | Ensuring a right to lifelong learning for everyone should be on the EU agenda with special attention given to the acquisition of digital skills. National education, training and apprenticeship systems should be further developed with a focus on STEM (science, technology, engineering and mathematics) areas and dual systems. These will lead to better matching of labour market needs and to enable people to acquire skills and to reskill and upskill to mitigate the consequences of the digital revolution, climate change and societal and demographic developments (25). |
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—

Ensuring a right to lifelong learning for everyone should be on the EU agenda with special attention given to the acquisition of digital skills. National education, training and apprenticeship systems should be further developed with a focus on STEM (science, technology, engineering and mathematics) areas and dual systems. These will lead to better matching of labour market needs and to enable people to acquire skills and to reskill and upskill to mitigate the consequences of the digital revolution, climate change and societal and demographic developments (25).

| — | Proposing a coherent policy mix of macroeconomic, industrial, sectoral and labour policies to ensure a greening of the European economy (26). The aim is to enhance the functioning of the entire supply chain and generate decent jobs along the chain, creating employment opportunities on a wide scale. This should entail tapping into the potential for creating and promoting quality green and productive jobs by establishing a green and sustainable growth agenda and implementing initiatives to allow companies, particularly SMEs and in particular micro-enterprises, to embrace SDGs as part of their business strategy. |
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—

Proposing a coherent policy mix of macroeconomic, industrial, sectoral and labour policies to ensure a greening of the European economy (26). The aim is to enhance the functioning of the entire supply chain and generate decent jobs along the chain, creating employment opportunities on a wide scale. This should entail tapping into the potential for creating and promoting quality green and productive jobs by establishing a green and sustainable growth agenda and implementing initiatives to allow companies, particularly SMEs and in particular micro-enterprises, to embrace SDGs as part of their business strategy.

| — | The European Semester, as the EU’s economic governance framework, has a degree of focus on employment and social performance, but it is weak on the dangers presented by climate change and on the EU’s progress towards reaching the Paris targets, as reported in the Annual Growth Survey 2019. The EESC therefore calls for a forward-looking EU 2050 sustainable development strategy embedded in a Sustainable Development Cycle, based on measurable and complementary social, economic and environmental indicators and targets (27), in order to design truly sustainable reforms. |
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—

The European Semester, as the EU’s economic governance framework, has a degree of focus on employment and social performance, but it is weak on the dangers presented by climate change and on the EU’s progress towards reaching the Paris targets, as reported in the Annual Growth Survey 2019. The EESC therefore calls for a forward-looking EU 2050 sustainable development strategy embedded in a Sustainable Development Cycle, based on measurable and complementary social, economic and environmental indicators and targets (27), in order to design truly sustainable reforms.

| — | The Social Scoreboard has proved to be a useful instrument, but it can be improved. The 14 scoreboard indicators and sub-indicators (35 in all) should be subject to continuous revision, involving the social partners and civil society organisations, to adapt them to the political objectives and changing socioeconomic situations in Europe. |
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The Social Scoreboard has proved to be a useful instrument, but it can be improved. The 14 scoreboard indicators and sub-indicators (35 in all) should be subject to continuous revision, involving the social partners and civil society organisations, to adapt them to the political objectives and changing socioeconomic situations in Europe.

| — | The EESC believes that the following should be included as key resilience factors in an action programme (28):






  — | strengthening financial stability: increasing the financial capacity of the European Stability Mechanism (ESM), promoting a European tax policy that includes fiscal harmonisation, facilitating the fiscal sufficiency of the Member States and establishing effective mechanisms to fight tax fraud, |
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The EESC believes that the following should be included as key resilience factors in an action programme (28):

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strengthening financial stability: increasing the financial capacity of the European Stability Mechanism (ESM), promoting a European tax policy that includes fiscal harmonisation, facilitating the fiscal sufficiency of the Member States and establishing effective mechanisms to fight tax fraud,

| — | completing Economic and Monetary Union by expanding the objectives of the ECB, creating a Single European Treasury with debt-issuing capacity, improving the governance of the Eurozone and making it more democratic, |
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completing Economic and Monetary Union by expanding the objectives of the ECB, creating a Single European Treasury with debt-issuing capacity, improving the governance of the Eurozone and making it more democratic,

| — | increasing the productivity of European economies by focusing on key factors such as investment (public and private), research, development, education and vocational training, improving business management and worker participation, |
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increasing the productivity of European economies by focusing on key factors such as investment (public and private), research, development, education and vocational training, improving business management and worker participation,

| — | labour markets and the quality of employment: strengthening collective bargaining and social dialogue, ensuring that automatic stabilisers work effectively and creating European unemployment insurance (to complement national schemes), and designing more and better active employment policies supported by a new role for the PES, |
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labour markets and the quality of employment: strengthening collective bargaining and social dialogue, ensuring that automatic stabilisers work effectively and creating European unemployment insurance (to complement national schemes), and designing more and better active employment policies supported by a new role for the PES,

| — | promoting social cohesion by developing and applying the EPSR, with appropriate and more targeted financing, and social dialogue, |
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promoting social cohesion by developing and applying the EPSR, with appropriate and more targeted financing, and social dialogue,

| — | promoting the creation of favourable environments for business activity and investment by improving the financing of companies. Completing, as a matter of urgency, the Capital Markets Union (CMU) and the Banking Union, including a European deposit insurance scheme (EDIS), |
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promoting the creation of favourable environments for business activity and investment by improving the financing of companies. Completing, as a matter of urgency, the Capital Markets Union (CMU) and the Banking Union, including a European deposit insurance scheme (EDIS),

| — | combating long-term unemployment and reintegrating people who are discouraged is another key policy area that needs urgent targeted measures. The EESC supports minimum requirements for unemployment insurance in terms of net replacement rate, entitlement period and coverage rate, and also of training and support to workers in the event of unemployment. |
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combating long-term unemployment and reintegrating people who are discouraged is another key policy area that needs urgent targeted measures. The EESC supports minimum requirements for unemployment insurance in terms of net replacement rate, entitlement period and coverage rate, and also of training and support to workers in the event of unemployment.

| — | It is absolutely crucial to overcome the public and private investment deficit, with the objective of reaching short-term investment levels in 2007 (22,5 % of GDP in the EU, compared to the current 20,5 %; both figures still significantly lower than those of China and the USA). Therefore, one of the main priorities of budgetary policies must be public investment and to favour private investment, and a reform process to improve the business environment. These reforms must go hand in hand with reforms that improve the quality of employment, reducing their alarming levels of precariousness and ensuring a high level of social and labour rights (29). |
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It is absolutely crucial to overcome the public and private investment deficit, with the objective of reaching short-term investment levels in 2007 (22,5 % of GDP in the EU, compared to the current 20,5 %; both figures still significantly lower than those of China and the USA). Therefore, one of the main priorities of budgetary policies must be public investment and to favour private investment, and a reform process to improve the business environment. These reforms must go hand in hand with reforms that improve the quality of employment, reducing their alarming levels of precariousness and ensuring a high level of social and labour rights (29).

| — | The EESC considers that in establishing benchmarks and minimum standards for a ‘triple A’ social Europe (30), the European Commission and Member States should agree on a set of common principles, definitions and methods for an adequate minimum income scheme to be put in place in all Member States. The current work on reference budgets (31) and the European Minimum Income Network (32) provide the basis for the European Commission and Member States to agree on common criteria for establishing what constitutes an adequate minimum income to lift people out of poverty and to lead a decent life compatible with human dignity. Consideration should be given to an EU legislative initiative in this field, in consultation with all stakeholders. |
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The EESC considers that in establishing benchmarks and minimum standards for a ‘triple A’ social Europe (30), the European Commission and Member States should agree on a set of common principles, definitions and methods for an adequate minimum income scheme to be put in place in all Member States. The current work on reference budgets (31) and the European Minimum Income Network (32) provide the basis for the European Commission and Member States to agree on common criteria for establishing what constitutes an adequate minimum income to lift people out of poverty and to lead a decent life compatible with human dignity. Consideration should be given to an EU legislative initiative in this field, in consultation with all stakeholders.

| — | Further public investments in health, education and social inclusion and in greening the economy, especially at the local and regional level, are needed. They should be accommodated through the introduction of the golden rule that the EESC has recommended in several of its most recent opinions, namely that: investment expenses, in particular those that promote long-term sustainable growth, should not be counted as regards fulfilment of the deficit objectives of the Stability and Growth Pact. This, if combined with a reform process, will still ensure the long-term sustainability of public finances (33). |
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Further public investments in health, education and social inclusion and in greening the economy, especially at the local and regional level, are needed. They should be accommodated through the introduction of the golden rule that the EESC has recommended in several of its most recent opinions, namely that: investment expenses, in particular those that promote long-term sustainable growth, should not be counted as regards fulfilment of the deficit objectives of the Stability and Growth Pact. This, if combined with a reform process, will still ensure the long-term sustainability of public finances (33).

| — | The EESC takes note of the Commission President-elect’s commitment to table a proposal for a legal instrument to ensure that every worker in our Union has a fair minimum wage. It considers it useful to set benchmarks that help assess the adequacy of low wages, with a view to preventing poverty among wage-earners, including by promoting analysis and the exchange of good practices through the available mutual learning processes and by introducing common standards to set transparent and predictable minimum wages, where they exist and if the social partners want them (34). |
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The EESC takes note of the Commission President-elect’s commitment to table a proposal for a legal instrument to ensure that every worker in our Union has a fair minimum wage. It considers it useful to set benchmarks that help assess the adequacy of low wages, with a view to preventing poverty among wage-earners, including by promoting analysis and the exchange of good practices through the available mutual learning processes and by introducing common standards to set transparent and predictable minimum wages, where they exist and if the social partners want them (34).

| — | Mitigating social disparities, combating tax evasion and fraud and supporting a fairer distribution of tax burden, must become political priorities for the upcoming Commission. It therefore calls for the rules adopted to combat these forms of crime and malpractice at European level to be applied without delay, and for the possibility to be evaluated of establishing other more effective measures that also include instruments to end the illicit activities of tax havens (35). |
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Mitigating social disparities, combating tax evasion and fraud and supporting a fairer distribution of tax burden, must become political priorities for the upcoming Commission. It therefore calls for the rules adopted to combat these forms of crime and malpractice at European level to be applied without delay, and for the possibility to be evaluated of establishing other more effective measures that also include instruments to end the illicit activities of tax havens (35).

3.   Building a greener, fairer and more inclusive future — taking urgent action to combat climate change and its impact

| 3.1. | The EESC stresses that environmental protection must be a high priority for the EU in light of the current environmental degradation, and that it must be mainstreamed in all policies and actions of the Union. The Committee underlines that the EU should make a renewed industrial policy strategy compatible with the need to take effective action to reduce greenhouse gas emissions, to increase the share of renewables in the energy mix and to make energy savings, with a view to ensuring that at least the Paris Agreement targets are implemented fully and immediately. At the same time, the EU should push the other parties to the Paris Agreement to fulfil their commitment to ensure a level playing field for European companies. This should also be reflected in an alignment of the EU’s emissions reduction targets for 2030 and 2050. |
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3.1.

| 3.2. | The faster-changing climate, collapsing biodiversity, other environmental risks and the collective failure to deliver successful policies are also a vital threat to Europe’s population, economy and ecosystems. That is why we need a strong overarching EU 2050 sustainable development strategy for the implementation of the UN Agenda 2030. The EU should accelerate the just and sustainable transition to achieve the highest possible level of renewable energy supply. The latter should be clean, affordable, and supportive of community and citizens’ ownership. |
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3.2.

| 3.3. | Europe must be a leader in fighting for the environment and tackling climate change. The EESC welcomes the fact that an increased effort in climate action is one of the EU’s priorities and will continue to be so, as set out in the Political Guidelines of the Commission President-elect, Ms von der Leyen. Environmental sustainability will require a broad policy mix, including trade policy. It will also require the timely implementation of measures, at global, EU, national and regional level, in areas such as energy and transport, taxation, research, industrial and competition policy, as well as employment and social policies. |
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3.3.

| 3.4. | Overall, projections of the impact of fully implementing the Paris Agreement show that the transition to a climate neutral economy could raise GDP by an additional 1,1 % and employment by 0,5 % compared to a scenario without climate action policies. This amounts to an additional 1,2 million jobs in the EU by 2030, on top of the 12 million new jobs already expected (36). For this to happen, a level playing in international competition should be created, particularly for European resource and energy-intensive industries (REIIs) (37). |
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3.4.

| 3.5. | The transition to a circular and climate-neutral economy will not be inclusive by default, as it implies potentially significant costs and risks for specific sectors. A just transition has two main dimensions: in terms of ‘outcomes’ (the new employment and socioeconomic landscape in a decarbonised economy) and of ‘process’ (how we get there). The ‘outcome’ should be a sound industrial and economic base backed up with a conducive investment environment and well-functioning labour and education systems capable of providing decent work for all in an inclusive society in which poverty is eradicated. The process, how we get there, should be based on a managed transition with meaningful economic policies and social dialogue and civil dialogue at all levels to make sure that burden- as well as benefit-sharing is just and nobody is left behind. Necessary measures and reforms may have a substantial impact on people and regions, including significant labour reallocation across sectors and occupations, and profound changes in future skill requirements. A sustainable transition requires investment in effective and integrated social protection. In addition, it must be closely combined with a profound and democratic strengthening of economic and monetary union, and with a solid financial strategy capable of ensuring adequate financing of the sustainable transition across an ambitious new Multi-Annual Financial Framework, sustainable and fair national tax systems, and strong public investments at national and European levels. In that context, a fitness check of the Multiannual Financial Framework (MFF) is needed. |
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3.5.

| 3.6. | EU instruments such as the European Semester, the ESF and the European Globalisation Adjustment Fund (EGF) as well as the European Social Dialogue can contribute to a just transition by supporting companies, workers and families who have been dependent on work in energy-intensive sectors during the transition, including through retraining, reskilling, individualised job search counselling and potentially income replacement. |
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3.6.

| 3.7. | The EESC welcomes the new guidelines on corporate climate-related information reporting as part of the Commission’s Sustainable Finance Action Plan, as well as the key recommendations on the types of economic activities that can make a real contribution to climate change mitigation or adaptation (taxonomy) (38). In this regard, it is vital to achieve predictability, certainty and clarity as to which activities are genuinely environmentally sustainable (39). |
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3.7.

Proposals:

| — | The EESC supports the development, in the framework of social dialogue at appropriate national and European levels, of adequate measures on ‘just transitions’ introducing measures and actions to manage, change and grant minimum protection in cases of reorganised workplaces or collective dismissals stemming from (technological, demographic, globalisation, climate change, circular economy) transitions, including the right to engage in collective bargaining to anticipate change and provide support to affected workers (evolution of the Directive on Collective Dismissals) (40). |
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The EESC supports the development, in the framework of social dialogue at appropriate national and European levels, of adequate measures on ‘just transitions’ introducing measures and actions to manage, change and grant minimum protection in cases of reorganised workplaces or collective dismissals stemming from (technological, demographic, globalisation, climate change, circular economy) transitions, including the right to engage in collective bargaining to anticipate change and provide support to affected workers (evolution of the Directive on Collective Dismissals) (40).

| — | A just transition needs to be an integral part of the sustainable development policy framework. Just transition policies should be focused on correcting the adverse distributional effects of climate policy measures, should focus on the active management of labour market transitions and should also deal with regional development issues. |
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A just transition needs to be an integral part of the sustainable development policy framework. Just transition policies should be focused on correcting the adverse distributional effects of climate policy measures, should focus on the active management of labour market transitions and should also deal with regional development issues.

| — | To address climate and environmental challenges, the EU must transform a linear economy into a circular, carbon-neutral economy, which ensures that cycles are long-lasting and as an efficient as possible (41). |
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To address climate and environmental challenges, the EU must transform a linear economy into a circular, carbon-neutral economy, which ensures that cycles are long-lasting and as an efficient as possible (41).

| — | The EESC believes that the Finance-Climate Pact should cover all aspects of a policy to tackle climate change: a fair transition (measures to mitigate the effects of the change, but also to compensate for damage and loss), as well as effective policies for adapting to climate change. The circular economy model should be given priority as much as possible and its regulatory framework improved. Everything will need to be financed on the basis of adequate budgets, achieved by redirecting current investments (green earmarking) and through new sources of accessible funding (42). |
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The EESC believes that the Finance-Climate Pact should cover all aspects of a policy to tackle climate change: a fair transition (measures to mitigate the effects of the change, but also to compensate for damage and loss), as well as effective policies for adapting to climate change. The circular economy model should be given priority as much as possible and its regulatory framework improved. Everything will need to be financed on the basis of adequate budgets, achieved by redirecting current investments (green earmarking) and through new sources of accessible funding (42).

| — | The pact requires the establishment of a clear and predictable European policy framework, over the longer term, with a view to ensuring planning security for investments. This framework must be accompanied by an active reflection on different policy options such as border adjustment mechanisms, such as the Carbon Border Tax, to avoid carbon leakage (43), for products that are not subject to the same environmental and social standards (44). |
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The pact requires the establishment of a clear and predictable European policy framework, over the longer term, with a view to ensuring planning security for investments. This framework must be accompanied by an active reflection on different policy options such as border adjustment mechanisms, such as the Carbon Border Tax, to avoid carbon leakage (43), for products that are not subject to the same environmental and social standards (44).

| — | Once the sustainability taxonomy (45) has been adopted and fully implemented, consideration should be given to the need for possible additional legislative measures, if appropriate and based on a sound impact assessment. In this context, the EESC would refer to its two opinions on the European-Finance Climate Pact (46) and on the Commission’s Action Plan: Financing Sustainable Growth (47). |
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Once the sustainability taxonomy (45) has been adopted and fully implemented, consideration should be given to the need for possible additional legislative measures, if appropriate and based on a sound impact assessment. In this context, the EESC would refer to its two opinions on the European-Finance Climate Pact (46) and on the Commission’s Action Plan: Financing Sustainable Growth (47).

| — | Investments, both public and private, in the carbon-neutral economy must be stepped up to achieve the EU’s upgraded emissions reduction targets for 2030, and radical change will be necessary to reach a carbon-neutral economy by 2050, in line with the Paris targets. The enduring weakness of investment activity in renewables in Europe is also in contrast with the high level of existing fossil fuel and other environmentally harmful subsidies, which continue across its Member States. The problem is not only underinvestment: the allocation of existing resources is also dysfunctional. Clear policy objectives and a more coherent policy framework are necessary to turn around these negative trends. In any case, the end of the fossil fuels era in Europe must be accompanied by the necessary investments to ensure the protection of its workers, the creation of new jobs and support for local development. Transition processes must be negotiated with the social partners and civil society organisations and related to transparency and effective communication policies. |
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Investments, both public and private, in the carbon-neutral economy must be stepped up to achieve the EU’s upgraded emissions reduction targets for 2030, and radical change will be necessary to reach a carbon-neutral economy by 2050, in line with the Paris targets. The enduring weakness of investment activity in renewables in Europe is also in contrast with the high level of existing fossil fuel and other environmentally harmful subsidies, which continue across its Member States. The problem is not only underinvestment: the allocation of existing resources is also dysfunctional. Clear policy objectives and a more coherent policy framework are necessary to turn around these negative trends. In any case, the end of the fossil fuels era in Europe must be accompanied by the necessary investments to ensure the protection of its workers, the creation of new jobs and support for local development. Transition processes must be negotiated with the social partners and civil society organisations and related to transparency and effective communication policies.

| — | CO2 emissions should be taxed EU-wide in a socially fair way, making polluters pay and supporting investment in affordable clean energy. Energy taxation can support the clean energy transition and contribute to sustainable and socially fair growth. |
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CO2 emissions should be taxed EU-wide in a socially fair way, making polluters pay and supporting investment in affordable clean energy. Energy taxation can support the clean energy transition and contribute to sustainable and socially fair growth.

| — | One of the greatest environmental health risks in the EU is air pollution, causing around 400 000 premature deaths per year. Tackling air pollution through climate action is an opportunity to raise popular and political support for climate change policies. |
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One of the greatest environmental health risks in the EU is air pollution, causing around 400 000 premature deaths per year. Tackling air pollution through climate action is an opportunity to raise popular and political support for climate change policies.

| — | Fighting energy and water poverty, and guaranteeing accessible, healthy and good quality food, safe products and an end to damaging exposure to toxic chemicals. A broad policy-mix, including the EU’s agricultural policy, should help meet new societal demands, including sustainable production methods, better nutrition, reduced food waste, better animal welfare, climate protection and the preservation of biodiversity. |
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Fighting energy and water poverty, and guaranteeing accessible, healthy and good quality food, safe products and an end to damaging exposure to toxic chemicals. A broad policy-mix, including the EU’s agricultural policy, should help meet new societal demands, including sustainable production methods, better nutrition, reduced food waste, better animal welfare, climate protection and the preservation of biodiversity.

| — | The EU should support partner countries’ efforts to phase out environmentally harmful subsidies in order to help them implement the 2030 Agenda and the Paris Climate Change Agreement. |
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The EU should support partner countries’ efforts to phase out environmentally harmful subsidies in order to help them implement the 2030 Agenda and the Paris Climate Change Agreement.

| — | The EU trade policy must be consistent with the 2030 Agenda and the Paris Agreement. Existing provisions on trade and sustainable development chapter agreements must be effectively enforced. |
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The EU trade policy must be consistent with the 2030 Agenda and the Paris Agreement. Existing provisions on trade and sustainable development chapter agreements must be effectively enforced.

4.   Protecting citizens and freedoms — peace, justice and strong institutions

| 4.1. | The EU provides peace, stability and prosperity across Europe and beyond, in spite of its many internal and external challenges. The EU stands resolutely for its principles of democracy, the rule of law and fundamental rights. These guide our policies and foster a sense of belonging, building on our shared culture. Democracy must be respected in Europe and promoted abroad. Civic engagement, public accountability, and fairer, more transparent and inclusive decision-making processes must be enhanced at all levels. |
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4.1.

| 4.2. | The EU needs open and vibrant societies, where individuals have equal rights and can live free from discrimination and with full respect for their privacy and safety. Cultural diversity enriches Europe and its people. Diversity is part of Europe’s identity and strength. |
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4.2.

| 4.3. | Europe is facing major challenges and they must be addressed and discussed from a European perspective and not from a national perspective only, and by giving full effect to the provisions enshrined in Articles 10 and 11 of the TEU. For this reason, European democracy needs to strengthen the transnational dimension of its objectives and challenges, while promoting a European citizenship based on the common values in the European Union, with more European institutional education and a deliberative, more participatory societal framework, as well as a more European focus. |
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4.3.

| 4.4. | Demographic developments show that Europe will need migrants, their talent, skills and entrepreneurial potential. There is an urgent need to change the narrative and policies on migration based on closer cooperation with third countries, to ensure a rational debate based on facts. Refugees and migrants should be seen not as a threat but as an opportunity for Europe’s economic and social model. For this, we need a comprehensive approach and strategy on migration, including legal migration. |
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4.4.

Proposals:

| — | The EU needs a comprehensive and enforceable mechanism for regular monitoring of the state of democracy and the rule of law in all EU countries. |
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The EU needs a comprehensive and enforceable mechanism for regular monitoring of the state of democracy and the rule of law in all EU countries.

| — | Free and independent media and civil society must be supported and allowed to play their role in democracy. |
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Free and independent media and civil society must be supported and allowed to play their role in democracy.

| — | Consumer policy is close to the interests of the public and can therefore influence people’s commitment to the EU’s integration process. The EESC calls on the Commission to ensure that consumer rights are enforced and respected in the REFIT process, in the digital world and in the safety of products and services. The Commission should strengthen measures to eliminate energy poverty and consumption poverty and to enhance access to food and services for all Europeans. The Commission should also promote consumers’ rights to information, education and participation and their right to organise themselves so that their interests are represented when the rules in which they have a stake are being devised. |
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Consumer policy is close to the interests of the public and can therefore influence people’s commitment to the EU’s integration process. The EESC calls on the Commission to ensure that consumer rights are enforced and respected in the REFIT process, in the digital world and in the safety of products and services. The Commission should strengthen measures to eliminate energy poverty and consumption poverty and to enhance access to food and services for all Europeans. The Commission should also promote consumers’ rights to information, education and participation and their right to organise themselves so that their interests are represented when the rules in which they have a stake are being devised.

| — | The Commission must complete its review of the main legal and non-legal instruments of EU consumer policy as a cross-cutting, horizontal citizenship policy and must present a new action plan to protect and defend consumers over the next 10 years. |
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The Commission must complete its review of the main legal and non-legal instruments of EU consumer policy as a cross-cutting, horizontal citizenship policy and must present a new action plan to protect and defend consumers over the next 10 years.

| — | Moreover, and taking into account that access to services of general interest (SGIs) is a vital component of social justice and is underpinned by the principle of the equal treatment of users, prohibiting any kind of discrimination or exclusion, the EESC calls for the concept of universal access to SGIs to be clarified, and for legislative measures to be introduced obliging Member States to establish access indicators (48). |
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Moreover, and taking into account that access to services of general interest (SGIs) is a vital component of social justice and is underpinned by the principle of the equal treatment of users, prohibiting any kind of discrimination or exclusion, the EESC calls for the concept of universal access to SGIs to be clarified, and for legislative measures to be introduced obliging Member States to establish access indicators (48).

| — | The Commission should present a European Agenda for Combating Discrimination on the grounds defined in Article 19 of the Lisbon Treaty and also take concrete action to unlock and review the Directive on implementing the principles of equal treatment and address the conditions of children, women, persons with disabilities and the elderly in vulnerable situations as well as new forms of vulnerability. The EESC recommends that the Commission take urgent action on this issue at the very beginning of its mandate. |
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The Commission should present a European Agenda for Combating Discrimination on the grounds defined in Article 19 of the Lisbon Treaty and also take concrete action to unlock and review the Directive on implementing the principles of equal treatment and address the conditions of children, women, persons with disabilities and the elderly in vulnerable situations as well as new forms of vulnerability. The EESC recommends that the Commission take urgent action on this issue at the very beginning of its mandate.

| — | The Commission should undertake specific initiatives in line with the recommendations of the UN Committee on the Rights of Persons with Disabilities and implement the UNCRPD in its external policies and programmes, including the launch of an EU disability card recognised in all Member States. In 2020, the EU should present its proposal for the European Disability Rights Agenda 2020-2030 and declare 2023 as the European Year of Disability Rights. |
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The Commission should undertake specific initiatives in line with the recommendations of the UN Committee on the Rights of Persons with Disabilities and implement the UNCRPD in its external policies and programmes, including the launch of an EU disability card recognised in all Member States. In 2020, the EU should present its proposal for the European Disability Rights Agenda 2020-2030 and declare 2023 as the European Year of Disability Rights.

| — | The EESC also encourages the Commission to support activities in educational institutions at all levels to help students to distinguish between fake news and science-based facts. |
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The EESC also encourages the Commission to support activities in educational institutions at all levels to help students to distinguish between fake news and science-based facts.

| — | The EU must improve its policies and actions to ensure gender equality by implementing a transformative and measurable agenda for gender equality, as part of an integrated and ambitious five-year EU gender equality strategy. This strategy should include eliminating gender pay gaps not only via a specific tool that enhances corporate transparency on wage policies and their strategies for tackling gender pay gaps, and addressing all areas defined in the Action Plan for combating the gender pay gap. In addition, the EU must guarantee that all people facing multiple discrimination have equal opportunities in society. |
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The EU must improve its policies and actions to ensure gender equality by implementing a transformative and measurable agenda for gender equality, as part of an integrated and ambitious five-year EU gender equality strategy. This strategy should include eliminating gender pay gaps not only via a specific tool that enhances corporate transparency on wage policies and their strategies for tackling gender pay gaps, and addressing all areas defined in the Action Plan for combating the gender pay gap. In addition, the EU must guarantee that all people facing multiple discrimination have equal opportunities in society.

| — | The EESC underlines the urgent need to assist and integrate refugees and asylum seekers. It calls on the Commission to urgently initiate and undertake an efficient reform of the Common European Asylum System that is respectful of human rights, and the establishment of a genuinely common system for all Member States. It also recommends that progress be made with resettlement and humanitarian visas for refugees in order to meet real needs. It calls on the Commission to intensify efforts to monitor and facilitate the implementation of the agreement on the distribution of refugees among Member States. |
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The EESC underlines the urgent need to assist and integrate refugees and asylum seekers. It calls on the Commission to urgently initiate and undertake an efficient reform of the Common European Asylum System that is respectful of human rights, and the establishment of a genuinely common system for all Member States. It also recommends that progress be made with resettlement and humanitarian visas for refugees in order to meet real needs. It calls on the Commission to intensify efforts to monitor and facilitate the implementation of the agreement on the distribution of refugees among Member States.

| — | Furthermore, it calls for human rights and international law to be respected in the review of partnership agreements with third countries of transit and origin of migration flows, and for the development of financial instruments to address the root causes of migration. |
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Furthermore, it calls for human rights and international law to be respected in the review of partnership agreements with third countries of transit and origin of migration flows, and for the development of financial instruments to address the root causes of migration.

| — | Cooperation with partner countries is essential in addressing the root causes of migration, helping refugees, dealing with mixed-migration flows, tackling smuggling and carrying out return and readmission work. To provide effective assistance to people in their home countries, humanitarian, development and political instruments need to be coordinated. |
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Cooperation with partner countries is essential in addressing the root causes of migration, helping refugees, dealing with mixed-migration flows, tackling smuggling and carrying out return and readmission work. To provide effective assistance to people in their home countries, humanitarian, development and political instruments need to be coordinated.

| — | The EU should adopt policies and measures that endorse safe, orderly and regular migration and also strengthen inclusion and social cohesion. The EU should regulate the status of ‘environmentally displaced individuals’ and work in closer coordination with the ILO as far as the labour migration and integration programmes are concerned. (49) |
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The EU should adopt policies and measures that endorse safe, orderly and regular migration and also strengthen inclusion and social cohesion. The EU should regulate the status of ‘environmentally displaced individuals’ and work in closer coordination with the ILO as far as the labour migration and integration programmes are concerned. (49)

| — | The EESC calls for safe, legal routes for refugees when they come to the EU. A coordinated approach from all Member States and European and national stakeholders, based on shared responsibility, fair allocation, convergence and respect for fundamental rights, is needed to include more options for family reunification, relocation and resettlement. |
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The EESC calls for safe, legal routes for refugees when they come to the EU. A coordinated approach from all Member States and European and national stakeholders, based on shared responsibility, fair allocation, convergence and respect for fundamental rights, is needed to include more options for family reunification, relocation and resettlement.

5.   Promoting Europe’s interests and values in the world — strengthening the means of implementation and revitalising the global partnership for sustainable development

| 5.1. | In an increasingly fractured and multipolar world, the EU needs to strengthen its position in order to guarantee its prosperity, security and values. As highlighted in the Global Strategy of June 2016, Europe needs to lead in the world through consistent and strong support for the multilateral, rules-based global order, with the UN at its core. The EU should promote global governance based on the core values of social market economy, human rights, rule of law, sustainable development, multilateralism and respect for international humanitarian law. |
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5.1.

| 5.2. | The EU should also make it a priority to develop strong relations with close neighbours, based on a clear balance of rights and obligations. Reference could be made to EU neighbourhood policy and development policy as one of the EU priorities, and the EU as the biggest donor in the world. Civil society should participate in monitoring these policies. |
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5.2.

| 5.3. | The EU must maintain the impetus of the enlargement process and continue with the accession negotiations and programmes with the Western Balkan countries. |
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5.3.

| 5.4. | EU trade policy is a key factor that applies to the EU as a whole and indeed unites all its Member States. Trade policy has helped the EU to increase its prosperity through commercial exchanges with a wide range of partners. At the same time, the EU embodies and promotes, through trade, the values of social inclusion and environmental protection that are essential to shaping sustainable globalisation — in other words, a form of globalisation that will benefit not only large companies and investors, but also ordinary people, workers, farmers, consumers, crafts and liberal professions and SMEs and in particular micro-enterprises. Trade is also a major tool to support the EU policy towards the developing world, in contributing to the shift from development to partnership, especially with Africa. |
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5.4.

| 5.5. | Europe needs a fair and modern taxation policy, adapted to the challenges of the digital economy and ensuring a level playing field for internet giants, on-line merchandise platforms and local businesses. Tackling tax evasion, fraud and avoidance will require more extensive cooperation at international level and between national tax authorities. |
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5.5.

Proposals:

| — | The EESC calls in particular for an ambitious trade policy agenda at all three levels, unilateral, bilateral and multilateral — a policy that will create growth and quality jobs in the EU while promoting a rules-based trade policy at global level. |
| --- | --- |

—

The EESC calls in particular for an ambitious trade policy agenda at all three levels, unilateral, bilateral and multilateral — a policy that will create growth and quality jobs in the EU while promoting a rules-based trade policy at global level.

| — | The EU, together with European civil society, including businesses, must also actively promote the full respect of human rights when negotiating trade agreements. Moreover, the ILO conventions should be respected. These agreements should be subject to democratic oversight, ensuring the due participation of civil society, and a roadmap on solid commitments should be sought in case ILO conventions are not properly ratified or implemented (50). |
| --- | --- |

—

The EU, together with European civil society, including businesses, must also actively promote the full respect of human rights when negotiating trade agreements. Moreover, the ILO conventions should be respected. These agreements should be subject to democratic oversight, ensuring the due participation of civil society, and a roadmap on solid commitments should be sought in case ILO conventions are not properly ratified or implemented (50).

| — | The EU must also include a solid commitment in relation to the Paris Agreement and the Convention on Biological Diversity, in order to put in place real social, consumer protection and environmental clauses in each trade agreement (all potential trading partners of Europe would be concerned since 195 of the 197 members of the United Nations are signatories to it). Carbon pricing at global level would also be an option to be further analysed particularly for the European resource and energy industries (REEIIs) (51) and, if well designed according to EU and WTO rules, should be actively promoted (52). A Carbon Border Tax could help to achieve this goal. |
| --- | --- |

—

The EU must also include a solid commitment in relation to the Paris Agreement and the Convention on Biological Diversity, in order to put in place real social, consumer protection and environmental clauses in each trade agreement (all potential trading partners of Europe would be concerned since 195 of the 197 members of the United Nations are signatories to it). Carbon pricing at global level would also be an option to be further analysed particularly for the European resource and energy industries (REEIIs) (51) and, if well designed according to EU and WTO rules, should be actively promoted (52). A Carbon Border Tax could help to achieve this goal.

| — | The EESC encourages the Commission to strengthen its dialogue with civil society to develop the functioning of Trade and Sustainable (TSD) Chapters in current and future trade agreements. The EESC urges the Commission to be more ambitious, particularly in order to strengthen effective enforceability of the commitments in TSD chapters (53). The EU must also include the highest levels of human rights, consumer protection, and workers’ rights in all future trade agreements. Moreover, the ILO conventions should be respected. These agreements should be subject to democratic oversight, ensuring the due participation of civil society. |
| --- | --- |

—

The EESC encourages the Commission to strengthen its dialogue with civil society to develop the functioning of Trade and Sustainable (TSD) Chapters in current and future trade agreements. The EESC urges the Commission to be more ambitious, particularly in order to strengthen effective enforceability of the commitments in TSD chapters (53). The EU must also include the highest levels of human rights, consumer protection, and workers’ rights in all future trade agreements. Moreover, the ILO conventions should be respected. These agreements should be subject to democratic oversight, ensuring the due participation of civil society.

| — | The EESC supports fair taxation and the fight against fraud, tax evasion, money laundering and the financial practices of tax havens; a common objective of EU institutions, governments and business must be to work together in order to put in place efficient mechanisms such as the two anti-tax avoidance directives. |
| --- | --- |

—

The EESC supports fair taxation and the fight against fraud, tax evasion, money laundering and the financial practices of tax havens; a common objective of EU institutions, governments and business must be to work together in order to put in place efficient mechanisms such as the two anti-tax avoidance directives.

| — | The EU must cooperate with other economic regions to effectively fight corruption and tax evasion worldwide and to ensure that international rules on corporation tax are clear, transparent, objective and predictable. |
| --- | --- |

—

The EU must cooperate with other economic regions to effectively fight corruption and tax evasion worldwide and to ensure that international rules on corporation tax are clear, transparent, objective and predictable.

| — | The new business models using internet platforms and other digital tools have resulted in companies relying less on a physical presence in a country. The EESC believes that it is very important to develop new principles on how to attribute corporate profits to an EU country and tax them, in dialogue with trading partners, and to actively participate in the ongoing discussions at OECD/G20 level on a global agreement on the digitalised economy, in order to avoid any escalation of trade and tax tensions between major economic players in the world (54). |
| --- | --- |

—

The new business models using internet platforms and other digital tools have resulted in companies relying less on a physical presence in a country. The EESC believes that it is very important to develop new principles on how to attribute corporate profits to an EU country and tax them, in dialogue with trading partners, and to actively participate in the ongoing discussions at OECD/G20 level on a global agreement on the digitalised economy, in order to avoid any escalation of trade and tax tensions between major economic players in the world (54).

6.   Delivering the priorities through strong governance and a stronger EU budget

| 6.1. | Changing economies and worlds of work, changing climate and changing geopolitics are already shaping our Union and will be major drivers for our future. The EU needs a new governance approach and, when needed, new rules and instruments when defining and implementing EU policies. Sustainable development requires a holistic and cross-sector policy approach to ensure that economic, social and environmental challenges are addressed together. |
| --- | --- |

6.1.

| 6.2. | The EESC underlines that the EU must tackle these challenges with strong political commitment, greater and better political integration, with full respect for and while promoting human rights, fundamental freedoms and the democratic principles and by working together. |
| --- | --- |

6.2.

| 6.3. | The EESC stresses that the financial and economic crisis has produced an imbalance between the main institutions of the Union. This requires new forms of governance and management at EU level. The role of the European Parliament must be strengthened to promote more democratic accountability. |
| --- | --- |

6.3.

| 6.4. | The implementation of the EPSR and the SDGs requires a robust budgetary base, a conducive business environment and public and private investment. The negotiations for the next Multiannual Financial Framework should aim to secure proper funding for employment, social and environmental policies and productive investment. |
| --- | --- |

6.4.

| 6.5. | A first step to strengthen the climate dimension of the next MFF would be to rise the climate-mainstreaming target for the whole MFF to 40 %, as requested by the EESC. This would require adjusting all sectoral climate targets accordingly and making them legally binding. The Commission and the Parliament should also work together to make sure that the green architecture of the new CAP, namely conditionality and the eco-schemes, will be implemented efficiently from the environmental point of view, to phase out EU support to projects that harm the climate and to improve climate-tracking methodologies. They should also free significant resources to support those individuals and territories most affected by the energy transition, by creating new instruments or reforming the existing ones. |
| --- | --- |

6.5.

| 6.6. | Unanimity, which the Treaties require in some fundamental matters, is an almost insurmountable obstacle at important moments and for crucial decisions, and the Committee advocates therefore, with regard to decision-making procedures, the principle of qualified majority voting (QMV) in the Council and, for legislation, the use of the ordinary legislative procedure in all areas where this is possible. The EESC recalls that under the current Treaties this can be achieved by using the various ‘passerelle clauses’ or, in the case of enhanced cooperation, by using Article 333 of the TFEU (55). |
| --- | --- |

6.6.

Proposals:

| — | Promoting the importance of cooperation at interinstitutional level, while respecting each institution’s prerogatives as enshrined in the Treaties, this cooperation having been given a new framework with the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. The EESC is of the view that it should be involved in order to ensure that views from all relevant stakeholders are taken into account and ultimately to facilitate the participation of citizens in the work of the EU. |
| --- | --- |

—

Promoting the importance of cooperation at interinstitutional level, while respecting each institution’s prerogatives as enshrined in the Treaties, this cooperation having been given a new framework with the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. The EESC is of the view that it should be involved in order to ensure that views from all relevant stakeholders are taken into account and ultimately to facilitate the participation of citizens in the work of the EU.

| — | Using the European Commission’s better regulation tools is another way to ensure further mainstreaming of sustainable development in European policies. All Commission impact assessments must evaluate environmental, climate, social and economic impacts so that sustainability is duly considered and factored in. Ex-post evaluations must also analyse all three dimensions, taking a strong, integrated approach. Social partner consultations are also required, respecting Treaty provisions requesting the specific consultation of labour and management in relation to legislation on social issues (Article 154(2)); consultations with the European Economic and Social Committee, the European Committee of the Regions and national parliaments form another component of the better regulation toolbox to meet the inclusiveness requirement that is at the heart of the 2030 Agenda (56). |
| --- | --- |

—

Using the European Commission’s better regulation tools is another way to ensure further mainstreaming of sustainable development in European policies. All Commission impact assessments must evaluate environmental, climate, social and economic impacts so that sustainability is duly considered and factored in. Ex-post evaluations must also analyse all three dimensions, taking a strong, integrated approach. Social partner consultations are also required, respecting Treaty provisions requesting the specific consultation of labour and management in relation to legislation on social issues (Article 154(2)); consultations with the European Economic and Social Committee, the European Committee of the Regions and national parliaments form another component of the better regulation toolbox to meet the inclusiveness requirement that is at the heart of the 2030 Agenda (56).

| — | The EESC strongly believes that the proposed Multiannual Financial Framework for 2021-2027 is not adapted to deal with the new challenges laid down in the European Council Strategic Agenda 2019-2024 and the Political Guidelines of the next European Commission 2019-2024. The EESC proposes an increase in funding to allow for (i) the implementation by the Member States of the European Pillar of Social Rights to stimulate the creation of quality jobs in the context of sustainable economic development; (ii) the implementation of the UN Agenda 2030; and (iii) the implementation of the Paris Agreement promoting just transitions towards green and digitised societies. |
| --- | --- |

—

The EESC strongly believes that the proposed Multiannual Financial Framework for 2021-2027 is not adapted to deal with the new challenges laid down in the European Council Strategic Agenda 2019-2024 and the Political Guidelines of the next European Commission 2019-2024. The EESC proposes an increase in funding to allow for (i) the implementation by the Member States of the European Pillar of Social Rights to stimulate the creation of quality jobs in the context of sustainable economic development; (ii) the implementation of the UN Agenda 2030; and (iii) the implementation of the Paris Agreement promoting just transitions towards green and digitised societies.

| — | Making the receipt of EU funds by the Member States conditional upon respect for the principle of the rule of law, a fundamental pillar of values of the Union according to Article 2 of the Treaty on European Union (TEU). The Committee also considers that this conditionality could be extended to the other principles linked to the Rule of Law contained in the EU Treaties (57). |
| --- | --- |

—

Making the receipt of EU funds by the Member States conditional upon respect for the principle of the rule of law, a fundamental pillar of values of the Union according to Article 2 of the Treaty on European Union (TEU). The Committee also considers that this conditionality could be extended to the other principles linked to the Rule of Law contained in the EU Treaties (57).

| — | The projects to be supported, which will be in line with the UN Sustainable Development Goals and which require significant resources for innovation and R & D, will need to be enforced through a tool making it possible to visualise the various sources of financing (including the future MFF) and based on different initiatives (58), namely:






  — | redirecting funding towards sustainable investments through ‘green earmarking’ and, in this context, promoting ‘green labelled’ loans from the European Investment Bank (EIB); |
| --- | --- | --- |

—

The projects to be supported, which will be in line with the UN Sustainable Development Goals and which require significant resources for innovation and R & D, will need to be enforced through a tool making it possible to visualise the various sources of financing (including the future MFF) and based on different initiatives (58), namely:

—

redirecting funding towards sustainable investments through ‘green earmarking’ and, in this context, promoting ‘green labelled’ loans from the European Investment Bank (EIB);

| — | using quantitative easing by the European Central Bank (ECB) as a source of financing; |
| --- | --- |

—

using quantitative easing by the European Central Bank (ECB) as a source of financing;

| — | increasing to 40 % the share of the European Fund for Strategic Investments dedicated to combating climate change; |
| --- | --- |

—

increasing to 40 % the share of the European Fund for Strategic Investments dedicated to combating climate change;

| — | the EU must show a level of ambition that matches the magnitude of the challenge involved in fighting climate change; an average 40 % of its global budget (MFF 2021-2027) must be allocated to this objective; |
| --- | --- |

—

the EU must show a level of ambition that matches the magnitude of the challenge involved in fighting climate change; an average 40 % of its global budget (MFF 2021-2027) must be allocated to this objective;

| — | increasing the corresponding share of the European Cohesion Fund over and above the current 20 %; |
| --- | --- |

—

increasing the corresponding share of the European Cohesion Fund over and above the current 20 %;

| — | using 3 % of pension and insurance funds; |
| --- | --- |

—

using 3 % of pension and insurance funds;

| — | Supporting businesses, particularly SMEs and in particular micro-enterprises, in their R & D investments, up to an amount of EUR 100 billion devoted to this purpose; |
| --- | --- |

—

Supporting businesses, particularly SMEs and in particular micro-enterprises, in their R & D investments, up to an amount of EUR 100 billion devoted to this purpose;

| — | Respecting the financial assistance commitments made to the countries of the South, which are contributing to the fight against climate change (59). |
| --- | --- |

—

Respecting the financial assistance commitments made to the countries of the South, which are contributing to the fight against climate change (59).

7.   EESC leading and facilitating civil society’s participation in EU affairs — empowering, involving and consulting civil society organisations

| 7.1. | The promotion of sustainability in all its dimensions — economic, social and environmental — requires a considerable effort and engagement by all of the players involved. Open democratic debate underpinned by the structured involvement of civil society has a pivotal role to play in making the transition fair and effective. Major questions about the ‘outcomes’, ‘how we get there’ and how to make sure that the burden- and benefit-sharing is just and that nobody is left behind need to be openly and transparently addressed. |
| --- | --- |

7.1.

| 7.2. | The EESC underlines the pivotal role of civil society organisations in the design, implementation and monitoring of policies at all stages and at all levels, including the local level. This requires a change in culture and an acknowledgement of the value of civil society at EU and Member State levels, which is already enshrined in Article 11 of the TEU, which provides for EU institutions to promote and facilitate horizontal and vertical civil dialogue, to carry out broad consultations and lay down the foundations for the European Citizens’ Initiatives. These complementary processes take place without prejudice to consultation of the EESC and social dialogue. |
| --- | --- |

7.2.

| 7.3. | Civil society has the capacity to reflect genuinely very different and sometimes diverging interests and to make the decision-makers aware of them. The EESC is a very good example of this process, and it is fully committed to continuing to play its role: facilitating dialogue, and building bridges within civil society and towards the other European institutions. |
| --- | --- |

7.3.

Proposals:

| — | Considering that the EESC is the civil society institution at EU level, its role should be thoroughly and extensively strengthened and utilised in leading and facilitating the involvement and consultation of civil society in EU affairs. It should therefore be actively involved in the preparation and realisation of the Conference on the Future of Europe, which is due to start in 2020 and was announced by Ursula von der Leyen in her agenda for Europe. |
| --- | --- |

—

Considering that the EESC is the civil society institution at EU level, its role should be thoroughly and extensively strengthened and utilised in leading and facilitating the involvement and consultation of civil society in EU affairs. It should therefore be actively involved in the preparation and realisation of the Conference on the Future of Europe, which is due to start in 2020 and was announced by Ursula von der Leyen in her agenda for Europe.

| — | The EESC follows closely and is actively involved in structured dialogues and consultative fora (e.g. the Circular Economy Stakeholder Platform, the European Migration Forum) that bring together and involve civil society organisations and other players from EU institutions and Member States. When constituting platforms such as REFIT, the Commission should consider the EESC’s representation, in accordance with the mandate given to the Committee by the Treaties, and in so doing ensure that this reflects the Committee’s composition in the form of its three groups. |
| --- | --- |

—

The EESC follows closely and is actively involved in structured dialogues and consultative fora (e.g. the Circular Economy Stakeholder Platform, the European Migration Forum) that bring together and involve civil society organisations and other players from EU institutions and Member States. When constituting platforms such as REFIT, the Commission should consider the EESC’s representation, in accordance with the mandate given to the Committee by the Treaties, and in so doing ensure that this reflects the Committee’s composition in the form of its three groups.

| — | The EESC points out that, at EU level, there is no structured involvement of civil society organisations in the process of monitoring the implementation of cohesion policy. It therefore strongly recommends that the Commission establish a European Civil Society Cohesion Forum (60) with the participation of employers’ and employees’ organisations, and of other relevant civil society organisations. |
| --- | --- |

—

The EESC points out that, at EU level, there is no structured involvement of civil society organisations in the process of monitoring the implementation of cohesion policy. It therefore strongly recommends that the Commission establish a European Civil Society Cohesion Forum (60) with the participation of employers’ and employees’ organisations, and of other relevant civil society organisations.

| — | When setting up internet portals to gather opinions from the public, thus including both organisations and individuals, the Commission should make a distinction between contributions from civil society organisations and those from individuals. To this end, the Commission should carry out stakeholder mapping in cooperation with the EESC to identify representative and geographically balanced target groups, drawing on the Transparency Register. In addition, the Commission should ensure that the responses have quantitative and qualitative weighting. Furthermore, the Commission should continuously work on improving these consultations in terms of transparency, accessibility, feedback and accountability to participants. |
| --- | --- |

—

When setting up internet portals to gather opinions from the public, thus including both organisations and individuals, the Commission should make a distinction between contributions from civil society organisations and those from individuals. To this end, the Commission should carry out stakeholder mapping in cooperation with the EESC to identify representative and geographically balanced target groups, drawing on the Transparency Register. In addition, the Commission should ensure that the responses have quantitative and qualitative weighting. Furthermore, the Commission should continuously work on improving these consultations in terms of transparency, accessibility, feedback and accountability to participants.

| — | In order to develop a more strategic approach to these practices, putting them on a more structured institutional and representative foundation, the Commission should work closely with the EESC and ask for an exploratory opinion on how civil dialogue could be organised effectively and on a permanent basis, leading to a specific Commission communication. |
| --- | --- |

—

In order to develop a more strategic approach to these practices, putting them on a more structured institutional and representative foundation, the Commission should work closely with the EESC and ask for an exploratory opinion on how civil dialogue could be organised effectively and on a permanent basis, leading to a specific Commission communication.

| — | The effectiveness of the European Citizens’ Initiative should be improved, exploring new ways, such as the use of digital tools, to increase the engagement of young people and people from vulnerable groups in particular. |
| --- | --- |

—

The effectiveness of the European Citizens’ Initiative should be improved, exploring new ways, such as the use of digital tools, to increase the engagement of young people and people from vulnerable groups in particular.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EP study on Global Trends to 2035 and European Strategy and Policy Analysis System (ESPAS) report Global Trends to 2030: Challenges and Choices for Europe, of 9 April 2019.

1

(2)  Supporting the Sustainable Development Goals across the world: The 2019 Joint Synthesis Report of the European Union and its Member States of 16 May 2019.

2

(3)  Ministerial Declaration Solidarity and Just Transition Silesia Declaration adopted at the Leaders' Summit during the 24th Conference of the Parties (COP24) to the United Nations Framework Convention on Climate Change (UNFCCC), on 3 December 2018 in Katowice, Poland.

3

(4)  EESC opinion of 26 September 2019 on the Reflection Paper ‘Towards a Sustainable Europe by 2030’ (not yet published in the OJ.)

4

(5)  EESC opinion of 13 March 2019 on Listening to the citizens of Europe for a sustainable future (Sibiu and beyond) (OJ C 228, 5.7.2019, p. 37).

5

(6)  EESC opinion of 25 January 2017 on the European Pillar of Social Rights (OJ C 125, 21.4.2017, p. 10).

6

(7)  A Union that strives for more — My agenda for Europe — Political guidelines for the next European Commission 2019-2024.

7

(8)  Decision No 1386/2013/EU of the European Parliament and of the Council of 20 November 2013 on a General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’ (OJ L 354, 28.12.2013, p. 171).

8

(9)  See footnote 5.

9

(10)  EC Summer Forecast 2019 https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/summer-2019-economic-forecast-growth-clouded-external-factors_en.

10

(11)  EESC opinion of 24 January 2019 on the Recommendation for a Council Recommendation on the economic policy of the euro area (OJ C 159, 10.5.2019, p. 49).

11

(12)  OECD report of 1 March 2019 Going beyond GDP: Measuring What Counts for Economic and Social Performance and EESC opinion of 29 March 2012 on GDP and beyond — the involvement of civil society in choosing complementary indicators (OJ C 181, 21.6.2012, p. 14).

12

(13)  EESC opinion of 17 July 2019 on ‘The new role of public employment services (PES) in the context of the implementation of the European Pillar of Social Rights’ (OJ C 353, 18.10.2019, p. 46).

13

(14)  Interinstitutional Proclamation on the European Pillar of Social Rights (OJ C 428, 13.12.2017, p. 10).

14

(15)  Resolution adopted by the UN General Assembly on 25 September 2015: Transforming our world: the 2030 agenda for Sustainable Development.

15

(16)  See, in particular, the opinion of 24 January 2019 on the Recommendation for a Council Recommendation on the economic policy of the euro area (OJ C 159, 10.5.2019, p. 49) and the opinions of 14 February 2018 on Lessons learned for avoiding the severity of austerity policies in the EU (OJ C 227, 28.6.2018, p. 1), of 18 January 2018 on the Recommendation for a Council Recommendation on the economic policy of the euro area (OJ C 197, 8.6.2018, p. 33), of 10 July 2013 on the Green Paper on long-term financing of the European economy (OJ C 327, 12.11.2013, p. 11), of 26 March 2014 on The impact of social investment on employment and public budgets (OJ C 226, 16.7.2014, p. 21), of 14 April 2018 on Funding the European Pillar of Social Rights (OJ C 262, 25.7.2018, p. 1) and of 20 February 2019 on the Annual Growth Survey 2019: For a stronger Europe in the face of global uncertainty (OJ C 190, 5.6.2019, p. 24).

16

(17)  See footnote 5.

17

(18)  EESC opinion of 17 October 2018 on the European Social Fund Plus (ESF+) (OJ C 62, 15.2.2019, p. 165)

18

(19)  See footnote 5.

19

(20)  EESC opinion of 17 October 2018 on the European Finance-Climate Pact (OJ C 62, 15.2.2019, p. 8).

20

(21)  See footnote 5.

21

(22)  Report of the ILO Global Commission on the Future of Work — Work for a brighter future of 22 January 2019. This report puts health and safety as part of the Universal Labour Guarantee.

22

(23)  EESC opinion of 25 September 2019 — Summary of the costs and benefits of Investments in occupational safety and health (OSH) (not yet published in the OJ).

23

(24)  Employment and social development in Europe 2019. Quarterly Review of 26 March 2019.

24

(25)  EESC opinion of 25 September 2019 on The European Pillar of Social Rights — evaluation of the initial implementation and recommendations for the future (not yet published in the OJ).

25

(26)  EESC opinion of 21 September 2017 on The transition towards a more sustainable European Future — a strategy for 2050 (OJ C 81, 2.3.2018, p. 44).

26

(27)  See footnote 5.

27

(28)  EESC opinion of 17 July 2019 on ‘Towards a more resilient and sustainable European economy’ (OJ C 353, 18.10.2019, p. 23).

28

(29)  See footnote 11.

29

(30)  EESC opinion of 20 February 2019 — For a European Framework Directive on a Minimum Income (OJ C 190, 5.6.2019, p. 1).

30

(31)  https://ec.europa.eu/social/main.jsp?catId=1092&intPageId=2312&langId=en

31

(32)  https://emin-eu.net/what-is-emin/

32

(33)  See footnote 16.

33

(34)  See footnote 25.

34

(35)  See footnote 11.

35

(36)  Eurofound (2019), Future of manufacturing — Energy scenario: Employment implications of the Paris Climate Agreement, Eurofound Research Report, February 2019.

36

(37)  EESC opinion of 17 July 2019 on the ‘Sectoral industrial perspective on reconciling climate and energy policies’ (OJ C 353, 18.10.2019, p. 59).

37

(38)  Communication from the Commission of 18 June 2019 Guidelines on non-financial reporting: Supplement on reporting climate-related information.

38

(39)  EESC opinion of 17 October 2018 on the Proposal for a Regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment (COM(2018) 353 final — 2018/0178 (COD)) and on the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2016/1011 on low carbon benchmarks and positive carbon impact benchmarks (COM92018) 355 final — 2018/0180 (COD)) (OJ C 62, 15.2.2019, p. 103).

39

(40)  See footnote 25.

40

(41)  See footnote 5.

41

(42)  See footnote 19.

42

(43)  See footnote 7.

43

(44)  See footnote 19.

44

(45)  See footnote 38.

45

(46)  See footnote 19.

46

(47)  EESC opinion of 17 October 2018 on the Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions — Action Plan: Financing Sustainable Growth (COM(2018) 97 final) (OJ C 62, 15.2.2019, p. 73).

47

(48)  EESC opinion of 19 June 2019 — For a better implementation of the Social Pillar, promoting essential services (OJ C 282, 20.8.2019, p. 7).

48

(49)  See footnote 5.

49

(50)  EESC opinion of 14 February 2018 on Trade and Sustainable development chapters (TSD) in EU Free Trade Agreements (FTA) (OJ C 227, 26.8.2018, p. 27).

50

(51)  EESC opinion of 17 July 2019 on ‘The sectoral industrial perspective on reconciling climate and energy policies’(OJ C 353, 18.10.2019, p. 59).

51

(52)  See footnote 19.

52

(53)  EESC opinion of 14 February 2018 on Trade and sustainable development chapters (TSD) in EU Free Trade Agreements (FTA) (OJ C 227, 28.6.2018, p. 27)

53

(54)  EESC opinion of 12 July 2018 on The taxation of profits of multinationals in the digital economy (OJ C 367, 10.10.2018, p. 73).

54

(55)  EESC opinion of 17 September 2015 on Improving the Lisbon Treaty (OJ C 13, 15.1.2016, p. 183).

55

(56)  See footnote 5.

56

(57)  EESC opinion of 19 September 2018 on the Multiannual Financial framework for the years 2021 to 2027 (OJ C 440, 6.12.2018, p. 106).

57

(58)  See footnote 19.

58

(59)  See footnote 19.

59

(60)  EESC opinion of 17 October 2018 on the Proposal for a Regulation of the European Parliament and of the Council on the European Regional Development Fund and on the Cohesion Fund (OJ C 62, 15.2.2019, p. 90).

60

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/15 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/15

---

Resolution on ‘Opening accession negotiations with North Macedonia and Albania: EU credibility and geostrategic interests should be upheld’

(2020/C 47/02)

At its plenary session on 30 and 31 October 2019 (meeting of 31 October), the European Economic and Social Committee adopted the following resolution by 174 votes to 12 with 15 abstentions.

| 1. | The European Economic and Social Committee (EESC) is deeply disappointed about EU leaders’ decision to further postpone opening accession negotiations with North Macedonia and Albania at the European Council of 17-18 October, due to the lack of unanimity between the Member States. |
| --- | --- |

1.

| 2. | The EESC strongly regrets the failed respect of the engagements taken vis-à-vis those two countries. Indeed, the European Council conclusions of 28 June 2018, which endorsed the conclusions on enlargement and the stabilisation and association process adopted by the Council on 26 June 2018, laid a clear path towards the opening of accession negotiations in June 2019. On 18 June 2019 the European Council already decided to revert, no later than October 2019, to the issue of the Commission’s recommendations to open accession negotiations with North Macedonia and Albania. |
| --- | --- |

2.

| 3. | The EESC stresses that the non-decision, for the second time, on opening the accession negotiations with these two countries that have fulfilled all the necessary conditions (1)
  is a geo-strategic and historic mistake and puts the EU’s credibility and reliability at stake. The EU had the opportunity to open negotiations while applying rigorous conditionality on good governance, insisting on the strict application of the criteria for membership during the negotiations process and devising better instruments to monitor the rule of law after accession. |
| --- | --- |

3.

| 4. | The EESC is convinced that the process of ‘Europeanising’ this region requires tough structural reforms within the countries in the Western Balkans. |
| --- | --- |

4.

| 5. | It has no doubt that there is a widespread enlargement fatigue among EU citizens in some of the Member States. It has no doubt that divide inside the EU on issues such as immigration and the new budget diverted the necessary political attention away from the enlargement policy. But political consensus and wide public support for the EU accession in both North Macedonia and Albania cannot be ignored. |
| --- | --- |

5.

| 6. | Young people in the Western Balkans have high expectations from the EU and we should not let them down. The EESC is convinced that we should give them a positive perspective for their future, allowing them to live in a region that is stable and prosperous. |
| --- | --- |

6.

| 7. | Civil society organisations are strongly convinced that the Western Balkans are a key geostrategic region of Europe, in our backyard, when other global players are looking with interest at the region. |
| --- | --- |

7.

| 8. | At the 7th Western Balkans Civil Society Forum promoted by EESC in Tirana on 16-17 April 2019, civil society organisations have reiterated in the final declaration that the enlargement of the EU, and in particular the spread of its democratic values and legal standards to the Western Balkans, is in the interest of both the region and the EU, despite the multitude of challenges it is currently facing (2). |
| --- | --- |

8.

| 9. | The EESC has repeatedly expressed concern about the shrinking space for civil society in a number of countries in the Western Balkans and called to encourage the authorities in the Western Balkans to redouble their efforts to ensure respect for the rule of law, fundamental human rights, judicial reform, the fight against corruption and discrimination and the independence of journalists and freedom of the press – some of the core European values that every EU Member State should respect. The social dialogue and the role of the social partners and civil society organisations in economic and social development must be strongly encouraged and promoted. |
| --- | --- |

9.

| 10. | The EESC will continue working closely and intensively with civil society in the Western Balkans to support and reassure them that their place is in the European Union. We will do whatever we can to promote reconciliation and European values in the region and our position on EU enlargement will remain firm. We are convinced that a clear perspective on EU accession is essential for the stability of the region and we express hope that enlargement will remain one of the EU’s priorities, despite the multitude of challenges it’s currently facing (3). |
| --- | --- |

10.

| 11. | From our part, through our regular activities with our partners from the region — Civil Society Joint Consultative Committees with Montenegro and Serbia, Western Balkans Civil Society Forums, as well as High Level Civil Society Conferences organised before EU-Western Balkans Summits — we shall continue to be the voice of the civil society of the Western Balkans and act as a bridge towards EU institutions and their respective governments. |
| --- | --- |

11.

| 12. | The EESC express its utmost appreciation of the European Parliament resolution adopted last 24 October 2019 and confirms its full commitment to support the European Parliament and the incoming European Commission to strengthen EU enlargement policy and to improve EU toolbox for engagement with the Western Balkans. |
| --- | --- |

12.

| 13. | The EESC urges all stakeholders to take all the necessary steps so that the European Council adopts a unanimous, positive decision before the EU-Western Balkans Summit in Zagreb in May 2020. We also ask the upcoming Croatian Presidency of the EU Council to bring new impetus to the enlargement process at the Summit. |
| --- | --- |

13.

Brussels, 31 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Council conclusions of June 2018.

1

(2)  7th Western Balkans Civil Society Forum: Final declaration https://www.eesc.europa.eu/en/agenda/our-events/events/7th-western-balkans-civil-society-forum/final-declarations

2

(3)  https://www.eesc.europa.eu/sites/default/files/files/7th_eesc_western_balkans_civil_society_forum_-_final_declaration.pdf

3

---

OPINIONS

European Economic and Social Committee

| 11.2.2020 | EN | Official Journal of the European Union | C 47/17 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/17

---

Opinion of the European Economic and Social Committee on Blockchain and the EU single market: what next?

(own-initiative opinion)

(2020/C 47/03)

Rapporteur: Ariane RODERT

Co-rapporteur: Gonçalo LOBO XAVIER

| Plenary Assembly decision | 21.2.2019 |
| --- | --- |
| Legal basis | Rule 32(2) of the Rules of Procedure
  Own-initiative opinion |
| Section responsible | Single Market, Production and Consumption |
| Adopted in section | 18.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 182/1/5 |

Plenary Assembly decision

21.2.2019

Legal basis

Rule 32(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Single Market, Production and Consumption

Adopted in section

18.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

182/1/5

1.   Conclusions and recommendations

| 1.1. | This opinion focuses on Blockchain (BC) as a technology. When applied, it can be a positive transformative force across many sectors in society, bringing with it values such as trust and transparency, democracy and security. Ultimately, it can help to reinvent socioeconomic models, thus supporting the societal innovation needed to tackle today’s societal challenges. However since the issue of cryptocurrencies is highly debated, the EESC should in the near future review these instruments separately relative to the risk for money laundering and/or tax evasion. |
| --- | --- |

1.1.

| 1.2. | Applying BC already benefits society. BC contributes to achieving the Sustainable Development Goals (SDGs), empowers citizens, boosts entrepreneurship and innovation, improves mobility and cross-border opportunities for businesses while enhancing transparency for consumers. Furthermore, it can reduce tax evasion and corruption and develop both private and public services. However, several challenges still remain to be addressed, in particular the urgent matter of providing legal clarity and certainty and protecting privacy. |
| --- | --- |

1.2.

| 1.3. | Despite the fact that the EU institutions have reviewed BC to some extent, a common EU approach is still needed. Given its track record to date, the EU has a unique opportunity to sustain its leading global market position but only with immediate EU action. |
| --- | --- |

1.3.

| 1.4. | The EESC therefore calls on the European Commission (EC) to launch a comprehensive BC initiative setting out a common EU approach and vision with SDGs at its core. This should be complemented by an action plan for Europe to become the reference point for BC worldwide. The existing European BC Partnership and the BC Observatory and Forum should be reinforced with the creation of an EU BC stakeholder platform bringing together representatives from the EU institutions, including the EESC and the CoR, industry, consumers, Member States, academics etc. to provide a space for joint learning and capacity-building, a network of networks and sharing good practices. |
| --- | --- |

1.4.

| 1.5. | The EESC can take an active part in hosting such a ‘platform’ ensuring transparency, inclusiveness, collaboration and the involvement of organised civil society. |
| --- | --- |

1.5.

2.   Introduction

| 2.1. | Blockchain (hereafter BC) and distributed ledger technology (DLT) has the potential to transform society. BC is a mathematical structure for storing data in a way that limits corruption and fake data. The technology provides a new way to create trust to securely exchange something of value. BC is regarded as a new more transformative phase of the internet era, but it should be noted that it is one of many new technological opportunities. |
| --- | --- |

2.1.

| 2.2. | This opinion focuses on BC as a technology, which can be applied to a whole host of areas and industries such as energy, finance, food and agriculture, medicine and healthcare, elections and governance. This is the focus of this opinion and in particular BC in relation to the EU single market. BC can, if properly applied, transform concepts such competition and governance and thereby tackle societal challenges and transitions. However since the issue of cryptocurrencies is highly debated, the EESC should in the near future review these instruments separately relative to the risk for money laundering and/or tax evasion. |
| --- | --- |

2.2.

| 2.3. | The recent EESC opinion Blockchain and distributed ledger technology as an ideal infrastructure for social economy (1) defines BC as ‘both a code, i.e. a communication protocol, and a public register, in which all transactions between network participants are recorded one after the other, with a high degree of transparency and in a way that cannot be altered’. This definition is complemented by the EC’s view that ‘BC is a technology for promoting user trust. It makes it possible to share on-line information, agree on and record transactions in a verifiable, secure and permanent way’ (2). |
| --- | --- |

2.3.

| 2.4. | The EU institutions have already taken some steps to support BC development. In 2017 the European Parliamentary Research Service (EPRS) published the report How blockchain technology could change our lives (3) and in 2018 the EC launched the BC Observatory and Forum (4). This is to accelerate BC innovation and development to retain Europe’s global leadership position in this transformative new technology. |
| --- | --- |

2.4.

| 2.5. | One milestone was April 2018, when the EC together with 21 Member States and Norway signed a declaration to create the European Blockchain Partnership (EBP) and cooperate to establish the European Blockchain Services Infrastructure (EBSI) (5). The aim is to support cross-border digital public services with the highest standards of security and privacy. Since then 27 Member States have joined the partnership. |
| --- | --- |

2.5.

| 2.6. | In 2018 the European Parliament (EP) adopted a non-legislative resolution (6) on BC and DLT emphasising the opportunity for the EU to become ‘the global leader’ and a ‘credible actor’ in shaping market development globally and across sectors, noting that the EU is currently at the forefront in BC development and application, compared to the US and China (7). |
| --- | --- |

2.6.

3.   Blockchain — opportunities for the single market and the EU

| 3.1. | Even if BC technology is a relatively new phenomenon, significant opportunities are already emerging from a single market context. |
| --- | --- |

3.1.

| 3.2. | BC contributes to achieving SDGs. BC has trust, openness and transparency built into its design and value proposition (8) which is highlighted in the context of achieving the UN’s Sustainable Development Goals (SDGs) (9). |
| --- | --- |

3.2.

| 3.3. | Some examples are (10):






  — | goal 1 ‘No poverty’ and the use of cryptocurrencies for the ‘unbanked’ population; |
| --- | --- | --- |

3.3.

—

goal 1 ‘No poverty’ and the use of cryptocurrencies for the ‘unbanked’ population;

| — | goal 3 ‘Good health and wellbeing’ and the opportunity in sharing patient healthcare records more securely and efficiently, and |
| --- | --- |

—

goal 3 ‘Good health and wellbeing’ and the opportunity in sharing patient healthcare records more securely and efficiently, and

| — | goals 12, 14, 15 for ‘Responsible production and consumption’ where BC can ensure provenance throughout supply chains. |
| --- | --- |

—

goals 12, 14, 15 for ‘Responsible production and consumption’ where BC can ensure provenance throughout supply chains.

BC also contributes to several other SDGs such as equal opportunities, human rights relating to personal data, decent work and economic growth; and democratic participation, etc.

| 3.4. | Empowering citizens. BC can potentially bring the power of information back to the people who own it. By sharing data in a transparent way and reducing the need for intermediaries, BC can empower actors that were previously in vulnerable positions in relation to centralised entities. |
| --- | --- |

3.4.

| 3.5. | Boosting entrepreneurship and innovation. With its collaborative and consensual mode of operation, innovative solutions and new businesses are emerging based on economic, environmental and social sustainability. Inclusiveness, enabled through BC, offers a base for the platform economy and other new business models – and, as the EESC has already explored, the social economy. |
| --- | --- |

3.5.

| 3.6. | Improving mobility and cross-border opportunities for businesses, while protecting consumers: by minimising barriers to trade in the EU and globally, while ensuring safety and security regarding payments and transactions in the process of exchange. This will improve market conditions and access to goods and services in the EU, while protecting consumer privacy, confidentiality and information sharing (11). |
| --- | --- |

3.6.

| 3.7. | Supporting the single digital gateway. The single digital gateway introduces the ‘once only’ principle which means that any data can be entered into the platform only once. The development of the EBSI which is conditioned by the implementation of the ‘once only’ principle, can thereby serve as a tool and enabler for an efficient, resilient and sustainable single market. |
| --- | --- |

3.7.

| 3.8. | Developing public and private services on BC enables huge positive effects from the digital transformation of the EU economy and society as a whole. Four use cases (12) are now being developed in the framework of European Blockchain Services Infrastructure (EBSI). These are: notarisation and authentication, diplomas, European self-sovereign identity, taxation and trusted data sharing. At Member State level, economic benefits are gained through direct access to markets, with zero or minimum intermediary costs, transferring true value to consumers. This can be upgraded with high levels of safety and security for consumers through traceability on BC and participatory co-creation of goods and services. Furthermore, BC-based voting systems can make voter registration and identification secure, and provide a robust and verifiable voting system. |
| --- | --- |

3.8.

| 3.9. | Creating and verifying digital identities for individuals and organisations. By combining decentralised BC principles with identity verification and cryptography, a digital identity can be created and attributed to every online transaction of an asset. This has several potential benefits for consumers, businesses and regulators alike. Digital identity on BC provides the possibility of mutual recognition and execution of operations using smart contract code which also simplifies the establishment of businesses. These digital identities and electronic signatures must follow the path set out by eIDAS; they should also ensure interoperability and compatibility. |
| --- | --- |

3.9.

| 3.10. | Mitigating breaches of personal data. Data breach risks can be mitigated or avoided through the responsible deployment of BC data structures. This will help protect sensitive data, while ensuring safe transmission of data to safeguard the right of individuals to confidentiality and privacy. One way this can be achieved is to avoid openly storing private data on the BC. Instead, private data could be stored off-chain and only exchanged as needed and in peer-to-peer communications. |
| --- | --- |

3.10.

| 3.11. | Standardisation processes are a condition for crossborder interoperability and the implementation of BC. Some have now been tested and examined by regulators, but as with any innovation, standardisation initiatives must be balanced with creating an enabling environment to fully explore the opportunities with this technology. |
| --- | --- |

3.11.

| 3.12. | Efforts should also be made to harmonise cryptographic standards among BC and other eIDAS-related technologies (13), to create new levels of interoperability between current and future technological models. This would address the risk of BC ‘silos’ developing. In fact, a standardisation roadmap has been put forward by the International Organization for Standardization (ISO) covering the period to 2020, including consideration of standardisation of areas such as terminology, taxonomy, identity verification, interoperability, governance, security and privacy, use cases and smart contracts. |
| --- | --- |

3.12.

| 3.13. | Improving transparency through smart contracts. BC-based solutions provide transparency through decentralisation, allowing participating parties to see and verify data. ‘Smart contracts’ (14), are an example of this. |
| --- | --- |

3.13.

| 3.14. | Limiting tax evasion and avoidance. The EU single market has the potential to strengthen e-commerce, while ensuring minimisation of the negative externalities accompanying today’s international trade. BC tax-processing systems can ensure higher transparency for both the payer and the government. BC can limit tax evasion and money laundering by increasing accountability of transactions and liability of operations, and therefore increase the competitiveness of the EU single market. The EC could launch a study on how BC can assist in this area. |
| --- | --- |

3.14.

| 3.15. | Generating new funding models such as crowdfunding, initial coin or token offerings are concepts of universal fundraising (geographically and demographically) through the issuance of a project-specific currency with a special appreciation mechanism. This is the culmination of the trend of crowdfunding. |
| --- | --- |

3.15.

| 3.16. | Reinventing socioeconomic models. The regaining of power by individuals can reinvent society. If BC’s main asset is to solve the problem of trust between individuals without going through a third party, it also allows new types of governance and relationships to be created based on the transparency of interactions. As with any societal change, care must be taken to protect against the emergence of structures leading to abuse while giving leeway for experimentation that could have major benefits for humanity. Moreover, BC technologies and networks should avoid creating a breach between those who control or can afford it and those who can only access it through models controlled by large corporations. Supporting and boosting organisations such as cooperatives, with open and democratic governance models, to develop BC businesses is key for BC success among SMEs and smaller organisations. |
| --- | --- |

3.16.

4.   Blockchain – some challenges to tackle

| 4.1. | To unleash the potential of BC on the EU single market and for European societies, several issues must be addressed, where the current legal uncertainty is a priority. Some regulatory solutions for cryptocurrencies and ICOs exist; however, the legislative framework remains unclear regarding system design and in areas where BC technology is applied, resulting in a fragmented approach at Member State level. Without a joint EU initiative for legal certainty and clarity across the EU, cross-border opportunities will be limited. Use cases and regulatory sandboxes for certain types of services and usage could be an initial stage to grasp the future legal requirements. The EU experience of developing complex, cross-border regulation and policy may be an advantage with regard to future regulation of blockchain. |
| --- | --- |

4.1.

| 4.2. | Protecting privacy is key. The General Data Protection Regulation (GDPR) (15) was introduced to tackle the most urgent data issues. However, when the GDPR was prepared BC technology was mostly unknown, and thus the potential tensions between the GDPR and BC need to be reviewed. The EESC calls on the EC to examine the GDPR, and propose revisions and further guidance on the relationship between the GDPR and BC. |
| --- | --- |

4.2.

| 4.3. | The legal distinction between anonymised and pseudonymised data concerns the categorisation of personal data. Pseudonymous data still allows for some form of re-identification (even indirect and remote), while anonymous data cannot be re-identified. While in permissioned BC, pseudonymisation is considered as a solution for the relations facilitated by BC technology, anonymisation is still a regulatory barrier for wider use of permissionless BC, which can be resolved through digital identity solutions embedded into the regulatory restrictions. |
| --- | --- |

4.3.

| 4.4. | The proof-of-work consensus mechanism is highly energy consuming. With the development of the alternative proof-of-stake consensus mechanism, this important environmental sustainability issue can be resolved. Solutions already exist which must be shared and fully applied (16). |
| --- | --- |

4.4.

| 4.5. | Another technical challenge is the interoperability with different BC platforms. Different BC may not be compatible due to the risk for parties that need to exchange data. Another concern is the compatibility between BC platforms and existing government systems, hindering governments switching from their existing platforms to a BC-based interoperability. Ensuring interoperability should be a priority in the near future for BC developers to enable mass adoption. |
| --- | --- |

4.5.

| 4.6. | The BC take-up rate relies on adoption by the diverse forms of enterprises, with SMEs being the majority in the EU. Today, transaction costs are in many cases prohibitive, making technical and consultative services out of reach for SMEs. Supporting the creation of new BC networks such as cooperatives is crucial to ensure fair access for SMEs and other smaller entities, allowing for improved democratic governance. |
| --- | --- |

4.6.

| 4.7. | As with every disruptive technology, social challenges must be addressed. There is a critical need to correctly inform the general public about disruptive technologies. They have a real impact on people’s daily life and this must be addressed carefully, making civil and social dialogue crucial. The EESC will continue to build knowledge and provide the perspectives of organised civil society on the next steps in BC development. |
| --- | --- |

4.7.

| 4.8. | It is critical to fully understand and review how BC technology impacts consumer protection and rights. Clarity is needed on the relationships between, for example, confidentiality and privacy enforced by legislation (e.g. EU data protection legislation), regulation (client confidentiality) or contract (commercial confidentiality). |
| --- | --- |

4.8.

| 4.9. | As with any new technology and all technology-based business models, it would be appropriate and relevant to analyse the effects and potential impacts on jobs, working conditions, workers’ rights and protection, and social dialogue. The analysis should also assess the effects on intermediary organisations. STEM skills are likely to become increasingly important for industries using BC. Given the lack of widespread understanding about the functioning and potential limitations of BC, the EESC calls for lifelong learning that enables people to acquire skills and to reskill and upskill in order to better exploit the opportunities and challenges of BC. |
| --- | --- |

4.9.

5.   The way forward

| 5.1. | Despite the fact that the EU institutions have reviewed BC to some extent, there is still a lack of a comprehensive and shared EU approach. Given its track record to date, the EU has a unique opportunity to sustain the leading global market position but only if the EU takes action. |
| --- | --- |

5.1.

| 5.2. | BC development is still very fragmented throughout the Member States. The EESC therefore urges the EU institutions to provide clarity and a common ground to unleash the full potential of BC for Europe. A first step is for the EC to launch a communication on EU BC and DLT development based on the principles of BC (17), to express political will, ownership and set out a vision and an action plan to create an enabling environment. This initiative should be complemented by the re-establishment of the EP intergroup on digitalisation, which should address the issue of BC and DLT. |
| --- | --- |

5.2.

| 5.3. | The EU common vision could aim at Europe becoming a BC-based world pilot continent, thus ensuring that the EU stays competitive while developing its own approach to digitalisation with SDGs at the core, backed by public pilot initiatives and programmes at Member State and EU levels. |
| --- | --- |

5.3.

| 5.4. | With the existing European BC Partnership, and the BC Observatory and Forum, the time is now to augment this initiative by creating an EU BC stakeholder platform gathering representatives from the EU institutions, including the EESC and the CoR, industry, consumers, civil society, Member States, academics, etc. Moreover, this platform should be open to all EU citizens to cooperate and be part of the BC project. |
| --- | --- |

5.4.

| 5.5. | This platform would provide a space for joint learning and capacity building, but also bring together stakeholders, acting as a network of networks, providing meeting places and sharing good practices. The EESC is well placed and has the necessary experience to take an active part in hosting such a ‘platform’ ensuring transparency, inclusiveness, collaboration and the involvement of organised civil society, building on similar existing initiatives (18). |
| --- | --- |

5.5.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  OJ C 353, 18.10.2019, p. 1.

1

(2)  https://ec.europa.eu/digital-single-market/en/blockchain-technologies

2

(3)  http://www.europarl.europa.eu/RegData/etudes/IDAN/2017/581948/EPRS_IDA(2017)581948_EN.pdf

3

(4)  https://www.eublockchainforum.eu/

4

(5)  https://ec.europa.eu/digital-single-market/en/news/european-countries-join-blockchain-partnership

5

(6)  http://www.europarl.europa.eu/doceo/document/TA-8-2018-0373_EN.html?redirect

6

(7)  One measure is that in 2018 alone, ICO (initial coin offering) fundraising in Europe was approximately USD 4,1 billion, nearly double the USD 2,3 billion raised in Asia so far, and significantly more than the USD 2,6 billion raised in the US. https://www.newsbtc.com/2018/10/16/europe-surpasses-us-and-asia-in-cryptocurrency-token-sales

7

(8)  The BC social value proposition refers to self-sovereign identity (authentication, authorisation), trust and transparency, democracy, immutability and the non-intermediary concept.

8

(9)  https://blockchain4sdg.com/how-blockchains-can-tackle-the-un-sustainable-development-goals/

9

(10)  UN/CEFACT, ECE/TRADE/C/CEFACT/2019/INF.3: Blockchain in trade facilitation: sectoral challenges and examples, http://www.unece.org/fileadmin/DAM/cefact/cf_plenary/2019_plenary/CEFACT_2019_INF03.pdf

10

(11)  Confidentiality refers to the protection of data shared between an entity (i.e. individual or organisation) and an authorised party from unauthorised third parties. Privacy refers to protection from intrusion into one’s personal identity and personal transactions.

11

(12)  https://ec.europa.eu/cefdigital/wiki/display/CEFDIGITAL/EBSI.

12

(13)  Like electronic signatures and timestamps, using the current cross-compatible cryptographic algorithms.

13

(14)  These are self-executing contractual states stored on the blockchain which nobody controls and therefore everyone can trust. Examples are trade clearing and settlement, gift/loyalty coupons, electronic health records, royalty distribution, product provenance, peer-to-peer transactions, lending, insurance, energy credits, and voting.

14

(15)  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), https://gdpr-info.eu/

15

(16)  www.tolar.io as a case of low energy consumption blockchain.

16

(17)  The BC principles are: self-sovereign identity — authentication, authorisation, traceability, trust, immutability, democracy, no-intermediation.

17

(18)  The European Circular Economy Platform, for instance, is a joint initiative with the Commission, and the Committee is also active in the AI HLEG and the GECES.

18

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/23 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/23

---

Opinion of the European Economic and Social Committee on ‘Ensuring an inclusive sectoral transition to a digitalised rail sector’

(own-initiative opinion)

(2020/C 47/04)

Rapporteur: Alberto MAZZOLA

Co-rapporteur: Guy GREIVELDING

| Plenary Assembly decision | 21 February 2019 |
| --- | --- |
| Legal basis | Rule 32(2) of the Rules of Procedure
  Own-initiative opinion |
| Section responsible | Consultative Commission on Industrial Change (CCMI) |
| Adopted in CCMI | 2.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 202/0/5 |

Plenary Assembly decision

21 February 2019

Legal basis

Rule 32(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

Consultative Commission on Industrial Change (CCMI)

Adopted in CCMI

2.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

202/0/5

1.   Recommendations

| 1.1. | Digitalisation contributes to making rail transport more efficient and more convenient for both passengers and freight, but it also exposes rail systems to cybersecurity risks. Therefore the EESC recommends a stronger cooperation between ENISA and the ERA. |
| --- | --- |

1.1.

| 1.2. | The EESC believes that ERTMS deployment, the centrepiece of the rail digital EU strategy, shall be dramatically accelerated. The required investment, more than EUR 100 billion, shall be pursued through a Commission dedicated initiative, with a strong EU budgetary commitment, concrete support from Member States and substantial private capital (InvestEU). |
| --- | --- |

1.2.

| 1.3. | The EESC encourages rail to develop with other public transport modes a comprehensive and interoperable Mobility-as-a-Service (MaaS) framework ensuring affordability of and accessibility to mobility and public transport for all citizens as a service of general interest as well as to pursue an open, plug and play IT framework for the distribution of multimodal tickets in Europe. Rail could be the backbone to develop the Mobility aspect of a European Digital Identity. |
| --- | --- |

1.3.

| 1.4. | The EESC calls upon the ETF, CER and EIM, as part of the EU social dialogue, to establish a proactive transparent dialogue, e.g. in the form of a ‘digital road map’ and launch joint initiatives to identify and anticipate the impact of automation and digitalisation and to maintain a high level of employment and social guarantees as part of a socially just transition. |
| --- | --- |

1.4.

| 1.5. | The EESC pleads for the establishment of an EU rail regulator to accompany the development of the EU rail single market which also covers the digital aspects. |
| --- | --- |

1.5.

2.   Introduction

The European mobility and transport system is currently undergoing a shift to a much greener and more digitalised system.

Logistic chains will mutate as new technology will provide easier digital integration of different modes, a denser flow of information on traffic and tracking, easier access to services and information to passengers, a more efficient use of infrastructure capacity and a higher degree of predictability on timing.

Digitalisation will also increase the amount of data available to railway undertakings: the use of this data, in full compliance with rules on privacy and data ownership, will create opportunities for new business initiatives.

3.   Need to ensure railways’ transition to digital

3.1.   
  Rail as part of the Digital Single Europe

Connectivity is a foundation allowing the full realisation of the European Single Digital Market and digitalisation of railways.

A high level of connectivity is also required in order to provide dependable information, such as train schedules, availability of tickets, travel planners, freight terminal data, etc. This is a strong customer and staff expectation, improving the quality of services and maintenance.

Further digitalisation of railways relies on good cooperation both between railways and with telecommunication players. New 5G networks will offer a great opportunity for railways by enabling, among other things, the internet of things and better real-time information.

Rail could be the backbone to develop the Mobility aspect of a European Digital Identity through a ‘Regulatory environment that drives competition and innovation, and empowers citizens and companies with trust and an awareness of the benefits of digital technology for citizens, consumers, companies and workers, including all of these combined into a single “e-person”’ (1).

3.2.   
  New specific products and IT

The deployment of the ERTMS (European Rail Traffic Management System) should be a centrepiece of the technical EU strategy in order to allow its advantages to materialise (e.g. technical and operational harmonisation, increased capacity on the network, improved safety and reliability, reduced costs of maintenance). In the last 20 years less than 10 % of the TEN-T Core network has been equipped with the ERTMS. The pace of deployments should be accelerated without neglecting the accessibility of the regional rail network.

Further to that, developing the technical and legal framework, fully respecting the social dialogue, for the increasing levels of automatic train operation, improved data connectivity along train routes also with 5G technology, as well as further digital developments relevant for rail should be on top of the agenda.

3.2.1.   Rail internal processes

3.2.1.1.   Opportunities: increased infra capacity, maintenance and predictive maintenance, cost reduction, ATO, safety, crisis management

Control, command and communication systems should go beyond merely being a contributor to the control and safe separation of trains and become a flexible, real-time, intelligent traffic management and decision support system.

Current systems do not sufficiently take advantage of new technologies and practices, including use of satellite positioning technologies, high-speed, high-capacity data and voice communications systems (Wi-Fi, 4G/LTE, 5G) and automation, as well as innovative real-time data collection, processing and communication systems. These have the potential to considerably improve traffic, thereby delivering improved capacity, decreased traction energy consumption and carbon emissions, reduced operational costs, enhanced safety, including at level crossings through C-ITS, and security and accessible, reliable and comprehensible customer information. Condition-based maintenance, based on sensors and digital technology, will dramatically improve the efficiency, reliability and resilience of the system, both infrastructure and rolling stock.

3.2.1.2.   Threats: security and cybersecurity

Digitalisation contributes to making rail transport more efficient and more convenient, but it also exposes rail systems to cybersecurity risks. Embracing the need for robust cybersecurity measures and being prepared to deal with cyber-attacks, including large-scale events, represent significant challenges for the whole rail sector.

‘A homogeneous interpretation of the rules for Cybersecurity, including mutual recognition between Member States, ... a certification framework and certification schemes ... could provide a common baseline [for digitalisation, ... ERA] should be involved in the process and in some cases, with the agreement of ENISA to guarantee coherence, delegated to draw up cybersecurity schemes. Minimum European standards for IT security should be adopted in cooperation with CEN/Cenelec/ETSI.’ (2)

3.2.2.   New services

3.2.2.1.   New applications for passengers: E-ticketing, E-booking, integrated ticketing, multimodal ticketing, MaaS, Digital platforms, digital stations

In order to improve the information related to journeys and to facilitate the choice of the adequate train and of intermodal journeys, as well as through-ticketing, some European railways launched a common project ‘Full Service Model’ together with leading ticket vendors to create an open, plug and play IT framework for the distribution of rail tickets instead of bilateral IT solutions between distributors and rail service providers.

In this new context, Mobility-as-a-Service (MaaS) describes a shift away from personally-owned modes of transportation and towards mobility solutions that are consumed as a service. The key concept behind MaaS is to offer travellers door-to-door mobility solutions based on their travel needs and choice, ensuring affordability of and accessibility to mobility and public transport as a service of general interest. MaaS regards the entire transport system as a single entity and rail, with its low rate of emissions, must be part of it.

3.2.2.1.1.   
  New issues: data protection, privacy, passenger rights

Legislative stability is key to deliver the step-change needed in the area of ticketing. Customer-friendly information on through-ticketing is essential with regards to realistic EU requirements in the rail passenger rights regulation.

Railways need to continue to promote accessibility in a cost-efficient way. Unnecessary business-to-business provisions bring about unnecessary red tape and should be dealt with on a contractual basis and, where appropriate, in the relevant legislative framework for data exchange.

3.2.2.2.   For freight

The rail sector adopted a joint declaration, entitled the ‘Sector Statement’, on the occasion of the Rotterdam TEN-T Days in 2016, outlining the steps to be taken in order to improve international rail freight transport in Europe. From the Sector Statement, ten priority actions were identified including train tracking and Expected Time of Arrival and Facilitating concrete ERTMS Implementation. Furthermore, on 2 December 2015 the European Social Partners in the rail sector signed a Rail Freight Declaration with their proposals on improving rail freight transport.

Automatic brake testing will allow a significant efficiency increase of the train formation activities. Protection of freight transport commercial data shall also be guaranteed.

3.3.   
  Financing digital transition and R&I

3.3.1.   Funding rail Digitalisation: Digital Europe, CEF, InvestEU, national programmes

Adequate support from EU and national funds should be guaranteed for all portions of the rail system and for the completion of an effective European rail network.

The Connecting Europe Facility needs to be continued and increased beyond 2020. It must be underlined how the CEF should put a focus on digitalisation issues such as ERTMS trackside and on-board. Deploying the ERTMS on the TEN-T network, with digital interlockings, requires more than EUR 100 billion, such investment can be supported only through a dedicated initiative, with a strong EU budgetary commitment, matched by concrete support from Member States and private capital (InvestEU). To mobilise the resources needed the Committee thinks the Commission’s proactive role needs to be strengthened and a regulatory framework should be developed. CEF II shall also fund cross border 5G rail corridors to improve connectivity.

3.3.2.   Shift2Rail and Shift2Rail2

EU support to boost innovation in the rail sector is also needed, in particular regarding the continuation of the successful Joint Undertaking Shift2Rail. The future European Institutionalised Partnership should get an increased budget and be able to count on an improved and simplified governance system that gives more consideration to the needs of the rail operating community and their customers and is still able to trigger the whole rail innovation ecosystem– across Member States. Research funding for digital innovation must include serious research funding for accompanying social impact assessment and measures to facilitate a just transition.

4.   Need to ensure that such transition is inclusive

4.1.   
  For employees

The introduction of digital technologies in the railway environment is expected to bring efficiency and productivity gains that will benefit the sector’s competitiveness, and that will require at the same time qualitative and quantitative changes in railway jobs and work organisation.

This transition is already happening and railway companies need to prepare and manage changes affecting their workforce in a timely and inclusive manner, in order to remain good quality and attractive employers.

There will be profound changes in the nature of work and the demand for skills. The EESC highlights the importance of dealing with these structural changes by enhancing a fair and smooth transition and addressing the skills gap, together with the appropriate monitoring of progress.

The impact on the health of railway workers should not be underestimated, including creating a mental burden that could lead to illnesses and cause tensions in people’s private lives.

Ensuring an inclusive transition means managing change in a socially responsible way, starting with an open and transparent dialogue with employees and their representatives. Such a dialogue should help address potential fears linked to digitalisation and ensure the necessary staff engagement throughout the change.

The utmost caution should be exercised when implementing digitalisation, in order to avoid disruptive transitions and social discord. It is absolutely essential that the European social partners — the ETF (European Transport Workers’ Federation), CER (Community of European Railway and Infrastructure Companies) and EIM (European Rail Infrastructure Managers Association) — meet as part of the EU sectoral social dialogue on railways to decide on joint projects in order to better identify and anticipate the impact of automation and digitalisation to maintain a high level of employment and social guarantees as part of a socially just transition.

The European and national policy makers and the social partners should establish coordination between the European Social Dialogue and national negotiations that addresses the labour and social consequences of the digitalisation process of the integrated European rail system.

At national level, railway companies, together with employee representatives, must draw up a kind of ‘digital roadmap’ at an early stage and provide employee representatives with training on identifying digital processes and influencing factors.

In addition, it is necessary to negotiate collective bargaining agreements with employee representatives at national level on:

| — | rights to consultation, participation and collective representation before new technologies are introduced, |
| --- | --- |

—

rights to consultation, participation and collective representation before new technologies are introduced,

| — | the definition of and conditions for alternative activities/employment, retraining and qualifications, |
| --- | --- |

—

the definition of and conditions for alternative activities/employment, retraining and qualifications,

| — | health and safety in the workplace, the right to disconnect, protection of employee data (against permanent monitoring), |
| --- | --- |

—

health and safety in the workplace, the right to disconnect, protection of employee data (against permanent monitoring),

| — | shorter working hours and/or (flexible) working patterns. |
| --- | --- |

—

shorter working hours and/or (flexible) working patterns.

Traffic safety and passenger and staff security cannot be guaranteed solely by means of digital and automated systems, a human presence is necessary.

The key to address this challenge is to put the focus on professional transitions, supported by life-long learning and investments in staff’s employability to avoid laying people off. For railways, two important challenges are the imbalanced age pyramid of its workforce and recruitment difficulties, especially among young people and women. As a consequence, rail companies need to take care of older workers’ capacity to remain in rapidly changing jobs to ensure that core knowledge is passed on from one generation to the next, and to widen their recruitment basis.

From the point of view of national and EU-wide systems, workforce imbalances can be reduced or even avoided by a good dialogue and cooperation between the educational sector and businesses, in order to prepare the ‘workforce of the future’ through training and retraining of employees and trainers with digital skills.

As mentioned above, national education systems — especially vocational education — play an important role in ensuring that the future workforce is equipped with the right skills. The establishment of sector skills councils is recommended.

4.2.   
  Passengers: elderly people accessing IT-intensive services, people with disabilities, rural areas, etc.

| 4.2.1. | Digitalisation will offer increasing opportunities to further reduce the environmental impact of our transport system and make mobility more efficient. Growing connectivity should also make ‘mobility-as-a-service’ options and multimodality easier. Rural areas would profit from this only if covered by the necessary investment. |
| --- | --- |

4.2.1.

| 4.2.2. | As rail transport is a service, it is important that civil society, consumer associations, environmental associations, disability organisations, associations promoting fair mobility and associations representing elderly persons could also become partners in implementing the digitalisation of the rail sector. |
| --- | --- |

4.2.2.

| 4.2.3. | With a view to harnessing the economic power of the EU’s older citizens, who make up 25 % of its population, the EESC believes that in growth terms it does not make sense to consider them as a population category outside the mainstream of life, but that both their abilities and their expectations should be recognised and they should be included as economic and social players of the digital age (3). |
| --- | --- |

4.2.3.

5.   In the context of the European data economy

| 5.1. | The development of new IT technologies has facilitated the collection and exploitation of transport data. Maximising the use of data will lead to economic growth, innovation and significant benefits for the rail sector, its customers and the European economy, creating and developing interoperable and interconnected services. The different aspects of opening up data and data sharing need to be better explored in order to create clear added value for the rail sector and society. |
| --- | --- |

5.1.

| 5.2. | The first step is to ensure interoperability of data formats in order for the actors to work together. Furthermore, it would be necessary to clarify the ownership, access and usage of different types of data. Close cooperation between authorities, consumer organisations, public and private operators, trade unions, infrastructure managers and suppliers will be vital in order to eradicate barriers to data sharing in the rail ecosystem. |
| --- | --- |

5.2.

| 5.3. | A proper big data analysis will then provide information about trends and demands that could help to redesign transportation with more personalisation and flexibility and help cities to be more efficient. The digitalisation and robotisation of transport require the adequate availability, accessibility and free flow of data. At the same time, proper data protection has to be ensured. |
| --- | --- |

5.3.

| 5.4. | The EESC calls upon the Commission to ensure fair competition and consumer choice in the domain of access to data. There are currently concerns about the level of competition resulting from attempts to gain access to passengers’ data. Challenges also arise in the domain of public transport, where access to data (e.g. train timetables and real-time location) will be essential to establishing smoothly functioning multimodal services. |
| --- | --- |

5.4.

| 5.5. | The European Commission should adopt binding regulations to make sure that the principles of fair competition without discriminating against public and private companies providing similar services are respected, as well as those of access to transport data — while fully respecting the rules of data protection. ‘The same conditions must apply to public and private companies with reciprocity for data exchanges and compensation of costs (4),’ including digital platforms. |
| --- | --- |

5.5.

6.   European Rail Supply industry

| 6.1. | ‘The digitalisation and robotisation of transport provide new business opportunities for both manufacturing and service industries, including SMEs, and could be an area of competitive advantage for the EU. To this end, the EESC calls for an encouraging and enabling business environment, including openness towards new business models and boosting the development of European digital platforms (5).’ |
| --- | --- |

6.1.

| 6.2. | With its Paper on Digitalisation ‘Digital Trends in the Rail Sector’ UNIFE, the European rail supply industry association, aims to express its view on how digital transformations will contribute to achieving the ambitions of Europe’s rail sector and its supply industry — both in terms of enhancing the experience of rail passengers and also in terms of optimising logistics and boosting capacity for carrying freight. In order to do this, five major focus areas have been identified:






  (1) | Big Data |
| --- | --- | --- |

6.2.

(1)

Big Data

| (2) | Cybersecurity |
| --- | --- |

(2)

Cybersecurity

| (3) | Artificial Intelligence (AI) |
| --- | --- |

(3)

Artificial Intelligence (AI)

| (4) | New Mobility Services |
| --- | --- |

(4)

New Mobility Services

| (5) | Digitalisation of Freight Logistics Services. |
| --- | --- |

(5)

Digitalisation of Freight Logistics Services.

7.   Roles of the institutions

7.1.   
  ERA

In order to pursue the development of the single European railway area, to avoid fragmented development of telematics applications, the Agency was given a strengthened role in the field of such applications. To that end, the Agency was empowered to act as the system authority for telematics applications, and shall, in that capacity, maintain, monitor and manage all corresponding subsystems requirements at EU level.

7.2.   
  ENISA

The European Union Agency for Network and Information Security (ENISA) is a centre of expertise for cybersecurity in Europe and contributes to a high level of network and information security (NIS) within the EU.

The Agency works to deliver advice and solutions including the pan-European Cybersecurity Exercises, National Cybersecurity Strategies, CSIRTs cooperation and capacity building, studies on secure Cloud adoption, addressing data protection issues, privacy enhancing technologies and privacy in emerging technologies, eIDs and trust services, and identifying the cyber threat landscape, etc. ENISA and the ERA shall work together on these matters

7.3.   
  A European Economic Rail Regulator

EU directives have provided for the mandatory constitution of regulatory bodies in the Member States dedicated to the surveillance of competition in the railways market. In addition to them, a single European railway area, in particular international freight and passenger traffic, also requires increased efforts on a continental scale with the establishment of a European rail regulator.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  OJ C 353, 18.10.2019, p. 79.

1

(2)  OJ C 227, 28.6.2018, p. 86.

2

(3)  The digital pillar of growth: e-seniors, a potential 25 % of the European population (OJ C 389, 21.10.2016, p. 28).

3

(4)  OJ C 353, 18.10.2019, p. 79.

4

(5)  Implications of the digitalisation and robotisation of transport for EU policy-making (OJ C 345, 13.10.2017, p. 52).

5

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/30 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/30

---

Opinion of the European Economic and Social Committee on Leaving no one behind when implementing the 2030 Sustainable Development Agenda

(own-initiative opinion)

(2020/C 47/05)

Rapporteur: Peter SCHMIDT

Co-rapporteur: Lutz RIBBE

| Plenary Assembly decision | 21.2.2019 |
| --- | --- |
| Legal basis | Rule 32(2) of the Rules of Procedure
  Own-initiative opinion |
| Sections responsible | Section for Agriculture, Rural Development and the Environment
  Section for Employment, Social Affairs and Citizenship |
| Adopted at plenary | 31.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 159/21/16 |

Plenary Assembly decision

21.2.2019

Legal basis

Rule 32(2) of the Rules of Procedure

Own-initiative opinion

Sections responsible

Section for Agriculture, Rural Development and the Environment

Section for Employment, Social Affairs and Citizenship

Adopted at plenary

31.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

159/21/16

1.   Conclusions and recommendations

| 1.1. | The UN Sustainable Development Goals (SDGs) are paving the way for a better and more sustainable future for all. At the heart of the SDGs is a commitment to ensure that ‘no one is left behind, by reaching the furthest behind first’ in the shift to a sustainable and resilient path, and that no goal is considered to have been met unless it has been met for all. |
| --- | --- |

1.1.

| 1.2. | The EESC believes that social concerns should be addressed in full synergy with environmental and economic ones. The implementation of the SDGs in the EU requires merging the social with the economic and environmental dimensions of sustainability, bringing about a systemic change and overcoming the silo thinking prevalent in current EU strategies. The value of defining measures and policies through the multidimensional lens of the 2030 Agenda is undeniable. Tackling the social question will be absolutely crucial in implementing this agenda. |
| --- | --- |

1.2.

| 1.3. | If compared with environmental or economic dimensions, both social issues and regional cohesion have so far been seen more as separate policy areas rather than as a truly integral part of sustainability policy. What defines the social dimension in a comprehensive sustainability policy is not only that it further develops traditional social policies (such as better welfare payments), but that it does more for justice and participation in the economy – to the benefit of people and regions. |
| --- | --- |

1.3.

| 1.4. | The transition to a sustainable, carbon-neutral and resource-efficient economy requires fundamental changes in our society and in our economy. Those changes will imply chances but also risks. Leaving no one behind means that all members of society and especially those that are further behind have a real chance to seize the chances and are well prepared for coping with the risks. This requires an active policy. In this context, the most vulnerable groups in society as well as the most disadvantaged regions and territories need special consideration. |
| --- | --- |

1.4.

| 1.5. | Leaving no one behind particularly entails re-empowering as many people as possible to play a positive role as active citizens, maximising accessibility of investments, new lifestyles, consumption patterns and sustainable technology to all people, groups and regions in the transition process. The transformation to sustainability cannot and must not be imposed from above; it will only be successful if it is based on broad support and active participation by all. |
| --- | --- |

1.5.

| 1.6. | To achieve the implementation of the SDGs and leave no one behind, the EESC calls on the European Commission, Parliament, Council and Member States to:






  — | set up a European Green and Social Deal as part of an overarching ‘EU 2050 Sustainable Development Strategy’ that is truly decoupled from the overuse of natural resources, whose central aim would be to increase the wellbeing of citizens. The EESC is pleased that the new Commission intends to launch a European Green Deal; however, the EESC insists that this should include the social dimensions; |
| --- | --- | --- |

1.6.

—

set up a European Green and Social Deal as part of an overarching ‘EU 2050 Sustainable Development Strategy’ that is truly decoupled from the overuse of natural resources, whose central aim would be to increase the wellbeing of citizens. The EESC is pleased that the new Commission intends to launch a European Green Deal; however, the EESC insists that this should include the social dimensions;

| — | make a systematic assessment of the potential negative/positive side-effects of the transition on Europe’s population (especially poor and vulnerable groups) and structurally weak regions and better understand the intergenerational drivers of sustainability and inequality; |
| --- | --- |

—

make a systematic assessment of the potential negative/positive side-effects of the transition on Europe’s population (especially poor and vulnerable groups) and structurally weak regions and better understand the intergenerational drivers of sustainability and inequality;

| — | set up the appropriate governance structures and tools to implement the SDGs and the European Green and Social Deal, e.g. using the European Semester, better regulation and the MFF, including the cohesion and social funds to drive transformation; |
| --- | --- |

—

set up the appropriate governance structures and tools to implement the SDGs and the European Green and Social Deal, e.g. using the European Semester, better regulation and the MFF, including the cohesion and social funds to drive transformation;

| — | develop a wider understanding of the ‘just transition’ (beyond coal) and fully implement the European Pillar of Social Rights in support of it, while driving reforms of redistributive systems (tailored taxation, social protection, and sustainable and social investments) as well as work-life balance and gender equality; |
| --- | --- |

—

develop a wider understanding of the ‘just transition’ (beyond coal) and fully implement the European Pillar of Social Rights in support of it, while driving reforms of redistributive systems (tailored taxation, social protection, and sustainable and social investments) as well as work-life balance and gender equality;

| — | ensure equal access as well as equal opportunities regarding adequate education and training for all; |
| --- | --- |

—

ensure equal access as well as equal opportunities regarding adequate education and training for all;

| — | overcome barriers to active participation by citizens who do not have the necessary financial and social capital, the necessary knowledge and information, and access to opportunities; |
| --- | --- |

—

overcome barriers to active participation by citizens who do not have the necessary financial and social capital, the necessary knowledge and information, and access to opportunities;

| — | introduce policies that both benefit citizens and protect the environment, e.g. air pollution plans prioritising vulnerable groups, green social housing policies, etc.; |
| --- | --- |

—

introduce policies that both benefit citizens and protect the environment, e.g. air pollution plans prioritising vulnerable groups, green social housing policies, etc.;

| — | promote a social and collaborative economy within the sustainability transition (e.g. skills, circular economy, energy transition, foster cooperatives); |
| --- | --- |

—

promote a social and collaborative economy within the sustainability transition (e.g. skills, circular economy, energy transition, foster cooperatives);

| — | provide SMEs with support to succeed in the transition and achieve sustainable competitiveness, through better access to skills, finance, innovation and technology; |
| --- | --- |

—

provide SMEs with support to succeed in the transition and achieve sustainable competitiveness, through better access to skills, finance, innovation and technology;

| — | enhance quality job creation; |
| --- | --- |

—

enhance quality job creation;

| — | design a strategy to ensure that not only cities but also rural communities become more inclusive, resilient and sustainable; |
| --- | --- |

—

design a strategy to ensure that not only cities but also rural communities become more inclusive, resilient and sustainable;

| — | strengthen climate protection and adaptation in Europe to fight desertification and address water scarcity and depopulation; |
| --- | --- |

—

strengthen climate protection and adaptation in Europe to fight desertification and address water scarcity and depopulation;

| — | give young people and future generations a meaningful voice and make them count in sustainability decision-making; |
| --- | --- |

—

give young people and future generations a meaningful voice and make them count in sustainability decision-making;

| — | promote a sustainable trade policy, which internalises the positive and negative social and environmental externalities of trade. |
| --- | --- |

—

promote a sustainable trade policy, which internalises the positive and negative social and environmental externalities of trade.

2.   Introduction

| 2.1. | For too long, the social dimension of sustainability has not been sufficiently taken care of, either globally or in the EU. Compared with the environmental and economic dimensions, both social issues and regional cohesion have so far been seen more as separate policy areas than as a truly integral part of sustainability policy, while widespread social inequalities and regional imbalances continue to exist in Europe and in some places they are getting worse. So far, policies have indeed left people, groups and regions behind, not only failing to respect planetary boundaries, but also the basic social needs of significant parts of the EU population. The EU is often held responsible for the gaping chasms between what is promised in cohesion and social policies and what happens in reality. |
| --- | --- |

2.1.

| 2.2. | The increasing positive and negative linkages between economic, social and ecological challenges cannot and must not be ignored. Recent protests across Europe should not be seen as signalling an outright rejection of reforms by the public at large. Rather, they are an expression of the fears of many people who are already dissatisfied with their current situation and who are now also afraid that the necessary transformations ahead of them – for example, in moving towards a carbon-neutral economy – will again come at their expense. |
| --- | --- |

2.2.

| 2.3. | Therefore, a new sustainable development policy framework must analyse the shortcomings of the current unsustainable policies and lead to a new green and social deal which meaningfully addresses the fears of the people through practical solutions. A fair distribution of the burden and the benefits is the first step in achieving the broadest possible public acceptance and support for these societal measures. People taking part in the transition in a positive way will reduce the risk of even greater dissatisfaction, opposition, or political resignation, for example people abstaining from voting. There is no doubt that lack of participation contributes to a shift towards extremism, populism, racism and nationalism in our society, as can now be seen in many EU Member States. |
| --- | --- |

2.3.

| 2.4. | We cannot solve the ecological crisis until the social dimension is addressed, and vice versa. We need a societal debate to accept that the social dimension must rank at least as high as the economic and environmental dimensions. |
| --- | --- |

2.4.

| 2.5. | The Committee reiterates that leaving no one behind must not and cannot be just about the particular concerns of individuals and their economic situation and circumstances (1). It is also about households, communities, regions, sectors and minorities being left behind and feeling abandoned – e.g. when public services are closed down or deteriorate, and even essential services are not accessible or affordable (it is not only about money). It begins with physical infrastructure (transport, telecommunications and the internet) and then affects education, health and social care and leisure activities, as well as administrative services, law enforcement agencies, the police, etc. |
| --- | --- |

2.5.

| 2.6. | Leaving no one behind entails re-empowering people as active citizens, maximising transparency and the inclusion of people, groups and regions in the transition process. |
| --- | --- |

2.6.

| 2.7. | Moreover, leaving no one behind extends to future generations, in line with the definition of sustainable development set out in the Brundtland Commission’s report (2). The EESC believes that the current European policy framework and economy short-changes young people and future generations and welcomes the fact that young people in particular are now clearly voicing their concerns, e.g. through the ‘Fridays for Future’ movement. |
| --- | --- |

2.7.

| 2.8. | As people need to be encouraged to face the coming transformation process without fear, political leaders at all levels must breathe life into the ‘leaving no one behind’ principle. Because transformation means change – and by no means everyone will be a winner during the shift to sustainability. It is therefore as wrong as it is unwise to talk just about ‘win-win’ or even ‘win-win-win’ situations. Although society will benefit as a whole, the costs and benefits will not be shared equally without policy interventions to make sure that no one is left behind. |
| --- | --- |

2.8.

3.   Worrying trends in social and environmental inequalities in Europe

| 3.1. | Europe has very high levels of human development and the life expectancy of its citizens is among the highest in the world. However, Europe still has a long way to go in achieving the social dimension of the SDGs. According to the latest available Eurostat data (3), 109,2 million people, or 21,7 % of the EU population, were at risk of poverty or social exclusion in 2018. Children and minority groups are most at risk. Severe material deprivation, an absolute poverty measure, decreased since 2008 from 8,5 % to 5,8 % of the EU population in 2018 (4), but is still far from the Europe 2020 target. |
| --- | --- |

3.1.

| 3.2. | The percentage of women in employment is only 67,5 % (5) compared to 73 % for men (with only 55 % of women with three or more children employed, against 85 % of men) (6); 32 % of women work part-time (7) compared to only 8 % of men. In 2017, women’s gross hourly earnings were on average 16 % below those of men in the EU due to a combination of stereotypes, segregation in the education and labour market, management and supervisory positions mostly being held by men, longer periods off the labour market, unpaid care responsibilities and pay discrimination (8). The lack of (child)care continues to be a key reason for women not being part of the labour force. One in three inactive women (31,7 %) reported that their inactivity was due to care responsibilities, compared with only 4,6 % of inactive men. The gender pay gap increases over the career and lifetime, leading to a staggering gender pension gap of 39 %, with the gender poverty gap being the highest in the oldest age group (65 or over) (9). |
| --- | --- |

3.2.

| 3.3. | Wealth inequality is even greater: 10 % of the wealthiest households hold 50 % of total wealth, while the 40 % least wealthy own only a little over 3 % (10). The income share of the bottom 40 % of the population in terms of total equivalised disposable income has stabilised at a low level, reaching 21,1 % in 2017 (Eurostat SDG 2019). Wide inequalities in the distribution of income exist in the EU, too: in 2016, the top 20 % of the population (with the highest income) received 5,2 times as much income as the bottom 20 % (11). |
| --- | --- |

3.3.

| 3.4. | The poor have also become poorer: the depth or severity of poverty (i.e. how far below the at-risk-of-poverty threshold the income of people at risk of poverty is) for the EU as a whole in 2016 was 25 %: this means that half of those living under the poverty line were at least 25 % below the relevant at-risk-of-poverty threshold (12). |
| --- | --- |

3.4.

| 3.5. | According to the (partial) evidence available, low-income households tend to live in a less healthy environment than higher income ones and suffer from multiple sources of vulnerability. Poorer households also have greater challenges in terms of affording energy and mobility (13). There is no equality between European citizens when it comes to exposure to pollution or other environmental hazards (14). |
| --- | --- |

3.5.

| 3.6. | While economic disparities between EU countries have reduced over time, there are stark differences among Member States (15), as the population at risk from poverty can vary from 32,8 % (Bulgaria) to 12,2 % (Czech Republic) (16). There is a 25,8 % variation in household disposable income across the EU with higher levels in northern and western countries and lower ones in eastern and southern countries. There are also wide differences between Member States when it comes to unemployment rates and to the prevalence of severe material deprivation (17). Overall, 64,9 % of the unemployed EU population is at risk, ranging from 81,8 % in Germany to 51,5 % in Poland (18). |
| --- | --- |

3.6.

| 3.7. | Inequalities are a result of our current economic situation. The trickle-down theory of growth that would lift all boats equally does not reflect European reality: indeed, not everyone has benefited from European growth in the same way, with higher income households benefiting much more than the bottom 40 % of the population. Many people struggle to cope, while a very tiny fraction benefits from most of the wealth we all contribute to create. |
| --- | --- |

3.7.

4.   The differential impacts of the sustainability transition

| 4.1. | The transition towards sustainability not only follows the necessity to treat our natural resources with more care and responsibility, there is also growing evidence of the respective economic potential. The global market for low-carbon goods and services is already rapidly growing. Some of the jobs that are created within the low-carbon economy are in regions and sectors that have seen decades of underinvestment. A more circular economy will contribute to resource efficiency, reduce negative environmental impacts and increase employment, including through relocation of activities back to Europe and within Member States, including disadvantaged areas. A recent study estimates an increase in net employment of around 650 000-700 000 jobs by 2030 as a result of circular economy policies (19). We should make sure that all people have access and that these are high-quality jobs. By 2030, the transition to a climate-neutral economy is expected to create an additional 1,2 million jobs in the EU, on top of the 12 million new jobs already expected. The transition could mitigate the ongoing job polarisation resulting from automation and digitalisation by also creating jobs in the middle of the wage and skill distribution scale, particularly in construction and manufacturing (20). All sectors will be impacted, with a much larger scale of disruption expected in the automobile industry and agriculture. |
| --- | --- |

4.1.

| 4.2. | Nevertheless, we continue to see enormous competitive distortions, because the existing framework of our market economy fails to avoid the wasting, contamination or destruction of natural resources. These distortions come not only at the expense of the environment, they also prevent the rapid deployment of new and sustainable economic options. They exist both within Europe and internationally. Both in internal market policy and in trade policy, there must be no competitive advantages that are filched by acting irresponsibly with people’s wellbeing or by plundering natural resources. The EESC therefore welcomes the fact that the new EU Commission president, for example, has called for the introduction of a Carbon Border Tax, provided that this scheme is designed to accelerate the transition towards sustainability and to achieve greater social justice. As a solid long-term solution, the EESC finds it important for the EU to strive for global carbon pricing. |
| --- | --- |

4.2.

| 4.3. | The taxation systems in EU Member States have a problem in that they rely overwhelmingly on taxing labour. In fact, environmental taxes represented only 6,3 % of total tax revenues in 2016 while labour taxation represented 49,8 % of the total. A holistic approach to tax reform, aligned with the SDGs, could indeed shift the focus away from labour to taxes on excessive wealth, consumption, pollution or digitalisation (21). Such a shift would need to take into account the growing income inequality in Europe as well as the correlation between income levels and carbon footprint. In fact, environmental taxes need to be designed to ensure behavioural change among the heaviest users whilst minimising negative impacts on income and asset inequality. For instance, putting an end to subsidies for fossil energy resources, introducing CO2 pricing and allocating the respective revenues to the development of public transportation could have a beneficial impact on income inequality and social outcomes. |
| --- | --- |

4.3.

| 4.4. | Only if Europe does its homework on this front, will the EU have the credibility to act as a global leader on sustainability. This is, for one thing, a prerequisite for benefiting from the fast-growing future markets, e.g. in the areas of circular economy, green tech, bio-engineering and sustainable finance. At the same time, a commitment to sustainability at global level helps to achieve EU policy objectives in other areas (such as addressing the causes of migration, fair global trade and reducing dependence on oil-rich countries from a foreign policy perspective). |
| --- | --- |

4.4.

| 4.5. | However, the transition towards sustainability requires huge public and private investment or high spending in consumer durables, which will pay off in the long run – at household, company as well as at municipality, regional and country level. The crucial question for social sustainability is: who can invest or spend this money? This question determines who benefits from the economic advantages identified – and who does not. Social sustainability is in jeopardy if:






  — | only large companies are able to invest and SMEs are not, |
| --- | --- | --- |

4.5.

—

only large companies are able to invest and SMEs are not,

| — | start-ups have no access to the future markets of a sustainable economy, |
| --- | --- |

—

start-ups have no access to the future markets of a sustainable economy,

| — | only the public sector in prosperous rather than in structurally weak regions has the budget to make infrastructure fit for sustainability, |
| --- | --- |

—

only the public sector in prosperous rather than in structurally weak regions has the budget to make infrastructure fit for sustainability,

| — | but most importantly, people with lower incomes and few financial resources, lower education and less knowledge, with lower bankability, lower social capital and less confidence have or perceive no real opportunities to invest or change their consumption patterns to sustainability. In such a scenario, the only ones who benefit from the sustainability transition are those who are already doing well. The social inequalities and injustices would then increase, as would regional disparities. |
| --- | --- |

—

but most importantly, people with lower incomes and few financial resources, lower education and less knowledge, with lower bankability, lower social capital and less confidence have or perceive no real opportunities to invest or change their consumption patterns to sustainability. In such a scenario, the only ones who benefit from the sustainability transition are those who are already doing well. The social inequalities and injustices would then increase, as would regional disparities.

| 4.6. | What defines social sustainability is not whether it further develops traditional social policies (such as better welfare payments), but whether it provides more equal opportunities to participate in the economy. To this end, SMEs, start-ups, the public sector in structurally weak regions and above all citizens (especially the most vulnerable ones) must be enabled to actively participate in the transition towards sustainability. In this context, further factors such as gender, individual capacities and age need to be considered as they might exacerbate existing inequalities in Europe. |
| --- | --- |

4.6.

| 4.7. | The territorial impact of the transition also needs to be factored in. Globally, 67 % of people will be living in cities by 2050. In Europe, the rate of urbanisation is expected to reach 80 %. Not all citizens place the same burden on the environment, and policy development needs to reflect this in appropriate ways. For example, Londoners produce just over half the emissions of the UK average (22). However, at the same time, rural populations often play an important role in providing and maintaining ecosystem services. Therefore, rural regions and smaller towns as well as the EU’s outermost regions should not be forgotten but involved in the transition. |
| --- | --- |

4.7.

5.   Strategic areas of action — towards solutions

| 5.1. | A common approach in the sustainable development policy is to use economic incentives to encourage environmentally desirable behaviour and/or to penalise behaviour that is harmful to the environment. For example, in the context of CO2 pricing, the underlying belief is that the market price should reflect the cost of CO2 emissions. This approach can be generalised for any externalities on the natural environment to be taken into account by price internalisation. The approach of internalising externalities is popular because it promises high effectiveness and efficiency and is compatible with the basic concept of the market economy. |
| --- | --- |

5.1.

| 5.2. | Fortunately, the European Commission has started to take the approach of internalising external effects more seriously, acknowledging for example that renewable energies are disadvantaged as long as the external costs of fossil resources are not fully reflected in the market price (23) or trying to implement the ‘Polluter Pays Principle’ (24) into the transport sector. These approaches are reconciling the ecological with the economic dimension of sustainability, but they do not incorporate the social dimension. We need to provide all societal groups and stakeholders with a framework that gives them a fair chance to produce and consume in a sustainable way. Otherwise, SMEs will lose their competitiveness, structurally weak regions will become even weaker and socially or individually disadvantaged people will have even fewer chances to participate in societal prosperity. |
| --- | --- |

5.2.

| 5.3. | Therefore, a sustainability strategy that relies solely on a market where ideally all externalities are internalised is not sufficient because it does not automatically deliver sustainable results for society. In addition to internalising external effects, a policy that also promotes social sustainability needs to take a broader approach. Existing barriers that prevent individual people, social groups, cooperatives, specific companies or the public sector from participating in sustainable development need to be removed. |
| --- | --- |

5.3.

| 5.4. | The sustainability transition will be particularly critical in specific sectors, such as food, transport, housing and energy. In particular, three examples from the energy sector illustrate this point:






  — | A higher CO2 price increases the cost of electricity, unless it is produced 100 % CO2-free. This makes the self-supply of electricity from renewable sources, such as solar energy (boosted in the future using electrical storage), more attractive. Prosuming makes sense in terms of environmental and economic sustainability. However, those who live in their own homes or those running bigger businesses and owning sufficiently large (roof) surfaces have much better chances to benefit from prosuming. For tenants or small craft businesses, on the other hand, becoming a prosumer is either harder or even objectively impossible. Therefore, electricity becomes more and more expensive for them, while self-suppliers can save money and pay off their investment while even receiving taxpayers’ money in certain circumstances. This increases social inequality and the competitive disadvantages of small businesses. Very similar problems are also seen in the heating sector. |
| --- | --- | --- |

5.4.

—

A higher CO2 price increases the cost of electricity, unless it is produced 100 % CO2-free. This makes the self-supply of electricity from renewable sources, such as solar energy (boosted in the future using electrical storage), more attractive. Prosuming makes sense in terms of environmental and economic sustainability. However, those who live in their own homes or those running bigger businesses and owning sufficiently large (roof) surfaces have much better chances to benefit from prosuming. For tenants or small craft businesses, on the other hand, becoming a prosumer is either harder or even objectively impossible. Therefore, electricity becomes more and more expensive for them, while self-suppliers can save money and pay off their investment while even receiving taxpayers’ money in certain circumstances. This increases social inequality and the competitive disadvantages of small businesses. Very similar problems are also seen in the heating sector.

| — | A higher CO2 price also makes fossil fuels expensive. In other words, the cost of purchasing an electric car is recouped more quickly. This, however, requires financial liquidity or at least creditworthiness. Individuals, or even small businesses, that do not have this are not in the position to buy an electric car and must, therefore, shoulder the higher price for petrol. Another option, at least in large cities, is public transport or cycling. But this is not a realistic alternative in many rural areas. The result is that we do not simply encounter the same problems as with electricity or heating; regional cohesion is also placed under further strain. |
| --- | --- |

—

A higher CO2 price also makes fossil fuels expensive. In other words, the cost of purchasing an electric car is recouped more quickly. This, however, requires financial liquidity or at least creditworthiness. Individuals, or even small businesses, that do not have this are not in the position to buy an electric car and must, therefore, shoulder the higher price for petrol. Another option, at least in large cities, is public transport or cycling. But this is not a realistic alternative in many rural areas. The result is that we do not simply encounter the same problems as with electricity or heating; regional cohesion is also placed under further strain.

| — | Finally, the best way to effectively encourage the development of the circular economy is probably to make raw material consumption more expensive, e.g. steering through VAT. However, the avoidance or recycling of raw materials by industry or commerce also often requires investment up front in equipment and technology, which again would benefit large companies to the detriment of SMEs. |
| --- | --- |

—

Finally, the best way to effectively encourage the development of the circular economy is probably to make raw material consumption more expensive, e.g. steering through VAT. However, the avoidance or recycling of raw materials by industry or commerce also often requires investment up front in equipment and technology, which again would benefit large companies to the detriment of SMEs.

| 5.5. | These examples show that – however justified it is to foster renewable energy, electromobility and the circular economy by making emissions or raw materials cost more – social sustainability will suffer if this is the only approach. It needs to be backed up by initiatives that specifically address the situation of disadvantaged market participants and at least compensate for their disadvantages. However, compensation pure and simple is often not enough to make progress on social sustainability. In some places, the disadvantaged must actually have better chances than others. |
| --- | --- |

5.5.

| 5.6. | In this context, participation for instance in the energy transition also depends on education and knowledge of potential action, so it is essential to help people improve their confidence about engaging in activities that lead to greater participation in sustainable development. Without this, the hurdles created by administrative procedures and bureaucracy can be all the more onerous. Changing the infrastructure also deserves attention. |
| --- | --- |

5.6.

| 5.7. | Another strategic area of action is qualification, education, guidance and assistance. The transition towards a climate-neutral economy will have a major impact on skills needs. There is an urgent need to invest in human capital (education, training, lifelong learning) to equip current and future generations with the necessary skills in green and digital technologies. Schools and universities should include specific SD curricula to also promote work-based learning reflecting the situation on the labour markets. Investing in the reskilling and upskilling of the population is essential so that nobody is left behind. |
| --- | --- |

5.7.

| 5.8. | Social transfers (e.g. financed by ‘progressive taxation’ and innovative taxes such as the financial transaction tax) are equally important. The changing nature of work due to technological change will make the issue of new entitlements, such as an adequate income for everyone, a key debate for the next period by fully involving the social partners. Ensuring that their design contributes to, rather than hinders, sustainability will be important. |
| --- | --- |

5.8.

| 5.9. | Social policy has been oblivious to environmental challenges. For instance, the European Social Fund does not address climate change, with only an estimated 7 % allocated to a low-carbon and climate-resilient economy through reform of education and training systems, adaptation of skills and qualifications, upskilling of the labour force and the creation of new jobs (25). Moreover, the lack of coherence between policy frameworks means that trade-offs, synergies and the need for flanking measures are either absent from the debate or difficult to assess due to a lack of adapted data, tools or processes. |
| --- | --- |

5.9.

| 5.10. | More specifically, to facilitate a paradigm shift away from ex post compensation and mitigation efforts and towards enabling socially disadvantaged people in structurally disadvantaged regions to develop bottom-up projects themselves and gradually create truly sustainable, participatory and inclusive economic models (26), the following elements will be needed:






  — | a guaranteed adequate income for those in need; |
| --- | --- | --- |

5.10.

—

a guaranteed adequate income for those in need;

| — | guaranteed access to microfinance support or public loans for people with low credit ratings from the point of view of private banks; |
| --- | --- |

—

guaranteed access to microfinance support or public loans for people with low credit ratings from the point of view of private banks;

| — | support for (especially community) self-supply, for example in the fields of energy, housing and agriculture, which could be embodied in different forms of structures within the social economy, in particular cooperatives); |
| --- | --- |

—

support for (especially community) self-supply, for example in the fields of energy, housing and agriculture, which could be embodied in different forms of structures within the social economy, in particular cooperatives);

| — | reducing administrative barriers to these actors; |
| --- | --- |

—

reducing administrative barriers to these actors;

| — | out-reach legal and technical counselling; |
| --- | --- |

—

out-reach legal and technical counselling;

| — | strengthening public investment in infrastructure and social investment. |
| --- | --- |

—

strengthening public investment in infrastructure and social investment.

6.   The role of the European Pillar of Social Rights in the context of sustainability

| 6.1. | The European Pillar of Social Rights (EPSR) proclaimed by the EU in November 2017 is the specific tool to address the social challenges faced by the EU, since it expresses principles and rights essential for fair and well-functioning labour markets and welfare systems in 21st century Europe and it is about delivering new and more effective rights for all citizens on the basis of 20 key principles structured around three categories: i) equal opportunities and access to the labour market, ii) fair working conditions, and iii) social protection and inclusion for all. |
| --- | --- |

6.1.

| 6.2. | The implementation of the EPSR requires a robust budgetary base and investment. On one hand, the next Multiannual Financial Framework should secure the needed funding, and, on the other, social investment can be facilitated by a reference to a ‘golden rule’ (27) for public investment with social and environmental objectives. Appropriate taxation policies, including effective measures against tax fraud, tax avoidance and aggressive tax planning, should allow the Member States and the EU to raise additional funds to contribute to the financing of the Social Pillar (28) and the SDGs. Private sector investment can also complement public expenditure/investments in some areas but should be subject to specific and transparent criteria that guarantee a sufficient social return for the benefit of the general interest (29). |
| --- | --- |

6.2.

| 6.3. | Although there is much common ground between the 17 SDGs and the 20 rights and principles of the EPSR, no proposal has yet been made on how to create useful synergies between the two. This could be done by starting to improve the 14 Social Scoreboard indicators to better match the 20 EPSR rights and principles and the SDGs. Based on an extended and more specific set of common indicators, the European Commission should also launch a strategy to better combine these two essential tools for socio-environmental progress, while avoiding confusing overlaps. The website www.inequalityin.eu (30) provides a good example of a tool that measures incomes and environmental parameters as indicators of quality of life within the Member States. |
| --- | --- |

6.3.

| 6.4. | There is a debate about how to operationalise the concept of ‘just transition’ in Europe. Active labour market policies should help ease the transition especially to low-carbon jobs (training and job search assistance, for instance) and increase workers’ participation, as well as Payments for Environmental Services, supporting disadvantaged groups during the transition (31). |
| --- | --- |

6.4.

Brussels, 31 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EESC opinion ‘The transition towards a more sustainable European future’ ( OJ C 81, 2.3.2018, p. 44).

1

(2)  The Brundtland report ‘Our Common Future’.

2

(3)  https://ec.europa.eu/eurostat/documents/2995521/10163468/3-16102019-CP-EN.pdf/edc3178f-ae3e-9973-f147-b839ee522578

3

(4)  See footnote 3.

4

(5)  Idem.

5

(6)  https://eige.europa.eu/publications/poverty-gender-and-intersecting-inequalities-in-the-eu

6

(7)  Eurostat

7

(8)  https://ec.europa.eu/info/policies/justice-and-fundamental-rights/gender-equality/equal-pay/gender-pay-gap-situation-eu_en

8

(9)  https://www.equalpayday.be/europa/; Eurostat

9

(10)  OECD, Understanding the Socio-Economic Divide in Europe, Background Report, 2017

10

(11)  Income inequality in the EU, Eurostat, 2016.

11

(12)  ‘What is poverty – Poverty facts and trends’, EAPN 2016.

12

(13)  30x30 Actions for a Sustainable Europe, #Think2030 Action Plan, IEEP.

13

(14)  EEA (2018).

14

(15)  Eurostat 2019.

15

(16)  See footnote 3.

16

(17)  ESPAS 2019; Eurostat 2019.

17

(18)  Eurostat 2018.

18

(19)  ‘Impacts of circular economy policies on the labour market’, Report for the European Commission by Cambridge Econometrics, Trinomics, and ICF May 2018.

19

(20)  ESDE 2019.

20

(21)  EESC opinion on Sustainable social security and social protection systems in the digital era (OJ C 129, 11.4.2018, p. 7).

21

Sustainable social security and social protection systems in the digital era

(22)  IIED.

22

(23)  Communication from the Commission — Guidelines on State aid for environmental protection and energy 2014-2020 (OJ C 200, 28.6.2014, p. 1).

23

(24)  White Paper Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system (COM(2011) 144 final).

24

(25)  Baldock, David and Charveriat, Céline. 2018. In the report, the data is referred to as: ‘own calculations based on Ricardo (2017). Climate mainstreaming in the EU Budget: preparing for the next MFF’.

25

(26)  EESC opinion on New sustainable economic models (OJ C 81, 2.3.2018, p. 57).

26

New sustainable economic models

(27)  OJ C 227, 28.6.2018, p. 1, point 1.6; OJ C 197, 8.6.2018, p. 33, points 1.8 and 3.6; OJ C 327, 12.11.2013, p. 11; OJ C 227, 28.6.2018, p. 95, point 1.4; OJ C 226, 16.7.2014, p. 21; OJ C 262, 25.7.2018, p. 1, point 3.14 and OJ C 190, 5.6.2019, p. 24, point 1.8; ECO/498 (see page 113 in this OJ).

27

(28)  OJ C 262, 25.7.2018, p. 1, point 1.6.

28

(29)  OJ C 262, 25.7.2018, p. 1, point 1.4.

29

(30)  https://www.inequalityin.eu

30

(31)  ITUC mentioning ILO guidelines for a just transition

31

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/38 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/38

---

Opinion of the European Economic and Social Committee on ‘The role of the EU’s trade and investment policies in enhancing the EU’s economic performance’

(own-initiative opinion)

(2020/C 47/06)

Rapporteur: Jonathan PEEL

Rapporteur: Tanja BUZEK

| Plenary Assembly decision | 24.1.2019 |
| --- | --- |
| Legal basis | Rule 32(2) of the Rules of Procedure
  Own-initiative opinion |
| Section responsible | REX |
| Adopted in section | 3.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 155/4/5 |

Plenary Assembly decision

24.1.2019

Legal basis

Rule 32(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

REX

Adopted in section

3.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

155/4/5

1.   Conclusions and recommendations

| 1.1. | Trade and investment are fundamentally important for the EU, not least the potential to enhance its own internal economic performance at ‘home’. One job in seven in the EU depends on exports and, given that 90 % of global economic growth over the next 10 to 15 years is expected to occur outside Europe, the EU needs to work to ensure it gains its optimum share of these openings and not lose out unnecessarily to competitors from third countries. |
| --- | --- |

1.1.

| 1.1.1. | EU trade and investment policy has become subject to scrutiny and political examination as never before. Major political developments, such as the growth of populism, the trade implications of Brexit, and industrial trade measures imposed by the current US Administration, have highlighted concerns about unfair trade deals and led to further political uncertainties. This opinion sets out to examine what the EU must do at ‘home’ to ensure that a fair trade promotes fair distribution of its rewards. The EU must win sufficient internal consensus to enable it to continue to negotiate beneficial and dynamic trade agreements around the world. To do that, it needs to promote a progressive trade agenda that builds on the protection of fundamental environmental, social and consumer standards and rights. |
| --- | --- |

1.1.1.

| 1.1.2. | The European Economic and Social Committee (EESC) reminds the incoming European Commission and Parliament of its recommendations made in a series of recent key opinions on EU trade and investment policies (1). We urge that these be incorporated in any new Trade Strategy. In this opinion, our objective is to concentrate on what the EU must do to get its own house in order whilst addressing existing trade controversies and provide for the needed safeguards. |
| --- | --- |

1.1.2.

| 1.2. | First, the EESC believes it is essential that the EU ensures the smooth and fair operation of the Internal Market and the Eurozone. One fifth of all export-related jobs in the EU (2) are based in a different Member State to that of the exporter, not least due to the growth in supply chains, the so-called ‘spill-over effect’. |
| --- | --- |

1.2.

| 1.2.1. | This goal needs to cover a very wide range of separate policies, ranging from transport and energy to better integration of services, to providing a legally robust and socially protected framework for the evolution of digitalisation and artificial intelligence (AI). It must also include even-handed EU regulation and policies that promote conditions that help businesses to take the lead in developing and applying new technologies that maintain competitiveness, whilst ensuring growth and decent jobs as part of a fair transition. |
| --- | --- |

1.2.1.

| 1.2.2. | Successful research and innovation are key to strengthening the EU’s position in the world. The EESC therefore calls for the incoming Commission to use every endeavour to ensure that Horizon Europe becomes an effective, resilient and robust follow-up to Horizon 2020. In turn, considerable efforts, particularly by Member States and fully involving social partners, will be required to ensure high-quality education and access to vocational and wider training. |
| --- | --- |

1.2.2.

| 1.2.3. | The encouragement and development of human skills is also fundamentally important. The EESC believes that emphasis must be placed in helping individual skills to be readily adapted through lifelong learning, increased emphasis on multilingualism and readily adaptable training programmes, as opposed to trying unsuccessfully to turn humans into better computers. |
| --- | --- |

1.2.3.

| 1.3. | The needs and potential of SMEs must be included in every policy area to help secure their access to finance and other resources, as well as support their ability to evolve. As the European Commission (EC) 2015 Communication ‘Trade for All’ (3) pointed out, over 600 000 SMEs, employing over 6 million people, directly account for one third of EU exports. |
| --- | --- |

1.3.

| 1.4. | Turning to the actual operation of trade, the EESC repeats its call for the EU, in supporting the WTO, to show global leadership in promoting rules to realise a progressive, fair and sustainable trade policy. It must continue to work closely with others to reform the WTO, not least to establish rules that ensure countries respect and implement the Sustainable Development Goals (SDGs). Here, the EU and its Member States should use their leverage and advocacy throughout the various WTO committee structures, especially covering those new areas such as trade and decent work. An open, rules-based international trade system that ensures high environmental, safety and labour standards is essential to enhance business opportunities and fair trading conditions for EU companies against those of their competitors. |
| --- | --- |

1.4.

| 1.5. | The EESC sees it as vital that EU trade and investment policy address all significant consequences of market opening, and limit negative impacts as far as possible, including social and transitional costs. The European Globalisation Adjustment Fund must, under any Multiannual Financial Framework, provide for sufficient funding to cover negative trade impacts and any limiting conditions and criteria for its application be re-examined. |
| --- | --- |

1.5.

| 1.5.1. | More comprehensive trade negotiations have greater potential in turn for conflict in sensitive areas. Any such controversies must be addressed effectively. These may involve challenges to high-level standards, notably in food safety, consumer protection, decent working conditions, protecting public services, or in enforcing sustainable trade rights, as covered in detail in a number of previous opinions. The EESC again emphasises that nothing in a trade agreement must be allowed to limit the public policy space of governments to regulate, as they see fit. |
| --- | --- |

1.5.1.

| 1.5.2. | Furthermore, the EESC calls on the new Commission to reconfirm its Horizontal Provisions for cross-border data flows and for personal data protection in EU trade and investment agreements. |
| --- | --- |

1.5.2.

| 1.5.3. | The EU is uniquely placed to take the lead on due diligence; the EESC calls on the Commission to propose EU rules in this area, and restates its belief that enforcing Responsible Business Conduct (RBC) through trade policy is important in enhancing the EU’s global trading position and in supporting sustainability, not least by encouraging companies to take responsibility for their impact on society. Equally, the EESC calls for trade agreements to require governments at both national and local levels to play a full role. |
| --- | --- |

1.5.3.

| 1.5.4. | The EESC believes that a more fundamental policy discussion on the role of trade and investment is essential to ensure a greater understanding of both its drivers and economic impact. EU evaluation policy needs to focus more on assessing qualitative elements of trade agreements, with the full involvement of civil society and the EESC. A broader set of indicators, with an open-minded look into alternative models, is required and impact assessments must be concluded before engaging in negotiations. At suitable íntervals, too, a more holistic study of the global impact of trade should be conducted. |
| --- | --- |

1.5.4.

| 1.5.5. | The EESC again strongly urges that the EEAS must become more trade aware. Trade has become an increasingly important element both geo-politically and as part of economic diplomacy, yet coverage of trade matters was notably absent from the recent Joint Communication on EU-Asia Connectivity (4). Equally, the EESC repeats its call for a closer, more coherent and transparent cross-collaboration between DG Trade and other Directorates-General, most notably DEVCO and EMPL. |
| --- | --- |

1.5.5.

| 1.6. | The EESC demands that dialogue with civil society on trade and investment policy throughout and beyond negotiations must become far more profound and its monitoring role be strengthened. This dialogue must be developed on a basis of further transparency and continuous improvement, as negotiations and agreements become more complex, not least due to the SDGs, Paris Agreement and moves towards a circular economy. |
| --- | --- |

1.6.

| 1.7. | The EESC also repeats its previous recommendation that not only is the multilateral approach to agriculture in need of rethinking and reinvigorating, but that the EU is well-placed to play a leading, proactive role in this, whilst promoting environmental, social and wider sustainable development standards, in line with the SDGs. The EU must also avoid making major concessions in agriculture that would undermine domestic production. |
| --- | --- |

1.7.

| 1.8. | The EESC was foremost in welcoming the emphasis in ‘Trade for All’ on sustainable development, especially in human and social rights and the environment, and the inclusion of Trade and Sustainable Development (TSD) chapters in all new-generation trade agreements. These need to become core to the promotion of EU trade and investment policy. Effective enforceability is now key to realising these commitments, not least to ensure a level playing field for EU businesses abroad. |
| --- | --- |

1.8.

| 1.8.1. | The EESC welcomes the recent announcement by the incoming Commission President of the proposed appointment of a new Chief Trade Enforcement Officer, reporting to the Trade Commissioner, ‘to monitor and improve the compliance of our trade agreements’ (5). We urge that this key new appointee be given wide ranging powers with equal weight and with equal effectiveness to cover all commitments agreed in FTAs, especially those related to sustainable development. This must involve an objective decision making process based on timely, effectively initiated investigations, backed by adequate resourcing and include a clear role for recognised stakeholders, both to submit complaints and to participate in any subsequent public hearings. In addition to in-depth reporting to the EP and Council, that in turn must entail a definitive role for the EESC and respective DAGs as well as continuous involvement of civil society. |
| --- | --- |

1.8.1.

| 1.8.2. | The EESC has previously recommended both that there should be a specific clause to promote the SDGs in all future mandates for TSD chapters, and that, following the Paris Agreement, combating global warming should now also be included as an integral part of EU values. The transition towards a low carbon, circular economy in turn has to be another core factor reflected in any EU negotiating mandate. |
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1.8.2.

| 1.8.3. | The actual transition to achieve a carbon neutral EU economy by 2050 will be a considerable challenge. This will have a profound impact on the development of trade policy, whilst decisions made over trade will in turn closely affect the detail of how this transition is achieved, both in the EU and globally. Ensuring a just transition here too must be placed at the heart of all future trade policy, practices and negotiations. |
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1.8.3.

| 1.8.4. | Increased trade flows will mean further increases in transport, where greenhouse gas (GHG) emissions are already notably high. The EESC therefore calls both that all modes of transport become part of an enhanced sustainable and just transport policy, and that a clear policy link between trade and transport be established, not least in meeting the relevant SDG commitments. |
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1.8.4.

| 1.8.5. | Finally, the EESC urges that in its moves towards a circular economy, the EU must take careful note of the issues affecting both the essential EU resource- and energy-intensive industries, work to prevent both carbon and investment leakage and fully investigate WTO-compatible palliative Border Adjustment Measures. |
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1.8.5.

2.   Background

| 2.1. | Trade and investment are fundamentally important for the EU, with the potential to enhance its own economic performance at ‘home’. The ‘Trade for All’ (6) Communication emphasised that over 30 million EU jobs, one in seven, depend on exports outside the EU and that 90 % of global economic growth over the next 15 years is expected to occur outside Europe. Whilst acknowledging the importance for enhancing its own economic performance through trade, the EU must not risk relying on an export-led model only. Equal importance must be given to enhancing internal demand by public and private investment and consumption. |
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2.1.

| 2.1.1. | The EU, which accounts for one sixth of world imports and exports, is the world’s largest exporter of manufactured goods and services, and in turn is the biggest export market for some 80 countries. A backbone of the European economy, industry accounts for 80 % of EU exports, providing important private innovation and high-skilled jobs. As ‘Trade for All’ pointed out, ‘the share of imports in the EU’s exports has increased by more than half since 1995’, which further underlines the key role played by business and industry and a dynamic and proactive trade policy. |
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2.1.1.

| 2.1.2. | The EU export dependent figure is now 36 million jobs at home (7), an increase of two thirds and by some EUR 1,5 trillion since 2000, with the EU maintaining its ‘share of world goods exports’ (at 15 %), compared with the rise of China and the corresponding decline in the global shares for both the US and Japan. The EC emphasises that jobs in export related activities ‘are better paid on average’ and have ‘a significant share’ in every Member State. |
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2.1.2.

| 2.1.3. | In contrast to trade in goods, for trade in services there is greater potential for downward pressure on wages. A recent OECD report (8) points out that services functions constitute a large part of the manufacturing industry and the foreign share of such services is increasing. Companies are increasingly considering whether to provide their own services or to buy from external suppliers. In the case of offshoring to countries with lower labour costs, the question of job displacement is particularly acute. |
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2.1.3.

| 2.1.4. | Brexit threatens to become a critical factor in the future of EU trade relations and continued tariff- and barrier-free trade flows. The loss from the Single Market of a major trading country could affect both the balance found in EU trade policy, as well as pose a sizeable challenge if followed by strong UK moves towards deregulation, including lowering of standards and rights. It is crucial that the EU use its best endeavours to counter any moves by the UK to compete on unfair terms. An EU-UK agreement that maintains high standards and rights is fundamentally important. |
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2.1.4.

| 2.2. | Many factors are combining to create an exponential global demand for trade in goods and, increasingly, in services. The world population is projected to reach 9-10 billion by mid-century. Due to rapid industrialisation and urbanisation, more than half of the world’s population for the first time now live in towns and cities, where people are more interdependent than in a rural, more subsistence-based society. |
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2.2.

| 2.2.1. | It has been estimated too that, by 2030, there may be up to 2 billion more people on middle incomes, notably in countries like China, India, Kenya, Chile and Indonesia, demanding and able to pay (many for the first time in their lives) for a far greater diversity and choice in what they eat, wear, use, drive or otherwise consume. |
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2.2.1.

| 2.2.2. | However, expanding markets is not the only reason for increased trade flows. In today’s world, activities of multinational enterprises are increasingly organised along global value chains. In analysing these strategies, the OECD (9) has described how tax strategies, scale (corporate concentration is on the increase), technological expertise, and diversification of the activities are key drivers for global trade. The digitisation of the economy is also blurring traditional boundaries. Furthermore, MNEs increasingly rely on non-equity relationships (strategic partnership, outsourcing). Group structures are therefore more complex than ever and business practices are changing. As a result, trade and investment policies may need to adjust. |
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2.2.2.

| 2.3. | An important opportunity for EU exporters is based on EU strengths, particularly in the production in value added or top end of market goods and services, and with some 70 EU preferential trade agreements already in operation and covering five continents, with significant other negotiations in progress. The alternative is to watch whilst these openings are seized by rival exporters, either those based in other developed countries or notably those from fast emerging economies. Significant recent developments here include the revised Trans Pacific Partnership (TPP), and other major trade negotiations across the Asia-Pacific area. |
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2.3.

3.   Key underlying elements to support EU trade-related prosperity

| 3.1. | The importance of the Single Market to EU trade is shown by its so-called ‘spill-over effect’, whereby one fifth of export-supported jobs are located in a different Member State. German exports, for example, account for 6,8 million jobs within Germany, but also 1,6 million jobs elsewhere in the EU. This is primarily due to the growth in lengthy supply chains, not only in Europe but also around the world, where unfinished products can cross borders many times, most notably in the automotive industry. Brexit has highlighted this factor: 650 000 UK-based jobs are linked to exports outside the EU originating from other Member States. EC figures (10) show that countries benefiting most include the Czech Republic, Slovakia and Poland. |
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3.1.

| 3.1.1. | Therefore, the smooth and fair operation of the Single Market and the Eurozone are significant factors in maintaining and boosting export-related jobs. Continued integration of the Single Market and the Eurozone remain paramount, including energy and a smoothly functioning transport system, and through facilitating fair worker mobility. |
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3.1.1.

| 3.1.2. | Crucial too are better integration of services and data flows, the latter within the framework of fully respecting EU data privacy rules, not least as the single market becomes increasingly digital. A healthy digital ecosystem too needs policies in which data can serve the public good and provide opportunities for developing public interest oriented digital services. |
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3.1.2.

| 3.1.3. | In its opinion on WTO reform, the EESC demanded ‘any future multilateral initiative on data flows [to] fully comply with EU horizontal provisions for cross-border data flows and data protection in EU trade and investment agreements’ (11) and called on the new Commission to reconfirm this core commitment as non-negotiable. |
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3.1.3.

| 3.2. | The rapid evolution of digitisation and artificial intelligence (AI), together with demographic changes and the transition towards a low-carbon, circular economy will radically transform society. Businesses play a lead role in providing innovation and new technologies, whilst the role of government is to provide the legislative framework for a just transition and principles for binding ethical AI rules. |
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3.2.

| 3.2.1. | Research and innovation, led by industry and backed by high-quality education and entrepreneurship, are essential to maintain the EU at the forefront of progress. A top priority for the incoming EC must be to ensure that Horizon Europe becomes an effective and robust follow-up to Horizon 2020. The EU must also focus on helping businesses improve their competitiveness, both internally and internationally, and in developing and applying new technologies. Innovation is also boosted through pilot projects and through cooperation between the public and private sectors and academia. |
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3.2.1.

| 3.2.2. | Technological change and development demand rapid changes in skills where gaps appear rapidly and unexpectedly, but most often in technical areas, notably in ‘STEM’ (Science, Technology, Engineering and Maths). |
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3.2.2.

| 3.2.3. | The encouragement and development of human skills and wider multilingualism are as important as a greater emphasis on access to vocational training, retraining and lifelong learning. |
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3.2.3.

| 3.2.4. | To narrow the skills gap, training systems will need to be sufficiently flexible and readily able to respond to future needs. This will therefore require considerable efforts by Member States and social partners also need to play an essential role here. |
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3.2.4.

| 3.3. | With different and new forms of work emerging, it is critical to enhance the smooth transition from education to work, between jobs and tasks, as well as providing stimulating conditions for self-employment and entrepreneurship. Changes in the world of work need to be backed by socially protected, flexible and well-functioning labour markets, together with a results oriented social dialogue. |
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3.3.

| 3.4. | Competition is a key driving force behind business development. EU trade policies and regulations, within the extent of their remit, must provide companies positive conditions that promote decent jobs with high labour standards when competing with countries outside the EU. Such regulation must be fit for purpose and encourage a positive entrepreneurial spirit and culture that is also attractive to younger people, and in particular women. |
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3.4.

| 3.4.1. | The EESC takes note of OECD and IMF reports (12) pointing to the increased concentration of industries, both for manufacturing and non-financial services. Further research is necessary to understand the drivers behind such market concentration, which may warrant a fresh look at competition and international trade policies. Here in particular, the trade agenda must not stand in the way of policies aiming at giving a better chance to SMEs to enter markets, including through ambitious European industrial policies — particularly in the digital sector. |
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3.4.1.

| 3.4.2. | The EU needs to provide an environment that is supportive of private and public investment. This requires stability and predictability, a stable macroeconomic environment, strong IPR protection and fiscal responsibility. The tax system for its part whilst fair also needs to encourage innovation, entrepreneurship, growth and job creation. |
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3.4.2.

| 3.4.3. | At the same time, EU trade and investment policies need to remain alert to any investment that may arise from fraud or tax avoidance. |
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3.4.3.

| 3.4.4. | Foreign Direct Investment (FDI) is important when companies increasingly locate production close to their ultimate markets, which, inter alia, can help them maintain their competitiveness. The EESC has also welcomed (13) EU trade defence regulation on recent moves to monitoring inward investment into the EU. |
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3.4.4.

| 3.4.5. | Nonetheless, the 2018 OECD annual report on FDI statistics has shown a 27 % drop in global FDI following US tax reform. For certain EU countries (Luxembourg, Netherlands), the drop has been spectacular. Particular attention should therefore be paid to the distinction between FDI which are linked to the real economy as opposed to FDI based on any fraudulent and tax-avoiding motives. This the EU must combat at all levels. |
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3.4.5.

| 3.5. | As ‘Trade for All’ pointed out, ‘over 600 000 SMEs, employing more than 6 million people directly export goods outside the EU, accounting for one third of exports’ (14), whilst adding that ‘many more export services’, or are suppliers to large companies. |
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3.5.

| 3.5.1. | The EESC specifically welcomed ‘the commitment to small businesses, which face greater hurdles when aiming at new markets’. Dedicated SME provisions were promised in all future negotiations, as were ‘regular surveys on barriers’ faced by SMEs in specific markets. The Committee’s opinion (15) on TTIP and its impact on SMEs is also relevant here. |
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3.5.1.

| 3.5.2. | The potential and needs of SMEs must be included in every policy area in order to help secure their access to finance, other resources and markets, as well as support their ability to evolve, given the varying needs of differing kinds of enterprises and the specific conditions in which SMEs operate (including rural and peripheral areas). |
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3.5.2.

4.   Addressing trade controversies

| 4.1. | The Lisbon treaty provided the EU with new competence in investment and bound it to tie in its work on both trade and investment with other key areas, notably development. We remain concerned that there is as yet insufficient read-across on trade impacts between the various Commission DGs, including DEVCO and EMPL. |
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4.1.

| 4.2. | On top of the ‘new generation’ of trade agreements, starting with Korea, the Commission also looked to negotiate more comprehensive FTAs, both with Eastern Partnership countries and more advanced trading partners. This included Japan, and notably the Comprehensive Economic Trade Agreement (CETA) with Canada, going beyond the elimination of mere tariffs but covering a wide range of different aspects like rules for services, the elimination of non-tariff barriers to trade and other trade-related aspects such as investment and competition or regulatory cooperation. |
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4.2.

| 4.2.1. | With this evolution, the EESC sees the call for a continuous development of a forward-looking progressive trade agenda becoming more urgent than ever. Such comprehensive trade negotiations have greater potential to lead to conflict with sensitive areas such as maintaining high-level standards, in particular in food safety, consumer protection and decent work conditions, in protecting public services, or enforcing rights of a sustainable trade agenda. |
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4.2.1.

| 4.2.2. | Given that new generation agreements go far beyond traditional tariff reduction but into setting rules for government measures not to affect trade, concerns arise that this will limit their public policy space. States not only have the right to regulate, as they see fit, but an obligation to so in the general interest. The EESC emphasises that nothing in a trade agreement must hinder this. |
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4.2.2.

| 4.2.3. | The EESC has stated (16) that the EU’s trade policy ‘will be judged by whether the Commission is able to demonstrate that environmental, labour and other standards are not lowered by trade agreements. Indeed these should aim to improve such standards’. |
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4.2.3.

| 4.3. | Open, rules-based international trade is essential both to enhance business opportunities and to ensure fair conditions for companies against foreign competitors. The EU must support WTO rules that promote fair trade that ensures respect for the SDGs and show global leadership both in tackling protectionism and disruption and in promoting a progressive and sustainable trade policy. Here, the EU and its Member States should use their leverage and advocacy throughout the various WTO committee structures, especially covering those new areas such as trade and decent work. |
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4.3.

| 4.4. | Trade is one of the most evaluated policy processes in the EC. However, in order to enable a wider policy discussion on the role of trade and investment, further analysis is needed to better understand the drivers and the economic impact of trade, as well as its potential contribution to SDGs. |
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4.4.

| 4.4.1. | Here the EU evaluation policy needs to play a key role. DG Trade evaluates the impact of major trade initiatives, using various tools: impact (IA) and sustainability impact assessments (SIA), economic assessment of negotiated outcomes and ex post evaluations. |
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4.4.1.

| 4.4.2. | Questions of methodology and timing are crucial and should be re-assessed. The used computable general equilibrium (CGE) model should be re-evaluated against alternative models and include a broader set of indicators measuring impacts on human and labour rights, climate change, biodiversity, consumers and FDI. A mere comparison of the situation with or without a trade agreement, however, falls short of the qualitative evaluation of negotiation options in particular on TSD. IA and SIA need to be concluded in a timely manner to advise negotiators and be taken into account before and during the negotiations, not presented after their conclusion. |
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4.4.2.

| 4.4.3. | Helping realise the SDGs, as previously recommended by the EESC in its opinion on The core role of trade and investment in meeting and implementing the SDGs (17), should move to the core of EU trade policy evaluation |
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4.4.3.

| 4.4.4. | The EESC sees a valuable contribution in the civil society consultation for SIAs and recommends to extend it to the early process of drafting the terms of reference. The work of the EC evaluation steering group inside could further improve by involving civil society too. Consultants need sufficient independence and expertise, particularly, regarding human rights and the environmental issues. |
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4.4.4.

| 4.4.5. | As far as labour markets are concerned, more detailed analysis is required on potential displacement effects, the evolution of wages and job security. Concerning the economic impact, attention should be paid not only to the EU, but also to what extent trade and investment enable less-developed economies to increase their productivity and innovation. Moreover, a holistic study of the global impact of trade should be conducted at suitable intervals. |
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4.4.5.

| 4.4.6. | Trade has become an increasingly important element both geo-politically and as part of economic diplomacy. To this end, the EEAS needs to become more trade aware — coverage of trade matters was notably absent from the Joint Communication on EU-Asia Connectivity (18). |
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4.4.6.

| 4.5. | The negotiations for a ‘TTIP’ agreement with the United States first highlighted many wider public and civil society concerns but these are general in nature. Whilst the EC put efforts in trade negotiations for political commitments not to encourage trade or investment by weakening levels of protection or to provide for guarantees such as specific exemptions and reservations, dedicated clauses on public monopolies or early dismissal of frivolous investor claims, the EESC sought and continues to seek further clarifications and guarantees on various highly sensitive points. |
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4.5.

| 4.5.1. | The exposure of public services in a trade agreement through market liberalisation and specific clauses (standstill and ratchet), that frame the parties’ future leeway to introduce Market Access restrictions and discriminatory measures, are seen as a crucial concern. The EESC has previously welcomed the ‘Commission’s stated desire, in line with positions taken by the EESC, the European Parliament and wider civil society, to protect public services in FTAs’; however emphasising ‘that this can best be done by the use of a positive list with regard to both market access and national treatment’ (19). |
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4.5.1.

| 4.5.2. | Given the constant possibility of a change of government and consequent change of policy towards public services, any previous opening in a trade agreement would be ‘locked in’. There can be no step backwards. Therefore, opening clauses of standstill and ratchet can constitute a threat in particular to public services, given their narrow and ambiguous definition of scope. |
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4.5.2.

| 4.5.3. | Preserving this public policy space becomes also vital in the context of including public procurement in trade agreements. Therefore, it was important to the EESC to call for ‘maintaining the ability for the procuring entities to use environmental, social and labour-related criteria such as the obligation to comply with and adhere to collective agreements, in procurement tenders’ (20). |
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4.5.3.

| 4.6. | In the context of investment protection, the EESC called for ‘procedural safeguards against claims that target domestic public interest legislation [...] to guarantee a Party’s right to regulate in the public interest, as they see fit, over the protection of the investor’ (21). In its opinion on the Multilateral Investment Court, for the EESC ‘this could only be sufficiently achieved by the inclusion of a public interest carve-out, [...] accompanied by appropriate guarantees that it will not be abused for protectionist reasons.’ In the wider context of its opinion on Specific key issues of the TTIP, the EESC called for the explicit mention of ‘collective agreements, including tripartite and/or generalised (erga omnes) agreements, in order to exclude them from being made subject to interpretation as breach of an investor’s legitimate expectation’ (22). |
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4.6.

| 4.7. | Whilst agriculture and trade have been EU competences for over 40 years, there has at times been a lack of communication, or ‘joined-up’ thinking, between these key interests. The EU must also avoid any temptation to make major concessions in agriculture that would undermine domestic production. |
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4.7.

| 4.7.1. | The EESC opinion on Agriculture in Trade Negotiations (23) stressed that bilateral agreements should aim to eliminate the application of double standards in agriculture, notably in connection with the SPS and TBT Agreements, in partner countries. The EU will also want to promote its environmental, social and wider sustainable development standards, in line with the SDGs. The EU (and others) must include a binding commitment to capacity building to help less developed countries to meet such standards, such as help in developing an acceptable certifying veterinary system, food safety standards being paramount. |
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4.7.1.

| 4.7.2. | The multilateral approach to trade in agriculture needs rethinking and reinvigorating. The WTO ‘Doha’ concept of trade dialogue between developed and developing countries has to be preserved and enhanced, whilst respecting the principle of food sovereignty for all. The same opinion stressed that the EU is well placed to play a leading, proactive role in promoting a fresh, balanced approach, not least due to the failure of some fast-emerging economies to make notable efforts to help others still less developed. |
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4.7.2.

| 4.8. | In its opinion on Reforming the WTO, the EESC saw ‘it vital that the precautionary principle, as enshrined in the EU treaties, is adequately protected also at multilateral level and to gain full legal recognition in order to ensure a higher level of protection through preventative decision making in the case of risk to human health or the environment. Given its importance, the EU should make it an offensive interest in all its trade negotiations’ (24). |
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4.8.

| 4.9. | Whereas Trade for All puts a distinct focus on consumers’ confidence in safe products, the UN Guidelines on Consumer Protection provide a much wider understanding including protection of consumers’ privacy, their rights in e-commerce and the right to effective enforcement of consumer rights. Given the impact of trade liberalisation on consumers, the EESC called in its opinion on TSD chapters in FTAs for ‘a consumer-specific chapter on ‘trade and consumers’ within the TSD framework, incorporating relevant international consumer standards and strengthening cooperation on the enforcement of consumer rights’ (25). |
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4.9.

| 4.10. | The EC 2017 Reflection Paper on Harnessing Globalisation identifies a number of consequences of unmanaged globalisation, in particular growing inequalities. The benefits of trade are never spread evenly. EU trade and investment policy must address all significant consequences of market opening, and limit negative impacts as far as possible, including social and transition costs. |
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4.10.

| 4.10.1. | ‘Trade for all’ was first to acknowledged that trade ‘can involve temporary disruptive impacts for some regions and workers, if new competition proves too intense for some firms’ and stresses that ‘for the people directly affected, a change like this is not small’. Here the European Globalisation Adjustment Fund is important. It helped over 27 600 workers in 2013-2014 (26). Therefore, the EESC sees it important that any future Multiannual Financial Framework should foresee sufficient funding directly linked to trade impacts and re-examine any limiting conditions and criteria for its application. To better anticipate and accompany restructuring changes, effective workers’ rights to information, consultation and collective bargaining are here essential for just transitions. |
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4.10.1.

| 4.11. | The EESC further calls to provide stronger protections for sensitive sectors from unfair trade competition, by including ILO standards in the criteria for assessing them. In a recent opinion on the methodology of trade defence instruments (27), the EESC called for a level playing field between European and third country exporting producers. In this respect, the EESC welcomed the Commission’s intention of using specific criteria to determine whether there are significant distortions in the market situation, however, noting that the respect of ILO standards and of Multilateral Environment Agreements should also be considered. |
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4.11.

| 4.12. | With respect to a strong commitment given by the EU Commission on strengthening labour provisions through trade negotiations, the EESC has called for partner countries to ‘demonstrate full respect of the eight ILO Core Labour Conventions before the conclusion of a trade agreement. If a partner country has not ratified or properly implemented these Conventions, or demonstrated an equivalent level of protection, the EESC recommends that a roadmap on solid commitments is sought, to be included in the TSD Chapter to ensure this be achieved in a timely manner’ (28). The EU must also promote the implementation and enforcement of up-to-date ILO standards to ensure a true level playing field for EU businesses abroad and support SDG 8 on Decent Work. |
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4.12.

| 4.13. | Trade policy must also reinforce Corporate Social Responsibility initiatives. Companies must take responsibility at all stages of the supply chain. That in turn should boost companies’ ‘licence to operate’, whilst maximising both innovation and sustainable economic growth. Consistent implementation of Responsible Business Conduct (RBC) is important in enhancing the EU’s global trading position and in helping to realise the Sustainable Development Goals (SDGs). In all FTAs, the EU should insist that each signatory party should actively encourage compliance by companies with the OECD Guidelines for Multinational Enterprises (29). By acknowledging the importance of government enforcement of labour market rules including through inspections, the EESC calls for trade agreements to require governments at national and local levels to play their full role. |
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4.13.

| 4.13.1. | More governments develop their own respective laws and instruments, most recently the French Duty of Vigilance law and the Dutch Child Labour Due Diligence bill. Canada enhanced its Corporate Social Responsibility Strategy by focusing on Canadian companies’ behaviour abroad and created a multi-stakeholder Advisory Body. In April 2019, the first Canadian Ombudsperson for Responsible Enterprise was appointed, with a mandate to review and report publicly alleged human rights abuses arising from Canadian companies’ operations in mining, oil and gas and garment sectors abroad, including recommendations for trade measures for companies. |
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4.13.1.

| 4.14. | The EESC sees the EU as uniquely placed to take the lead on due diligence, in particular with view on the growing global supply and value chains. Voluntary and binding measures are not mutually exclusive, but must complement each other. In this respect, the EESC has noted the work on the so-called UN binding treaty, currently under discussion by the Members of the UN, which intends to codify legally binding international human rights obligations for the activities of transnational corporations and welcomes EESC’s ongoing work for the own-initiative opinion REX/518. After the example of certain Member States that have already passed legislation on due diligence, the EESC urges the Commission to propose EU rules in this area. |
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4.14.

5.   Trade and sustainable development: the need to realise the SDGs/Paris Agreement

| 5.1. | In its opinion on Trade for All (30), the EESC welcomed above all the EU emphasis ‘on its extensive coverage of sustainable development, especially in human and social rights and the environment. In its opinion on Trade and Sustainable Development chapters in FTAs (31) the EESC urged the EC ‘to be more ambitious in its approach, in particular with respect to strengthening effective enforceability of the commitments in TSD chapters, which is of crucial importance to the EESC. TSD chapters must be given equal weight to those covering commercial, technical or tariff issues.’ |
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5.1.

| 5.1.1. | In this respect, the EESC particularly welcomes the recent announcement by the incoming Commission President of the forthcoming appointment of a new Chief Trade Enforcement Officer ‘to monitor and improve the compliance of our trade agreements’, whilst not detracting from the overall responsibility of the Trade Commissioner. Here it is essential that this must include wide ranging powers with equal weight and with equal effectiveness to cover all commitments agreed in FTAs, in particular those related to TSD chapters and social and environmental concerns arising in relation to other chapters in trade and investment agreements. This post must also include an objective decision making process based on timely, effectively initiated investigations, backed by adequate resourcing and include a clear role for recognised stakeholders, both to submit complaints and to participate in any subsequent public hearings. In addition to in-depth reporting to the EP and Council, that in turn must entail a definitive role for the EESC and respective DAGs as well as the underlying continuous involvement of civil society. |
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5.1.1.

| 5.2. | In each of what the EU calls its post 2010 ‘new generation’ FTAs, it has included a special TSD chapter. This has also involved an active monitoring role for civil society from each party. |
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5.2.

| 5.2.1. | The EESC considers the constructive dialogue with civil society on trade and investments policy to be an essential element and repeats its call for its role to be further strengthened. In its opinion on The role of Domestic Advisory Groups (DAGs) (32), the EESC highlighted this involvement and demanded its extension to cover all aspects of a trade agreement, with a prioritised focus on their impact on TSD commitments. |
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5.2.1.

| 5.2.2. | The EESC has already recommended not only a specific clause to promote the SDGs be included in all future mandates for TSD chapters (33), but that, following the Paris Agreement, combating global warming should now also be included. |
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5.2.2.

| 5.3. | Both the 17 SDGs, the centrepiece of the UN’s comprehensive ‘2030 Agenda for Sustainable Development’, and the Paris Agreement on climate change (34) must remain global priorities. Here trade and investment need to play a core supporting role. However, a considerable challenge will be to achieve a carbon neutral EU economy by 2050. |
| --- | --- |

5.3.

| 5.3.1. | All of these will have profound effects on trade as in turn trade flows will have an effect on them, both in the EU and globally. The Paris and SDG agendas must be placed at the heart of all future trade policy, practices and negotiations. UNCTAD (35) has estimated that an extra USD 7 trillion will be required to achieve the SDGs, of which a third at least will need to come from the private sector. Moreover, public resources will critical too in implementing and financing the SDGs. As the WTO Director-General has previously pointed out, the MDGs have already shown the ‘transformative potential of trade’ (36). |
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5.3.1.

| 5.3.2. | In turn, significant regulatory changes will be required to achieve a successful energy transition and the necessary freedom to reach the goals under the Paris agreement. The EESC, in its opinion on the Multilateral investment court, called for a hierarchy clause that ensures that in the event of any inconsistency between an international investment agreement and any international environmental, social or human rights agreement binding on one Party to a dispute, the obligations under the international environmental, social, or human rights agreement shall prevail, in order to avoid precedence being given to investors’ agreements (37). |
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5.3.2.

| 5.4. | The EESC has previously concluded (38), that the EU is ‘uniquely placed to further the realisation of the SDGs’ as it ‘has the credibility to play an effective bridging role between developed and developing countries’. Nevertheless, it urged that sharper focus be given to integrating the SDGs fully ‘in the European policy framework and current Commission priorities’, in conjunction with Member States where necessary. |
| --- | --- |

5.4.

| 5.4.1. | The EESC has already emphasised that trade in agriculture (39) will have a particularly important role to play in meeting eleven of the Goals. A more recent opinion, Connecting Europe and Asia (40), emphasised ‘that it is essential that a formal connection between the [Chinese] Belt and Road Initiative and the SDGs be established’, again listing the nine most relevant SDGs. |
| --- | --- |

5.4.1.

| 5.5. | At least 13 SDGs refer to climate change. The Paris Agreement in turn is the world’s first comprehensive climate agreement. If the SDGs are the blueprint for the next generation, this is the blueprint for the future of the planet. It is widely accepted that an increase in global average temperature in excess of 2 °C above pre-industrial levels would have catastrophic effects. Countries most likely to be affected would also be least able to manage the necessary changes. |
| --- | --- |

5.5.

| 5.5.1. | Increased trade flows by their nature will mean further increases in transport, where greenhouse gas (GHG) emissions are already notably high. Transport accounts for 24 % of global CO2 emissions and is the only sector where emissions are still growing, predicted to reach 40 % of total emissions by 2030. With international aviation and shipping not directly included in the Paris Agreement, there is an urgent need to address all transport modes in an enhanced just and sustainable transport policy, including other players in the supply chain, such as energy producers and original equipment manufacturers (OEMs). |
| --- | --- |

5.5.1.

| 5.5.2. | In a separate opinion on the Role of transport, the EESC highlighted ‘the many challenges with respect to the SDGs, such as the need to reduce climate and environmental impacts, to improve transport systems and traffic safety, and to manage concerns related to jobs and decent work’ (41) Now, the EESC is also calling for a policy link to trade and investment to be established. |
| --- | --- |

5.5.2.

| 5.6. | This overall concern has led to the growth of the concept of a ‘circular economy’, described as an economic system aimed at minimising waste and making the most of resources. The aim of a circular economy is to minimise both resource input and waste and emissions and energy leakage. This can be achieved through a regenerative approach based on long lasting design, maintenance, repair, reuse, re-manufacturing, refurbishing and recycling. |
| --- | --- |

5.6.

| 5.6.1. | Many believe that a sustainable world should not mean a drop in the quality of life for consumers, can be achieved without loss of revenue or extra costs and that circular business models can be as profitable as linear models. |
| --- | --- |

5.6.1.

| 5.6.2. | Nevertheless, a number of related issues arise, notably for EU resource- and energy-intensive industries (REIIs), faced with an inherent difficulty. They play an important, strategic role in EU industrial value chains. Whereas the purpose of climate change policy is to reduce GHG emissions (both from the combustion of fossil fuels and from industrial processes) — the current EU target is to reach carbon neutrality by 2050 — REII energy costs represent a notably high proportion of their total costs: 25 % for steel, 22-29 % for aluminium (42), 25-32 % for glass (43). This problem is covered in greater depth in a separate EESC opinion (44). |
| --- | --- |

5.6.2.

| 5.6.3. | Carbon and therefore investment leakage occurs when a higher price in the EU leads to a loss of market share and related jobs. In this case, GHG emissions are simply transferred from EU producers to producers elsewhere (who often are less energy-efficient), with (at best) no effect on global GHG emissions. |
| --- | --- |

5.6.3.

| 5.6.4. | Palliative Border Adjustment Measures (BAMs), where countries can both impose a tax on imported goods and refund tax on exported goods, are possible and are accepted as legal by the WTO provided they meet certain conditions. |
| --- | --- |

5.6.4.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  As referenced in most footnotes from 9 onwards.

1

(2)  DG Trade publication, November 2018.

2

(3)  COM(2015) 497 final.

3

(4)  JOIN(2018) 31 final.

4

(5)  Commission president-elect Ursula von der Leyen’s mission letter to Commissioner-designate for Trade Mr Phil Hogan, 10 September 2019.

5

(6)  See footnote 3.

6

(7)  And a further 20 million outside Europe.

7

(8)  OECD Trade Policy Papers, No 226 (2019), Offshoring of services functions and labour market adjustments, Paris.

8

Offshoring of services functions and labour market adjustments

(9)  OECD Trade Policy Papers, No 227 (2019), Micro-Evidence on Corporate Relationships in Global Value Chains: The Role of Trade, FDI and Strategic Partnerships, Paris.

9

Micro-Evidence on Corporate Relationships in Global Value Chains: The Role of Trade, FDI and Strategic Partnerships

(10)  See footnote 2.

10

(11)  OJ C 159, 10.5.2019, p. 15.

11

(12)  OECD Productivity Working Papers, No 18 (2019), Industry Concentration in Europe and North America, Paris; World Economic Outlook Report, April 2019.

12

Industry Concentration in Europe and North America

(13)  OJ C 262, 25.7.2018, p. 94.

13

(14)  See footnote 3.

14

(15)  OJ C 383, 17.11.2015, p. 34.

15

(16)  OJ C 264, 20.7.2016, p. 123.

16

(17)  OJ C 129, 11.4.2018, p. 27.

17

(18)  See footnote 4.

18

(19)  OJ C 264, 20.7.2016, p. 123.

19

(20)  OJ C 159, 10.5.2019, p. 15.

20

(21)  OJ C 110, 22.3.2019, p. 145.

21

(22)  OJ C 487, 28.12.2016, p. 30.

22

(23)  OJ C 173, 31.5.2017, p. 20.

23

(24)  OJ C 159, 10.5.2019, p. 15.

24

(25)  OJ C 227, 28.6.2018, p. 27.

25

(26)  EC Press Release, July 2015.

26

(27)  OJ C 209, 30.6.2017, p. 66.

27

(28)  OJ C 227, 28.6.2018, p. 27.

28

(29)  OECD Guidelines for Multinational Enterprises, 2011.

29

(30)  Footnote 16.

30

(31)  OJ C 227, 28.6.2018, p. 27.

31

(32)  OJ C 159, 10.5.2019, p. 28.

32

(33)  Footnote 16.

33

(34)  The Paris Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC COP21).

34

(35)  Unctad WIF Press Release, Geneva 14.10.2014, since repeated.

35

(36)  UN Speech, 21.9.2016.

36

(37)  OJ C 110, 22.3.2019, p. 145.

37

(38)  See footnote 17.

38

(39)  See footnote 23.

39

(40)  OJ C 228, 5.7.2019, p. 95.

40

(41)  OJ C 367, 10.10.2018, p. 9.

41

(42)  A. Marcu, W. Stoefs: Study on composition and drivers of energy prices and costs in selected energy-intensive industries, CEPS, 2016, available at: http://ec.europa.eu/DocsRoom/documents/20355

42

Study on composition and drivers of energy prices and costs in selected energy-intensive industries

(43)  C. Egenhofer, L. Schrefler: Study on composition and drivers of energy prices and costs in energy-intensive industries. The case of the flat glass industry, CEPS, 2014.

43

Study on composition and drivers of energy prices and costs in energy-intensive industries. The case of the flat glass industry

(44)  OJ C 353, 18.10.2019, p. 59.

44

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/50 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/50

---

Opinion of the European Economic and Social Committee on ‘A more constructive role for civil society in implementing environmental law’

(exploratory opinion)

(2020/C 47/07)

Rapporteur: Arnaud SCHWARTZ

Co-rapporteur: István KOMORÓCZKI

| Referral | European Commission, 18.12.2019 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union
  Exploratory opinion |
| Bureau decision | 11.12.2018 |
| Section responsible | Agriculture, Rural Development and the Environment |
| Adopted in section | 1.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 152/3/1 |

Referral

European Commission, 18.12.2019

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Exploratory opinion

Bureau decision

11.12.2018

Section responsible

Agriculture, Rural Development and the Environment

Adopted in section

1.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

152/3/1

1.   Conclusions and recommendations

| 1.1. | In requesting this opinion, the European Commission (EC) stated that in organised civil society — ‘employers, workers and other representatives are central to implementation’. The EESC agrees with this and, as it did in previous opinions (1) (2), stresses the fact that environmental legislation is not properly implemented because of a lack of political will at all institutional levels. This has nothing to do with civil society not fulfilling its role sufficiently or constructively. |
| --- | --- |

1.1.

| 1.2. | The EESC therefore calls on the EC to develop a better compliance framework at EU level. This should happen with more transparent and resolute handling of complaints and infringements, but also by adding greater human and financial resources (for instance under the Multiannual Financial Framework — MFF). The aim is to explain what EU environmental legislation is, check whether it is properly implemented, evaluate it and assist the courts to carry out their remit when necessary. |
| --- | --- |

1.2.

| 1.3. | The EESC supports the Environmental Implementation Review (EIR) process, which is key to providing a wide range of environmental information on issues such as sustainability, climate change and quality of life in Europe. However, it is waiting for the EC and the Member States to fulfil their obligations by integrating the views of civil society organisations (CSOs) into the EIR and country reports. |
| --- | --- |

1.3.

| 1.4. | The EESC also asks the EC to integrate CSOs more systematically into future EU environmental law fitness checks as well as into future EIR processes at both national and EU level. This integration should take place at a very early stage during the definition of the evaluation criteria, in cooperation with the EESC or equivalent committees depending on whether this happens at European, national or local level. |
| --- | --- |

1.4.

| 1.5. | The EESC asks the EC to ensure that the Member States develop, introduce and operate harmonised, green and sustainable tax systems based on the ‘polluter pays’ principle. This way, resources will be systematically redistributed towards those acting to prevent the pollution of soil, water and air. This principle should also apply to municipalities and other local or regional authorities. |
| --- | --- |

1.5.

| 1.6. | Environmental CSOs and SMEs should be more involved in providing information to employees and shaping environmental education and training to ensure that the general public has a basic understanding of these issues. This cooperation should be supported and financed by Member States. Mandatory education on climate and environmental topics (ages 6-18) should be part of each country’s national curriculum, and CSOs active in the area of the environment should be involved in theoretical or practical work on a compulsory basis from 2020 onwards. |
| --- | --- |

1.6.

| 1.7. | On a political level, the EESC urges all Member States to establish at the very least a ministry for environmental protection, enabling a greater focus on and better coordination and enforcement of environmental law. |
| --- | --- |

1.7.

| 1.8. | In order to reduce our ecological footprint and strengthen sustainable development, the EESC urges Member States to implement fully Green Public Procurement (GPP) strategies in a way that is regularly and directly supervised by the EC. The latter should go further in requiring CSOs to be consulted when preparing GPP and finalising incoming bids. The possibility of using EU funds in order to strengthen the positive impact of GPP should also be put forward by the EC. |
| --- | --- |

1.8.

| 1.9. | The EU must help to develop local development models and promote widespread domestic protection of the environment. For these reasons, a more visible EU presence is needed locally in order to ensure that EU funds are well spent and relevant public and private stakeholders are involved in properly implementing environmental law and governance. This could also respond to the need to ensure that people and organisations living in outlying regions of the EU are supported and treated as a key part of the EU. The EC should also ensure that enough well trained personnel are employed of access to information and justice, and particularly in the field of inspection in order to monitor the proper implementation. |
| --- | --- |

1.9.

| 1.10. | The EESC points out that the EC has to safeguard and strongly sustain our key environmental and social standards when promoting and protecting the EU economy during global trade negotiations. This is not only a way to enhance European competitiveness, improve Europe’s image and give its population and territories a future, but also offers a chance to show other parts of the world a more democratic and sustainable method of governance based on stronger CSO involvement. |
| --- | --- |

1.10.

| 1.11. | The EESC proposes setting up a tripartite body (EC, the Member States and CSOs) for dispute settlements and/or for debating problems raised by CSOs before any potential environmental harm takes place or any legal remedy is sought. In addition, an independent EU scientific advisory body should be able to make recommendations to the EC when a CSO reports a problem. The EC should also present reasoned decisions. |
| --- | --- |

1.11.

| 1.12. | The Member States and the EC should extend more political, financial and professional support to SMEs and CSOs for focusing on protecting the environment after 2020. |
| --- | --- |

1.12.

2.   General comments

2.1.   
  The role of civil society in the governance, implementation and evaluation of environmental law

Context

| 2.1.1. | Frans Timmermans, the first vice-president of the EC, wrote to the president of the EESC in December 2018 requesting this exploratory opinion, stating that ‘civil society — employers, workers and other representatives are central to implementation’. The EESC, as the voice of organised civil society, reflects the grass roots opinions of EU society in areas that fall within the themes mentioned in the above letter. |
| --- | --- |

2.1.1.

| 2.1.2. | In the past few years, the EESC has adopted several opinions dealing with this topic, which the EC should take into account (3) (4). |
| --- | --- |

2.1.2.

| 2.1.3. | In the light of the global rise in concern about the environment among citizens (5), the EESC would like to remind the EC that one of the biggest issues for better implementation of environmental law has been the lack of political will at local, national and EU level. This has also resulted in insufficient human and financial resources (for instance under the Multiannual Financial Framework), which are needed in order to explain the purpose of the environmental legislation, ensure that it is properly implemented, help the courts to carry out their remit when needed (6) and evaluate it. In other words, the insufficient implementation of environmental legislation is not due to civil society’s failure to fulfil its role sufficiently and constructively. The EESC is of the opinion that the fault lies chiefly with the legislative bodies, which simply did not care enough. |
| --- | --- |

2.1.3.

| 2.1.4. | Last, but not least, the EESC would argue that a stronger role for organised civil society in the governance, implementation and evaluation of the EU environmental regulations is essential to achieving the UN Sustainable Development Goals (SDGs), beginning with SDG 1, and putting global climate agreements into practice. Consequently, the EESC draws the attention of the competent authorities to a number of general, sectoral and topical improvements listed in this opinion. |
| --- | --- |

2.1.4.

Access to information

| 2.1.5. | The EESC strongly supports the Environmental Implementation Review process, which is key to providing a wide range of environmental information on issues such as sustainability, climate change and quality of life in Europe. It is waiting for the EC and the Member States to fulfil their obligations by integrating the views of CSOs into the EIR and country reports. |
| --- | --- |

2.1.5.

| 2.1.6. | The EESC asks the EC to require the Member States to adopt a mechanism enabling access to environmental information within a one-month time limit (Aarhus Convention (7)). It is no longer acceptable for the public to be forced to wait — sometimes for more than a year — before being able to access this information. |
| --- | --- |

2.1.6.

| 2.1.7. | The EESC also asks the EC to better communicate and promote the vision of EU directives more regularly and efficiently by means of social media. This could be supported by CSOs. Ongoing training and education on environmental issues are key. |
| --- | --- |

2.1.7.

Participation

| 2.1.8. | The EESC asks the EC to integrate CSOs more systematically into future fitness checks of the EU environmental regulations as well as into future EIR processes at both national and EU level. This integration should take place at a very early stage when the evaluation criteria are defined, in cooperation with the EESC and equivalent committees at national and local level. |
| --- | --- |

2.1.8.

| 2.1.9. | As argued in the previous opinions (8) (9), the EESC reiterates that effective implementation of environmental protection measures depends partly on providing civil society (employers, workers and other stakeholders) with a more active role. The EESC consequently repeats its call for the stronger and more structured involvement of CSOs, which would have the potential to strengthen EIRs. For example, CSOs concerned by environmental issues at national level and scientific communities must be given the opportunity to contribute their expertise and insight to the country reports, as well as to the structured country dialogues and the follow-up to them. |
| --- | --- |

2.1.9.

| 2.1.10. | The same is true for EU trade negotiations: the EC has to safeguard and strongly sustain our key environmental and social standards when promoting and protecting the EU economy during global trade talks. This is not only a way to enhance European competitiveness, improve Europe’s image and give its population and territories a future, but also offers a chance to show other parts of the world a more democratic and sustainable method of governance based on stronger CSO involvement. |
| --- | --- |

2.1.10.

| 2.1.11. | CSOs are often called upon to represent and voice society’s concerns on costs and inconveniences in implementation. Therefore, the EESC proposes that CSOs should play a role at an earlier stage in proceedings when asked to organise consultations and become relevant actors in dispute resolution. The EESC believes that dispute resolution should come in earlier in the process. |
| --- | --- |

2.1.11.

| 2.1.12. | The EESC proposes setting up a tripartite body (EC, Member States and CSOs) for dispute settlements and/or for debating problems raised by CSOs before any potential environmental harm takes place or any legal remedy is sought. In addition, an independent EU scientific advisory body should be able to make recommendations to the EC when a CSO reports a problem. The EC should also present reasoned decisions. |
| --- | --- |

2.1.12.

Access to justice

| 2.1.13. | Once again, referring to a previous opinion (10), the EESC calls for the EC to work on improving access to justice for civil society (e.g. with the right for CSOs to stand before the European Court of Justice and having specialised judges and prosecutors at EU, national and local level). |
| --- | --- |

2.1.13.

| 2.1.14. | To improve access to justice, the EESC also thinks that individuals should be able to approach the European Court of Justice directly, as in the case of the European Court of Human Rights (ECHR), when the transposition of EU law into national law is at stake and domestic remedies have been exhausted. |
| --- | --- |

2.1.14.

| 2.1.15. | Given the often excessive judicial delays, the EESC calls on the EC to consider establishing an environmental injunction for issues other than emergencies, with which Member States must comply, whereby work is suspended pending a decision by the Court of First Instance in the event of there being any immediate harm to the environment. |
| --- | --- |

2.1.15.

| 2.1.16. | The EESC also asks the EC to create an appropriate mechanism in order that fines paid for causing environmental damage are invested in actions aimed at supporting environmental protection. |
| --- | --- |

2.1.16.

2.2.   
  Civil society’s proposals regarding the role of SMEs, employers, trade unions and environmental organisations in implementing environmental law

The role of SMEs in implementing environmental law

| 2.2.1. | As pointed out in a previous opinion (11), the EESC, like the EC, is cautious in acknowledging that a lack of respect for the mechanisms that guarantee the implementation of environmental legislation and governance is a regrettable factor that contributes to unfair competition and causes economic harm. |
| --- | --- |

2.2.1.

| 2.2.2. | SMEs and micro enterprises in particular represent 99,8 % of firms in Europe: they are defined either by staff numbers or by turnover and balance sheet volume (12). SMEs’ contribution to value creation and employment, as well as their environmental impact, is considerable. Though individually SMEs have generally limited human and financial resources, it is in everyone’s interest to mobilise and encourage them to focus more on the rules of environmental protection. SMEs’ abilities and involvement in innovation, renewal, job creation and maintaining social progress are very important for achieving the UN SDGs and meeting the Paris Agreement’s global climate goals. There are a number of other important areas such as health, agriculture, manufacturing, tourism and hospitality, services and business in general where developing and harmonising environmental standards, safeguarding sustainable development and tackling climate change issues are key. In this regard, the EC, Member States and CSOs really need to work more closely with SMEs. |
| --- | --- |

2.2.2.

| 2.2.3. | The EESC calls on the EC to ensure that the Member States develop, introduce and operate harmonised, green, sustainable and environmentally friendly tax systems based on the ‘polluter pays’ principle. This way, resources will be systematically redistributed towards those fighting to prevent soil, water and air pollution. This principle should also apply to municipalities and other local or regional authorities. |
| --- | --- |

2.2.3.

The role of trade unions and employers in implementing environmental law

| 2.2.4. | The EESC calls on the EC to subsidise some of the costs incurred in training employees to recognise and implement environmental regulations as part of courses organised by trade unions and/or employers. |
| --- | --- |

2.2.4.

| 2.2.5. | CSOs concerned by environmental protection and SMEs should be more involved in providing information to employees and shaping environmental education and training to ensure that the general public has a basic understanding of these issues. This cooperation should be financed by Member States. Mandatory education on climate and environmental topics (ages 6-18) should be part of each country’s national curriculum, and CSOs active in the area of the environment should be involved in theoretical or practical work on a compulsory basis from 2020 onwards. |
| --- | --- |

2.2.5.

The role of CSOs concerned by environmental issues in implementing environmental law

| 2.2.6. | The EESC asks the EC to ensure that the EU budget covers the costs linked to the contributions by non-profit CSOs to the EU and national processes, as well as to the structure of governance, implementation and evaluation of environmental law. |
| --- | --- |

2.2.6.

| 2.2.7. | Generally speaking, Member States and the EC should extend more political, financial and professional support to SMEs and CSOs for focusing on protecting the environment after 2020. |
| --- | --- |

2.2.7.

| 2.2.8. | CSOs concerned by environmental issues should be able to participate in decision-making on the use of EU funds at regional level for projects that have an impact on the environment. In addition, CSOs should have easier access to these funds. |
| --- | --- |

2.2.8.

| 2.2.9. | Moreover, environmental CSOs must have the ability to advise and participate in the drafting of annual Member State reports related to environmental directives (e.g. in relation to the Birds and Habitats Directives or the state of the environment of each country). The EC should also be more vigilant in ensuring that Member States issue these reports on time (because some are not submitted when they should be, as stipulated in Article 16 of the Habitats Directive (13) or Article 9 of the Birds Directive (14)). |
| --- | --- |

2.2.9.

2.3.   
  Organised civil society’s proposals regarding its role in implementing environmental law in the fields of waste, air and biodiversity

The role of civil society in implementing environmental regulations in the field of waste

| 2.3.1. | The EESC is deeply concerned that, based on the EC’s report, half of EU countries are running the risk of missing the municipal waste recycling target of 50 % by 2020 (15). |
| --- | --- |

2.3.1.

| 2.3.2. | The EESC urges the EC and the Member States to phase out the burning and burying of recyclable waste. It is high time that the EC and the Member States meet their commitments with regard to protection of the environment rather than accepting lobbies acting against an urgently needed sustainable, zero waste and circular economy. |
| --- | --- |

2.3.2.

| 2.3.3. | In this respect, the EESC urges all Member States to play a significant role in focusing on and acting in the interest of protecting the environment. The EC should ask Member States to establish, as part of their governmental structure, a ministry with a portfolio of environmental protection and sustainable development enabling them to focus more on coordinating and enforcing the EU environmental regulations. |
| --- | --- |

2.3.3.

| 2.3.4. | In order to facilitate the meeting of waste targets and support this process by means of better education and training, the EESC also urges the Member States to introduce clear education and information campaigns on waste prevention and management that targets the general public, including primary and secondary schools. In order to highlight better the overall social responsibility for protecting the environment, the targeted activities of SMEs and NGOs with regard to waste collection and management should regularly receive a much broader on-line coverage on the part of the EC and Member States. Following the example of the European Green Capitals competition (in 2019: Oslo (16)), the EESC proposes that, starting from 2020, the EC should give national environmental NGOs the necessary financial resources to annually award similar green prizes in the Member States to three rural settlements (cities or towns) based on their environmental performance. This prize, of course, will be more symbolic than substantial, while targeted local and national media interest will emphasise the importance of this issue. |
| --- | --- |

2.3.4.

| 2.3.5. | Taxes, tax penalties, exemption from paying certain taxes and tax reliefs are important incentives for countries’ economic management and growth when encouraging or discouraging stakeholders to reduce, dispose of, destroy and manage waste as a useful resource. With a view to involving SMEs in managing waste resources more efficiently and maintaining better air quality, the EESC suggests that Member States impose higher taxes for waste landfill, seriously reduce or even ban waste incineration and implement the ‘pay as you throw’ principle across all Member States, as well as imposing penalties for contaminated recyclables. The introduction of green (or environmentally friendly) taxes or one-time tax relief for SMEs making key innovations in waste management and re-use would be very useful. |
| --- | --- |

2.3.5.

| 2.3.6. | The EESC strongly supports the basic goals outlined in the Waste Framework Directive (17), which stipulates that waste should be managed without endangering human health and harming the environment, and in particular without risk to water, air, soil, plants or animals, without causing a nuisance through noise or odours, and without adversely affecting the countryside or places of special interest. As a follow-up, the EC should complement EU waste legislation and policy by devising a mixture of selective waste collection methods (door-to-door, waste islands, tips, collective-societal actions in waste collection) and establishing a national network of tips. Mandatory introduction (and enforcement) of deposit return schemes for single-use containers (PET, aluminium, glass), intelligent use of bulky waste (reuse centres), extension of separately collected waste (textile, biodegradable, hazardous) and wider encouragement of home and community composting, together with financial and technical support for the use of compost, will reduce the waste disposal burden. |
| --- | --- |

2.3.6.

| 2.3.7. | CSOs and relevant SMEs (mainly waste management companies) should be better involved in related environmental decision making and national implementation. The Member States should establish financial support schemes for SMEs playing an active role in waste collection, waste recycling, waste re-evaluation and the circular economy more generally. |
| --- | --- |

2.3.7.

| 2.3.8. | In order to reduce our ecological footprint and strengthen sustainable development, the EESC urges Member States to implement fully Green Public Procurement (GPP) strategies in a way that is regularly and directly supervised by the EC. The latter should go further in requiring national environmental NGOs active in Member States to be involved when preparing GPP and finalising incoming bids. The possibility of using EU funds in order to strengthen the positive impact of GPP should also be put forward by the EC. |
| --- | --- |

2.3.8.

| 2.3.9. | EIR (18) should be published regularly, sharing relevant information on an ongoing basis. The EIR published on 4 April 2019 referred to a study which estimated that the total costs for society of current environmental implementation gaps are around EUR 55 billion annually (19). |
| --- | --- |

2.3.9.

| 2.3.10. | EU peer-to-peer expert exchanges between Member States’ environmental agencies and municipalities have been functioning well for the last two years and have provided stakeholders with greater awareness. However, new ideas and best practices learned should receive much wider on-line coverage in the Member States by ensuring that the content and outcome of these peer-to-peer events are regularly published. Better involvement on the part of national CSOs and SMEs can result in closer technical or business cooperation and faster recognition of SME opportunities. The EESC urges the EC to publish global environmental dates (20) each year, calling on and enabling local stakeholders in the Member States, when mobilising or financing stakeholders, businesses, CSOs and authorities to organise waste collection, clean-up or air quality improvement events. |
| --- | --- |

2.3.10.

The role of civil society in implementing environmental law in the field of air

| 2.3.11. | Due to mounting health and environmental problems, Member States should improve overall air quality and involve NGOs and businesses more actively in the pollution-prevention process. Heating in households using coal and wet wood, burning of commercial (e.g. plastic, textile), garden or other waste in the open air, old vehicles with engines that produce higher emission yields, civil and military aviation (21), road transport, maritime transport, river and ocean cruise ships, as well as some industrial and agricultural practices, all cause considerable air pollution. |
| --- | --- |

2.3.11.

| 2.3.12. | The EESC fully appreciates the Common Agricultural Policy (CAP), which introduced binding rules on environmental protection to promote sustainable development (Article 11, TFEU), on consumer protection (Article 12), on animal welfare requirements (Article 13), etc. The EESC encourages the EC to continue improving these fields and e.g. introduce new CAP measures linked to the improvement of air quality and reduction of emission levels. However, in order to alleviate problems relating to the cost borne by small business and farmers, the EU should also fully implement the decision to establish a proper alternative fuels infrastructure (22) as agreed under Directive 2014/94/EU on the deployment of alternative fuels infrastructure (23). |
| --- | --- |

2.3.12.

| 2.3.13. | In order to reduce air pollution from old vehicles, the EC should stop cross-border sales of second-hand cars that are more than five years old. Reducing road freight transport, improving conditions for rail, sea and river freight transport and implementing low emission zones in inhabited areas are key factors in reducing air pollution. With a view to avoiding air and noise pollution, there is a need for further efforts and the use of Member State funds to replace current outdated diesel car engines with e-cars or at least engines with lower emissions between 2022 and 2027. |
| --- | --- |

2.3.13.

| 2.3.14. | In order to improve air quality, the EC should support the Member States in modernising rolling stock, eliminating speed restrictions on railway lines, extending electronic distance-based road tolls for trucks to all roads and introducing greater differentiation of the toll system based on emissions. The Member States — based on regular dialogue with NGOs and relevant SMEs — should establish urban road pricing in capital cities (including introduction of a congestion charge by 2025) and create more zones for pedestrians, bigger parks and other green areas in cities. NGOs and SMEs should be regularly involved and consulted online when planning and introducing these zones. |
| --- | --- |

2.3.14.

| 2.3.15. | The EESC urges the EC to look into regulations on using more renewable energy, thus stepping up the share of renewables in the provision of electricity and heating. Both NGOs and SMEs should be visibly involved in devising new national energy plans resulting in decreased energy use, especially of fossil fuels. Member States should discuss tangible and feasible proposals in this regard; best practices should also be recognised and given the necessary financial resources. Member States should regularly share their best environmental practices. |
| --- | --- |

2.3.15.

The role of civil society in implementing environmental law in the field of biodiversity

| 2.3.16. | For the EESC, especially when it comes to the impact on biodiversity, it is essential that Member States carry out public consultations at an early stage, when all options are still open and there is room for a true analysis of alternatives. It is primarily up to the Member States and the competent authorities to ensure that developers take this requirement seriously and encourage early public consultations. |
| --- | --- |

2.3.16.

| 2.3.17. | In order to enable CSOs to hold genuine discussions with the EC, the functioning of the EC (especially how decisions are made) and its expectations (the kind of information expected) should be clarified, for example in the event of failure to uphold environmental law or risk of damage to biodiversity. |
| --- | --- |

2.3.17.

2.4.   
  Civil society’s proposals regarding implementation of environmental law and the EC’s role as guardian of the Treaties

| 2.4.1. | The EESC calls on the EC to submit comments to national parliaments when a Member State legislates to transpose EU environmental law. |
| --- | --- |

2.4.1.

| 2.4.2. | The EESC also wants the EC, at the request of third parties, to produce observations and communicate them to the parties concerned when a challenge to a national provision transposing EU environmental law is referred to a supreme court. |
| --- | --- |

2.4.2.

| 2.4.3. | The EESC asks the EC to remind the Member States that the concept of over-transposition does not exist in EU legislation and that EU environmental law requires that measures be taken on an ongoing basis to improve the state of the environment. Therefore, EU legislation forbids any backsliding. |
| --- | --- |

2.4.3.

| 2.4.4. | The EESC also calls on the EC to explain to Member States that EU environmental law, which authorises derogations from the rules of secondary legislation, requires that those derogations be strictly delimited by the states in order not to contravene the EU’s objectives. |
| --- | --- |

2.4.4.

| 2.4.5. | The EESC encourages the EC to continue drafting guidelines to facilitate the interpretation and application of secondary environmental law, particularly in two fields:






  a) | taking into account health issues in environmental evaluations, |
| --- | --- | --- |

2.4.5.

a)

taking into account health issues in environmental evaluations,

| b) | defining wetlands by their multi-functional functionality. |
| --- | --- |

b)

defining wetlands by their multi-functional functionality.

| 2.4.6. | The EU must help to develop and observe local development models and promote protection of the environment. Therefore, local EC checks on a more regular basis are needed in the Member States to ensure that EU funds are well spent and that all relevant public and private stakeholders are properly implementing environmental regulations and governance. This could also respond to the general requirement that people and organisations living in outlying regions of the EU are supported and treated as a key part of the EU. The EC should also ensure that enough well trained personnel are employed in each Member State in the fields of access to information and justice, and even more in the field of inspection, in order to monitor the proper implementation of environmental regulations. |
| --- | --- |

2.4.6.

| 2.4.7. | The EESC calls on the president of the EC to endow the Commissioner for Environmental Protection with greater authority, especially with regard to environmental and health-related issues. The commissioner should also focus on and become more involved in coordinating developments in rural areas, improving quality of life everywhere and ensuring that domestic businesses comply with agreed EU environmental requirements. The competitive economy of the future has to become the economy of beauty, covering all that is beautiful and good: cultural, artistic, environmental, locally based activities that improve quality of life. Growth of domestic happiness (GDH) i.e. overall well-being, — which is linked to a healthier economy and creates better and more sustainable economic, social and environmental values that can then be re-generated — should be one of our basic goals. |
| --- | --- |

2.4.7.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EESC opinion on EU actions to improve environmental compliance and governance (OJ C 283, 10.8.2018, p. 83).

1

EU actions to improve environmental compliance and governance

(2)  EESC opinion on Implementation of EU environmental legislation in the areas of air quality, water and waste (OJ C 110, 22.3.2019, p. 33).

2

Implementation of EU environmental legislation in the areas of air quality, water and waste

(3)  EESC opinion on EU actions to improve environmental compliance and governance (OJ C 283, 10.8.2018, p. 83).

3

(4)  EESC opinion on Implementation of EU environmental legislation in the areas of air quality, water and waste (OJ C 110, 22.3.2019, p. 33).

4

(5)  https://glocalities.com/latest/reports/environmental-concern

5

(6)  EESC opinion on Implementation of EU environmental legislation in the areas of air quality, water and waste (OJ C 110, 22.3.2019, p. 33) (conclusion 1.5).

6

(7)  https://ec.europa.eu/environment/aarhus/

7

(8)  EESC opinion on Environmental Implementation Review (OJ C 345, 13.10.2017, p. 114).

8

Environmental Implementation Review

(9)  EESC opinion on Implementation of EU environmental legislation in the areas of air quality, water and waste (OJ C 110, 22.3.2019, p. 33).

9

(10)  EESC opinion on EU actions to improve environmental compliance and governance (OJ C 283, 10.8.2018, p. 83).

10

(11)  EESC opinion on EU actions to improve environmental compliance and governance (OJ C 283, 10.8.2018, p. 83).

11

(12)  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32003H0361

12

(13)  Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ L 206, 22.7.1992, p. 7).

13

(14)  Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ L 20, 26.1.2010, p. 7).

14

(15)  COM(2019) 149 final

15

(16)  http://ec.europa.eu/environment/europeangreencapital/index_en.htm

16

(17)  Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (OJ L 312, 22.11.2008, p. 3), http://ec.europa.eu/environment/waste/framework/

17

(18)  http://ec.europa.eu/environment/eir/pdf/eir_2019.pdf

18

(19)  http://ec.europa.eu/environment/eir/pdf/study_costs_not_implementing_env_law.pdf

19

(20)  https://en.wikipedia.org/wiki/List_of_environmental_dates

20

(21)  EESC opinion on Emissions trading scheme on aviation activities (OJ C 288, 31.8.2017, p. 75).

21

Emissions trading scheme on aviation activities

(22)  EESC opinion on Action Plan on Alternative Fuels Infrastructure (OJ C 262, 25.7.2018, p. 69).

22

Action Plan on Alternative Fuels Infrastructure

(23)  Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure (OJ L 307, 28.10.2014, p. 1), https://eur-lex.europa.eu/eli/dir/2014/94/oj

23

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/58 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/58

---

Opinion of the European Economic and Social Committee on ‘Blue bio-economy’

(exploratory opinion)

(2020/C 47/08)

Rapporteur: Simo TIAINEN

Co-rapporteur: Henri MALOSSE

| Referral | Finnish EU Presidency, 7.2.2019 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Bureau decision | 19.2.2019 |
| Section responsible | Section for Agriculture, Rural Development and the Environment |
| Adopted in section | 1.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 151/1/1 |

Referral

Finnish EU Presidency, 7.2.2019

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Bureau decision

19.2.2019

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted in section

1.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

151/1/1

1.   Conclusions and recommendations

| 1.1. | The blue bio-economy means economic activities and value creation based on sustainable and smart use of renewable aquatic resources and the related expertise. There is a vast amount of expertise, know-how and human tradition linked to water, aquatic resources and the blue bio-economy in Europe. Nonetheless, with regard to its potential and opportunities, business activities related to the blue bio-economy are still rather modest in Europe. There are several barriers that have to be addressed. |
| --- | --- |

1.1.

| 1.2. | The full potential of the blue bio-economy in the EU has to be identified and research priorities defined to enhance the sustainable growth of this economy. In particular, it is necessary to develop a better understanding of the applicability of aquatic raw materials in value-adding processes. Strengthening sustainable growth requires targeted research funding to boost innovation, multidisciplinary development, entrepreneurship and new high-quality jobs. Sustainable growth also demands a level competitive playing field as an operating environment, and broad collaboration and creation of new partnerships between industry, research organisations, public authorities and the third sector. |
| --- | --- |

1.2.

| 1.3. | The status of waters and aquatic ecosystems is not adequate in many areas of the EU. Good water quality and healthy aquatic environment, however, are the basis for the blue bio-economy. There is a need to preserve and restore the good status and biodiversity of the oceans, seas, lakes and rivers. This requires a major effort from all the stakeholders, including the EU, national and regional institutions, universities and research centres, all professionals involved (e.g. fishing and tourism sectors) as well as civil society organisations. These efforts must include adequate research, training and transfer of know-how. |
| --- | --- |

1.3.

| 1.4. | Increased investments are needed in the management of aquatic environments and sanitation facilities to ensure access to, and sustainable use of, clean water and adequate sanitation for all. Competitive solutions are needed to remove waste from water and to develop water-saving and recycling technologies. New cost-effective solutions are needed to decrease nutrient loads draining into natural waters, and to restore critical habitats and changed water bodies. |
| --- | --- |

1.4.

| 1.5. | The EESC calls for the EU and other actors within the blue bio-economy to come up with urgent action to combat climate change and its impacts. In particular, urgent adaptation of fisheries and aquaculture to climate change is critical as the conditions change dramatically and this has a major impact on these important livelihoods. Fisheries, aquaculture and algae culture are crucial to increase sustainable aquatic food production in EU. Developing climate-resilient aquatic food systems requires further research and innovation prior to successful implementation. Algae biomass is a potentially important aquatic resource that can be used as a raw material for a wide range of uses. |
| --- | --- |

1.5.

| 1.6. | Joint efforts between universities, research centres, NGOs and the fishing sector are needed to develop new added value products from fish by-products and waste materials. New financing instruments are needed to promote technological innovations and services. Collaboration across sectoral boundaries and better decision-making processes are needed. Restoring the biodiversity of the seas, lakes and rivers will open up new opportunities for business, mainly, including family and small businesses on local markets. Furthermore, promotion of new business models for water tourism and recreational use of aquatic resources offer new sustainable business opportunities for remote regions. |
| --- | --- |

1.6.

| 1.7. | The priorities for development measures on the blue bio-economy agenda include (i) clean water and sanitation; (ii) a healthy, diverse and safe aquatic environment; (iii) sustainable aquatic food production; (iv) high-value non-food products; (v) climate change adaptation; (vi) blue health and well-being; and (vii) better coordination in combating illegal activities related to aquatic resources. By investing in this development, Europe can reinforce its position as a leading player in the circular economy. |
| --- | --- |

1.7.

| 1.8. | The European Union is called upon to promote awareness-raising, education and training incorporating research and the exploitation and transfer of the know-how of communities in coastal and inland water areas, enabling respectful management of the environment and the creation of European training networks in this field. For agriculture, the EU should also address the issue of water scarcity. |
| --- | --- |

1.8.

| 1.9. | The EESC suggests that the blue bio-economy become one of the flagship areas of EU policies and in its cooperation policies with neighbouring countries, as well as in the framework of the UN Sustainable Development Goals and the COP 21 Goals of the Paris Agreement. In this regard, the EESC proposes that the EU Council and to the European Parliament ask the Commission to launch several pilot actions in the different marine and aquaculture areas of the EU, taking care to choose those that represent the great diversity of existing situations in the EU, the degree to which they are affected by the risk of collapse and the development potential of the blue bio-economy. A management committee should be set up including Member States, regions, and stakeholders, with the participation of the EESC, in order to organise exchanges of practices and ensure that successful pilot projects are developed on a larger scale. |
| --- | --- |

1.9.

2.   Introduction

| 2.1. | The blue bio-economy means economic activities and value creation based on sustainable and smart use of renewable aquatic resources and the related expertise. Businesses and activities that grow the raw materials for these products, or extract, refine, process and transform the biological compounds, all form part of the blue bio-economy. |
| --- | --- |

2.1.

| 2.2. | The importance, characteristics and opportunities of the blue bio-economy in the different Member States varies widely according to geographical conditions, and this has to be addressed. Most of the Member States have direct access to the ocean or seas. Coastal waters are extremely important for many Member States. In addition, lakes and rivers play a crucial role in most countries. |
| --- | --- |

2.2.

| 2.3. | In May 2019, the EESC adopted an opinion (1) on the European Commission’s Communication updating the 2012 bio-economy strategy. The conclusions and recommendations set out in the opinion are relevant from the point of view of the blue bio-economy. The present opinion describes the possibilities and potential of the blue bio-economy in more detail. The blue bio-economy is closely linked to the concept of the circular economy. |
| --- | --- |

2.3.

| 2.4. | Clean water and renewable aquatic resources represent significant sustainable business opportunities and may offer key solutions to many of the global Sustainable Development Goals (SDG2, SDG3, SDG6, SDG7, SDG8 and SDG14). Through this exploratory opinion, the EESC aims to respond to the question raised by the Finnish presidency of the Council of the EU of how the EU can boost the development of the blue bio-economy and what measures must be prioritised. |
| --- | --- |

2.4.

3.   General

| 3.1. | The blue bio-economy can offer multiple benefits only as long as the aquatic environment is healthy and productive. Threats to biodiversity, coupled with climate change, pose a high risk to the production capacities of aquatic organisms, as demonstrated by the IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services) report from May 2019. Overexploitation, pollution, coastal development, peak tourism and transport all constitute serious challenges, especially in those areas of the European Union most affected (particularly the Mediterranean) by these stressors. There is a need for solutions adapted to different environments and regions. |
| --- | --- |

3.1.

| 3.2. | The demand for biomass will increase in the future and the EU has to address this challenge. A biomass-based transition towards a greenhouse gas-neutral economy will be limited by the availability of land. Therefore it will be important to improve the productivity of aquatic resources in capturing the full range of opportunities of the bio-economy. This includes for instance the production and use of algae, and other novel sources of protein which have the potential to relieve the pressure on agricultural land. |
| --- | --- |

3.2.

| 3.3. | The blue bio-economy has growing potential to improve food security and provide healthy and low-carbon footprint food, novel foods and food additives, animal feeds, nutraceuticals, pharmaceuticals, cosmetics, new materials, clean water, non-fossil energy, nutrient recycling and many more benefits. The growth of the blue bio-economy depends on ensuring the good status of waters and aquatic ecosystems, resilient fisheries and aquatic production systems, effective systemic collaboration across sectoral boundaries, technological innovations, new financing instruments and improved services and sustainable business models. |
| --- | --- |

3.3.

| 3.4. | It is essential to underline the importance of cultural factors in the implementation of a blue bio-economy. The know-how of human populations of coastal and inland water areas represents an exceptional asset for Europe as long as it is identified, preserved and passed on to new generations. Thus, any action that is undertaken in the blue bio-economy should incorporate the cultural and human dimension and ensure that all relevant stakeholders are involved, and especially local representatives, professionals and civil society. |
| --- | --- |

3.4.

4.   Blue bio-economy and the Sustainable Development Goals

| 4.1. | The UN’s SDGs are closely linked to water and aquatic environments. These goals address the key global challenges we face and outline how to achieve a more sustainable future with reference to fundamental issues such as food security, climate change and the prevention of environmental degradation. The goals are highly interconnected and are considered in this document from the perspective of sustainable business opportunities based on water and aquatic natural resources. There is a strong nexus between water, energy and food in particular. |
| --- | --- |

4.1.

Clean water and sanitation

| 4.2. | Goal 6 (Clean water and sanitation) aims to ensure access to and sustainable use of clean water and adequate sanitation for all. Globally, more than 1 billion people still do not have access to fresh water of adequate quality and more than 2 billion people are living with the risk of reduced access to freshwater resources. The global need for fresh water is expected to increase significantly by 2030. The EESC addressed the topic of drinking water in an opinion in 2018 (2). |
| --- | --- |

4.2.

| 4.3. | Although progress has recently been made in the EU and other regions, there needs to be increased investment in the management of freshwater resources and sanitation facilities. The key objective is to find competitive solutions to remove waste from water and to develop water-saving and recycling technologies to reduce water waste. There is major potential in water-saving and water-recycling solutions and technologies, and in smart management of water resources and supply. There are new water-sanitation concepts and new technologies to remove drug and hormone residuals as well as micro-plastics from waste water. There are also promising innovations to turn seawater into drinking water using renewable energy. |
| --- | --- |

4.3.

| 4.4. | Good water quality is the basis for the blue bio-economy. Good management of water resources is an essential part of the solution to almost all major problems in the world, such as overconsumption of aquatic resources and the need to adapt to climate change. Water lifecycle management requires clear goals, up-to-date information, planning and management. This includes digital solutions for water services and monitoring, and versatile new technological solutions for wastewater treatment (membrane technology) and nexus thinking out of silos. |
| --- | --- |

4.4.

| 4.5. | The EU has the potential to become a major global player in the water sector as a provider of water-related technologies and services. Digitalisation offers a new opportunity for the water businesses, and can significantly increase the efficiency of water resource management, as well as of production and service concepts. Digital solutions can be used to produce services that meet customer needs now and in the future. The EU can offer competitive and sustainable solutions in this field to the whole world. |
| --- | --- |

4.5.

Healthy, diverse and safe aquatic environment

| 4.6. | Oceans, seas and inland waters serve as the world’s largest sustainable source of protein, with more than 3 billion people globally dependent on marine and coastal biodiversity for their livelihoods. Our oceans, seas and inland waters are being rapidly degraded by human activities. In particular, coastal and inland waters are deteriorating due to pollution and eutrophication, and the loss of habitats is alarming. All of these changes have a devastating effect on the functioning of aquatic ecosystems and biodiversity, and thereby on potential food production. Careful management of this essential global resource is a key feature of a sustainable future. |
| --- | --- |

4.6.

| 4.7. | Goal 14 (Life below water) aims to conserve the oceans, seas and aquatic resources, and promotes their sustainable use. Several measures are needed to improve the situation, including significantly reducing aquatic pollution of all kinds and managing all human activities more effectively. New solutions are needed to decrease nutrient loads draining into natural waters. Economically efficient means and methods to improve the ability of soil to catch and bind nutrients must be developed and tested. Eutrophication can also be reduced by increasing the use of under-utilised fish species as well as the production and harvesting of algae (as nutrients are removed with catches). New solutions are needed to reduce eutrophication and restore rivers, lakes and seabeds. |
| --- | --- |

4.7.

| 4.8. | Healthy aquatic environments can provide a significant number of new high-quality jobs. Healthy fish stocks and clean waters are the basis of sustainable fishing and recreational water use, and open up new opportunities for the blue bio-economy. River and freshwater restoration efforts are being undertaken worldwide to restore degraded habitats, ecosystem processes, migrating fish stocks, biotic communities and the services they provide. Restoring migrating stocks will bring new potential livelihoods to sparsely populated areas, providing jobs for people under a family business model with access to local markets. |
| --- | --- |

4.8.

Sustainable aquatic food production

| 4.9. | Global food demand is expected to increase significantly. Goal 2 (Zero hunger) aims to end hunger, achieve food security, improve nutrition and promote sustainable primary production by 2030. |
| --- | --- |

4.9.

| 4.10. | Fisheries and aquaculture provide nutritious food and generate much-needed incomes, while supporting rural development and potentially also protecting the environment. Currently, fish represent about 17 % of the global animal protein supply and 6,5 % of all protein for human consumption. For hundreds of millions of people fish is the major source of protein and essential nutrients. Many fish stocks are still being over-exploited and require better management. Heavy subsidies are still maintaining serious overcapacity of fishing fleets in many parts of the world. Oceans, seas and inland waters should be utilised much more sustainably than is currently the case. Investment in aquaculture, fisheries and fish processing, and in the development of new products from waste and side-streams, is crucial to increase sustainable food production and help maintain food security. In particular, the EU has a substantial negative trade balance when it comes to fish and fishery products; around 60 % of the seafood eaten in the EU is imported: these imports do not always match the EU criteria for sustainable production and food security. |
| --- | --- |

4.10.

| 4.11. | Aquaculture has significant potential for further growth. Considerably more biomass could be produced sustainably in European aquaculture by increasing the number of species used in aquaculture, including the lower-trophic marine species (e.g. algae and molluscs). However, the development of aquaculture has many barriers. First of all, growing aquaculture production requires additional sources of feed. The catches of low-value fish in capture fisheries will in the future be increasingly used for direct human consumption and less as raw material for animal feed. Additional feed biomass is needed to grow aquaculture and could come from currently largely under-used species such as krill and other mesopelagic organisms, seaweeds, as well as from processing waste (side-streams). Secondly, the limited space available for aquaculture facilities is an increasing problem that needs to be solved. Key to sustainable development of aquaculture is good planning of marine and freshwater activities that considers ecological, economic, social and cultural dimensions. Thirdly, better solutions are needed to solve the issues of nutrient leakage and disease control. |
| --- | --- |

4.11.

| 4.12. | Strict environmental regulation in different countries has a major effect on the costs and competitiveness of aquaculture. Various new technologies are being intensively developed but a large number of economic and technological uncertainties remain. Recirculating aquaculture systems (RAS) offer several benefits such as minimum water requirement, effective control of effluents and waste, small space requirement, and control of production conditions. RAS technologies have potential especially in freshwater systems. It is likely, however, that an increasing share of marine aquaculture will have to take place in off-shore waters. New approaches to multiuse and integrated management, including spatial planning and local management plans, are needed. |
| --- | --- |

4.12.

Added-value aquatic products and non-food uses

| 4.13. | Processing fish and other aquatic organisms for human consumption generates side-streams, which are often not used for direct human consumption. It is estimated that 30-70 % of all harvested fish biomass becomes low-value by-product or is completely wasted. This comprises potentially useful and valuable material, which could potentially be used by industry for food and non-food purposes. High-value functional ingredients for specialised products can be developed from these materials. A variety of aquatic organisms can support the development of new products such as nutraceuticals, pharmaceuticals and cosmetics. They can also provide new enzymes, lipids, biopolymers, and other biomaterials. Making use of these raw materials in an eco-efficient way is crucial. There is considerable global pressure to improve the use of all biological material and thereby also reduce waste. Marine biotechnology can play an important role in creating added value in the blue bio-economy. |
| --- | --- |

4.13.

| 4.14. | Algae biomass is becoming increasingly significant as a resource for a variety of commercial applications in the blue bio-economy. Algae provide an effective, sustainable and still largely untapped resource for bio-based processes and products. Algae are rich in nutrients and dense with energy. Increased production of macroalgae and microalgae is gaining widespread recognition in Europa as a resource that can be used as a raw material for a wide range of uses. There is a growing interest in harvesting, cultivating or processing algae to create a wide range of high-value products, including food, animal feed, nutraceuticals and bio-based products. |
| --- | --- |

4.14.

Climate change mitigation and adaptation

| 4.15. | Climate change is widely recognised to affect a range of environmental variables, including rainfall, temperatures, river flows, harmful algal blooms and ocean acidification. Goal 13 (Climate action) encourages urgent action to combat climate change and its impacts. Rising temperatures impact oceans, seas and other waters as well as nutrient networks, fisheries and livelihoods. In Europe, climate change is expected to increase winter precipitation and, together with rising temperatures, the risk of eutrophication and deterioration of water quality increases. This will have many adverse consequences for fish stocks and other aquatic resources, and thereby also on fisheries and other modes of production. High temperatures hamper the life of cool water species such as salmonids, and contribute to the spread of many harmful species and diseases. Species that benefit from eutrophication are gaining ground. High temperature peaks present major challenges for aquaculture farms. For agriculture, the EU should also address the issue of water scarcity. |
| --- | --- |

4.15.

| 4.16. | The future food system must be part of the solution to climate change, not part of the problem. In essence, fishing and aquaculture are effective ways of producing protein from the point of view of climate emissions. Therefore, sustainable fishing and fish farming should be promoted. Furthermore, strengthening the resilience of fisheries and aquatic production systems is essential. Fishing activities must adapt to the changed conditions such as extreme weather conditions and ice-free winters. In aquaculture, one potential way to prepare for temperature peaks is through offshore cultivation, which can in some cases benefit from the increase in average sea temperature. Recirculating aquaculture systems (RAS) can help the aquaculture industry to adapt to climate change. Fish breeding programmes can improve the tolerance of cultivated fish to higher temperatures. |
| --- | --- |

4.16.

Blue health and well-being

| 4.17. | Goal 3 (Good health and well-being) aims to ensure healthy lives and promote well-being for all at all ages. There is significant growth potential in well-being and recreational services based on aquatic environments. Promoting sustainable recreational use of aquatic resources offers new business opportunities for remote non-urban regions, which will contribute to the generation of new high-quality jobs. Due to its importance and economic potential, the blue bio-economy also contributes to Goal 8 (Decent work and economic growth). |
| --- | --- |

4.17.

5.   Priority actions

| 5.1. | The priorities for development measures on the blue bio-economy agenda are: (i) clean water and sanitation, desalination of sea water, reduction of pollution; (ii) a healthy, diverse and safe aquatic environment, and restoration of ecosystems and biodiversity in aquatic environments; (iii) sustainable aquatic food production; (iv) creation of high-value non-food products; (v) climate change adaptation; (vi) blue health and well-being, energy saving and renewal energy production from the sea and from rivers and lakes; (vii) better saving and preserving water resources; and (viii) better coordination in combating illegal activities related to aquatic resources. In addition, low-cost and clean aquatic bioenergy and utilisation of organic waste are important emerging topics. By investing in this type of development, Europe can reinforce its position as a leading player in the circular economy. |
| --- | --- |

5.1.

| 5.2. | The EESC proposes that the EU Council and the European Parliament ask the Commission to launch specific pilot actions aiming to improve the status and production capacity of aquatic ecosystems in selected locations of the EU, taking care that they represent the diversity of existing situations and the development potential of blue bio-economy. These pilot actions should be carried out in coastal and inland water areas (including islands) that are moderately or badly affected by human impact such as excessive seasonal tourism, pollution, nutrient load from land-based sources, modified watercourses, and excessive exploitation of aquatic resources. |
| --- | --- |

5.2.

| 5.3. | The pilot projects should be implemented as quickly as possible, in conjunction with local elected representatives, universities and research centres, professionals and relevant civil society actors. The projects should enable the key actions and measures to be developed and tested in order to improve the current inadequate situation at the pilot sites. The EESC is recommending a reasonable number of pilot projects to be conducted in the Mediterranean, the Black Sea, the Atlantic coast, the North Sea and the Baltic Sea, as well as in inland water areas with major potential for improvement. These projects could, for instance, entail cleaning nutrient-rich or polluted waters in areas such as ports or tourist zones using specific filtering species such as oysters, sea urchins, mussels or aquatic plants (algae), or restoring migratory pathways and spawning grounds in order to restore the life cycles of migratory fish. At the same time, the capacity to capture CO2 on a large scale could also be tested in these pilot projects. Pilot projects could also examine the feasibility of new technologies to produce energy from seas and lakes or to find new ways of saving water resources. |
| --- | --- |

5.3.

| 5.4. | On the basis of the results and experiences obtained in the pilot projects, the European Union is called upon to promote training and transfer of the know-how in the communities in coastal and inland water areas, enabling the restoration and adequate management of the environments and the creation of European training networks, and demonstrating opportunities for creating high-quality jobs in this field. |
| --- | --- |

5.4.

| 5.5. | A management committee should be set up for the pilot projects including Member States, regions, and stakeholders, with the participation of the EESC, in order to coordinate exchanges of practices and ensure that successful pilot projects are developed on a larger scale. At the same time, the EU Member States and concerned regions should be encouraged to prepare blue bio-economy strategies, with consultation of local stakeholders and civil society organisations. |
| --- | --- |

5.5.

| 5.6. | EU expertise on the blue bio-economy gained through the research programmes of Horizon Europe, LIFE and the blue bio-economy pilot projects should be available, under certain conditions, to third countries, in particular the Eastern Neighbourhood countries, the Mediterranean and African countries, Russia for the Baltic sea area, as well as other interested countries. The blue bio-economy should become an EU flagship in its cooperation programmes with the UN and a tool to achieve the COP 21 Paris goals in the fight against global warming. |
| --- | --- |

5.6.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EESC opinion on the Communication updating the 2012 Bio-economy Strategy (OJ C 240, 16.7.2019, p. 37).

1

(2)  EESC opinion on the quality of water for human consumption (recast) (Drinking water directive) (OJ C 367, 10.10.2018, p.107).

2

---

III Preparatory acts

European Economic and Social Committee

| 11.2.2020 | EN | Official Journal of the European Union | C 47/64 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/64

---

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 — Building trust in human-centric artificial intelligence’

(COM(2019) 168 final)

(2020/C 47/09)

Rapporteur: Franca SALIS-MADINIER

| Referral | European Commission, 3.6.2019 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Single Market, Production and Consumption |
| Adopted in section | 18.10.2019 |
| Adopted at plenary session | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 198/1/4 |

Referral

European Commission, 3.6.2019

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Single Market, Production and Consumption

Adopted in section

18.10.2019

Adopted at plenary session

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

198/1/4

1.   Conclusions and recommendations

| 1.1. | Artificial intelligence (AI) is not an end in itself, but a tool that can deliver far-reaching positive change and involve risk, which is why its use must be regulated. |
| --- | --- |

1.1.

| 1.2. | The Commission should take measures with regard to forecasting, preventing and prohibiting the malicious use of AI and machine learning and better regulate the placing of products with malicious intent on the market. |
| --- | --- |

1.2.

| 1.3. | The EU should, in particular, promote the development of AI systems that focus on specific applications to speed up the ecological and climate transition. |
| --- | --- |

1.3.

| 1.4. | It is important to identify which challenges can be met by means of codes of ethics, self-regulation and voluntary commitments and which need to be tackled by regulation and legislation supported by oversight and, in the event of non-compliance, penalties. AI systems must always comply with existing legislation. |
| --- | --- |

1.4.

| 1.5. | AI requires an approach which covers technical as well as societal and ethical aspects. The EESC is pleased that the EU intends to build a human-centric AI approach which is in line with its fundamental values: respect for human dignity, freedom, democracy, equality and non-discrimination, the rule of law and respect for human rights. |
| --- | --- |

1.5.

| 1.6. | The EESC reiterates (1) the need to consult and inform workers and their representatives when AI systems are introduced that are likely to alter the way work is organised, supervised and overseen, as well as worker evaluation and recruitment systems. The Commission must promote social dialogue with a view to involving workers in the uses of AI systems. |
| --- | --- |

1.6.

| 1.7. | The EESC stresses (2) that trustworthy AI presupposes that humans have control of machines and that citizens are informed about its uses. AI systems must be explainable or, where this is not possible, citizens and consumers must be informed about their limitations and risks. |
| --- | --- |

1.7.

| 1.8. | The EU needs to address the emerging risks (3) in the area of health and safety in the workplace. Standards must be established to avoid autonomous systems causing harm or damage to people. Workers must be trained to work with machines and to stop them in an emergency. |
| --- | --- |

1.8.

| 1.9. | The EESC calls for the development of a robust certification system based on test procedures that enable companies to state that their AI systems are reliable and safe. The transparency, traceability and explainability of algorithmic decision-making processes are a technical challenge which needs to be supported by EU instruments such as Horizon Europe. |
| --- | --- |

1.9.

| 1.10. | Privacy and data protection will determine how far citizens and consumers trust AI. Data ownership and the control and use of data by companies and organisations have yet to be resolved (particularly in relation to the Internet of Things). The EESC urges the Commission to review the General Data Protection Regulation (GDPR) (4) and related legislation on a frequent basis in the light of developments in technology. |
| --- | --- |

1.10.

| 1.11. | The EESC believes that consideration must be given to the contribution that AI systems can make to reducing greenhouse gas emissions, particularly in industry, transport, energy, construction and agriculture. It calls for the climate and digital transitions to be interlinked. |
| --- | --- |

1.11.

| 1.12. | The EESC believes that oversight of AI systems may not be sufficient to define who is responsible and build trust. The EESC recommends that, as a priority, clear rules be drawn up assigning responsibility to natural persons or legal entities in the event of non-compliance. The EESC also calls on the Commission, as a priority, to examine the fundamental question of the insurability of AI systems. |
| --- | --- |

1.12.

| 1.13. | The EESC proposes developing, for companies which comply with the rules, a European trusted-AI Business Certificate based partly on the assessment list put forward by the high-level experts’ group on AI (high-level group). |
| --- | --- |

1.13.

| 1.14. | By promoting work in this area in the G7 and G20 and in bilateral dialogues, the EU must endeavour to ensure that AI regulation goes beyond the EU’s borders. We need an international agreement on trustworthy AI, which will develop international standards and carry out frequent checks on the relevancy of those standards. |
| --- | --- |

1.14.

2.   Summary of the Commission proposal

| 2.1. | This communication builds on the work of the high-level group which the Commission appointed in June 2018. In this communication, the Commission identifies seven key requirements for achieving trustworthy AI, which are listed in point 4, |
| --- | --- |

2.1.

| 2.2. | The Commission has launched a pilot phase involving stakeholders on a broad scale. This exercise focuses in particular on the assessment list drawn up by the high-level group for each of the key requirements. At the beginning of 2020, this group will review and update the assessment list and if appropriate the Commission will propose further measures. |
| --- | --- |

2.2.

| 2.3. | The Commission wants to take its AI approach international and will continue to play an active role, including in the G7 and G20. |
| --- | --- |

2.3.

3.   General comments

| 3.1. | Human-centric AI needs an approach covering technical, societal and ethical issues. The EESC is pleased that the European institutions intend to build an AI approach which is in line with the values underpinning the EU: respect for human dignity, freedom, democracy, equality and non-discrimination, the rule of law and respect for human rights. As the Commission points out (5), AI is not an end in itself, but a tool that can deliver far-reaching positive change. Like any tool, it creates both opportunities and risks, which is why the EU has to regulate its use and clearly establish just who is responsible. |
| --- | --- |

3.1.

| 3.2. | Trust in human-centric AI will be forged by affirming values and principles and providing a well-established regulatory framework and ethical guidelines setting out key requirements. |
| --- | --- |

3.2.

| 3.3. | It is important to work with all stakeholders to identify which of the many challenges posed by AI need to be tackled by regulation and legislation supported by regulatory oversight mechanisms and, in the event of non-compliance, penalties, and which can be tackled by means of codes of ethics, self-regulation and voluntary commitments. The EESC is pleased that the Commission has taken on board some of the principles originally raised by the EESC, but considers it unfortunate that it has not yet proposed any specific measures to address legitimate concerns (as regards consumer rights, system security and liability). |
| --- | --- |

3.3.

| 3.4. | AI systems must comply with the existing regulatory framework, particularly as regards protection of personal data, product liability, consumer protection, non-discrimination, professional qualifications and information and consultation of workers in the workplace. It is important to make sure that this legislation is adapted to the new challenges of digitalisation and AI. |
| --- | --- |

3.4.

| 3.5. | As the Commission notes, ‘processes to clarify and assess potential risks associated with the use of AI systems, across various application areas, should be put in place’ (6). The EESC attaches the utmost importance to the future arrangements for this assessment and to the establishment of indicators that could be used to perform it. The assessment list proposed by the high-level group is a starting point for implementing these processes. |
| --- | --- |

3.5.

| 3.6. | This also concerns the question of fair distribution of the expected added value of AI systems. The EESC believes that the beneficial transformation which AI has the potential to bring in terms of economic development, sustainability of (particularly energy) production and consumption processes and better use of resources must benefit all countries and all citizens. |
| --- | --- |

3.6.

4.   Specific comments

4.1.   Human agency and oversight

| 4.1.1. | The Commission wants to be sure that the use of AI systems will never undermine human autonomy or give rise to adverse effects. The EESC supports this approach of human oversight of machines, as it has already stated in previous opinions. |
| --- | --- |

4.1.1.

| 4.1.2. | Under this approach, citizens also have to be properly informed about the uses of these systems. The systems have to be explainable or, where this is not possible (in the case of deep learning, for instance), the user has to be informed about the system’s limitations and risks. In any event, people have to retain the freedom to decide differently from the AI system. |
| --- | --- |

4.1.2.

| 4.1.3. | In businesses and public administrations, workers and their representatives must be properly informed and consulted when AI systems are introduced that are likely to alter the way work is organised and to affect them (in terms of supervision, oversight, evaluation and recruitment). The Commission must promote social dialogue with a view to involving workers in the uses of AI systems. |
| --- | --- |

4.1.3.

| 4.1.4. | With regard to human resources, particular attention must be paid to the risks of misuse of AI systems, such as unlimited surveillance, collection of personal and health data, and sharing of these data with third parties, and to the emerging risks in terms of health and safety in the workplace (7). Clear standards must be established to ensure that human-machine collaboration does not cause damage to humans. The International Organization for Standardization (ISO) standard on collaborative robots (8), which is aimed at manufacturers, integrators and users, provides guidelines for the design and organisation of a collaborative workspace and the reduction of the risks to which people can be exposed. Workers must be trained to use AI and robotics, to work with them and, in particular, to stop them in an emergency (‘emergency brake principle’). |
| --- | --- |

4.1.4.

4.2.   Technical robustness and safety

| 4.2.1. | The EESC calls for the introduction of European security standards and the development of a robust certification procedure based on test procedures that would enable companies to state that their AI systems are reliable. The EESC would also like to stress the importance of the insurability of AI systems. |
| --- | --- |

4.2.1.

| 4.2.2. | The Commission pays scant attention to the issue of forecasting, preventing and prohibiting the malicious use of AI and machine learning, against which many researchers have issued warnings (9). Their recommendations should be taken into account, particularly those concerning the dual use of these technologies which can potentially touch on digital security (increase in cyber attacks, exploitation of human and AI vulnerabilities, data poisoning), physical security (hacking of autonomous systems, including autonomous vehicles, drones and automatic weapons) and political security (mass collection of personal data, targeted propaganda, video manipulation, etc.). Researchers, engineers and public authorities must work closely to prevent these risks; for their part, experts and other stakeholders such as users and consumers must be involved in discussions on these issues. |
| --- | --- |

4.2.2.

4.3.   Privacy and data governance

| 4.3.1. | The Commission calls for access to data to be ‘adequately governed and controlled’ (10). The EESC believes that we need to go further than general statements. The degree of trust that people have in AI systems will also determine their development. The issues of data ownership, and the control and use of data by companies and organisations have yet to be resolved. The amount of data transmitted for example by cars to car manufacturers and the type of data transmitted are startling (11). Despite the concept of privacy by design, with which connected objects have to comply under the GDPR, we can see that consumers have very little or no information on this subject and no means of controlling these data. The EESC therefore urges the Commission to review the GDPR and related legislation in the light of developments in technology (12). |
| --- | --- |

4.3.1.

4.4.   Transparency

| 4.4.1. | The EESC believes that the explainability of algorithmic decision-making processes is key to understanding not the mechanisms but the underlying logic of the decision-making processes and how they are influenced by AI systems. Developing standard test procedures for machine learning systems continues to be a technical challenge which needs to be supported by EU instruments such as Horizon Europe. |
| --- | --- |

4.4.1.

| 4.4.2. | The EESC agrees with the Commission that AI systems must be identifiable as such, ‘ensuring that users know they are interacting with an AI system’ (13), including in the context of relations between patients and health professionals and professional services linked to citizens’ health and well-being. The EESC also stresses that users and consumers must also be able to be informed about the services performed by human beings. Many AI systems actually involve large amounts of human work, which is often hidden from end-users (14). There is the underlying issue here of the lack of transparency towards users and consumers of services, and a form of usage of concealed and unrecognised work. |
| --- | --- |

4.4.2.

| 4.4.3. | In addition, the EESC believes that consumers must always be informed when AI systems are integrated into the products they buy, and must always be able to access and control their data. |
| --- | --- |

4.4.3.

4.5.   Diversity, non-discrimination and fairness

| 4.5.1. | Risks in the form of discrimination are present in some AI applications which profile citizens, users and consumers (for example for recruitment, letting property and certain personal services). The EU has adopted a body of legislation on equal treatment and non-discrimination (15) and AI systems must comply with it. However, this legislation must also be adapted and, if appropriate, bolstered (including in terms of enforcement) in order to cope with new practices. There is a real danger that algorithmic profiling could become a new and powerful tool of discrimination. The EU must prevent this danger. |
| --- | --- |

4.5.1.

| 4.5.2. | The Anti-Racism Directive (16) and the Directive on equal treatment for men and women beyond the workplace (17) provide for the creation of special bodies responsible for promoting gender equality. The EESC calls for these bodies to play an active role in monitoring and overseeing AI systems with regard to the risks of direct or indirect discrimination. |
| --- | --- |

4.5.2.

4.6.   Societal and environmental well-being

| 4.6.1. | The Commission does not propose any specific ways to link up the climate transition and the digital transformation, particularly as regards the use of AI systems. Consideration must be given to the contribution that AI systems can make to reducing greenhouse gas emissions, particularly in industry, transport, energy, construction and agriculture. |
| --- | --- |

4.6.1.

| 4.6.2. | The Commission points out that AI systems can be used to enhance social skills but they could also lead to a deterioration in this area. The EESC feels that the EU must be more proactive in gauging certain societal challenges. For example, studies have shown that some applications incorporating AI systems are designed to keep users of online services (social networks, games, videos, etc.) connected for as long as possible. The aim is to be able to collect as much data as possible on their behaviour; the strategies used range from endless transmitting of algorithmic recommendations to reminders and notifications, games, etc. The effects on children of the excesses of connection and solicitation have been studied (18) and the findings have shown an increase in anxiety, aggression, sleeplessness and an impact on education, social interaction, health and well-being. In order to build trustworthy AI, the EU must take these effects into account and prevent them. |
| --- | --- |

4.6.2.

| 4.6.3. | Lastly, one of the elements of societal well-being is related to a sense of security at work. The effects of digitalisation can undermine security and cause stress (19), and so strategies are needed to anticipate change before any restructuring occurs and provide ongoing training for all workers. This requires a high standard of social dialogue in companies between employers and workers’ representatives, involving in particular inclusive deployment of new technologies, especially AI and robotics. To consolidate trust between management and workers, IA systems in the area of management, evaluation and oversight of workers must be explainable, their parameters must be known and the way they work must be transparent. |
| --- | --- |

4.6.3.

4.7.   Accountability

| 4.7.1. | The decisions taken by machine learning systems cannot be explained in simple terms; moreover, they are updated regularly. The EESC believes that oversight of AI systems may not be sufficient to define who is responsible and build trust. It therefore recommends that rules be drawn up assigning responsibility to natural persons or legal entities in the event of non-compliance. The EESC recommends relying more on trustworthy companies or professionals than on algorithms, and proposes developing, for companies which comply with all the rules, a European trusted-AI Business Certificate based partly on the assessment list suggested by the high-level group. |
| --- | --- |

4.7.1.

| 4.7.2. | The Product Liability Directive (20) establishes the principle of strict liability for European producers: where a defective product causes harm to a consumer, the producer can be held liable even when there is no fault or negligence on their part. The increasingly widespread design, deployment and use of AI systems mean that the EU needs to adopt adapted liability rules for situations where products with digital content and consumer services can be dangerous and harmful. Consumers must be able to take legal action in the event of harm caused by an AI system. |
| --- | --- |

4.7.2.

5.   The need for regulation beyond Europe

| 5.1. | In a global context, AI regulation must go beyond Europe’s borders. Europe should promote a broad consensus on AI in the G7 and G20 and keep up bilateral dialogue so that a majority of countries can participate in AI standardisation processes and verify their relevance on a regular basis. |
| --- | --- |

5.1.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  OJ C 440, 6.12.2018, p. 1.

1

(2)  OJ C 288, 31.8.2017, p. 1, OJ C 440, 6.12.2018, p. 1.

2

(3)  https://osha.europa.eu/en/emerging-risks

3

(4)  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).

4

(5)  COM(2019) 168 final.

5

(6)  COM(2019) 168 final, p. 5.

6

(7)  See in particular OSH and the future of work: benefits and risks of artificial intelligence tools in workplaces.

7

OSH and the future of work: benefits and risks of artificial intelligence tools in workplaces

(8)  ISO/TS 15066, 2016.

8

(9)  See report on The Malicious Use of Artificial Intelligence: Forecasting, Prevention, and Mitigation, February 2018.

9

The Malicious Use of Artificial Intelligence: Forecasting, Prevention, and Mitigation

(10)  COM(2019) 168 final, p. 6.

10

(11)  Your car knows when you gain weight, The New York Times (International Edition), 22.5.2019.

11

Your car knows when you gain weight

(12)  OJ C 190, 5.6.2019, p. 17.

12

(13)  COM(2019) 168 final, p. 6.

13

(14)  See for instance A white-collar sweatshop: Google Assistant contractors allege wage theft, The Guardian, 29.5.2019 and Bot technology impressive, except when it’s not the bot, The New York Times (International Edition), 24.5.2019.

14

A white-collar sweatshop: Google Assistant contractors allege wage theft

Bot technology impressive, except when it’s not the bot

(15)  OJ L 180, 19.7.2000, p. 22; OJ L 303, 2.12.2000, p.16; OJ L 373, 21.12.2004, p. 37; OJ L 204, 26.7.2006, p. 23.

15

(16)  Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin (OJ L 180, 19.7.2000, p. 22).

16

(17)  Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services (OJ L 373, 21.12.2004, p. 37).

17

(18)  See Kidron, Evans, Afia (2018), Disrupted Childhood — The Cost of Persuasive Design, 5Rights Foundation.

18

Disrupted Childhood — The Cost of Persuasive Design

(19)  Report by the high-level group on the impact of the digital transformation on EU labour markets, 2019.

19

(20)  Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ L 210, 7.8.1985, p. 29).

20

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/69 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/69

---

Opinion of the European Economic and Social Committee on

‘Proposal for a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe’

(COM(2019) 330 final — 2019/00152 (COD))

and

‘Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast)’

(COM(2019) 331 final — 2019/00151 (COD))

(2020/C 47/10)

Rapporteur-general: Antonello PEZZINI

| Referral | European Parliament, 18.7.2019
  Council, 26.7.2019 |
| --- | --- |
| Legal basis | Articles 173(3) and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Single Market, Production and Consumption |
| Bureau decision | 24.9.2019 |
| Adopted at plenary | 31.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 168/0/1 |

Referral

European Parliament, 18.7.2019

Council, 26.7.2019

Legal basis

Articles 173(3) and 304 of the Treaty on the Functioning of the European Union

Section responsible

Single Market, Production and Consumption

Bureau decision

24.9.2019

Adopted at plenary

31.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

168/0/1

1.   Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) fully supports the synergy between the EIT and the multiannual EU framework programme for research and innovation, as proposed in the revised regulation, as part of the process of rationalisation introduced by Horizon Europe, setting out a simplified architecture with regard to research and innovation. |
| --- | --- |

1.1.

| 1.2. | The EESC is convinced that Horizon Europe’s ‘Open Innovation’ will offer a one-stop-shop to high-potential innovators through the European Innovation Council, and will step up cooperation with ecosystems and operators, in synergy with the EIT, avoiding duplication and overlaps and ensuring effective complementarities, as set out by the Council in connection with the proposal for the programme implementing Horizon Europe (1). |
| --- | --- |

1.2.

| 1.3. | In this regard, the EIT should represent one of the main drivers for target-focused innovation, capable of meeting challenges to society in areas such as: sustainable innovation ecosystems; innovation and business skills with a view to lifelong learning; more efficient institutions of higher education; new market-oriented solutions to face global challenges; synergies and added value throughout the Horizon Europe programme. |
| --- | --- |

1.3.

| 1.4. | In the EESC’s view, the EIT and its Knowledge and Innovation Communities (KICs) should play a more central role on the EU’s national and regional innovation scene; they should fine-tune their own capacities to achieve closer and more effective coordination with all other stakeholders at the different levels; and they should step up their work with businesses of every size, with the aim of fostering a culture of entrepreneurship in the EU. |
| --- | --- |

1.4.

| 1.5. | The EESC recommends that the EIT maintain and highlight its unique added value as a European leader in high-skill, specialist business education applying a ‘learning-by-doing’ approach, identifying and trialling new teaching and learning methods. The EIT label should be recognised by the main international accreditation bodies and exported beyond the KICs and their partners in order to foster an ever-growing innovation community, in cooperation with non-EU countries, in Asia and with the USA in particular. |
| --- | --- |

1.5.

| 1.6. | In the EESC’s view, the EIT should support the development of new products of strong commercial value, enriched by educational experiences and disseminated internationally, based on the industrial doctorate model. This would undoubtedly facilitate wider and more active involvement by commercial partners in KIC activities. |
| --- | --- |

1.6.

| 1.7. | In order to involve SMEs more effectively, the KICs should sound out new systems for harnessing and promoting the ‘proximity effect’, bringing in local centres in particular: they should provide an access point to global innovation platforms from regional and local actors. |
| --- | --- |

1.7.

| 1.8. | The EIT and KICs should, each from their side, build up their own strategies for financing businesses and development, in order to support the process of consolidating innovative enterprises. Network links with the financial sector and risk capital funds should also be strengthened. |
| --- | --- |

1.8.

| 1.9. | The EESC recommends that the way KICs are spread should better reflect the geopolitical balance and ensure better cover of the EU’s territory, beginning with the cultural and creative industries, with a view to covering areas such as the Adriatic/Balkan and Chinese areas. |
| --- | --- |

1.9.

| 1.10. | With regard to the proposed decision on the Strategic Innovation Agenda (SIA) for the 2021-2027 period, the EESC considers that the process should be marked by a holistic approach, and should cover all types of partnership (P2P, PPP, EIT-KIC and FET Flagships), as urged in the Council conclusions, in order to provide a complete picture of what is being done through partnerships and to achieve the policy objectives. |
| --- | --- |

1.10.

| 1.11. | The EESC broadly agrees with the Strategic Innovation Agenda, as set out in the annex to the proposal for a decision, insofar as the implementation of the measures put forward is fully aligned with the Horizon Europe strategic plan, as set out in the common understanding of the European Parliament and the Council on the 9th framework Programme (FP) (2). |
| --- | --- |

1.11.

| 1.12. | The EESC welcomes the announced intention that ‘the EIT will continue its efforts towards simplification in order to alleviate unnecessary administrative burden of the KIC, allowing the implementation of their annual Business Plan and multi-annual strategy in an agile and efficient way’. |
| --- | --- |

1.12.

| 1.13. | The EESC considers that the EIT should be required to produce a value-for-money report on all successful innovative products placed on the market over its 10 years of experience. |
| --- | --- |

1.13.

| 1.14. | The EESC attaches similar importance to: reporting and monitoring work, with specific impact indicators; evaluation of the KICs’ operational performance; real achievements; results and progress towards meeting objectives, in line with the Horizon Europe framework. |
| --- | --- |

1.14.

2.   Introduction

| 2.1. | Europe’s difficulties in turning inventions into marketable products and services have prompted the EU to review its research policies, seeking to remedy its inability to convert its excellence in fundamental research into market-oriented innovation, and to do so rapidly. |
| --- | --- |

2.1.

| 2.2. | The European Institute of Innovation and Technology (EIT), on which the EESC has previously issued a number of opinions (3), was set up by the European Union in 2008 in order to strengthen its capacity for innovation, and is a constituent part of the European Framework Programme for Research and Innovation (FP). |
| --- | --- |

2.2.

| 2.3. | As things stand, the EIT is Europe’s largest integrated innovation ecosystem. It brings together partners from business, research and educational bodies and supports the KICs. These communities represent a wide range of European partnerships, capable both of tackling specific global challenges and of strengthening development ecosystems, promoting the integration of education with research in order to create a favourable climate and to simulate the creation of innovative businesses, in close alignment with the European Innovation Council (EIC). |
| --- | --- |

2.3.

| 2.4. | The current 2014-2020 FP (Horizon 2020) explicitly finances innovation with new public instruments that have been brought in to boost innovation in Europe and further encourage businesses to be involved in innovation, such as: public-private partnerships, e.g. the Joint Technology Initiatives (JTI); loan and guarantee schemes, such as the RSFF; and risk capital, such as the GIF (4). |
| --- | --- |

2.4.

| 2.5. | With a budget of more than EUR 300 million for the 2008-2013 period, EUR 2,7 billion for 2014-2020 and EUR 3,1 billion for 2021-2027, the EIT is set to play an important role within the Europe 2020 strategy (5). |
| --- | --- |

2.5.

| 2.6. | The EIT’s purpose is to improve innovation processes, by integrating training and entrepreneurship with research and innovation, with the specific aim of focusing on tangible results and benefits (6). |
| --- | --- |

2.6.

| 2.7. | The EIT’s activity is channelled through the KICs: large-scale European partnerships which address specific societal challenges by bringing together education, research and business organisations. The EIT awards grants to the KICs and is required to monitor their activities, with effective verification and publication of results. |
| --- | --- |

2.7.

| 2.8. | The EIT is now integrated into Horizon Europe as part of the third pillar (Innovative Europe), but synergies and complementarity also need to be generated with the other components of the programme (7). As an integral part of the EIT, KICs are considered to be ‘institutionalised European partnerships’. |
| --- | --- |

2.8.

| 2.9. | More specifically, the EIT’s overall objectives are reflected in its areas of work, as identified by Horizon Europe, which also establishes the selection, implementation, monitoring, evaluation and termination criteria for European partnerships, including KIC-EIT ones. |
| --- | --- |

2.9.

| 2.9.1. | It is worth pointing out the main areas of work:






  — | strengthening sustainable innovation ecosystems across Europe, |
| --- | --- | --- |

2.9.1.

—

strengthening sustainable innovation ecosystems across Europe,

| — | fostering the development of entrepreneurial and innovation skills in a lifelong learning perspective, |
| --- | --- |

—

fostering the development of entrepreneurial and innovation skills in a lifelong learning perspective,

| — | supporting transformation towards a business culture in universities, |
| --- | --- |

—

supporting transformation towards a business culture in universities,

| — | bringing new solutions to the market to tackle global challenges facing society. |
| --- | --- |

—

bringing new solutions to the market to tackle global challenges facing society.

| 2.10. | The EIT operates as a decentralised EU body. It is based in Budapest. The EIT is not a research centre and does not directly contribute to funding individual projects, but offers grants to KICs. |
| --- | --- |

2.10.

| 2.11. | The KICs are selected by open call based on priority topics with a high social impact. The EIT is currently supporting eight KICs that bring together businesses, universities and research centres in cross-border partnerships (8). |
| --- | --- |

2.11.

| 2.12. | Each KIC seeks to strengthen innovation capacity, managing a balanced portfolio of activities across three sectors:






  — | innovation support projects intended to support and develop new and innovative products, services and solutions, |
| --- | --- | --- |

2.12.

—

innovation support projects intended to support and develop new and innovative products, services and solutions,

| — | education, innovative education and training programmes, supplied by each KIC in the form of postgraduate programmes (MSc/PhD); management/professional development programmes; lifelong learning modules; summer schools, with an EIT quality mark, |
| --- | --- |

—

education, innovative education and training programmes, supplied by each KIC in the form of postgraduate programmes (MSc/PhD); management/professional development programmes; lifelong learning modules; summer schools, with an EIT quality mark,

| — | business creation and support activities, with start-up programmes to help entrepreneurs and potential entrepreneurs to turn their ideas into successful businesses, concentrating mainly on market access, online financing, mentoring and coaching. |
| --- | --- |

—

business creation and support activities, with start-up programmes to help entrepreneurs and potential entrepreneurs to turn their ideas into successful businesses, concentrating mainly on market access, online financing, mentoring and coaching.

| 2.13. | At the same time, as part of the awareness-raising strategy, each KIC is committed to carrying out awareness-raising, communication and dissemination activities, including the development of Regional Innovation Schemes (RIS) in close synergy with the EIT. |
| --- | --- |

2.13.

| 2.14. | The EESC has previously emphasised that the KICs ‘should guarantee the representation of different European countries, namely regarding the innovation hubs’ location’ and that ‘the entrepreneurship fostered by the academic pillar [...] should be reinforced’ (9). |
| --- | --- |

2.14.

| 2.15. | The EESC has also noted the ‘concentration of KICs’ in a small number of countries, and declared that it ‘would like to see a focused effort being made to forge links with laboratories, businesses and research institutions in as many Member States as possible’ (10). |
| --- | --- |

2.15.

| 2.16. | The European Parliament has called on the Commission to keep KICs in the current EIT structure, stressing the importance of transparency and extensive stakeholder involvement, and inviting the Commission ‘to analyse how EIT and KICs may interact with the EIC’ (European Innovation Council) (11). |
| --- | --- |

2.16.

| 2.17. | The European Parliament has also noted from the report of the Court of Auditors that the KICs have not fully used the grants awarded by the Institute, mainly due to incomplete implementation of the business plans (12). The special report of the Court of Auditors on the EIT indicated that its complex operational framework and management problems have impeded its overall effectiveness, with a number of weaknesses. |
| --- | --- |

2.17.

| 2.18. | The Council has recognised the proven added value of strategic partnerships and initiatives, such as the EIT and the Marie Skłodowska-Curie actions (13) and, in the third pillar of the agreement on the future Horizon Europe programme (Innovative Europe), the focus will be on scaling up breakthrough and disruptive innovation by establishing the European Innovation Council. The latter will offer a one-stop-shop for high-potential innovators (14). |
| --- | --- |

2.18.

3.   The European Commission’s proposals

| 3.1. | The proposals seek to reinforce the openness and transparency of KICs and the alignment of the EIT with the forthcoming EU research and innovation programme (2021-2027) and, in particular, with the proposed approach for European partnerships under Horizon Europe, with the aim of further boosting the EU’s innovation potential. |
| --- | --- |

3.1.

| 3.2. | With a proposed budget of EUR 3 billion, representing an increase of EUR 600 million (+ 25 %) over the current strategic agenda for innovation (2014-2020), it is considered that the EIT could effectively finance existing activities and new KICs, and support the innovation capacity of 750 higher education institutions. |
| --- | --- |

3.2.

| 3.3. | The EIT should launch activities aimed at:






  — | strengthening sustainable innovation ecosystems across Europe, |
| --- | --- | --- |

3.3.

—

strengthening sustainable innovation ecosystems across Europe,

| — | fostering the development of entrepreneurial and innovation skills in a lifelong learning perspective and supporting the entrepreneurial transformation of EU HEIs, |
| --- | --- |

—

fostering the development of entrepreneurial and innovation skills in a lifelong learning perspective and supporting the entrepreneurial transformation of EU HEIs,

| — | bringing new solutions to the market to tackle global challenges. |
| --- | --- |

—

bringing new solutions to the market to tackle global challenges.

| 3.4. | The proposal to recast the EIT regulation (15) is intended to ensure greater legal clarity and closer alignment with the EU’s Framework Programme for Research and Innovation with a new legal basis, and also introduces a simplified financing model for the EIT so as to more efficiently encourage additional public and private investment, strengthening the EIT’s administrative structure. |
| --- | --- |

3.4.

| 3.5. | The proposal for a decision on the Strategic Innovation Agenda (SIA) 2021-2027 — which must be in line with the Horizon Europe Framework Programme for Research and Innovation — sets out to pursue the following objectives:






  — | to increase the regional impact of the KICs through stronger EIT networks, involving more higher education institutions, businesses and research organisations, linked to the regional smart specialisation strategies, |
| --- | --- | --- |

3.5.

—

to increase the regional impact of the KICs through stronger EIT networks, involving more higher education institutions, businesses and research organisations, linked to the regional smart specialisation strategies,

| — | to boost the innovation capacity of higher education, |
| --- | --- |

—

to boost the innovation capacity of higher education,

| — | to launch new KICs. The EIT will set up two new KICs, selected in fields most relevant to Horizon Europe policy priorities. The first will focus on the cultural and creative industries and the second will be identified at a later stage, in 2025. |
| --- | --- |

—

to launch new KICs. The EIT will set up two new KICs, selected in fields most relevant to Horizon Europe policy priorities. The first will focus on the cultural and creative industries and the second will be identified at a later stage, in 2025.

4.   General comments

| 4.1. | The EESC welcomes the role of the EIT in promoting EU competitiveness through its support for the innovation ecosystem, insofar as the Institute has successfully contributed to the growth of the ‘knowledge triangle’. |
| --- | --- |

4.1.

| 4.2. | The EESC is convinced that ‘Open Innovation’ will offer a one-stop-shop to high-potential innovators through the European Innovation Council, and will step up cooperation with ecosystems and operators of innovative processes. |
| --- | --- |

4.2.

| 4.3. | In this regard, the EIT should be one of the main drivers for target-focused innovation in order to tackle the challenges facing society in areas such as:






  — | sustainable innovation ecosystems across Europe, |
| --- | --- | --- |

4.3.

—

sustainable innovation ecosystems across Europe,

| — | entrepreneurial innovation and capacity in a lifelong learning perspective, including greater capacity for higher education institutions, |
| --- | --- |

—

entrepreneurial innovation and capacity in a lifelong learning perspective, including greater capacity for higher education institutions,

| — | new market-oriented solutions to tackle global challenges, |
| --- | --- |

—

new market-oriented solutions to tackle global challenges,

| — | synergies and added value within the whole of Horizon Europe. |
| --- | --- |

—

synergies and added value within the whole of Horizon Europe.

| 4.4. | The EIT and KICs should play a more central role on the EU’s national and regional innovation scene, and should boost their own capacities by means of closer and better coordination with all the stakeholders. |
| --- | --- |

4.4.

| 4.5. | The EIT should address all companies, regardless of size, boosting the EU’s culture of entrepreneurship by involving all the social interest groups, generate synergies with the European Innovation Council (EIC) and give added value to a wide range of projects under Horizon Europe. |
| --- | --- |

4.5.

| 4.6. | The EESC is of the view that the EIT and the KICs should give priority both to systematically stepping up contacts between the large and medium-sized companies that are active in the KICs and to new start-ups involved in KIC initiatives. |
| --- | --- |

4.6.

| 4.7. | The EIT and KICs should develop their own strategies to finance businesses, in order to help strengthen innovative companies through targeted links with the financial sector and risk capital funds. |
| --- | --- |

4.7.

| 4.8. | The EESC considers that EIT financial support should be balanced on the basis of the sector’s dimensions, type and maturity. Small and medium-sized enterprises experience greater difficulty with regulatory burdens and should be supported financially. |
| --- | --- |

4.8.

| 4.9. | In order to involve SMEs more effectively, the KICs should sound out ways of harnessing and promoting the ‘proximity effect’, in particular through local centres that should provide an access point to global innovation platforms from regional and local actors. |
| --- | --- |

4.9.

| 4.10. | The EESC sees local centres as key to the future of the KICs. The integration of local innovation systems and an efficient gatekeeper function for external partners are two crucial aspects for the future financial sustainability of the KICs. |
| --- | --- |

4.10.

| 4.11. | KIC openness and transparency should be increased. The procedures and criteria for selection as a KIC partner (full, associate, etc.) should be made public. The rules for selecting activities/projects (e.g. for innovation proposals) should be made widely available throughout the EU, and suitable feedback mechanisms should be introduced and monitored by independent bodies. |
| --- | --- |

4.11.

| 4.12. | The EESC recommends that the EIT maintain and highlight its unique added value in the field of education, as a European leader in high-level education, and develop specialist business education skills applying a ‘learning-by-doing’ approach. The EIT label should be recognised by the main international accreditation bodies. |
| --- | --- |

4.12.

| 4.13. | In the EESC’s view, the EIT should support the development of new products with a strong commercial presence as part of an international educational experience, based on the industrial doctorate model. |
| --- | --- |

4.13.

| 4.13.1. | The EESC fully supports the alignment of the EIT with the EU’s multiannual Framework Programme for Research and Innovation as proposed in the revised regulation, as part of Horizon Europe and the proposed ‘European partnerships’. |
| --- | --- |

4.13.1.

| 4.14. | According to the EESC, there is a need for further simplification of the way both the EIT — the governance of which must be reinforced — and the KICs function: all following the same rules, they should have annual reports and adopt multiannual, rather than yearly, business plans. |
| --- | --- |

4.14.

| 4.15. | The EESC emphasises the need to take effective remedial action in response to the comments made by the EU Court of Auditors concerning a number of key aspects of the EIT model which are not properly designed to ensure that it provides an effective and innovative public system. |
| --- | --- |

4.15.

| 4.16. | With regard to the proposed decision on the Strategic Innovation Agenda (SIA) 2021-2027, the EESC considers that the process should be marked by a holistic approach, and should cover all types of current partnership (P2P, PPP, EIT-KIC and FET Flagships), as urged in the Council conclusions. |
| --- | --- |

4.16.

Brussels, 31 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Interinstitutional file 2018/0225 (COD) — 8550/19, 15.4.2019.

1

(2)  Interinstitutional file 2018/0224 (COD) — 7942/19, 27.3.2019.

2

(3)  OJ C 161, 13.7.2007, p. 28, OJ C 181, 21.6.2012, p. 122, OJ C 62, 15.2.2019, p. 33.

3

(4)  JTI — the Joint Technology Initiatives were introduced to respond better to industry’s needs in dedicated fields of research. They are independent EU bodies in which industry, and in some cases the Member States, participate. RSFF — a risk-sharing finance facility was set up to improve access to debt financing for researchers, in particular for high-risk investment in the research, technological development and innovation sector. GIF — a tool for innovative, high-growth SMEs under the programme for competitiveness and innovation, which supplies risk capital to innovative, high-growth capacity SMEs.

4

(5)  Article 3 of Regulation (EU) No 1292/2013 of the European Parliament and of the Council of 11 December 2013 amending Regulation (EC) No 294/2008 establishing the European Institute of Innovation and Technology (OJ L 347, 20.12.2013, p. 174).

5

(6)  Decision No 1312/2013/EU of the European Parliament and of the Council of 11 December 2013 on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT): the contribution of the EIT to a more innovative Europe (OJ L 347, 20.12.2013, p. 892).

6

(7)  See footnote 1.

7

(8)  EIT Climate-KIC: Drivers of climate innovation in Europe and beyond; EIT Digital: For a strong, digital Europe; EIT Food: EIT Food connects businesses, research centres, universities and consumers; EIT Health: Together for healthy lives in Europe; EIT InnoEnergy: Pioneering change in sustainable Energy; EIT Manufacturing: Strengthening and increasing the competitiveness of Europe’s manufacturing; EIT RawMaterials: Developing raw materials into a major strength for Europe; EIT Urban Mobility: Smart, green and integrated transport.

8

(9)  OJ C 62, 15.2.2019, p. 33.

9

(10)  OJ C 181, 21.6.2012, p. 122.

10

(11)  European Parliament resolution of 13 June 2017 on the assessment of Horizon 2020 implementation in view of its interim evaluation and the Framework Programme 9 proposal (OJ L 331, 18.9.2018, p. 30).

11

(12)  Resolution (EU) 2019/1483 of the European Parliament of 26 March 2019 with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Institute of Innovation and Technology for the financial year 2017 (OJ L 249, 27.9.2019, p. 229).

12

(13)  Council conclusions on moving towards a vision of a European Education Area (23 May 2018).

13

(14)  Council of the EU — Press release 27 March 2019.

14

(15)  Regulation (EU) No 1292/2013.

15

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/76 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/76

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence effort within the Union framework’

(COM(2019) 192 final — 2019/0096 (CNS))

(2020/C 47/11)

Rapporteur: Benjamin RIZZO

| Referral | Council of the European Union, 13.5.2019 |
| --- | --- |
| Legal basis | Article 113 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 17.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 204/2/5 |

Referral

Council of the European Union, 13.5.2019

Legal basis

Article 113 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

17.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

204/2/5

1.   Conclusions and recommendations

| 1.1. | The EESC recognises the Commission’s aim of ensuring equal treatment, for VAT purposes, for armed forces of Member States working together within an EU framework and NATO armed forces employed in the EU, which already benefit from VAT exemption. Having a level playing field in this respect seems reasonable. |
| --- | --- |

1.1.

| 1.2. | The EESC understands why certain EU structures have been set up since 2000 to administer armed forces deployed within the EU for its security and defence. Now, with a director general in charge of defence, these structures will be better utilised and overseen. |
| --- | --- |

1.2.

| 1.3. | The EESC understands that the two conditions for the exemption set out in the Commission proposal are that armed forces are deployed outside their own Member State, on the one hand, and that they are involved in a European common defence effort, on the other hand. |
| --- | --- |

1.3.

| 1.4. | The EESC accepts that there are some areas not covered by the new exemption. These areas concern, in particular, security purposes, humanitarian rescue tasks and cases in which the solidarity clause is evoked. As a consequence the overall VAT exemptions are limited to ‘military operations’, applying a narrow interpretation of such a concept. |
| --- | --- |

1.4.

| 1.5. | The EESC suggests that different national tax authorities should have one system under which the new exemptions are implemented. Therefore, it is recommended that the Commission, through its VAT Control Group, set up a dedicated system where the VAT-exempted invoices issued by suppliers to armed forces will need to be inserted in order to benefit from the exemption set out in the Commission proposal. That way, a unified system will be used in all Member States. |
| --- | --- |

1.5.

| 1.6. | The EESC considers that the information regarding the costs/benefits effects of the exemptions brought about by the Commission proposal should be better calculated, so that a more realistic report on such exemptions can soon become available. This will encourage better and more transparent reporting for Member States and public opinion in general. |
| --- | --- |

1.6.

2.   The Commission proposal

| 2.1. | With its proposal for a Council Directive amending Directive 2006/112/EC (1) on the common system of value added tax and Directive 2008/118/EC (2) concerning the general arrangements for excise duty as regards defence effort within the Union framework, published on 24 March 2019, the European Commission presented its plan to exempt supplies to armed forces from Value Added Tax (VAT) and excise duties when these forces are deployed outside their own Member State and take part in a European defence effort. |
| --- | --- |

2.1.

| 2.2. | According to Article 2 of Council Directive 2006/112/EC on the common system of value added tax, the scope of VAT includes ‘any supply of goods and services for consideration by a taxable person within the territory of a Member State and any importation of goods into the European Union’. |
| --- | --- |

2.2.

| 2.3. | The Directive singles out a common list of VAT exemptions aimed at ensuring that EU own resources are collected in a uniform manner across Member States. At present, the exemptions list does not include the supply of goods or services for security and defence purposes. Therefore, goods or services supplied to, or goods imported by, armed forces are subject to VAT. |
| --- | --- |

2.3.

| 2.4. | By contrast, the VAT Directive currently provides for an exemption concerning supplies to the armed forces of any State party to the North Atlantic Treaty, that are involved in a common defence effort outside their own State. Such an exemption was devised to address situations in which ‘the circle of revenue and expenditure flow is broken, because VAT on such supplies would normally constitute revenue for the State in which the armed forces are located, rather than their own’. |
| --- | --- |

2.4.

| 2.5. | Council Directive 2008/118/EC concerning the general arrangements for excise duty sets forth a similar exemption from excise duty for movements of excise goods for the armed forces of any North Atlantic Treaty Organisation (NATO) member. |
| --- | --- |

2.5.

| 2.6. | Excise duties under the EU law are applied on alcoholic beverages, manufactured tobacco products and energy products (motor fuels and heating fuels, such as petrol and gasoline, electricity, natural gas and coal). The structure of the taxes and minimum rates are harmonised at EU level. |
| --- | --- |

2.6.

| 2.7. | While NATO’s defence effort has been exempted by both the VAT Directive (since 1977) and the Excise Directive (since 1993), no exemption is currently available for the supplies related to the common defence effort within the EU framework. |
| --- | --- |

2.7.

| 2.8. | The Common Security and Defence Policy (CSDP) (3) — originally established (2000) as the European Security and Defence Policy (ESDP) — is a key instrument for the progressive development of a common Union defence policy. The Lisbon Treaty contributed significantly to developing the CSDP, establishing, inter alia, the European External Action Service (EEAS) in order to support the High Representative for Foreign Affairs and Security Policy in all her duties, including the CSDP. |
| --- | --- |

2.8.

| 2.9. | The Treaty on European Union (TEU) also includes a mutual assistance clause and allows Member States to strengthen their military by means of ‘permanent structured cooperation’ (PESCO) (4). |
| --- | --- |

2.9.

| 2.10. | The EU Military Committee (EUMC) (5), set up in 2001, is the Council’s highest military body, directing ‘all military activities within the EU framework and advising on the planning and execution of military missions and operations under the CSDP, and on the development of military capabilities’. |
| --- | --- |

2.10.

| 2.11. | In June 2016, the global strategy for the European Union’s foreign and security policy (EUGS) (6) laid the ground for further developing the CSDP towards three core priorities: responding to external conflicts and crises, building the capabilities of partners and protecting the Union and its citizens. |
| --- | --- |

2.11.

| 2.12. | In March 2018, the Commission and the High Representative presented a Joint Communication on the military mobility action plan (7). The action plan recognises the need for ‘equal treatment of defence efforts with a view to reducing administrative burden and thus delays and costs in military mobility’. |
| --- | --- |

2.12.

| 2.13. | More specifically, the Joint Communication states that ‘facilitating military mobility also concerns the current Value Added Tax rules. Defence efforts and military mobility, in particular, necessitate a number of supplies such as training, exercise materials, accommodation, provision of food/canteen services, fuel, etc. These supplies are in principle subject to Value Added Tax. In the framework of the Ad Hoc Working Group on Military Mobility, Member States identified the need to ensure that defence efforts are treated equally, in order to reduce the administrative burden, thus avoiding delays and costs for military mobility, and providing Member States with an incentive to cooperate’. |
| --- | --- |

2.13.

| 2.14. | Following such a request, the Commission proposal under discussion here pursues the alignment of both the VAT treatment and excise exemption of defence efforts in the EU and NATO frameworks as far as possible. According to the proposal, the CSDP activities covered by the exemptions are: i) military missions and operations; ii) battlegroups; iii) mutual assistance. In addition, PESCO and EDA activities will be covered as well. |
| --- | --- |

2.14.

| 2.15. | It is worth noting that, based on the Commission proposal, supplies to the armed forces and the accompanying civilian staff can only be exempted in case such forces take part in a defence effort carried out for the implementation of a Union activity under the CSDP. |
| --- | --- |

2.15.

| 2.16. | Therefore, the exemptions do not cover the deployment of armed forces solely for security purposes, for humanitarian and rescue tasks or when evoking the solidarity clause laid down in Article 222 TFEU without defence implications. |
| --- | --- |

2.16.

| 2.17. | According to a prudential estimation, a value of EUR 530 million — out of a total defence spending of EUR 5,3 billion — can be attributed to outsourced activities that will be covered by the Commission proposal, which could result in a possible loss of VAT revenue for all Member States of around EUR 80 million (assuming an average VAT rate of 18 %). |
| --- | --- |

2.17.

| 2.18. | With regard to excise duties, energy products and electricity should be the main products subject to exemption. As with VAT, it can be assumed that around 10 % of such costs would be exempt from excise duty in the future. However, there is no available data to provide a basis for quantifying the impact. |
| --- | --- |

2.18.

| 2.19. | Member States will be required to adopt and publish, by 30 June 2022 at the latest, the laws, regulations and administrative provisions necessary to comply with the new rules, communicating the text of those provisions to the Commission. |
| --- | --- |

2.19.

3.   General and specific observations

| 3.1. | The Commission proposal complements the 2016 VAT action plan to modernise the VAT system, achieving a simpler, more fraud-proof and business-friendly model. The above-mentioned modifications regarding the military field are therefore inserted within a wider reform and are going to become part of the new system from the outset. Thus, all the possible issues related to future modifications to a system already in place will be avoided. |
| --- | --- |

3.1.

| 3.2. | The Commission proposal changes the current list provided by Directive 2006/112/EC, bringing about a new exemption. Such a substantial modification is aimed at allowing a sort of ‘level playing field’, from a VAT perspective, with regard to the NATO operations, on the one side, and the operations carried out under a common framework by Member State military forces, on the other. Consistency will therefore be achieved and the scope of exemption will be similar for Union and NATO defence efforts. |
| --- | --- |

3.2.

| 3.3. | The EESC notes that the current exemptions for NATO defence activities, which are already framed and limited in scope, will not be extended, since a mere alignment in favour of military operations carried out under a common framework will be put in place. |
| --- | --- |

3.3.

| 3.4. | The choice of drafting the new Directive provisions to mirror the existing paragraphs referring to the armed forces of NATO is consistent with the Commission final aim of achieving an equal treatment between such operations and the military efforts carried out under a common EU framework. |
| --- | --- |

3.4.

| 3.5. | The EESC notes that there will be no negative implications for the EU budget, as the own resource based on gross national income (GNI) compensates for any expenditure not covered by traditional own resources and the VAT own resource. The non-collected VAT own resources from certain Member States will be compensated by all Member States through the GNI own resource. |
| --- | --- |

3.5.

| 3.6. | The proposal is in line with the subsidiarity principle, given that the EU legislation is better suited than several national rules to coordinate the applicability of VAT to specific military operations across the internal market. Member States were consulted in the Group on the future of VAT and broadly confirmed the need to act at EU level, thereby justifying the choice of a Directive proposal. |
| --- | --- |

3.6.

| 3.7. | The proposal also seems consistent with the principle of proportionality, as it does not go beyond what is necessary to meet the objectives of the Treaties linked to the progressive framing of a common defence policy under the CSDP. Such a long-term and ambitious objective is supported by the EESC. |
| --- | --- |

3.7.

| 3.8. | The choice of maintaining consistency between VAT and excise duties, addressing both the exemptions within a single proposal, seems reasonable and able to justify one of the rare occasions in which excise duties and VAT are jointly regulated within EU legislation. |
| --- | --- |

3.8.

| 3.9. | However, the EESC suggests that the scope of application of the exemption that will be granted both in the VAT and excise duty systems should be better specified. It is indeed strategic to precisely fix the specific perimeter of such an exemption in order to ensure certainty of the law and predictability of the VAT and excise duty systems. |
| --- | --- |

3.9.

| 3.10. | As for the need for clarity and predictability of the law, it is worth noting that the exemptions granted will be mainly applied and evaluated, from different perspectives, by national suppliers operating in the military field and by national tax authorities. The national tax authorities will instruct national suppliers operating in the military field how to construct their VAT invoices to the military. |
| --- | --- |

3.10.

| 3.11. | In this respect, the EESC recommends that the Commission issue detailed implementation rules — by means of an explanatory note or guidelines issued by the VAT Committee — for national tax authorities and enterprises to avoid technical complications within Member States. The previous practice related to the NATO exemption could certainly be useful in order to provide some initial guidelines. |
| --- | --- |

3.11.

| 3.12. | The EESC finally underlines that a new exemption mechanism — such as the one set forth in the Commission proposal — certainly requires adequate control mechanisms in order to supervise its concrete implementation. The EESC therefore suggests that the Commission develop and launch a system via the Commission VAT control group for an adequate system to be introduced in all Member States to control the new exemption scheme, aimed at collecting, when it is possible and viable, all the relevant practical information from national tax authorities. |
| --- | --- |

3.12.

| 3.13. | Such a system might contribute to an effective and, at the same time, transparent implementation of the new exemption, also allowing the development of an accurate ex post impact assessment analysis. Thus, a common platform could be adopted by Member States, creating one system that will be followed by all Member States rather than different systems in different countries. |
| --- | --- |

3.13.

| 3.14. | It is recommended that a more detailed and effective cost estimation be undertaken to understand the effect of this VAT exemption, as these are part of the taxes paid by the general public and more transparency is recommended. It is also apparent that in major natural disasters the cost of this exemption could be much greater. |
| --- | --- |

3.14.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Council Directive 2006/112/EC on the common system of value added tax (OJ L 347, 11.12.2006, p. 1).

1

(2)  Council Directive 2008/118/EC concerning the general arrangements for excise duty and repealing Directive 92/12/EEC (OJ L 9, 14.1.2009,p. 12).

2

(3)  The common security and defence policy (CSDP) is an integral part of the Union’s common foreign and security policy (CFSP)[1]. The CSDP is framed by the Treaty on European Union (TEU). Article 41 outlines the funding of the CFSP and CSDP, and the policy is further described in Articles 42 to 46, in Chapter 2, Section 2 of Title V (‘Provisions on the Common Security and Defence Policy’), and in Protocols 1, 10 and 11 and Declarations 13 and 14. The specific role of the European Parliament in the CFSP and CSDP is described in Article 36 of the TEU.

3

(4)  The provisions for PESCO are enshrined in Article 46 of the Treaty on European Union (TEU) and Protocol 10 on permanent structured cooperation established by Article 42(6) TEU.

4

(5)  The European Union Military Committee (EUMC) is the highest military body set up within the Council (COUNCIL DECISION of 22 January 2001 setting up the Military Committee of the European Union).

5

(6)  Shared vision, common action: a stronger Europe – a global strategy for the European Union’s foreign and security policy.

6

(7)  Improving Military Mobility in the European Union, Joint Communication to the European Parliament and the Council (JOIN(2017) 41 final)

7

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/81 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/81

---

Opinion of the European Economic and Social Committee on ‘Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Investor Citizenship and Residence Schemes in the European Union’

(COM(2019) 12 final)

(2020/C 47/12)

Rapporteur: Jean-Marc ROIRANT

| Referral | Commission, 12.3.2019 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Section for Employment, Social Affairs and Citizenship |
| Adopted in section | 15.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 213/1/5 |

Referral

Commission, 12.3.2019

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Section for Employment, Social Affairs and Citizenship

Adopted in section

15.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

213/1/5

1.   Conclusions and recommendations

| 1.1. | The EESC echoes the European Parliament’s call in a recent report (1) to phase out all investor schemes, and urges the Member States to follow this recommendation or provide reasonable arguments and evidence for not doing so. |
| --- | --- |

1.1.

| 1.2. | Until this takes effect, the EESC acknowledges that to address the risks posed by citizenship-by-investment (CBI) and residence-by-investment (RBI) schemes, detailed in chapter 3 below, and to fulfil its primary mandate, the group of Member States’ experts set up by the European Commission should focus on:






  i) | minimum standards for due diligence and security checks that are adapted to the risk profile of CBI and RBI applicants and that comply with existing EU anti-money-laundering rules; |
| --- | --- | --- |

1.2.

i)

minimum standards for due diligence and security checks that are adapted to the risk profile of CBI and RBI applicants and that comply with existing EU anti-money-laundering rules;

| ii) | minimum standards for the operational integrity of the scheme, including transparency and governance measures as well as regulatory measures for the industry in accordance with the relevant legal framework; and |
| --- | --- |

ii)

minimum standards for the operational integrity of the scheme, including transparency and governance measures as well as regulatory measures for the industry in accordance with the relevant legal framework; and

| iii) | guidelines and mechanisms for information-sharing between Member States as well as between national competent authorities within the Member States. |
| --- | --- |

iii)

guidelines and mechanisms for information-sharing between Member States as well as between national competent authorities within the Member States.

| 1.3. | These measures must be backed up by close monitoring and enforcement of sanctions by the Commission, where this is permitted under the Community acquis. |
| --- | --- |

1.3.

| 1.4. | The EESC recommends that Member States be urged to apply a due diligence process without specific duration restrictions and adapted to the high-risk profile of applicants, i.e. enhanced due diligence standards as detailed in the Fifth Anti-Money Laundering Directive (2). This should include any benefactor when applicants are given the possibility of relying on third parties to make their investment. |
| --- | --- |

1.4.

| 1.5. | The EESC recommends that the Commission establish a coordination mechanism that allows Member States to exchange information on successful and rejected applications for citizenship and residence permits. This could take the form of interconnected central registers containing information on the due diligence process under which an application has been rejected and the underlying reasons for such a decision, to discourage shopping around between Member States. Publication of the reasons for refusal should take into consideration any concerns that security agencies may have on grounds of public safety or international cooperation between agencies. |
| --- | --- |

1.5.

| 1.6. | The EESC recommends that all agents and intermediaries providing services to applicants be subject to anti-money-laundering rules as set out in the Fifth Anti-Money Laundering Directive. |
| --- | --- |

1.6.

| 1.7. | The EESC further recommends that the EU encourages all agents providing services to applicants to be accredited and subject to a code of conduct establishing minimum criteria and requirements harmonised at EU level, so that agents failing to prepare rigorous and reliable documentation for acceptance can be sanctioned and, if they do so more than once, lose their licence/accreditation. |
| --- | --- |

1.7.

| 1.8. | While the EESC recognises that public authorities may need to hire specialist agencies to conduct the necessary checks, it insists that authorities should nevertheless maintain primary responsibility for accepting or rejecting applicants. Authorities must also maintain a set of measures to avoid conflicts of interest or bribery risks. In particular, specialist agencies should be selected according to robust contracting principles that prioritise high quality service over delivery cost and be barred from marketing the schemes or providing additional services to applicants, and their remuneration must not depend on the outcome of the applications. |
| --- | --- |

1.8.

| 1.9. | It is also critical that any enhanced due diligence report that identifies risks should be discussed with the relevant public agency to ensure that all Member States concerned have a comprehensive picture of the type and level of risk at hand and fully understand how the sources and research techniques applied by the specialist agency adhere to best practice principles. Adequate notes and documents relating to decisions should be kept for as long as the statute of limitations on falsification of documents and bribery offences allows. |
| --- | --- |

1.9.

| 1.10. | Member States should ensure that programmes operate with strong governance and oversight mechanisms and are subject to public scrutiny. Citizens should be informed of the objectives, risks and benefits that come with CBI and RBI schemes. The EESC stresses the importance of CBI and RBI applicants’ information being publicly accessible, and calls on the Commission to encourage Member States systematically collect and publish information on the schemes in open-data format, and on a harmonised and comparable basis. |
| --- | --- |

1.10.

| 1.11. | The EESC believes it is important that Member States conduct regular impact assessments and make adjustments as necessary, that they exercise independent oversight over the schemes, and that they conduct regular audits and publish the results in accordance with applicable legislation. |
| --- | --- |

1.11.

| 1.12. | Member States should further provide for robust whistleblowing mechanisms for staff and citizens to report concerns and wrongdoing, and should build in mechanisms for revoking citizenship and residency rights in the event of new evidence of corruption or criminality being uncovered. Any decision concerning deprivation of citizenship should be made in accordance with national and EU legislation. |
| --- | --- |

1.12.

2.   Background and gist of the Commission report

| 2.1. | Nationality is a bond between a citizen and the state. Citizenship of a country is traditionally based on birthright acquisition, be it by descent (jus sanguinis) or by birth in the territory (jus soli). States can also grant citizenship to persons fulfilling certain requirements or who can demonstrate a genuine connection to the country (naturalisation). This includes the requirement to acquire and maintain a permanent residence in the relevant Member State, as a manifestation of the applicant’s intention to transfer some of their interests to the Member State in question. |
| --- | --- |

2.1.

| 2.2. | In recent decades, a large number of EU Member States have set up CBI and RBI schemes which aim to attract investment in exchange for citizenship or residence rights in the country concerned. |
| --- | --- |

2.2.

| 2.3. | In a Resolution of 16 January 2014 (3), the European Parliament expressed concern that national schemes involving the ‘direct or indirect outright sale’ of EU citizenship undermined the very concept of EU citizenship. In a debate on 30 May 2018, the European Parliament discussed a range of risks associated with CBI and RBI schemes (4). The issue was further discussed in the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) of the European Parliament. TAX3’s final report (5) sets out a number of key mitigation measures to reduce the risks posed by CBI and RBI schemes, including a call on Member States to phase out all existing schemes as soon as possible. Until the schemes are definitively repealed, the report calls on the Commission to rigorously monitor the implementation of customer due diligence on applicants and to ensure better data collection and coordinate information exchange among Member States. |
| --- | --- |

2.3.

| 2.4. | On 23 January 2019, the Commission issued a report (6) that examines the relevant national legal frameworks and practices and describes the main risks, challenges and concerns related to these schemes. |
| --- | --- |

2.4.

| 2.5. | The Commission’s report explains that the schemes pose risks in respect of security, money laundering, tax evasion and circumvention of EU rules. Those risks, according to the report, are further exacerbated by the lack of transparency in how some of the schemes operate and a lack of cooperation between Member States. The Commission has committed to further monitoring CBI and RBI schemes for their compliance with EU law and to taking action when necessary. With a view to improving this process, and in order to identify specific measures to tackle the challenges stemming from the schemes, the Commission has set up a group of experts that already met twice this year to look at the risks arising from investor citizenship schemes and to define mitigation measures. |
| --- | --- |

2.5.

| 2.6. | Most of these schemes were introduced in the aftermath of the 2007 financial crisis. A number of European countries hit hard by the crisis may have seen it as an opportunity to economic recovery. In the context of competition between countries to attract foreign direct investment, this might have encouraged different standards and requirements. |
| --- | --- |

2.6.

3.   General comments

3.1.   Risks and threats for the EU

| 3.1.1. | The EESC welcomes the Commission’s report, which provides a robust analysis and clear articulation of the different types of risks posed by these schemes for all EU citizens and the EU as a whole. In particular, it shows that CBI and RBI schemes, if not implemented appropriately, may carry inherent corruption, money laundering, security and tax evasion risks, exposing both the individual Member States that operate such programmes and the entire EU to these threats. |
| --- | --- |

3.1.1.

| 3.1.2. | The EESC considers that questions might arise about the compliance of some of these schemes with EU principles and objectives, including the principle of sincere cooperation. |
| --- | --- |

3.1.2.

3.2.   No distinction between CBI and RBI schemes

| 3.2.1. | The EESC agrees that no distinction should be made in the way risks posed by CBI and RBI schemes are addressed. |
| --- | --- |

3.2.1.

| 3.2.2. | Although the consequences of being granted a passport or a visa differ significantly in terms of the rights they grant, both types of scheme bear the same level of security risk and should therefore be accompanied by mitigation measures of a similarly high standard. This is especially important in order to prevent displacement from citizenship to residency schemes by the riskiest candidates. |
| --- | --- |

3.2.2.

| 3.2.3. | While RBI schemes may appear less risky because of their temporary nature, they also work as a gateway to permanent status. In some countries, the people granted investor’s residence visas can apply for permanent residence or citizenship after only a few years. |
| --- | --- |

3.2.3.

3.3.   Money laundering and corruption risks

| 3.3.1. | The Commission’s report highlights how risk-taking coupled with inadequate security and due diligence checks on applicants could open the EU’s door to corrupt individuals. |
| --- | --- |

3.3.1.

| 3.3.2. | The Commission’s report underpins a number of potential loopholes and grey areas with respect to security and due diligence checks. In particular, it raises concerns related to the processing of citizenship applications by national authorities and the way this interacts with EU rules. |
| --- | --- |

3.3.2.

| 3.3.3. | The EESC notes that in general, despite the high risk profile of applicants, enhanced due diligence checks are not systematically applied. Moreover, dependants or third-party sponsors providing funds to support the applicant are not systematically subject to strict due diligence checks and controls. |
| --- | --- |

3.3.3.

| 3.3.4. | The EESC understands that one of the main selling points of these programmes is to offer a fast track to citizenship or residence, sometimes within a few months. It is usual to see this explicitly advertised. However, the profile and the origin of applicants will often make it difficult to carry out adequate due diligence and security checks and conduct reliable business intelligence reports within the time limit. |
| --- | --- |

3.3.4.

| 3.3.5. | Lack of minimum standards indicate that not all Member States are equally selective, raising doubts about the strictness of checks and controls conducted on them. |
| --- | --- |

3.3.5.

| 3.3.6. | Some Member States running RBI schemes do not seem to have a process in place for proactively addressing security concerns, which may only emerge after residence is granted. |
| --- | --- |

3.3.6.

| 3.3.7. | The EESC further underlines the significant risk of circumvention of EU anti-money-laundering rules, given that the intermediaries and bodies through which the funds paid by applicants are channelled do not qualify as obliged entities under the Fourth and Fifth Anti-Money Laundering Directives. Moreover, not all Member States require the investment to be made through a national bank subject to EU anti-money-laundering obligations, and in cases where payments are made in cash directly to governmental organisations the transfers are not covered by EU anti-money-laundering legislation either. |
| --- | --- |

3.3.7.

3.4.   Governance and transparency gaps

| 3.4.1. | The EESC is worried that insufficient accountability and limited transparency in CBI and RBI schemes could also give rise to corruption. The lack of transparency and integrity also exposes the state itself and public officials to corruption risks. Structural weaknesses of CBI and RBI schemes may include: high discretionary power in decision-making, a lack of proper independent oversight, and risk of conflict of interests of private agents and intermediaries involved in both the application and due diligence process. |
| --- | --- |

3.4.1.

| 3.4.2. | The EESC is particularly concerned that such structural weaknesses and opacity in a sector generating high cash flow and dealing with customers of high net worth risk may expose governments to undue influence, abuse of power, and bribery. In short, these schemes not only create a risk of corrupt individuals entering Member States, but also of authorities themselves becoming corrupted. |
| --- | --- |

3.4.2.

| 3.4.3. | The EESC understands that in some jurisdictions public authorities undertake due diligence themselves, while in others they may hire specialist agencies to conduct the checks that will then be factored into the final decision. It further notes that in any case governments must maintain primary responsibility for accepting or rejecting applications, using due diligence findings to inform their decision. In cases where this key step in the application process is handed over to specialist agencies, the EESC warns against possible risks of conflict of interest and bribery and believes that it should not be allowed for such agencies to be contracted by the state to perform due diligence checks on applicants while at the same time providing services and advice to applicants. |
| --- | --- |

3.4.3.

| 3.4.4. | The EESC would like to see more official figures available indicating the magnitude of the phenomenon (size of investments, number of applicants, beneficiaries, nationalities, amount and impact of the investment, etc.) and regrets that, despite increasing public interest, even basic information about applicants for CBI and RBI schemes and their investments is still shrouded in secrecy. |
| --- | --- |

3.4.4.

3.5.   The EU dimension

| 3.5.1. | The Commission report highlights the EU dimension of the problem. Not only is the EU used as a key selling point to attract investors, but a decision made by a Member State to grant a passport or a visa may also adversely affect other Member States and the EU as a whole since such a decision grants access to the whole Schengen area and internal market. |
| --- | --- |

3.5.1.

| 3.5.2. | The EESC agrees that the reputation of EU citizenship, as well as the common body of rights and values, is at risk and reiterates the Parliament’s position and the words of a former Commissioner (7) that ‘EU citizenship should not be for sale’. |
| --- | --- |

3.5.2.

| 3.5.3. | Consequently, the conferral of citizenship and residency — its benefits, ethical implications and risks — affects all EU citizens. The EESC notes that despite this, EU citizens remain in the dark about how these schemes work, how their national governments may or may not be mitigating the inevitable risks of CBI and RBI schemes, and where the investments made under these schemes are ultimately going. |
| --- | --- |

3.5.3.

| 3.5.4. | The EESC recognises that the lack of harmonised standards and practices at EU level may encourage a race to the bottom in terms of due diligence standards and transparency, and ‘passport-shopping’ by risky individuals between jurisdictions. The Commission report highlights that this risk is further increased by the current lack of consultation and information exchange between Member States on CBI applicants for investor citizenship. In practice, this means that an application rejected in one Member State on security and money laundering grounds has a chance of succeeding in another Member State. The EESC therefore thinks it would useful for Member States to introduce a requirement to submit a valid Schengen visa as part of the investor citizenship application. |
| --- | --- |

3.5.4.

| 3.5.5. | The EESC considers that although the way in which CBI and RBI schemes operate varies from country to country, a case-by-case approach targeted at specific problems identified in individual countries will not suffice and a coordinated approach at EU level is needed to address the issue. |
| --- | --- |

3.5.5.

3.6.   Tax evasion and other types of risk

| 3.6.1. | As the European Parliament (8) and the Organisation for Economic Cooperation and Development (OECD) (9) have recently detailed, CBI and RBI schemes could potentially be misused for tax evasion purposes, as they allow investors to remain tax residents in their home jurisdiction while benefiting from the tax advantages of CBI and RBI schemes. |
| --- | --- |

3.6.1.

| 3.6.2. | The schemes offering access to special tax regimes have been identified as particularly risky and likely to lead to tax evasion. In particular, they make it possible for individuals to circumvent reporting under the Common Reporting Standard (CRS). The OECD has included two EU Member States on its list of jurisdictions offering CBI/RBI schemes that potentially pose a high risk to the integrity of the CRS (10). |
| --- | --- |

3.6.2.

| 3.6.3. | The European Parliament study referred to in points 2.3 and 3.6.1 above highlights other types of risks posed by CBI and RBI schemes, such as macroeconomic risks due to the volatility of this kind of investment flow, socioeconomic risks resulting from price inflation on the property market, or political risks, including the risk of deteriorating trust in EU institutions and damaging the reputation of EU citizenship and thus potentially jeopardising EU citizens’ mobility and freedom of movement in the future. It further highlights the risks of increasing discrimination between categories of migrants. It is therefore important that Member States clarify what risks they are prepared to take in light of the expected benefits and impact, and that they perform regular impact assessments to ensure that the benefits outweigh those risks. |
| --- | --- |

3.6.3.

4.   Specific comments

4.1.   Role of the private sector

| 4.1.1. | When assessing the role of private companies in the governance of CBI and RBI the EESC recognises the existence of two distinct types of company. The first are companies contracted by the state to manage the programme, process applications, and screen applicants, and the second are companies that provide services to investors and help them apply for the programme, whether they are accredited or not. |
| --- | --- |

4.1.1.

| 4.1.2. | While the EESC recognises that private companies contracted by the state can play a useful role in conducting due diligence on applicants, carrying out necessary background checks and compiling business intelligence reports, it warns against tasking these firms with risk assessment or decision-making. The EESC insists that this responsibility should lie with the relevant public authorities. |
| --- | --- |

4.1.2.

| 4.1.3. | The EESC is very worried about the promotion of EU rights and EU citizenship as a product for sale. It is also extremely concerned about the existence of a conflict of interest when firms contracted to screen applicants are also carrying out related commercial activities or providing additional services to potential investors. |
| --- | --- |

4.1.3.

| 4.1.4. | Regarding private agents and companies providing services to investors applying for CBI and RBI schemes, the EESC laments the fact that despite the risk profile of their desired clients the firms and individuals who work in the CBI/RBI industry are neither systematically subject to statutory regulation nor considered obliged entities under anti-money-laundering rules. |
| --- | --- |

4.1.4.

| 4.1.5. | In addition, the EESC understands that not all Member States providing services to applicants require accreditation and/or licensing of intermediaries, i.e. the obligation to pass a ‘fit and proper’ test and abide by a set of minimum accreditation criteria including confirmation that intermediaries are regulated professionals, disclosure of their beneficial ownership information and a declaration of interests. The EESC would therefore welcome the introduction of an obligatory code of conduct, supervision of regulated professionals by a competent Member State body, and provision of information regarding regulated professionals via a publicly accessible Registry of Service Providers. |
| --- | --- |

4.1.5.

4.2.   The external dimension

| 4.2.1. | The EESC is concerned about the risks posed to the EU by CBI and RBI schemes put in place by third countries with which the EU has visa-free agreements, such as the accession countries, Eastern Partnership countries and Caribbean and Pacific countries. We support the Commission’s recommendation to make the granting of visa-free status to third countries conditional on the highest possible standards of implementation of CBI and RBI schemes and to review existing visa-free regimes in light of such standards. |
| --- | --- |

4.2.1.

| 4.2.2. | The EESC recommends that while working towards a phase-out of existing schemes in the EU, accession countries should not be allowed to run CBI or RBI schemes when they join, so that no new schemes are added to the ones currently in place. |
| --- | --- |

4.2.2.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  http://www.europarl.europa.eu/cmsdata/162244/P8_TA-PROV(2019)0240.pdf.

1

(2)  Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (OJ L 156, 19.6.2018, p. 43), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018L0843&from=EN

2

(3)  European Parliament resolution of 16 January 2014 on EU citizenship for sale (OJ C 482, 23.12.2016, p. 117), http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2014-0038+0+DOC+XML+V0//EN

3

(4)  http://www.europarl.europa.eu/doceo/document/CRE-8-2018-05-30-ITM-019_EN.html?redirect

4

(5)  http://www.europarl.europa.eu/cmsdata/162244/P8_TA-PROV(2019)0240.pdf

5

(6)  https://ec.europa.eu/info/sites/info/files/com_2019_12_final_report.pdf

6

(7)  https://europa.eu/rapid/press-release_SPEECH-14-18_en.htm

7

(8)  http://www.europarl.europa.eu/RegData/etudes/STUD/2018/627128/EPRS_STU(2018)627128_EN.pdf

8

(9)  https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/residence-citizenship-by-investment

9

(10)  http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/residence-citizenship-by-investment

10

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/87 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/87

---

Opinion of the European Economic and Social Committee on ‘Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions — Progress in the implementation of the EU Forest Strategy “A new EU Forest Strategy: for forests and the forest sector”’

(COM(2018) 811 final)

(2020/C 47/13)

Rapporteur: Andreas THURNER

Co-rapporteur: Antonello PEZZINI

| Referral | European Commission, 18.2.2019 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Plenary Assembly decision | 22.1.2019 (in anticipation of the referral) |
| Section responsible | Agriculture, Rural Development and the Environment |
| Adopted in section | 1.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 162/0/1 |

Referral

European Commission, 18.2.2019

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Plenary Assembly decision

22.1.2019 (in anticipation of the referral)

Section responsible

Agriculture, Rural Development and the Environment

Adopted in section

1.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

162/0/1

1.   Conclusions and policy recommendations

The EESC...

| 1.1. | calls for an updated EU Forest Strategy after 2020 as a part of the European Green Deal. The new strategy could feasibly look ahead to 2050, to ensure coherent implementation of well-recognised political commitments such as the UN Strategic Plan for Forests, the UN Sustainable Development Goals (SDGs) and the Paris Agreement. The importance of forests, forestry and forest-based industries in meeting these goals should be recognised across all sectors and lead to optimised cross-sectoral cooperation; |
| --- | --- |

1.1.

| 1.2. | highlights climate change as a major challenge for the planet with immediate, mostly negative, consequences for the forest sector itself. At the same time, the forest-based sector has great potential to provide solutions for mitigation through a sustainable and circular bioeconomy under the precondition that effective adaptation strategies are implemented in good time. The full potential of CO2 sequestration must be further developed by enhancing wood mobilisation in a sustainable manner, increasing the substitution of fossil-based raw materials and energy, and stepping up carbon storage in long-lasting wood products. Forests made up of diverse species foster more climate benefits than monocultures, which can have a negative impact on long-term sustainability; |
| --- | --- |

1.2.

| 1.3. | emphasises the importance of further developing harmonised forest information systems in order to increase knowledge and data on the availability and status of forest resources and the opportunities they present to provide society with multiple services, including renewable raw materials, energy and other forest products; |
| --- | --- |

1.3.

| 1.4. | underlines the importance of the multifunctional role of forests and notes that climate change is a threat to ecosystem services. Due to climate change, the likelihood of natural disturbances such as forest fires, floods, droughts and damages caused by pests such as bark beetles is projected to increase. A solid mix of financial instruments is crucial to ensuring continued investment in modern technology as well as in climate and environmental measures to strengthen the multifunctional role of forests. When it comes to private forest holdings, it is crucial to ensure that property rights are respected and decisions related to forests are made in partnership with forest owners; |
| --- | --- |

1.4.

| 1.5. | recommends a mapping of the current status of the workforce and a forecasting of labour needs in the European forest-based sector, especially regarding the workforce in the forests. An accurate picture of the attractiveness of the sector and its skilled labour force is necessary to further develop the forest-based value chain and ensure the vitality of the ecosystems. Decent jobs and labour conditions are a prerequisite to attract people to the forest-based sector; |
| --- | --- |

1.5.

| 1.6. | encourages, when it comes to forest-related EU policies, strong ex-ante involvement of the Standing Forestry Committee, the Civil Dialogue Group on Forestry and Cork, and the EU Expert Group on Forest-based Industries and Sectorally Related Issues, in order to take full advantage of the available expertise; |
| --- | --- |

1.6.

| 1.7. | stresses the importance of reducing global deforestation and forest degradation by strengthening active and sustainable forest management, for example through a pan-European agreement, mobilising locally produced biomass in Europe and supporting the transition towards more sustainable consumer patterns. |
| --- | --- |

1.7.

2.   General comments

The EESC...

| 2.1. | welcomes the European Commission’s report on the progress in the implementation of the EU Forest Strategy and notes that most of the actions in the Multi-Annual Implementation Plan (Forest MAP) have been implemented as envisaged; |
| --- | --- |

2.1.

| 2.2. | welcomes the Council Conclusions on the progress in the implementation of the EU Forest Strategy and the recommendations regarding a new strategic framework for forests; |
| --- | --- |

2.2.

| 2.3. | reiterates the importance of Member States’ subsidiarity when it comes to forest policy and underlines the crucial role of the EU Forest Strategy as a policy coordination and coherence tool across the various forest-related policies to strengthen the holistic view of Sustainable Forest Management (SFM) and the forest-based sector’s value chain; |
| --- | --- |

2.3.

| 2.4. | emphasises the relevance of the forest-based sector when it comes to the transition from a fossil-based to a bio-based economy. A strong role for the forest-based sector in the circular bioeconomy will provide great opportunities for the European economy to reach technological global leadership in this sector; |
| --- | --- |

2.4.

| 2.5. | highlights climate change as a major challenge for humankind and our planet, which already affects forests and the forest-based sector to a serious extent (e.g. impact on quantity and quality of wood supplies and enormous amounts of damaged wood). Consequently, mitigation measures and the management of forests and their adaptation to changing climatic conditions are crucial. Healthy and resilient forests have a decisive role in this regard. Active and sustainable management, including the maintenance of forest biodiversity are essential to safeguard their resilience and vitality in the long-term. Further development of wood mobilisation (e.g. via digitalisation and new techniques) and the use of wood and wood-based products are key elements in achieving the climate targets. The full potential of CO2 sequestration needs to be further developed through increased substitution of fossil-based raw materials and energy, and carbon storage in long-lasting wood products; |
| --- | --- |

2.5.

| 2.6. | stresses the importance of research and innovation in finding solutions for more sustainable woody biomass-based value chains. This will boost progress towards GHG emissions reductions in terms of processing technologies as well as the development of new innovative woody biomass-based solutions for the markets. Further development and the take-up of digital and technological solutions will facilitate precision-forestry technologies and offer improvements to support sustainable forest management; |
| --- | --- |

2.6.

| 2.7. | acknowledges the importance of the multifunctional role of forests and the provision of multiple ecosystem services and recognises climate change as a major threat to forests fulfilling this role. Therefore, adequate resources are required to ensure that the various ecosystem services continue, including the protective function of forests, as well as a sustainable supply of wood for society, while safeguarding biodiversity and ensuring climate change adaptation. A solid mix of financial instruments (e.g. EIB, EFSI, CAP, ESF, national funds, private funds) will ensure the continuation of investments in modern technology as well as in climate and environmental measures that strengthen the multifunctional role of forests. The future MFF should consider the establishment of a specific fund for measures to mitigate substantial losses in forestry due to climate change; |
| --- | --- |

2.7.

| 2.8. | underlines the important role of actively managed forests and the forest-based industry in the creation of additional green jobs and growth in rural and urban areas, including those related to ecotourism, recreation and health services; |
| --- | --- |

2.8.

| 2.9. | emphasises that new and modern techniques in the forest sector require a skilled labour force and decent labour conditions. Currently, the lack of skilled young workers seems to be a Europe-wide problem. Appropriate measures must therefore be taken to address this challenge and attract young people to the forest-based sector. In this regard, mapping the workforce would be a useful step; |
| --- | --- |

2.9.

| 2.10. | stresses the need to foster early planning, cooperation and investment when it comes to the prevention and tackling of natural disturbances such as forest fires, floods, drought and damage caused by pests (e.g. from bark beetles) and diseases; |
| --- | --- |

2.10.

| 2.11. | underlines the importance of forests’ protective role against erosion, avalanches, rock falls and floods, especially in mountain areas; |
| --- | --- |

2.11.

| 2.12. | notes that forests are naturally biodiverse ecosystems, including managed forests. However, industrial monoculture plantations, particularly of non-native species, often lack biodiversity, entail an increased disaster risk and in some cases do not act as net sequesters of carbon. Sustainable forestry must include the need for mixed-species forest cover managed under a continuous-cover forestry model. Forests made up of diverse species foster more climate benefits than monocultures, which can have a negative impact on long-term sustainability; |
| --- | --- |

2.12.

| 2.13. | encourages better ex-ante incorporation of the expertise of the Standing Forestry Committee, the Civil Dialogue Group on Forestry and Cork, and the EU Expert Group on Forest-based Industries and Sectoral Related Issues into forest-related EU policies. This will strengthen the knowledge base regarding the forest-based value chain in decision-making, in public awareness and communication campaigns, and in the endorsement and implementation of political decisions; |
| --- | --- |

2.13.

| 2.14. | points out that local governments and regional authorities play an important role in strengthening the sustainable use of forests and the vitality of the forest-based sector, and have the opportunity to consider this in public procurement processes; |
| --- | --- |

2.14.

| 2.15. | considers proper communication and information measures about SFM to be important for ensuring the support of society. In this regard, urban and peri-urban forests offer great potential, as there are strong interlinkages between society (local recreation) and the forest-based sector; |
| --- | --- |

2.15.

| 2.16. | emphasises the importance of fostering the process towards a legally binding agreement on forests in order to strengthen the policy framework on forests in the pan-European region. |
| --- | --- |

2.16.

3.   Specific comments

3.1.   Forests play a decisive role in tackling climate change

| 3.1.1. | The transition to a climate-neutral economy is a huge challenge as well as an opportunity and requires a considerable reduction of fossil emissions as well as a substantial increase in CO2 sequestration. The substitution of fossil-based raw-material products and fuels has huge potential as regards reaching climate neutrality by 2050. |
| --- | --- |

3.1.1.

| 3.1.2. | Effective absorption of CO2 requires continuous and increasing biomass growth and sound harvesting methods and timing. The long-term storage of biogenic carbon requires an enhanced (more, better, longer) use of wood-based products. Active and sustainable forest management and the resource-efficient use of wood are key elements in achieving the climate targets (as already outlined in a previous opinion on the implications of climate and energy policy (1), and in a previous opinion on effort-sharing and the LULUCF sector (2)). Efforts to enhance the use of wood-based products could benefit from the recognition of a wider array of ‘harvested wood products’ (HWP) under the LULUCF Regulation (3) and, in any case, from HWP gaining longer half-life values through the use of environmentally appropriate wood-preserving technologies. |
| --- | --- |

3.1.2.

| 3.1.3. | One m3 of wood captures around one metric ton of CO2 (4). Growing biomass has the proven capacity to absorb CO2. Therefore active forest management under SFM practices (5) and the continuous regeneration of forest stands are crucial to achieving a maximum sustainable increase that fosters biomass availability. |
| --- | --- |

3.1.3.

3.2.   Multifunctional forests and ecosystem services require adequate remuneration

| 3.2.1. | In addition to wood and non-wood products (e.g. cork, mushrooms, berries), forests provide a variety of ecosystem services on which rural, peri-urban and urban communities depend (e.g. water, air, recreational space, health services). Changes to conditions due to climate change increase the pressure on forests and the risk of natural hazards occurring. Accordingly, appropriate climate protection measures and mitigation and adaptation efforts must strengthen the resilience and multifunctional role of forests. |
| --- | --- |

3.2.1.

| 3.2.2. | Despite the difficult market situation caused by calamities aggravated by climate change (e.g. bark beetles, wind throws, forest fires, floods and drought), it is of the utmost importance to ensure the continuity of ecosystem services, in order to maintain this multifunctional role of forests. Therefore, it is crucial that an adequate market setting backs the supply of wood and woody biomass for forest-based industries. |
| --- | --- |

3.2.2.

| 3.2.3. | It could also be worthwhile to look into the commodification of carbon offsets through voluntary carbon markets (6). For example, the Life pilot project CARBOMARK (7) deals with the development of voluntary local carbon markets for climate change mitigation. The objective is to promote a local market for trading carbon credits on a voluntary basis, as a means of strengthening the EU’s policies on combating climate change:






  — | mitigating the effect of greenhouse gases by fostering carbon capture; |
| --- | --- | --- |

3.2.3.

—

mitigating the effect of greenhouse gases by fostering carbon capture;

| — | generating income for disadvantaged areas by estimating the value of the carbon-capture service provided by the forest ecosystem; |
| --- | --- |

—

generating income for disadvantaged areas by estimating the value of the carbon-capture service provided by the forest ecosystem;

| — | promoting the adoption of offsetting strategies by local administrations; |
| --- | --- |

—

promoting the adoption of offsetting strategies by local administrations;

| — | making small and medium-sized enterprises more accountable, and thus encouraging them to mitigate their own environmental impact. |
| --- | --- |

—

making small and medium-sized enterprises more accountable, and thus encouraging them to mitigate their own environmental impact.

However, it is important to ensure that the compensation mechanism is not disproportionate either way and does not hamper the sustainable wood mobilisation and sustainable management of the resource.

3.3.   A sustainable and circular bioeconomy provides economic opportunities for the forestry sector with great potential to mitigate climate change (as already outlined in a previous opinion (8))

| 3.3.1. | A sustainable bioeconomy contributes to climate change mitigation through several mechanisms: sequestration of CO2 from the atmosphere in biomass via photosynthesis, storage of carbon in bio-based products and substitution of fossil-based feedstock, materials, products and fuels through bio-based ones. |
| --- | --- |

3.3.1.

| 3.3.2. | Wood-based products can store carbon for a long time, thereby keeping it out of the atmosphere. Long-lasting wood products, such as timber for wood construction and high-quality furniture are some of the most effective means of carbon storage. The reuse and recycling of bio-based products with shorter working lifespans will guarantee that the carbon remains stored. All these products, including advanced biofuels, textiles and green chemicals, have great potential to replace fossil-based raw materials and products that are the main causes of climate change. Moreover, at the end of their working lifespans, bio-based products can be used for new bio-based products or as bioenergy and thereby replace fossil energy sources. There is, of course, also the case for side streams along the value chain. |
| --- | --- |

3.3.2.

| 3.3.3. | Facilitating the establishment of well-functioning bio-based, wood-based value chains through cross-sectoral cooperation can play a key role in the development of new business ecosystems and opportunities for the sector. In this regard, it is important to give priority to research, innovation and the upscaling of innovations, as well as education, training and skills development, in order to support these wood-based value chains and the circular bioeconomy in general. |
| --- | --- |

3.3.3.

3.4.   Strengthening sustainable forest management (SFM) and halting global deforestation must remain clear objectives of the EU Forest Strategy

| 3.4.1. | SFM is a national competence of EU Member States, and the commonly agreed definition of SFM is embedded into national and sub-national laws that are implemented across the EU. Sustainable forestry practices are based on forest governance systems at national level. Voluntary market-based tools, such as certification, can be one way of providing proof of sustainability. |
| --- | --- |

3.4.1.

| 3.4.2. | Reducing global deforestation and forest degradation by strengthening active and sustainable forest management through a pan-European agreement, sufficiently robust sustainability chapters in trade agreements, mobilising locally produced biomass in Europe and supporting the transition towards more sustainable consumer patterns are all key to achieving the SDGs. In addition, common efforts are needed in supporting afforestation activities globally. |
| --- | --- |

3.4.2.

| 3.4.3. | In this regard, the EESC welcomes the EC communication on ‘Stepping up EU action to protect and restore the world’s forests’ (9). |
| --- | --- |

3.4.3.

4.   Background

| 4.1. | The European Commission published the mid-term review report (10) on the ‘Progress in the implementation of the EU Forest Strategy’ (‘the report’) on 7 December 2018. The report provides insights into progress in the implementation of each of the eight priority areas as identified by the EU Forest Strategy (11):






  1) | Supporting our rural and urban communities |
| --- | --- | --- |

4.1.

1)

Supporting our rural and urban communities

| 2) | Fostering the competitiveness and sustainability of the EU’s Forest-based industries (F-BI), bioenergy and the wider green economy |
| --- | --- |

2)

Fostering the competitiveness and sustainability of the EU’s Forest-based industries (F-BI), bioenergy and the wider green economy

| 3) | Forests in a changing climate |
| --- | --- |

3)

Forests in a changing climate

| 4) | Protecting forests and enhancing ecosystems services |
| --- | --- |

4)

Protecting forests and enhancing ecosystems services

| 5) | What forests do we have and how are they changing? |
| --- | --- |

5)

What forests do we have and how are they changing?

| 6) | New and innovative forestry and added-value products |
| --- | --- |

6)

New and innovative forestry and added-value products

| 7) | Working together to coherently manage and better understand our forests |
| --- | --- |

7)

Working together to coherently manage and better understand our forests

| 8) | Forests from a global perspective. |
| --- | --- |

8)

Forests from a global perspective.

| 4.2. | The Multi-annual Implementation Plan (12) (Forest MAP) lists priorities for the EC up to 2017. The report also seeks to help determine the priorities for the remaining period 2018-2020. |
| --- | --- |

4.2.

| 4.3. | The report concludes that the implementation of the EU Forest Strategy is largely on track. Outstanding elements either are in the process of implementation or will be implemented by 2020. However, the report does not look beyond 2020. |
| --- | --- |

4.3.

| 4.4. | On 15 April 2019, the Council adopted its Council Conclusions (13) on the Progress in the implementation of the EU Forest Strategy and called on the Commission ‘to start reflecting on options for a new EU Forest Strategy post 2020’. Logically, such a strategic framework should be for forests and the forest-based sector as a whole. |
| --- | --- |

4.4.

| 4.5. | The European Committee of the Regions adopted an opinion (14) on the implementation of the EU Forest Strategy at its plenary session in April 2019. |
| --- | --- |

4.5.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EESC opinion on the Implications of climate and energy policy on agricultural and forestry sectors (OJ C 291, 4.9.2015, p. 1).

1

(2)  EESC opinion on Effort-sharing 2030 and land use, land use change and forestry (LULUCF) (OJ C 75, 10.3.2017, p. 103).

2

(3)  Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework, and amending Regulation (EU) No 525/2013 and Decision No 529/2013 (OJ L 156, 19.6.2018, p. 1).

3

(4)  Source: BFW-Praxisinformation Nr. 28 (2012, page 4).

4

(5)  Resolution H1 General Guidelines for the Sustainable Management of Forests in Europe.

5

(6)  Voluntary Carbon Market Insights: 2018 Outlook and First-Quarter Trends.

6

(7)  CARBOMARK - Improvement of policies toward local voluntary carbon markets for climate change mitigation.

7

(8)  EESC opinion on Bioeconomy — contributing to achieving the EU’s climate and energy goals and the UN’s sustainable development goals (OJ C 440, 6.12.2018, p. 45).

8

(9)  COM(2019) 352 final.

9

(10)  EU forest strategy on track to achieve its 2020 aims.

10

(11)  COM(2013) 659 final.

11

(12)  SWD(2015) 164 final.

12

(13)  Council Conclusions on the progress on the implementation of the EU Forest Strategy and on a new strategic framework for forests.

13

(14)  CoR opinion: Implementation of the EU Forest Strategy (OJ C 275, 14.8.2019, p. 5).

14

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/92 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/92

---

Opinion of the European Economic and Social Committee on ‘Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the implementation of the Circular Economy Action Plan’

(COM(2019) 190 final)

(2020/C 47/14)

Rapporteur: Peter SCHMIDT

| Referral | Commission, 11.4.2019 |
| --- | --- |
| Legal basis | Article 29(1) of the Treaty on the Functioning of the European Union |
| Bureau decision | 19.3.2019 |
| Section responsible | Section for Agriculture, Rural Development and the Environment |
| Adopted in section | 1.10.2019 |
| Adopted at plenary | 31.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 164/2/0 |

Referral

Commission, 11.4.2019

Legal basis

Article 29(1) of the Treaty on the Functioning of the European Union

Bureau decision

19.3.2019

Section responsible

Section for Agriculture, Rural Development and the Environment

Adopted in section

1.10.2019

Adopted at plenary

31.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

164/2/0

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes the Commission report on the implementation of the Circular Economy Action Plan (CEAP), and in particular the acknowledgement of the vital role stakeholder engagement will play in the transition to a circular economy. The Committee is also supportive of the plans to launch a European Green Deal and propose a new CEAP focusing on specific sectors, such as textiles and construction, set in the political guidelines by the Commission President elect von der Leyen (1). |
| --- | --- |

1.1.

| 1.2. | The European Circular Economy Stakeholder Platform (ECESP) is an established platform for bringing together the circular economy community in Europe. A joint initiative of the Committee and the European Commission, the Platform was created in 2017 following recommendations made in the EESC opinion on the Circular Economy Package (2). The partnership of the institutions has been a key feature of the Platform’s success and it is important that this partnership continues and grows for any new CEAP, to ensure civil society actors are at the heart of the transition. |
| --- | --- |

1.2.

| 1.3. | The EESC strongly believes in the key role of the Platform to ensure stakeholder engagement – a role which should continue and be reinforced in the future. In particular, the Platform should be further developed to ensure a holistic approach to the circular economy, taking into account the interlinkages with other policy areas (e.g. energy, climate change, social policy, citizen engagement, wellbeing, social integration/inclusion, citizen/consumer rights and responsibilities etc.) and across governance levels (European, national, regional and local); and to identify obstacles to the circular economy transition, especially in key sectors such as textiles, food, construction, electronics and (micro)plastics. Evidence must be gathered on the benefits of job creation, access to services, cost savings and collaborative consumption models. |
| --- | --- |

1.3.

| 1.4. | To reflect the increasing importance and multi-dimensionality of the circular economy, for the next mandate the Coordination Group members supporting the Platform should include other key stakeholders (e.g. from the youth and the finance sector), help develop future scenarios to strengthen the interlinkages across sectors, meet more regularly and become ambassadors for the Platform also in fora outside the circular economy community. Additional future activities of the Coordination Group could support testing circular economy solutions on the ground through pilot interventions and living labs to inform policy making. The Coordination Group has been, is, and will be integral to the success of the Platform, and should therefore be consulted concerning the policy direction for any new CEAP. |
| --- | --- |

1.4.

| 1.5. | The EESC highlights that the circular economy transition must now be driven at national, regional and local level to be inclusive. It is important that activities be tailored to local issues, and that they capitalise on local strengths. |
| --- | --- |

1.5.

| 1.6. | A decentralised approach can be particularly instrumental to explore the role of the circular economy in contributing to a good life for citizens. The EESC recommends the creation of a Citizen Insights Panel to help assess citizen behaviour, motivations and barriers to engage with circular solutions. The Citizen Insights Panel would build upon and expand the existing Consumer Insight Action Panel, an initiative of members of the Coordination Group of the ECESP, dedicated to better understanding consumer and citizen engagement and accelerating change towards the circular behaviours that really matter. |
| --- | --- |

1.6.

| 1.7. | Finance is already playing an important role in enabling the transition. To further decentralise the circular economy and localise solutions, local financial institutions should be empowered to better embrace the circular economy, for example through the extension of the European Investment Bank Circular City programme to ‘circular villages’. Another proposal to steer the economy towards circular economy principles is to use VAT as an economic instrument to help ensure the extension of a product’s lifespan through re-use and repair. |
| --- | --- |

1.7.

| 1.8. | Acknowledging the important role played by retailers in making products more circular, a circular retail task force can help to further integrate circular economy principles along the value chain, including enabling circular behaviour. The EESC suggests that the Commission could stimulate this task force through the already existing Retail Forum. Civil society organisations and sustainable behaviour/lifestyle expert organisations should be engaged in this process to ensure citizen representation and an integrated approach to circular production and consumption. |
| --- | --- |

1.8.

| 1.9. | Public Procurement (PP) can be a key driver in accelerating the transition. To promote a higher uptake of circular products, works and services and leverage its potential for driving circularity, it is important to institutionalise circular PP, build the capacity and knowledge of relevant stakeholders, provide legal clarity, and support implementation of circular PP. A circular public procurement training programme would be very useful. A series of market engagement workshops across Europe focussing on circularity would also be effective. The EESC recommends that to minimise and in the best case to avoid negative environmental impacts and waste creation across their whole life-cycle, Minimum Environmental Criteria for public procurement, already foreseen in EU Directives, become mandatory in all Member States. |
| --- | --- |

1.9.

| 1.10. | Consumers’ understanding and engagement is also crucial for the success of the circular economy transition. The introduction of a circular economy label could accelerate the transition and support consumers in making a sustainable choice, but should be accompanied by a Europe-wide communication campaign. Capacity building is also a key pillar to support stakeholders in understanding and becoming part of the EU transition towards the circular economy. |
| --- | --- |

1.10.

2.   Circular Economy Action Plan

| 2.1. | The Europe 2020 strategy emphasises smart, sustainable and inclusive growth as a way to improve its competitiveness and productivity and underpin a sustainable social market economy. The circular economy is a key pathway to achieving this strategy and ensuring well-being for people and planet. In 2015, the European Commission published a Circular Economy Action Plan (CEAP) to support and boost the transition from a linear economic model to a circular model in Europe. |
| --- | --- |

2.1.

| 2.2. | The CEAP (3) set out an ambitious programme of 54 actions across multiple value chains, covering production, consumption, waste management, and secondary raw materials, as examples. Throughout the Action Plan, the European Commission makes reference to the involvement of, and cooperation with, stakeholders for the enabling of the transition to a circular economic model. |
| --- | --- |

2.2.

| 2.3. | In 2016, the European Economic and Social Committee adopted an opinion on the Circular Economy Package (4), with the suggestion of the creation of a platform through which stakeholders in the circular economy community could engage and share good practices, knowledge and experiences. The Committee and the European Commission together established the European Circular Economy Stakeholder Platform (ECESP) (5) — a virtual space that brings stakeholders together online, and in person through an annual conference. This platform is supported by a Coordination Group — a group of 24 people representing civil society organisations from across Europe who act as ambassadors for the platform. |
| --- | --- |

2.3.

| 2.4. | In 2019, the European Commission adopted a report (6) on the implementation of the CEAP, presenting the main achievements under the plan and the future challenges. This report covers themes such as building a circular economy and accelerating the transition. Under the latter, the Commission makes specific reference to the need for strong stakeholder engagement. The EESC notes that the supporting documents for the report (SWD (2019) 90/91/92) are only available in English, which hinders understanding and participation at Member State level. |
| --- | --- |

2.4.

| 2.5. | The EESC welcomes this update report, and in particular the acknowledgement of the vital role stakeholder engagement will play in the transition to a circular economy. |
| --- | --- |

2.5.

| 2.6. | The EESC notes that the circular economy should also be included in the Energy and Climate National Plans and that the social dimension should also be more prominently highlighted in this context. |
| --- | --- |

2.6.

| 2.7. | The EESC highlights the need for a full analysis of all material flows, in and out of the EU, as part of a wider analysis on the impact of CE on trade. |
| --- | --- |

2.7.

3.   Engaging stakeholders for a future Circular Economy Action Plan

| 3.1. | The European Circular Economy Stakeholder Platform has already become a successful and visible EU-level forum for facilitating cross-sectoral, multi-stakeholder dialogues and sharing good practices, strategies and knowledge on a wide range of circular economy topics. |
| --- | --- |

3.1.

| 3.2. | It is now time to carry this type of successful multi-stakeholder engagement to the regional, national and local level to multiply the positive effects throughout the Member States and increase citizens’ involvement. It is important that activities be decentralised, tailored to local issues, and that they capitalise on local strengths. Due to the variety of cultures and contexts across Europe, different focus areas and different industries are relevant for different countries. This is highlighted in the EESC-commissioned study on circular economy strategies and roadmaps in Europe: Identifying synergies and the potential for cooperation and alliance building (7). |
| --- | --- |

3.2.

| 3.3. | Citizen behaviour, motivations and barriers to engaging with circular solutions are equally context-dependent, raising the importance of facilitating multiple decentralised experiments to better understand and accelerate the circular behaviours that really matter. The engagements should be locally relevant, action oriented, and cater to specific implementation activities in the different countries, thereby meeting the needs and increasing the well-being of local people. This and other citizen behaviour facing strategies are currently being explored in the Consumer Insight Action Panel and it is recommended that they be further expanded. |
| --- | --- |

3.3.

| 3.4. | A decentralised approach can be particularly instrumental to explore the role of the circular economy in contributing to a good life for citizens, by encompassing social indicators for the measurement of success of circular economy activities at the local level. Aspects such as the level of social interaction and integration enabled by sharing initiatives or the satisfaction of learning new skills for repairing products or producing your own food or clothing are a few examples of this connection. |
| --- | --- |

3.4.

| 3.5. | This could take the form of national, regional or city stakeholder events (8) focusing on problems of local importance and strengthening stakeholder engagement at the local level. Key players would be local SMEs, governments, civil society organisations and especially consumers, who all come together to:






  — | Address specific challenges of local value |
| --- | --- | --- |

3.5.

—

Address specific challenges of local value

| — | Define ways that CE can contribute to personal well-being |
| --- | --- |

—

Define ways that CE can contribute to personal well-being

| — | Identify how CE can enable happiness and increase quality of life |
| --- | --- |

—

Identify how CE can enable happiness and increase quality of life

| — | Design choices that enable citizens to lead sustainable and circular lifestyles |
| --- | --- |

—

Design choices that enable citizens to lead sustainable and circular lifestyles

| — | Connect to local agencies and infrastructure (or invest in new ones where lacking) |
| --- | --- |

—

Connect to local agencies and infrastructure (or invest in new ones where lacking)

| — | Create matchmaking opportunities to solve local problems |
| --- | --- |

—

Create matchmaking opportunities to solve local problems

| — | Engage labour unions in skill building for local employees |
| --- | --- |

—

Engage labour unions in skill building for local employees

| — | Kick-off learning hubs that will continue on after the events |
| --- | --- |

—

Kick-off learning hubs that will continue on after the events

| — | Discuss standardisation processes like the Italian ‘Prassi di Riferimento’ (9) for the circular economy. |
| --- | --- |

—

Discuss standardisation processes like the Italian ‘Prassi di Riferimento’ (9) for the circular economy.

| 3.6. | Such events and platforms will be particularly relevant in countries and regions where little circular activity is taking place. The events should spark new circular actions and engagement to ensure broader understanding and implementation of circular economy across all of the EU. Future circular economy action plans should support local stakeholders and local solutions in order to successfully implement EU strategy and improve well-being throughout all countries of Europe. |
| --- | --- |

3.6.

| 3.7. | To spark local circular economy solutions and boost broader uptake of such practices, it is important to showcase and scale up replicable circular economy projects in different contexts — e.g. 100 circular neighbourhoods, 100 circular communities, 100 circular villages, 10 circular campuses, and 10 circular islands. |
| --- | --- |

3.7.

| 3.8. | Finance is already playing an important role in enabling the transition. To further decentralise the circular economy and localise solutions, local financial institutions should be empowered to better embrace the circular economy – from better understanding circular principles to better supporting the transition with products, services and operations. For example, the European Investment Bank could use existing tools aimed at big cities, such as the Circular City programme, and extend it also to ‘circular villages’. Local banks should take a more active role in this process. The interlinkages between climate change and circular economy funding should also be further explored. |
| --- | --- |

3.8.

| 3.9. | The environmental crises are systemically intertwined with the crises of inequality, migration and democracy. These crises are born — but not only — of the enormous inequality inherent to financial capitalism, and the continuous erosion of democracy, and are results of the market society we have become. None of these crises can be adequately addressed in isolation, and a well-designed circular economy can help to mitigate the vulnerability of the economic, environmental and social system. |
| --- | --- |

3.9.

| 3.10. | A systemic transition should also address the accompanying social and environmental challenges intertwined with the crises arising from inequality or democratic erosion. It is important to foster dialogue with the civil society organisations (CSOs) to confront the potential risks and deeper issues of a circular economy, and to build the competence of the relevant CSOs to ensure a fairer/just transition. |
| --- | --- |

3.10.

| 3.11. | A transition to the circular economy requires stakeholders to develop new proficiencies/skills for a circular mindset and practices, ranging from deeper knowledge of material composition to improved understanding of business models and social behaviour, especially in key sectors such as textile, construction, food, electronics and (micro)plastics. It is important to develop and improve circular competences of key stakeholders, such as entrepreneurs, manufacturers, retailers, public procurers and citizens. |
| --- | --- |

3.11.

| 3.12. | To help boost the transition, entrepreneurs, manufacturers, trade unions and consumers should be supported in developing a smart, ICT-driven circular economy. There are a number of ways to achieve this, for example through the development of smart circular economy competence centres, which could be integrated in the local hubs to foster exchange and matchmaking, or the creation of a task force with major stakeholders from the ICT sector. |
| --- | --- |

3.12.

| 3.13. | The use of Value Added Tax (VAT) should be explored as a way to ensure the extension of a product’s lifespan through re-use and repair. A number of EU Member States have already made efforts to reduce VAT on both second-hand goods as well as repair services (10). |
| --- | --- |

3.13.

| 3.14. | There is scope also to use existing frameworks that businesses are already used to, for example, environmental auditing tools such as the Eco-Management and Auditing System (EMAS), international tools such as those developed by ISO (e.g. ISO 14001 or the upcoming ISO/TC 323 on the circular economy) or the Minimum Environmental Criteria (which are defined in EU Directives but application in Member States is not compulsory). |
| --- | --- |

3.14.

| 3.15. | Retailers are already playing an important role in making products more circular, for example by reducing packaging. Retailers could also have a strong influence on consumers’ lifestyles – they decide what consumers can choose from, influence what consumers purchase and even how they use and dispose of products. A circular retail task force similar to the retail forum can help to further integrate circular economy principles along the value chain, including enabling circular behaviour, and should also be extended to citizen/behaviour and consumer organisations as well as trade unions. |
| --- | --- |

3.15.

| 3.16. | Public Procurement (PP) is a key driver in accelerating the transition and the CEAP had set actions to facilitate the integration of CE principles in PP. Pioneering work has been carried out with lessons learned. Discussions are emerging on what circular procurement means in practice and what impactful role circular procurement could have for promoting circular economy development — e.g. as a pulling force (i.e. enlarging the market of existing circular solutions with the purchasing power) or even as a potential driving force (i.e. co-creating new solutions for satisfying the needs of the public buyers). To promote a higher uptake of circular PP and leverage its potential for driving innovation, it is important to institutionalise circular PP, build the capacity and knowledge of relevant stakeholders, provide legal clarity, and foster circular PP dialogues. |
| --- | --- |

3.16.

| 3.17. | Circular lifestyle or circular behaviour change can be a complementary indicator to measuring the systemic circular economy transition, and show the influence of the circular economy infrastructure, business and policy on the citizen level. It is important for us European citizens to be able to consider what and how we are using, repairing and disposing of today rather than what and how we used, rented, repaired and disposed of before. Tools such as ‘living labs’ should be created at city level. Living labs are real-life settings, such as households, organisations and even city quarters, in which circular solutions and interventions can be prototyped, tested in reality and inform circular economy strategies. Premature obsolescence should be tackled more decisively, as the EESC recommended in its opinion ‘Towards more sustainable consumption: industrial product lifetimes and restoring trust through consumer information’. In particular, an extension of warranty at least to five years should be considered. The Consumer Insight Action Panel, in collaboration with business, NGOs and consumer organisations, is looking into solutions and models to foster lifetime warranty models. |
| --- | --- |

3.17.

| 3.18. | The circular economy is a key instrument for the achievement of the Sustainable Development Goals (SDGs) and a low carbon economy. To pace the transition to a circular economy, it is important to foster dialogue and exchange on how stakeholders can use the circular economy as a tool to achieve the SDGs or other relevant targets. To ensure that a circular and sustainable economy works for all stakeholders, employees should be supported through existing frameworks, such as vocational training, thus equipping existing and future employees with the skills to underpin the transition. |
| --- | --- |

3.18.

| 3.19. | It is important to explore and showcase how innovation for a circular economy can boost competitiveness for a more sustainable and low carbon economy. Universities and research centres should be potential circular innovation hubs for developing, testing and diffusing innovations, as universities have good research capacity to address circular challenges. Problem-based learning and training is valuable to foster future innovators, entrepreneurs and researchers, who develop their careers in universities. Universities with a high population density and resource demand can work as living labs to test the solutions before they are launched. Pilot projects are needed to develop and demonstrate scalable circular campus approaches and solutions, and a network of circular campus can help to further promote knowledge exchange. |
| --- | --- |

3.19.

| 3.20. | The transition to a circular economy in Europe will no doubt impact stakeholders on an international level, for example through trade agreements. By innovating to move to a circular economy, Europe can set global standards for a fairer economy that works for all of its citizens — diverse and adaptable to both rural and urban areas. This will require a local, regional and national level approach to include civil society stakeholders in the creation, development, implementation and monitoring of circular economy strategies (11) that work for those regions (i.e. tackling poverty, providing quality jobs and a higher quality of life, working within ecological boundaries). A good practice in this regard can be found in the Slovenian approach to their circular economy roadmap. The EESC encourages decision-makers involved in drafting circular strategies and roadmaps to take this approach. |
| --- | --- |

3.20.

4.   The role of the European Circular Economy Stakeholder Platform (ECESP)

| 4.1. | The ECESP is an established platform for bringing together the circular economy community in Europe. A joint initiative of the Committee and the European Commission, the Platform was created in 2017 following recommendations made in the EESC opinion on Closing the loop — An EU action plan for the circular economy (12). The aim of the Platform is to facilitate civil society consultation, cooperation between national, regional and sectoral networks and the exchange of expertise, information and best practices. The EESC provides the secretariat for this Platform, ensuring the bridge between civil society and policy makers. |
| --- | --- |

4.1.

| 4.2. | The Platform is supported by a Coordination Group of 24 experts from across Europe selected from civil society organisations, business and trade union representatives, think-tanks, research centres and public bodies that have a stake in the circular economy. This diverse group of stakeholders represent this European platform through their actions and roles at local, regional and national levels. These actions are successfully supported by the EESC and the European Commission through the virtual platform (13). |
| --- | --- |

4.2.

| 4.3. | The Coordination Group guides the Platform’s activities, including the focus of the second day of the annual European Circular Economy Conference (with three editions so far), and its members act as its ambassadors. The Group meets formally once a year and has a mandate until 2020. The Group was established following a call for expressions of interest, and the terms of reference were set by the EESC and the European Commission. In the future, Coordination Group members should meet more regularly and/or on specific issues, and be ambassadors also outside the circular economy community. |
| --- | --- |

4.3.

| 4.4. | The partnership of the institutions has been a key feature of the Platform’s success and it is important that this partnership continues and grows for any new Circular Economy Action Plan, to ensure civil society actors are at the heart of the transition. |
| --- | --- |

4.4.

| 4.5. | The Coordination Group of the Platform offers a pool of potential knowledge and experience at Member State level that should be viewed as advantageous by European institutions, such as the European Commission, the European Investment Bank, etc. Such knowledge and experience should be cultivated through more active involvement and consultation with the Coordination Group. The involvement of the Coordination Group has been, is, and will be integral to the success of the Platform, and should be integral to any new Circular Economy Action Plan (CEAP). Any new mandate for the Platform should reflect this, and seek to develop further the role such civil society actors have already played, for example with consumers, finance, bioeconomy, education and innovation. The Coordination Group should therefore be consulted concerning the policy direction for any new CEAP. In this context, the EESC will continue its key role of integrating stakeholders into the policy-making process. |
| --- | --- |

4.5.

| 4.6. | The EESC’s expertise in building consensus and being inclusive is critical. The important work of the Committee in providing the secretariat and the website for the ECESP is recognised and supported. This structure has been integral to the wider success of ECESP. |
| --- | --- |

4.6.

| 4.7. | The Platform’s website also provides a burgeoning source of knowledge and good practices, helping the ECESP deliver a ‘virtual one-stop shop’ for the circular economy. This crucial online tool must continue to receive appropriate institutional support and be provided with the space and resources to grow, so it can further disseminate innovative solutions, critical knowledge and key contacts to unlock stakeholders’ potential towards the circular transition across Europe. |
| --- | --- |

4.7.

Brussels, 31 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  A Union that strives for more - My agenda for Europe.

1

(2)  OJ C 264, 20.7.2016, p. 98.

2

(3)  COM(2015) 614 final.

3

(4)  OJ C 264, 20.7.2016, p. 98.

4

(5)  European Circular Economy Stakeholder Platform.

5

(6)  COM(2019) 190 final.

6

(7)  Circular economy strategies and roadmaps in Europe: Identifying synergies and the potential for cooperation and alliance building – Study and accompanying EESC opinion on Developing synergies across different circular economy roadmaps (not yet published in the OJ).

7

(8)  For example, the European Commission’s Circular Economy Virtuous Circle Tour.

8

(9)  See UNI.

9

(10)  Reduced taxation to support re-use and repair.

10

(11)  EESC opinion on Developing synergies across different circular economy roadmaps (not yet published in the OJ).

11

(12)  OJ C 264, 20.7.2016, p. 98.

12

(13)  European Circular Economy Stakeholder Platform.

13

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/98 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/98

---

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 United in delivering the Energy Union and climate action — Setting the foundations for a successful clean energy transition’

(COM(2019) 285 final)

(2020/C 47/15)

Rapporteur: Tommaso DI FAZIO

| Referral | Commission, 22.7.2019 |
| --- | --- |
| 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 | 16.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 219/0/1 |

Referral

Commission, 22.7.2019

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

16.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

219/0/1

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes the initiative of the European Commission (EC) to launch the assessment of the draft National Energy and Climate Plans (NECPs) submitted by the Member States, thereby following up on the new governance model launched by the Council and the Parliament in December 2018 and aimed at ensuring (together with the Member States, regional and local authorities, organised civil society and the public) a process of convergence and consistency of action at European level for the transition to clean energy and climate protection through a multilevel interactive dialogue which fully involves civil society and public and private entities at local and regional level. |
| --- | --- |

1.1.

| 1.2. | The EESC welcomes the fact that the EU is the first major global economy to adopt, through specific National Energy and Climate Plans, a legally binding framework to deliver on its 2015 commitments under the COP21 Paris Agreement and the UN 2030 Agenda, under which the Member States have been called on to draw up proposals for ‘integrated’ National Energy and Climate Plans. |
| --- | --- |

1.2.

| 1.3. | The EESC is pleased that the EU is thus becoming a legislative and governance benchmark for the entire planet in the fight against the constant and absolutely worldwide deterioration in the state of the climate. It will only be possible to meet the 2030 climate objective, which lays the groundwork for the more ambitious — and necessary — 2050 objective of total decarbonisation, through multi-faceted, guided and concerted efforts by all the Member States. |
| --- | --- |

1.3.

| 1.4. | The Committee strongly supports the launch of a shared, robust and harmonised platform to eliminate the compartmentalisation (between policies and sectors, between public administrations, stakeholders and citizens and between countries) and map common paths towards the 2030 objectives with sustainable and competitive development, climate neutrality, a gradual decarbonisation process and an integrated and systemic approach. The Committee believes that the success of the plans can best be ensured if it is unanimously shared by the population through a bottom-up process of involvement. |
| --- | --- |

1.4.

| 1.5. | It is essential and a priority, the EESC believes, to nurture a widespread culture of sustainability that will support the process of energy transition and climate neutrality, be broadly disseminated in the education and training system at all levels from childhood on, and result in the proactive and conscious participation of all parts of society: it is crucial, in the EESC’s view, to recommend that initiatives to this end be an integral part of the NECPs. |
| --- | --- |

1.5.

| 1.6. | The Committee considers that a human-centric transition must be recommended in the NECPs towards a more inclusive, sustainable, cost-effective, fair and safe global energy system. This system should provide solutions to the global energy and climate challenges based on social consensus, but also on creating value for businesses and society without jeopardising the energy triangle of security and access, environmental and social sustainability, and economic development and competitive growth. |
| --- | --- |

1.6.

| 1.7. | In the EESC’s view, completing the European energy market, which is not yet fully interconnected, interoperable and transparent and still has major gas and electricity price differentials, must be another priority recommendation, accompanied by commitments to full implementation and frequent checks to ensure that the legislation has been properly implemented. |
| --- | --- |

1.7.

| 1.8. | The energy and transport sectors’ contribution to decarbonisation should, the EESC feels, be developed on the basis of consumer incentives and through the promotion of the distribution of technologies which are key to reaching the zero emissions target by 2050. The EESC recommends that special strategies be adopted for high energy intensity industries and regions — including through the use of ETS and carbon market mechanisms in LULUCF — that should be explicitly included in the NECP, along with reforms to be put in place to deliver a decarbonised wholesale market which is better able to integrate the electricity, gas and thermal energy sectors, as well as a more transparent European retail market. The EESC recommends particular attention be paid to the fair application of the ETS to competitiveness, by introducing an appropriate carbon border tax for high energy content products imported into the EU. |
| --- | --- |

1.8.

| 1.9. | The EESC agrees with the EC’s assessment that the plans are key to ensuring that all parties involved deliver on the common 2030 climate and energy targets, provided that they give businesses and the financial sector the necessary and predictable clarity and certainty to stimulate investment across Europe, including for research and innovation, in order to boost the EU’s competitiveness in the sector. The national plans should also help the Member States to programme funding — around 25 % of the total budget — under the next financial framework for the 2021-2027 period. |
| --- | --- |

1.9.

| 1.10. | The Committee stresses the importance of recommending more clarity in NECPs when it comes to the additional investment amounts needed to implement planned measures that require a broad political and social consensus, together with platforms that encourage multi-stakeholder collaboration and agreement. With regard to investments planned under NECPs, the EESC believes an assessment should be made of the ways and means by which these can be removed from the constraints of the Stability Pact, or even given separate treatment, in view of their neutral purpose, the cross-cutting nature of the participation and the lofty common objective to be achieved. |
| --- | --- |

1.10.

| 1.11. | The EESC recommends particular attention be given to the social consensus and to responses to the problems that will arise in the implementation of the plans, especially where pursuit of the clean energy objective will involve restructuring or even the closure of entire sectors of production. The arrangements for the relocation of workers should be set out in the plans themselves. |
| --- | --- |

1.11.

| 1.12. | The EESC recommends that the Commission check that all the Member States explicitly include chapters in the NECPs on the social sustainability of the processes that will be implemented, as well as on the implementation policies for promoting inclusive growth, fair distribution of costs and benefits and clear, transparent information for civil society. |
| --- | --- |

1.12.

| 1.13. | The Committee would consider it useful to recommend mobilising the network of economic and social councils and equivalent bodies in the Member States for the proactive participation of organised civil society in the development and monitoring of NECPs, the role of which should be set out in a dedicated chapter in the plans, together with the comments of public and private stakeholders at local and regional level. |
| --- | --- |

1.13.

| 1.14. | The EESC asks the EC that the final assessment of the definitive NECPs be submitted to the Council, the Parliament, the Committee of the Regions and the EESC itself, the desire being for it to be the subject of an inter-institutional conference involving representatives of civil society and local and regional authorities, in order to ensure effective follow-up to the real state of knowledge and awareness of the energy and climate transition process. |
| --- | --- |

1.14.

| 1.15. | The EESC also thinks that NECPs must provide for appropriate actions and funds for continuing awareness-raising and refresher campaigns to make sure the media do not let their guard and attention slip when information overload edges the energy and climate issue off the front pages. |
| --- | --- |

1.15.

| 1.16. | The agreement that has now been reached on the importance of the climate target and the need to implement the National Energy and Climate Plans is such that, in the EESC’s view, the issue merits being one of the main arguments propounded throughout the entire course of the European Semester. |
| --- | --- |

1.16.

2.   Introduction

| 2.1. | In line with the legislative framework for the Energy Union and the rules on climate action which came into effect on 24 December 2018 (1), the EU countries have undertaken to:






  — | develop NECPs covering the five dimensions of the Energy Union — energy security, the internal energy market, energy efficiency, decarbonisation, R&I and competitiveness — for the 2021-2030 period (and each successive ten-year period), based on a common model, |
| --- | --- | --- |

2.1.

—

develop NECPs covering the five dimensions of the Energy Union — energy security, the internal energy market, energy efficiency, decarbonisation, R&I and competitiveness — for the 2021-2030 period (and each successive ten-year period), based on a common model,

| — | submit a draft NECP to the European Commission by 31 December 2018 and, once the Commission has reviewed and assessed the draft, be ready to submit the final plans by 31 December 2019, |
| --- | --- |

—

submit a draft NECP to the European Commission by 31 December 2018 and, once the Commission has reviewed and assessed the draft, be ready to submit the final plans by 31 December 2019,

| — | report back on progress made in implementing their respective NECPs in the annual steps on the state of the Energy Union, with the first review of the NECPs scheduled for 2024. |
| --- | --- |

—

report back on progress made in implementing their respective NECPs in the annual steps on the state of the Energy Union, with the first review of the NECPs scheduled for 2024.

| 2.2. | The communication considered in this opinion is part of this framework and sets out the EC’s recommendations based on the assessments of the draft NECPs submitted by the Member States, which focus on:






  — | the level of ambition in the objectives set, targets and contributions to the joint efforts to achieve the objectives of the Energy Union, particularly the EU’s 2030 greenhouse gas reduction targets for renewable energy and energy efficiency and the extent to which electricity grids will be interconnected by 2030, |
| --- | --- | --- |

2.2.

—

the level of ambition in the objectives set, targets and contributions to the joint efforts to achieve the objectives of the Energy Union, particularly the EU’s 2030 greenhouse gas reduction targets for renewable energy and energy efficiency and the extent to which electricity grids will be interconnected by 2030,

| — | policies and measures relating to the objectives set by the Member States and the EU and the other policies and measures with a potential cross-border dimension, |
| --- | --- |

—

policies and measures relating to the objectives set by the Member States and the EU and the other policies and measures with a potential cross-border dimension,

| — | any additional policies and measures which may be necessary in the integrated national energy and climate plans, |
| --- | --- |

—

any additional policies and measures which may be necessary in the integrated national energy and climate plans,

| — | interactions and consistency between the policies and measures currently in force and those planned in the NECPs, both within a single dimension and between the five dimensions of the Energy Union, |
| --- | --- |

—

interactions and consistency between the policies and measures currently in force and those planned in the NECPs, both within a single dimension and between the five dimensions of the Energy Union,

| — | working towards the objectives while safeguarding competitiveness and social fairness. |
| --- | --- |

—

working towards the objectives while safeguarding competitiveness and social fairness.

| 2.3. | Regarding renewables, the EC’s recommendations to the Member States are based on a formula set out in Annex II to Regulation (EU) 2018/1999 which, in turn, is based on objective criteria. The recommendations aim, on the one hand, to assess the overall level of ambition at EU level and, on the other, to guarantee that every Member State involved will have sufficient time to build adequate social consensus and proceed with the final NECPs which, following a formal iterative process, will again be analysed and assessed by the Commission. |
| --- | --- |

2.3.

3.   The Commission communication

| 3.1. | The EC has drawn up this communication which:






  — | analyses the draft NECPs and looks at their aggregated effects in reaching the 2030 Energy Union objectives, |
| --- | --- | --- |

3.1.

—

analyses the draft NECPs and looks at their aggregated effects in reaching the 2030 Energy Union objectives,

| — | complements the detailed analyses at national (2) and European level (3) and the specific recommendations addressed to each Member State (4). |
| --- | --- |

—

complements the detailed analyses at national (2) and European level (3) and the specific recommendations addressed to each Member State (4).

The aim is to help the Member States finalise their NECPs by the end of 2019, with a view to implementing the recommendations through ongoing iterative dialogue.

The Commission has stated that further fine-tuning will be needed by and with the Member States, particularly with regard to individual objectives, cross-border cooperation, the link between climate policy and air quality, a better focus on investments, competitiveness and social fairness.

| 3.2. | According to the Commission, the final plans need to:






  — | include more detailed information on the policies and measures designed to deliver in good time on the objectives and contributions proposed for renewable energy, |
| --- | --- | --- |

3.2.

—

include more detailed information on the policies and measures designed to deliver in good time on the objectives and contributions proposed for renewable energy,

| — | be more robust and indicate clearer energy consumption trajectories, identify gaps and best practice, the scale, the timeframe and expected energy savings in the planned policies and measures, particularly as regards the implementation of energy saving obligations and the long-term renovation strategy, along with investment needs and funding sources, |
| --- | --- |

—

be more robust and indicate clearer energy consumption trajectories, identify gaps and best practice, the scale, the timeframe and expected energy savings in the planned policies and measures, particularly as regards the implementation of energy saving obligations and the long-term renovation strategy, along with investment needs and funding sources,

| — | identify in the NECPs energy supply risks, such as those associated with raw material supply, the impact of climate change or accidental, natural, man-made or terrorist threats to critical energy infrastructure, particularly risks relating to cybersecurity and digitalisation, |
| --- | --- |

—

identify in the NECPs energy supply risks, such as those associated with raw material supply, the impact of climate change or accidental, natural, man-made or terrorist threats to critical energy infrastructure, particularly risks relating to cybersecurity and digitalisation,

| — | stipulate the objectives, programmes and timelines for energy market reforms in line with the legislation adopted under the Clean Energy for all Europeans package and with existing network codes and guidelines. This must include support for the reforms in wholesale markets and the development of competitive retail markets, and take into account monitoring reports by national regulators and the Agency for the Cooperation of Energy Regulators, |
| --- | --- |

—

stipulate the objectives, programmes and timelines for energy market reforms in line with the legislation adopted under the Clean Energy for all Europeans package and with existing network codes and guidelines. This must include support for the reforms in wholesale markets and the development of competitive retail markets, and take into account monitoring reports by national regulators and the Agency for the Cooperation of Energy Regulators,

| — | involve all sections of society in this process as part of a co-creation exercise which should enable stakeholders to feel that they have a real stake in this matter. |
| --- | --- |

—

involve all sections of society in this process as part of a co-creation exercise which should enable stakeholders to feel that they have a real stake in this matter.

4.   General comments

| 4.1. | The EESC welcomes the Commission communication, which aims to introduce a new model which will ensure — together with the Member States, regional and local authorities, organised civil society and individual Europeans — that a process of convergence and consistency of action at European level underpins the transition towards clean energy, sustainable and competitive development, decarbonisation and an integrated, systemic and technologically neutral approach, the circular economy as a lever for innovative solutions for climate change, and social fairness based on the European energy pact (5) which places consumers at the centre of the system, with a plan to combat energy poverty. |
| --- | --- |

4.1.

| 4.2. | The EESC points out that there has always been strong and growing support (6) by EU citizens for Energy Union objectives and more ambitious climate and energy policies, as well as growing support for Energy Union objectives from Europe’s business sector (7), both inside and outside the energy sector. Furthermore, the EESC is pleased (8) that the regulation on the governance of the Energy Union and climate action has come into force and has called on organised civil society to be as active as possible so as to ensure that this regulation is implemented properly. |
| --- | --- |

4.2.

| 4.3. | The EESC considers that ‘There is an urgency to take action on climate change, since we are already feeling its impact. The transition towards a sustainable economy is also an opportunity. To succeed in this transition we need to maintain the competitiveness of our enterprises and encourage R & D. We must include all sectors and civil society, and maintain a permanent citizens’ dialogue to avoid anybody being left behind’ (9). |
| --- | --- |

4.3.

| 4.4. | The EESC stresses just how important is the EU’s commitment, as confirmed at the highest political level by the Sibiu Declaration (10), to be a responsible world leader in the fight against climate change, in protecting citizens and the environment and in upholding the principle of fairness. |
| --- | --- |

4.4.

| 4.5. | The EESC endorses the principle whereby ‘The draft NECPs offer a common, solid and comparable platform to engage and discuss across the Union with civil society, business, social partners and local governments the Union’s common challenges and long-term priorities in the field of energy and climate’ (11). |
| --- | --- |

4.5.

| 4.6. | However, social consensus should be a priority, particularly considering that some EU regions which are still dependent on coal mining or the use of other fossil fuels are still far from completing the transition to sustainability, and that the incomes and economic opportunities of the people living there are below those of people in other Member States. Failure to provide adequate answers to the negative impact of the energy transition on people and businesses, particularly SMEs, and the inability to provide adequate support to those hardest hit can lead to strong political and social resistance and slow down the overall process of implementing the NECPs. |
| --- | --- |

4.6.

| 4.7. | The EESC considers that a human-centric transition towards a more inclusive, sustainable, cost-effective, fair and safe global energy system should therefore be recommended. This system should provide solutions to the global energy and climate challenges, creating value for businesses and society without jeopardising the energy triangle of security and access, environmental and social sustainability, and economic development and competitive growth. |
| --- | --- |

4.7.

| 4.8. | Top of the list of recommendations — for the European institutions themselves as well as for the Member States — should be completing the European energy market. This is still not fully linked up, interoperable and transparent, with marked differences in gas and electricity prices due either to the energy component or to grid and distribution fees and taxes. The EESC is disappointed that energy prices still differ widely across the EU; this is symptomatic of serious shortcomings in the single market and, if the appropriate corrective measures are not taken, could undermine our chances of achieving the 2030 Energy Union objective. |
| --- | --- |

4.8.

| 4.8.1. | The EESC therefore calls on the Commission and the Member States to ensure that the NECPs include commitments to fully implement the legislation and to carry out frequent checks to ensure that it has been implemented properly in the interests of both businesses and consumers as part of a renewed strategy to complete the single market by 2025. This should be capable of tackling the global challenges of sustainable competitive growth and climate in a modern environment which is smart, digitalised and interconnected across the entire continent. |
| --- | --- |

4.8.1.

| 4.8.2. | The EESC considers that support should be recommended in order to deliver a decarbonised wholesale market which is better able to integrate the electricity, gas and thermal energy sectors, as well as a more transparent European retail market which enables people and businesses to really reap the benefits of energy and climate sustainability measures, in terms of consumption and lower costs on the EU market, by enabling them to make fully informed choices. |
| --- | --- |

4.8.2.

| 4.9. | The recommendations regarding the energy sector’s contribution to decarbonisation should, the EESC feels, be developed on the basis of consumer incentives and the promotion of the distribution of technologies which are key to a climate neutral economy, with a view to reaching the zero emissions target by 2050. The European Commission should in this respect explicitly recommend special strategies for high energy intensity industries, such as the chemicals, steel, cement and paper industries, as well as for high carbon intensity regions, encouraging and providing incentives for them to switch over to using more energy efficient technologies. |
| --- | --- |

4.9.

| 4.9.1. | It is essential that high energy intensity industries are supported effectively by the EU and their national governments: one way is to improve the ETS State aid Guidelines. The EESC considers that ‘as an instrument for reducing the EU’s energy emissions, the EU’s Emissions Trading System (EU ETS) should provide a carbon price signal while also boosting sustainable investment in new low-carbon technologies’ (12), including via the Innovation Fund financed under the EU ETS. |
| --- | --- |

4.9.1.

| 4.9.2. | The EESC considers that decarbonising transport, which currently accounts for 90 % of the oil used, will require a gradual shift to alternative, zero-impact fuels, with appropriate infrastructure and greater energy efficiency which makes the most of digital technologies and smart pricing and encourages multi-modal integration and more sustainable transport modes. |
| --- | --- |

4.9.2.

| 4.9.3. | The construction industry is responsible for 40 % of energy consumption and around 15 % of greenhouse gas emissions; EU rules on and incentives for energy efficient buildings need to be implemented fully. Investments are also needed in smart electricity grids in order to integrate and optimise the use of various types of renewable energy and sustainable generation, storage and distribution technologies. Consumption of renewable energy at the place of production must be encouraged by means of specific legislative stimulus measures built into an appropriate regulatory framework. |
| --- | --- |

4.9.3.

| 4.10. | The EESC endorses the Commission’s encouragement for fully implementing, in the context of the NECPs, the EU rules adopted in May 2018 (13) on land use, land use change and forestry (LULUCF) (14), whereby the Member States are required to offset greenhouse gas emissions produced as a result of land use by ensuring that forests absorb an equivalent amount of CO2 between 2021 and 2030. The sector can still act to increase carbon capture. As the EESC has pointed out, ‘Active and sustainable forest management and the resource-efficient use of wood are key elements in achieving the climate targets’ (15). |
| --- | --- |

4.10.

| 4.11. | As regards security, the EESC endorses the recommendations for a resilient European energy system which makes full provision for both supply and emergency stockpiles, and cybersecurity. IT security is key for guaranteeing a safe transition in the EU towards a decarbonised, decentralised, digitalised and integrated energy system. |
| --- | --- |

4.11.

| 4.12. | We need to tackle the challenges and risks identified for the energy sector head on, both at EU level by promoting the role of the European Union Agency for Cybersecurity (ENISA), and by means of recommendations to the Member States for harmonised approaches to cybersecurity in order to reduce the risk of weak links in an increasingly interconnected European grid system. This will ensure that all stakeholders are aware of attacks and that there is a common response to cybersecurity threats, as the EESC has already emphasised (16). The entire energy system is highly digitised so as to guarantee permanent stability and balance; a cyber attack could compromise or cause a blackout in specific small areas or even across large regions. An unfortunate but always possible targeted hacker attack could even lead to geopolitical issues. |
| --- | --- |

4.12.

| 4.13. | The EESC fully endorses the EC’s recommendations on R&I and considers that it is paramount to ensure that the transition process is internationally competitive, to accelerate the energy system transformation in a cost-efficient way, and to boost the contribution of national industrial and innovative ecosystems to the creation of European strategic and sustainable value chains. One instance here is batteries, the subject of a recent EESC opinion (17). |
| --- | --- |

4.13.

| 4.14. | The Member States should make sure that a range of instruments are properly harnessed under the NECPs, including the new 2021-2027 Horizon Europe framework programme, the Structural Funds and the EIB, the European Fund for Strategic Investments, the European Globalisation Adjustment Fund and the Innovation Fund which is financed by selling quotas under the EU ETS system. |
| --- | --- |

4.14.

| 4.15. | The investments and related budgets needed to deliver on the EU’s climate and energy objectives (estimated to require an additional EUR 260 billion each year (18)) are still the most problematic factor, together with fairness and social sustainability which must be the cornerstone of a human-centric process of energy and climate transition. |
| --- | --- |

4.15.

| 4.15.1. | The EESC points out that the scale of these additional investments seems very limited compared to the figures cited in its recent opinions (19), and that the necessary financing requires a major political and social trade-off along with platforms that foster cooperation and common understanding between a range of stakeholders, beginning with members of the public, consumers, workers and businesses, with regard to a long-term approach to the energy transition, mid-term objectives and more immediate priorities. |
| --- | --- |

4.15.1.

| 4.15.2. | Another key problem is the social fairness and social sustainability of the transition process, as well as fair distribution of the costs and benefits: the EESC has already pointed out that Europe needs a Social Pact for an Energy Transition, ‘to be agreed by the EU, Member States, regions, cities, social partners and organised civil society, in order to ensure that the transition leaves no one behind’ (20). |
| --- | --- |

4.15.2.

| 4.15.3. | The EESC recommends that the Commission check that all the Member States explicitly include chapters in the NECPs on the social sustainability of the processes that will be implemented, as well as on the implementation policies for promoting inclusive growth, fair distribution of costs and benefits and clear, transparent information for civil society, accompanied by plans to train people in the skills needed to make them informed, proactive players in mutually agreed processes. |
| --- | --- |

4.15.3.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action, amending Regulations (EC) No 663/2009 and (EC) No 715/2009 of the European Parliament and of the Council, Directives 94/22/EC, 98/70/EC, 2009/31/EC, 2009/73/EC, 2010/31/EU, 2012/27/EU and 2013/30/EU of the European Parliament and of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1).

1

(2)  SWD(2019) 211; SWD(2019) 225; SWD(2019) 214; SWD(2019) 275; SWD(2019) 229; SWD(2019) 277; SWD(2019) 230; SWD(2019) 261; SWD(2019) 262; SWD(2019) 263; SWD(2019) 224; SWD(2019) 264; SWD(2019) 223; SWD(2019) 265; SWD(2019) 228; SWD(2019) 266; SWD(2019) 267; SWD(2019) 268; SWD(2019) 227; SWD(2019) 226; SWD(2019) 281; SWD(2019) 272; SWD(2019) 273; SWD(2019) 271; SWD(2019) 274; SWD(2019) 276; SWD(2019) 278; SWD(2019) 279.

2

(3)  SWD(2019) 212.

3

(4)  C(2019) 4401; C(2019)4402; C(2019) 4403; C(2019) 4404; C(2019) 4405; C(2019) 4406; C(2019) 4407; C(2019) 4408; C(2019) 4409; C(2019) 4410; C(2019) 4411; C(2019) 4412; C(2019) 4413; C(2019) 4414; C(2019) 4415; C(2019) 4416; C(2019) 4417; C(2019) 4418; C(2019) 4419; C(2019) 4420; C(2019) 4421; C(2019) 4422; C(2019) 4423; C(2019) 4424; C(2019) 4425; C(2019) 4426; C(2019) 4427; C(2019) 4428.

4

(5)  COM(2015) 80 final and OJ C 345, 13.10.2017, p. 120.

5

(6)  See Special Eurobarometer 459 report on ‘Climate Change’, March 2017.

6

(7)  See Union of the Electricity Industry — Eurelectric and B Team Initiative.

7

(8)  See OJ C 353, 18.10.2019, p. 96.

8

(9)  EESC president, Luca Jahier at the seminar on Concrete measures to combat climate change in the new EU term 2019-2024, 6 June 2019, Helsinki (https://www.eesc.europa.eu/en/node/71384). In addition, ‘Energy prices which are increasing faster than household budgets, income inequality across Europe and the costs incurred by the energy transition (decentralisation and digitalisation of electricity and gas markets) determine the degree to which energy poverty is present in a society’, as pointed out in TEN/694 (not yet published in the OJ).

9

Concrete measures to combat climate change in the new EU term 2019-2024

(10)  Declaration of Sibiu, informal meeting of the Heads of State and Government, Sibiu (Romania), 9 May 2019.

10

(11)  COM(2019) 285 final.

11

(12)  EESC opinion on the ‘Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments’ (COM(2015) 337 final — 2015/0148 (COD)) (OJ C 71, 24.2.2016, p. 57).

12

(13)  Regulation (EU) 2018/841 of the European Parliament and of the Council of 30 May 2018 on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry in the 2030 climate and energy framework, and amending Regulation (EU) No 525/2013 and Decision No 529/2013/EU (OJ L 156, 19.6.2018, p. 1).

13

(14)  See OJ C 351, 15.11.2012, p. 85.

14

(15)  See EESC opinion on Implications of climate and energy policy on agricultural and forestry sectors (OJ C 291, 4.9.2015, p. 1) and EESC opinion on Effort-sharing 2030 and land use, land use change and forestry (LULUCF) (OJ C 75, 10.3.2017, p. 103).

15

(16)  OJ C 81, 2.3.2018, p. 102; OJ C 75, 10.3.2017, p. 124; OJ C 227, 28.6.2018, p. 86; OJ C 440, 6.12.2018, p. 8.

16

(17)  OJ C 353, 18.10.2019, p. 102.

17

(18)  Figure taken from the EUCO 32-32.5 scenario (in line with the principal technological dynamics hypothesised in the EURO scenarios) (cf. https://ec.europa.eu/energy/en/data-analysis/energy-modelling/euco-scenarios).

18

(19)  See OJ C 353, 18.10.2019, p. 79. The EESC points out that achieving a net-zero greenhouse gas economy will require additional investments in the range of EUR 175 to 290 billion a year, for a total of EUR 520-575 billion in energy, and about EUR 850-900 billion in transport.

19

(20)  See OJ C 353, 18.10.2019, p. 96.

20

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/105 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/105

---

Opinion of the European Economic and Social Committee on ‘Proposal for a Decision of the European Parliament and of the Council amending Decision No 573/2014/EU on enhanced cooperation between Public Employment Services (PES)’

(COM(2019) 620 final)

(2020/C 47/16)

| Referral | European Parliament, 19.9.2019
  Council of the European Union, 19.9.2019 |
| --- | --- |
| Legal basis | Articles 149 and 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Section for Employment, Social Affairs and Citizenship |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 219/3/11 |

Referral

European Parliament, 19.9.2019

Council of the European Union, 19.9.2019

Legal basis

Articles 149 and 304 of the Treaty on the Functioning of the European Union

Section responsible

Section for Employment, Social Affairs and Citizenship

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

219/3/11

Since the Committee endorses the content of the proposal and has already set out its views on the subject in its earlier opinion SOC 620 — The new role of public employment services (PES) in the context of the implementation of the European Pillar of Social Rights (1), adopted on 17 July 2019, it decided, at its 547th plenary session of 30 and 31 October 2019 (meeting of 30 October 2019), by 219 votes to 3 with 11 abstentions, to issue an opinion endorsing the proposed text and to refer to the position it had taken in the abovementioned document.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  OJ C 353, 18.10.2019, p. 46

1

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/106 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/106

---

Opinion of the European Economic and Social Committee on Euro area economic policy 2019 (additional opinion)

(COM(2018) 759 final)

(2020/C 47/17)

Rapporteur: Petr ZAHRADNÍK

| Committee Bureau decision | 14.5.2019 |
| --- | --- |
| Legal basis | Rule 32(1) of the Rules of Procedure and Rule 29(a) of the Implementing Provisions of the Rules of Procedure |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 17.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 137/0/4 |

Committee Bureau decision

14.5.2019

Legal basis

Rule 32(1) of the Rules of Procedure and Rule 29(a) of the Implementing Provisions of the Rules of Procedure

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

17.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

137/0/4

Preamble

This opinion is part of a package of two follow-up opinions, one on the Annual Growth Survey (COM(2018) 770 final) and one on the Recommendation on the economic policy of the euro area (COM(2018) 759 final). The aim is to update and elaborate on previous EESC proposals, (1) taking into account the latest developments and economic forecasts for the EU and the euro area, as well as the various reports and recommendations published within the current European semester. The package provides EU civil society’s comprehensive economic, social and environmental policy input into the next cycle of the European semester, which will be launched in November 2019. The EESC calls on the European Commission and the Council to make use of this input in the upcoming Autumn Semester Package and the ensuing inter-institutional decision-making process.

1.   Conclusions and recommendations

| 1.1. | The EESC respects the positive development of the EU economy and the euro area over the last few years. At the same time, it is very well aware of the risks that could reverse this trend. The EESC notes that the EU economy and euro area economy are now more exposed than usual to risks from outside the EU. Central elements of uncertainty here are Brexit, especially a no-deal Brexit, and the escalation of trade wars. |
| --- | --- |

1.1.

| 1.2. | The EESC is convinced that the current priority of EU and euro area economic policy is to reduce and mitigate the risk of recession and steer the EU’s economy towards a path of sustainable growth. It is therefore essential for fiscal policy to accompany the ECB’s expansionary monetary policy with a positive fiscal stance within the euro area and the EU, while respecting the principles of fiscal discipline. The EESC is convinced that the need to increase resilience and maintain potential for future growth is urgent and that it is high time to deal with this. |
| --- | --- |

1.2.

| 1.3. | The EESC notes that the current investment growth rate is higher than the growth in EU and euro area GDP, thanks to which 2018 saw the highest level of investment (20,5 %) since 2008 (22,8 %). Nevertheless, it believes that the investment need is greater and that more resources are required, both in private and public investment, to overcome this investment deficit, particularly given that such investments are greater in China or the USA. |
| --- | --- |

1.3.

| 1.4. | The EESC is fully aware, however, that this economic development has not been spread evenly throughout the EU and the euro area and that the progress of convergence remains unsatisfactory. Sustainability also remains an increasingly complicated challenge for the EU. |
| --- | --- |

1.4.

| 1.5. | The EESC welcomes the fact that significantly improved fiscal discipline is offering room for greater fiscal expansion – subject to compliance with all rules on fiscal prudence. This room is opening up both for individual Member States and the EU as such. The EESC welcomes the proposal for a budgetary instrument for convergence and competitiveness (BICC) – a pilot project to strengthen fiscal policy in the euro area – and its close link to the Reform Support Programme. The EESC expects the BICC and the Reform Support Programme to provide significant support for reforms and investment both within the euro area and in countries outside the euro area. Nevertheless, the EESC believes that, overall, the European Commission proposal concerning the MFF for 2021-2027 may not be sufficient to successfully implement priority programmes and reiterates its call for an increase in the amount of resources for this purpose. |
| --- | --- |

1.5.

| 1.6. | At the same time, the EESC calls for the continuation of effective structural reforms with well targeted investment strategies. Here it supports and appreciates adherence to the ‘virtuous triangle’ of current economic policy priorities consisting in the equilibrium and mutual conditionality of investment aid, the implementation of structural reforms and the practice of fiscal responsibility and prudence. Given the limited public funds, the EESC underlines the unique importance of private investment, whose long-term growth is directly dependent on a credible economic policy and the reduction of fiscal imbalances. The Banking Union and Capital Markets Union can help accelerate the growth of investments through more efficient and flexible capital flows. The EESC is concerned about the delays in implementing the remaining elements of these unions. |
| --- | --- |

1.6.

| 1.7. | The EESC notes with attention and concern the broad spectrum of macroeconomic imbalances within the EU and the euro area. It calls on both the European Commission and the Member States to unite their efforts to align the positions of the Member States when it comes to addressing external imbalances, particularly given the greater degree of external risks in the future. |
| --- | --- |

1.7.

| 1.8. | The EESC fully endorses the principle that investment and reform are to go hand in hand, and the principles of responsibility and subsidiarity. |
| --- | --- |

1.8.

| 1.9. | The EESC believes that the priorities of the European economy should now be more strongly geared towards supporting domestic demand. At the same time it believes that the very positive external balance of European trade in goods and services should be more evenly distributed among more Member States. |
| --- | --- |

1.9.

| 1.10. | The EESC strongly supports further work to improve the functionality and homogeneity of the internal single market, especially in segments which have not yet been more substantially integrated and in those manifesting centrifugal tendencies. It also notes, with concern, the problem of the shortage of workers and skills mismatch. |
| --- | --- |

1.10.

2.   Context

2.1.   Current economic development of the euro area and the EU: European Commission’s forecast for spring and summer

| 2.1.1. | The economy of the EU and the euro area is growing for the seventh year in a row, but forecasts show signs of future deterioration in economic performance. However, this does not mean that growth has been even all across the EU and the euro area. According to the European Commission’s spring and summer economic forecasts, the growth trajectory of both the EU and the euro area should continue this and next year, albeit at a slower pace. The summer forecast also sees heightened risks of a slowdown. |
| --- | --- |

2.1.1.

| 2.1.2. | The deceleration is largely driven by the external environment and a constraint on the EU’s ability to maintain a record volume of exports. Key risk factors include the impact of Brexit, particularly a no-deal Brexit, and the escalation of trade wars in the world economy – these are now more evident than, for example, a year ago. |
| --- | --- |

2.1.2.

| 2.1.3. | The most important endogenous factors include the difficulties in achieving social and environmental sustainability and unsatisfactory progress in convergence within the EU, as well as an uneven distribution of income and wealth. Changes affecting important sectors (such as the automotive or energy sectors) can also be classified as significant. An expected downturn in credit growth from 3,7 % year-on-year to 3,0 % in the course of 2019 may be some cause for concern (2). |
| --- | --- |

2.1.3.

| 2.1.4. | The opinion of the European Economic and Social Committee on the ‘Recommendation for a Council Recommendation on the economic policy of the euro’ (3) warned of the risks of a new economic crisis and urged European and national authorities to take a coordinated approach in identifying these and in strengthening the resilience of the European economy, especially given that two of Europe’s leading economies may slip into recession in the latter half of this year. |
| --- | --- |

2.1.4.

| 2.1.5. | While investment growth rate and volumes have approached, or already reached, pre-crisis levels, the EU and euro area’s investment needs are still greater than their level at present. From this perspective, there is still an ongoing investment deficit in the EU and euro area. A sharp fall in the pace of growth in investment in the coming period is also a matter of concern. In 2018, investment in the EU grew by 3,7 % compared with the previous year; according to estimations, this year and next year it will only grow by 2,3 % for the EU and euro area. At 20,5 % of GDP, the 2018 investment level was the highest since 2008 (22,8 %) (4). Here, with a view to the future, Europe would need to allocate much more robust funds, particularly to strategically important activities and sectors that can provide long-term competitive advantages in the global context. |
| --- | --- |

2.1.5.

| 2.1.6. | Employment has increased significantly, to the point where many countries are facing shortages in available workforce, thus hindering their growth potential. At the same time, this situation encourages the acceleration of innovation processes and procedures based on automation and virtualisation of economic activities that do not require physical, manual or unskilled labour (economic decoupling), more intensive preparation of the workforce for new challenges and addressing the problem of structural unemployment. We are also seeing marked differences between Member States’ labour markets: some still have jobless rates topping 10 % and in many cases youth unemployment levels are alarming. Further causes for concern may be the weak or negative growth of real wages in some Member States or the problem of in-work poverty. |
| --- | --- |

2.1.6.

2.2.   Fiscal policy

| 2.2.1. | Improving fiscal discipline in a context of very low interest rates creates favourable conditions for financing and scope for fiscal stimulus measures in some Member States, which has a positive impact on domestic demand. The EESC adds that a responsible budgetary policy also covers the revenue side of the budget, and thus can effectively combat tax fraud, which can generate additional resources to finance public investment. |
| --- | --- |

2.2.1.

| 2.2.2. | There is also scope to strengthen the fiscal position of the euro area; the proposal for a budgetary instrument for convergence and competitiveness (BICC) is a significant step in this direction (5). This aims to help improve the EMU’s economic resilience through financial support for reforms and investment in each Member State. The EESC reiterates its view, which has already been published in the opinion on the Multiannual Financial Framework post-2020 (6), on the lack of sufficient budgetary resources within the MFF for 2021-2027, which also concerns the funds allocated to structural reforms or support for convergence and competitiveness in the euro area. Like the European Parliament and Committee of the Regions, the EESC has called for resources for the next MFF to be equal to 1,3 % of GNI. |
| --- | --- |

2.2.2.

| 2.2.3. | Its core component is intended to be a framework for establishing reform and investment strategies which the instrument would support. On the basis of the European Commission’s proposal (7), the Council of the EU will (after discussions within the Eurogroup) determine strategies on reform and investment priorities for the euro area as a whole. As a follow-up, the Council of the EU will adopt a recommendation which will include priority guidelines for individual Member States concerning reforms and investments which will be supported by the BICC in the form of subsidies. |
| --- | --- |

2.2.3.

2.3.   Economic and monetary policy

| 2.3.1. | Effective structural reforms linked to well-targeted investment strategies and accompanied by a responsible fiscal approach – both compliant with sustainable development principles – are the cornerstone of the economic policy of the EU, the euro area and individual Member States for the upcoming period, at least in the medium term. |
| --- | --- |

2.3.1.

| 2.3.2. | A document was published for the Eurogroup summit providing a summary of the situation and prospects for the euro area (8). The euro area has also been discussed in the context of efforts to strengthen the international position of the euro (9). Euro area membership could be set to expand again as, after last year’s efforts by Bulgaria to complete the necessary formalities to join the single currency, Croatia has also followed suit this year. At the same time, the EESC encourages the non-euro Member States to create and implement plans for a sustainable shift towards the euro area in the near future. |
| --- | --- |

2.3.2.

| 2.3.3. | Among the most recent steps that have helped strengthen the euro area we should not forget, for example, the implementation of the common backstop to the Single Resolution Fund (SRF), the principles of which had already been agreed upon in 2012. This has strengthened the role of the European Stability Mechanism (ESM). Steps towards establishing a European deposit insurance scheme have been defined, which is a critical step towards completing the Banking Union. An outline has been sketched of the budgetary instrument for convergence and competitiveness for the euro area as part of the future EU budget. Some progress has been made towards strengthening the international role of the euro, but much more can be done through the combined efforts of Member States and the European institutions. |
| --- | --- |

2.3.3.

2.4.   Structural policy and reforms

| 2.4.1. | This year’s country-specific recommendations show efforts to promote the ‘virtuous triangle’ of support for investments, implementing structural reforms and ensuring responsible fiscal policies that address, where possible, the specific needs of individual Member States. |
| --- | --- |

2.4.1.

| 2.4.2. | The issue of resolving structural shortcomings and problems of EU economies, increasing their resilience and fulfilling their long-term growth potential at a time of increasing global economic risks entails the need to formulate priority reforms (at Member State and EU level) and implement them faster and more intensively. |
| --- | --- |

2.4.2.

| 2.4.3. | Achieving a more symmetrical rebalancing in the EU and the euro area is also important. The need to correct macroeconomic imbalances takes many forms. In addition to problems with their external balances, particularly their current accounts, some countries also show additional signs of macroeconomic imbalances such as high public and private sector debt, dynamic growth of property prices, increasing unit labour costs or various types of external imbalances. |
| --- | --- |

2.4.3.

| 2.4.4. | Structural reforms also pertain to strengthening the environment and quality of the single market and improving the complementarity between single market policy and national structural reforms to achieve maximum alignment. |
| --- | --- |

2.4.4.

2.5.   Euro area governance

| 2.5.1. | Country-specific recommendations are instructions and guidance for strengthening the performance and governance of the EMU, the resilience of euro area economies in line with the 2019 recommendation on euro area economic policy and advancing social convergence in line with the European Pillar of Social Rights In any event, it seems that the EU is again entering a stage where economic policy measures are very much linked to the euro area environment and remaining outside it could present an increased risk of a Member State being marginalised, particularly in a situation where there seems to be increasing will for a stronger position for the euro area in the coming EU multiannual financial framework. The EESC emphasises the importance of balancing all pillars of the EMU, as discussed in the opinion on A new vision for completing the Economic and Monetary Union (10). |
| --- | --- |

2.5.1.

3.   General comments

| 3.1. | The EESC considers that in times when key positions in EU institutions are changing, the state of the European economy is in a better position than it was the last time there was a similar changeover of EU posts in 2014. At the same time, however, the EESC is very conscious of the risks (see points 2.1.1 – 2.1.3) that could reverse these developments and can see the strategic challenges that need to be met with a view to future economic developments. |
| --- | --- |

3.1.

| 3.2. | However, the current downturn in growth (confirmed, for example, by low economic confidence indicators in September), which in the euro area was never that strong anyway, and the increase in crisis risk factors should now impel the European institutions and Member States to take steps to fulfil the main economic objective of European economic policy: developing effective pre-emptive measures to prevent a return to a general recession and setting the euro area and EU economies back on the path to sustainable growth. To this end, it is essential to align fiscal and monetary policy. According to the ECB, accommodative monetary policy cannot be tightened in the coming period, as this would have a negative effect on economic growth. However, space for growth-friendly fiscal policy has been created. Member States with significant current account surpluses should develop this fiscal effort on a larger scale, which, if sustainable investments are made, could bring additional benefits to their economies and societies. In the EESC’s opinion, monetary and fiscal policy, supporting growth – particularly investment – and structural reforms that strengthen economic resilience should be the three axes of economic policy in response to the current situation. |
| --- | --- |

3.2.

| 3.3. | The EESC therefore supports increasing the resilience of the EU and euro area economies in the face of negative worldwide factors that threaten the conditions for seamless global trade and investment, increase uncertainty and tighten conditions on international financial markets. The EESC recommends that the priorities of the European economy should focus more closely on meeting domestic demand in the medium term. At the same time, the very positive external balance of trade in goods and services should be more evenly distributed across more Member States. Many of them will have to undergo major structural reforms, as their current performance in a number of competitiveness indicators is risky in this respect. |
| --- | --- |

3.3.

| 3.4. | The EESC is convinced that the need to increase the resilience of the European economy and the potential for it to grow in the future is a matter of urgency and now is the time to tackle it. Lower economic output in the near future has the potential to amplify the prevailing structural problems and shortcomings, including the resulting social consequences. In terms of fiscal responsibility, it is essential to find the – very fine and delicate – balance between the efforts of highly indebted countries to reduce their debt rates and build their fiscal reserves, on the one hand, and the capacity of surplus or fiscally neutral countries to use their fiscal margins for investment, particularly public investment, on the other hand. |
| --- | --- |

3.4.

| 3.5. | The EESC welcomes the proposal for the BICC. However, it calls for it to be given concrete form as soon as possible and for a functional link to be found between it and the newly proposed Reform Support Programme. The crucial issue here is that the programme be capable of ensuring substantial support for reforms and investment in countries outside the euro area without this jeopardising the BICC’s specific goals focused on the euro area. The EESC also calls on the European Commission to put together transparent indicators to be used by the BICC to assess its performance and outcomes. In this context, the EESC calls for stronger involvement of the European Parliament, social partners and civil society in the spirit of the opinion on A new vision for completing the Economic and Monetary Union (11). |
| --- | --- |

3.5.

| 3.6. | The EESC welcomes the fact that the BICC is also an integral part of the European Semester process, since recommendations made under the European Semester should be supported as a matter of priority. |
| --- | --- |

3.6.

| 3.7. | The EESC agrees with the BICC’s main goal, which is to achieve greater convergence and better competitiveness by improving the coordination of reforms and investment plans in the euro area. In order to achieve this goal, the EESC calls on the European Commission to draft a plan for allocating funds among individual countries on the basis of a transparent methodology. |
| --- | --- |

3.7.

| 3.8. | The EESC welcomes the fact that this year’s country-specific recommendations are very much tailored to the needs of targeted investment strategies. As of next year, the country-specific recommendations and the European Semester should start to play a greater role as the EU’s strategic economic guidelines, since the Europe 2020 strategy is coming to an end and there is currently no successor to it on the horizon. In this connection, the European Semester should also respect the objectives of the European Pillar of Social Rights and the Sustainable Development Strategy 2030. |
| --- | --- |

3.8.

| 3.9. | The EESC acknowledges and respects the conclusions of the Eurogroup’s review summit of 21 June (12) which not only objectively trace the evolution of the euro area since the Five Presidents’ Report of 2015, but chiefly set out new goals that in particular pertain to significantly increasing the weight of the euro area in the EU’s next multiannual financial framework. |
| --- | --- |

3.9.

| 3.10. | The EESC is convinced that in the autumn of 2019 the euro area is something completely different from what it was exactly 10 years ago, when it was faced, unprepared, with an unprecedented crisis which it was not equipped to deal with at the time. However, over the past four or five years, too, the euro area has shown that it has been growing stronger. It has learned from the crisis and plans to continue doing so. This should include not only the ability to plan for the next few years but also to realistically allocate the necessary resources to make the European economy more resilient (which is not always the case). |
| --- | --- |

3.10.

| 3.11. | The EESC is of the opinion that this period, on the one hand, completes the era of the emergence of parts of the pool of euro area components that have been absent in times of crisis, but that at the same time the EU is ambitious in moving forward in an effort to significantly step up the fiscal position of the euro area (i.e. something that that both supporters and opponents of monetary integration in Europe are almost at one in describing as far from inadequate). The proposed reform programme, together with the European Investment Stabilisation Function, could become a pilot programme on the basis of which the euro area could have a significant and decisive influence on the form of the next European budget. If this happens, some of its chapters (if only a small minority of them for the moment) should then only be available to euro area members. |
| --- | --- |

3.11.

| 3.12. | The EESC considers that when it comes to current account balances there are still stark differences between conditions in Member States, compounded by differences of interpretation regarding economic policy instruments and objectives. While it is true that a number of countries that previously had a chronic current account deficit have significantly reduced their deficits, it is also the case that some Member States still have high current account surpluses. It is important to bridge the gap between these two groups, otherwise there is a high risk of a two-track European economy which could last for a long time. For countries in deficit, the convergence process should involve greater measures to support competitiveness and productivity (in line with the indicators used in the European Semester), while surplus countries should focus more on factors that increase aggregate demand, for example through more robust investments beneficial to the creation of high quality jobs. |
| --- | --- |

3.12.

| 3.13. | The EESC endorses the general country-specific recommendations for 2019-2020 to encourage Member States to modernise their economies, thus increasing their growth potential and their resilience. The sometimes significant national socioeconomic differences that exist in some countries should not be forgotten. Their economic development is very uneven, which presents major obstacles for their future economic development. Deploying instruments to lower social inequality and bolster social cohesion is also crucial. |
| --- | --- |

3.13.

| 3.14. | The EESC believes that investments and reforms must go hand in hand, which is particularly important when the EU’s multiannual financial framework for 2021-2027 is finally approved. Member States should also fully respect the principles of responsibility and subsidiarity. While the EU budget is not a panacea that can resolve all identified investment needs, appropriately targeting its resources could do a great deal to tackle specifically identified investment gaps that were addressed in this year’s country-specific recommendations. Here, too, a closer link can be made between the future EU budget and the European Semester, which could better connect limited funds with real needs while respecting the criteria of performance and quantified results. |
| --- | --- |

3.14.

| 3.15. | Given the limited public funds, the EESC underlines the unique importance of private sector investment, whose long-term growth is directly proportional to a credible economic policy and the reduction of fiscal imbalances. |
| --- | --- |

3.15.

4.   Specific comments

| 4.1. | Given the global economic, trade and investment uncertainty, there is a growing need for self-reliance through strengthening the single market. The EESC is convinced that a well functioning and homogeneous single market could help eliminate some of the imbalances identified. The level of integration on services markets is relatively low; there is a risk that without appropriate legislation new activities based on technology will only proliferate in certain countries, i.e. that within the EU approaches taken in individual Member States will become mutually incompatible. The banking union and capital markets union should also make the free circulation of capital more efficient and flexible. The EESC expresses some concern here about the delays in implementing the remaining elements of the banking union and the capital markets union. The envisaged financial union is an important platform for promoting alternative funding options and opportunities. In terms of the need for greater integration of the internal market, the most room for manoeuvre is in the labour market and on taxation and tax rules (so far an exclusive national competence in relation to direct taxation). |
| --- | --- |

4.1.

| 4.2. | The EESC acknowledges that this year the European Semester places a strong emphasis on investment, which has helped Member States to better fix their investment priorities where there is the highest rate of macroeconomic return; at the same time, regulatory and structural barriers have been identified at Member State and EU level, which are a crucial factor in the underachievement of the European economy’s long-term growth potential. |
| --- | --- |

4.2.

| 4.3. | The EESC believes that a climate of business confidence, predictability and legal certainty, which fully respects the rule of law and social justice, is essential for a sound and rational investment strategy. |
| --- | --- |

4.3.

| 4.4. | The EESC still sees the excessive administrative burden as an unnecessary obstacle. The solution may lie in adopting systems for digitalising public services; digitalisation is seen as a key factor in productivity, competitiveness and growth. How it is implemented must respect the social consensus and the outcomes of the social dialogue engendering it. |
| --- | --- |

4.4.

| 4.5. | The EESC also views the shortage of qualified workers and the skills mismatch as a barrier at this time to increasing the amount of investment. |
| --- | --- |

4.5.

| 4.6. | The EESC emphasises the importance of investment being increasingly tied to intensive research and innovation; this relates not only to the amount of funds invested, but also to substantially improving the quality of the investments made. At the same time, capital investment needs vary throughout different parts of the EU; there is a great need for investment not only in regions whose development is lagging, but also in those that are undergoing significant technological change, as well as for those that are global leaders in certain sectors and seek to maintain their position. |
| --- | --- |

4.6.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

---

(1)  EESC opinions on the Annual Growth Survey 2019 (OJ C 190, 5.6.2019, p. 24), and on Euro area economic policy (2019) (OJ C 159, 10.5.2019, p. 49).

1

Annual Growth Survey 2019

Euro area economic policy (2019)

(2)  European Economic Forecast. Spring 2019, European Commission.

2

(3)  OJ C 159, 10.5.2019, p. 49.

3

(4)  Source: Eurostat.

4

(5)  Term sheet on the Budgetary Instrument for Convergence and Competitiveness, Eurogroup, 14.6.2019.

5

(6)  The relevant conclusions on the efficacy of budget resource use can be found in the EESC opinion on the Multiannual Financial Framework post-2020 (OJ C 440, 6.12.2018, p. 106).

6

(7)  COM(2019) 354 final.

7

(8)  COM(2019) 279 final.

8

(9)  EESC opinion ‘Towards a stronger international role of the euro’ (OJ C 282, 20.8.2019, p. 27).

9

(10)  OJ C 353, 18.10.2019, p. 32.

10

(11)  OJ C 353, 18.10.2019, p. 32.

11

(12)  COM(2019) 279 final.

12

---

| 11.2.2020 | EN | Official Journal of the European Union | C 47/113 |
| --- | --- | --- | --- |

11.2.2020

EN

Official Journal of the European Union

C 47/113

---

Opinion of the European Economic and Social Committee on ‘Annual Growth Survey 2019’

(additional opinion)

(COM(2018) 770 final)

(2020/C 47/18)

Rapporteur: Anne DEMELENNE

| EESC Bureau Decision | 14.5.2019 |
| --- | --- |
| Legal basis | Rule 32(1) of the Rules of Procedure and Rule 29(a) of the Implementing Provisions for the Rules of Procedure
  Additional opinion |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 17.10.2019 |
| Adopted at plenary | 30.10.2019 |
| Plenary session No | 547 |
| Outcome of vote
  (for/against/abstentions) | 140/3/6 |

EESC Bureau Decision

14.5.2019

Legal basis

Rule 32(1) of the Rules of Procedure and Rule 29(a) of the Implementing Provisions for the Rules of Procedure

Additional opinion

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

17.10.2019

Adopted at plenary

30.10.2019

Plenary session No

547

Outcome of vote

(for/against/abstentions)

140/3/6

Preamble

This opinion is part of a package of two follow-up opinions, one on the Annual Growth Survey (COM(2018) 770 final) and one on the Recommendation on the economic policy of the euro area (COM(2018) 759 final). The aim is to update and elaborate on previous EESC proposals (1), taking into account the latest developments and economic forecasts for the EU and the euro area, as well as the various reports and recommendations published within the current European semester. The package provides EU civil society’s comprehensive economic, social and environmental policy input into the next cycle of the European semester, which will be launched in November 2019. The EESC calls on the European Commission and the Council to make use of this input in the upcoming Autumn Semester Package and the ensuing inter-institutional decision-making process.

1.   Conclusions and recommendations

| 1.1. | This opinion of the EESC is a supplement to the opinion of the EESC on the 2019 Annual Growth Survey. It takes into account the country-specific recommendations (2), CSRs, the European Commission’s communication on the European Semester and the respective Council recommendations. It covers selected economic and social issues concerning the European Semester 2019 in more depth. |
| --- | --- |

1.1.

| 1.2. | The investment gap in the European Union is not closed as of yet. There is still a need for public and private investment as well as expenditure on training and education (starting from early childhood education) to improve the competitiveness of the European business sector. The country-specific recommendations have a welcome focus on investment this year. Special attention must be paid to productive investments and investment in social infrastructure to prioritise sustainable growth, and in enabling the implementation of the social pillar. |
| --- | --- |

1.2.

| 1.3. | The structural reform effort of Member States needs to increase. In particular, regarding the current account surplus countries, the low compliance of Member States with the Macroeconomic Imbalance Procedure needs to be addressed for the sake of economic and political stability in the European Union and the euro area. The EESC regrets that an imbalance exists between broad unspecific recommendations with regard to important areas such as investment, the social field, and climate change, and the concrete numerical policy goals derived from the fiscal rules. |
| --- | --- |

1.3.

| 1.4. | The current environment of very low interest rates has freed up funds in national budgets as a result of lower interest expenditure on government bonds. Member States should use these funds to expand their physical, digital and environmental investment expenditure as well as expenditure on training, skills and qualifications that should be regarded as investment in people and not as costs. |
| --- | --- |

1.4.

| 1.5. | As regards the field of social CSRs, the larger role of the European Pillar of Social Rights and the social scoreboard is welcome. The Committee encourages the Commission to proceed with and develop it during the next cycles of the European Semester. Should an economic downswing occur in the next years, it is important that positive social policy goals play a central role in the European Semester and are on an equal footing with other macroeconomic and fiscal goals. |
| --- | --- |

1.5.

| 1.6. | Climate change has become a central issue during the last year and can be reflected more in the Semester. Recommendations for next year’s cycle should contain more CSRs to combat the existential threat of climate change, if not even at least one per Member State. |
| --- | --- |

1.6.

| 1.7. | Taxation needs to favour productive investment and spending in the real economy. Tax revenue should be shifted to sources other than those related to work and sustainable consumption. |
| --- | --- |

1.7.

| 1.7.1. | The financialisation of parts of the European economy has put an undue burden on companies and employees alike that create employment, produce value added, and increase the real capital stock. The EESC asks the Commission to investigate the possibility of using the European Semester to promote overall stakeholder value rather than only shareholder value. |
| --- | --- |

1.7.1.

| 1.7.2. | Various Member States have received recommendations on strengthening social dialogue in this year’s country-specific recommendations. To further the involvement of the social partners, minimum standards should be introduced concerning the consultation of the national social partners by national governments at various stages during the European Semester. |
| --- | --- |

1.7.2.

| 1.7.3. | Commission policy on public assets should be guided by the principle that the privatisation of public assets should exclude those of strategic importance and better provided by the public sector, and not occur at a net loss to the state by selling in bad economic times. |
| --- | --- |

1.7.3.

2.   Background: the priorities of the European Commission in the European Semester 2019 and in the country-specific recommendations

| 2.1. | According to the European Commission, Member States have made at least some progress with 40 % of the CSRs addressed to them. With a multi-annual view, more than two thirds of CSRs have seen ‘some progress’ (3). While implementation is strong on financial services, progress has also been observed with regard to the promotion of job creation with permanent contracts and in addressing labour market segmentation. However, implementation remains limited and too slow in key areas necessary for the correction of macroeconomic imbalances (4). |
| --- | --- |

2.1.

| 2.2. | The country-specific recommendations 2019 build on the findings of the 2019 Country Reports and include a stronger focus on investment with at least one investment-related recommendation for each Member State. |
| --- | --- |

2.2.

| 2.3. | As regards the macroeconomic outlook, uncertainty has not decreased. The expected exit of the United Kingdom from the European Union and global ‘trade wars’ caused by the United States still remain firmly on the table as downside risks to economic growth and employment in the near future. Despite a low aggregate unemployment rate when viewed against the last two decades, several countries have not reached the employment levels from before the crisis. The GDP growth rate in the European Union is expected to be a meagre 1,4 % in the EU this year and 1,2 % in the euro area (5). As the Governing Council of the European Central Bank (6) has pointed out, inflation in the euro area is still not sufficient to meet its target (of a level close to, but below, 2 % in the medium term) and fiscal policy will therefore need to play its part in sustaining euro area and European Union growth. |
| --- | --- |

2.3.

3.   General comments on the recommendations of the European Commission

3.1.   Investment

The EESC welcomes and strongly supports the special focus of the European Commission on increasing investment in this year’s country reports and CSRs. In the past, the Committee has repeatedly called on Member States and the European Commission to place a stronger emphasis on increasing public and private investment and is glad to see one of its recommendations put into practice. In line with this, investment needs to be productive and sustainable, while speculative financial and real estate investment should be avoided.

| 3.1.1. | The investment targets as CSRs are not very concrete, in line with the practice by the Commission to set broad goals. However, this still leaves an imbalance because the fiscal targets are very concrete following the treaty prescriptions. It remains unclear how investment goals can be achieved in countries that are tightly bound by requirements of the Stability and Growth Pact. As in previous opinions, the EESC therefore recommends that investment be given a more prominent role by introducing a golden rule into the European fiscal framework (7). |
| --- | --- |

3.1.1.

| 3.1.2. | The European Semester needs a stronger emphasis on sustainable growth guided by the UN 2030 Sustainable Development Goals, which is reflected in the EESC’s demand for an Annual Sustainable Growth Survey (8). Infrastructure investment needs to be made green and social, focusing on renewable energy just as the new Commission is considering. This should be reflected in the European Semester even more. Inspired by the welcome emphasis on investment in the CSRs this year, the EESC proposes that the European Commission and the Council evaluate whether the CSRs should contain at least one concrete ambitious goal per Member State to substantially reduce greenhouse gas emissions until the potentially catastrophic climate challenge is resolved. In that context, the EESC welcomes the fact that the ECB has invested in green bonds in its private sector asset purchase programme (APP) and is of the view that the ECB should continue and extend this commitment when it restarts its net purchases and during the reinvestment phase of its programme. |
| --- | --- |

3.1.2.

| 3.1.3. | Regarding concrete investment needs, the EESC asks the European Commission and the Member States to come up with a concrete plan to increase public and private investment to cover gaps that have been identified in important areas for assuring Europe’s economic and social future and maintaining competitiveness in relation to China and the United States, such as investment in information technology and artificial intelligence (research, development, including IT infrastructure). Investment should also be understood to include necessary spending on education, vocational training, skills enhancement and mobility, plus support for energy-saving in industry and transport, e.g. development and utilisation of the railway network. Support for such spending should be enhanced through the use of Structural Funds. This would help competitiveness and overcome the shortage of an adequately skilled labour force, which is recognised across the EU as one of the obstacles to investment (9). |
| --- | --- |

3.1.3.

| 3.1.4. | The Committee believes that there is room for more concrete goals and strategic priorities when it comes to reaching the broad goals of the European Council. While the EU 2020 indicators were too cursory, the broad priorities agreed to by the Council need to be made concrete and extended to other policy areas. The EESC therefore asks the Council and the Commission to develop a long-term strategy for 2030 which should be reflected in the CSRs of 2020 (10). This long-term strategy should include a vision for an economy of well-being in the European Union that includes higher investment in productive activities, better education, qualifications, skills and training, social protection, health, energy savings and affordable housing, and favouring gender equality. |
| --- | --- |

3.1.4.

3.2.   Current account imbalances

| 3.2.1. | The Committee welcomes the focus of the European Commission on current account surplus countries as a major macroeconomic problem of the euro area and the European Union. While former current account deficit countries have eliminated their deficits, current account surplus countries remain unwilling to take significant policy action to increase domestic demand, such as an increase in public investment, higher wages, higher government spending or lower taxes, in order to reduce their surpluses. Lower taxes are best implemented by shifting away from labour taxation and VAT to other sources of tax revenue. However, any potential reduction in the tax wedge on labour should not concern social security contributions as they serve as an important financial element for health care, pensions, accident insurance, unemployment and other social protection purposes. |
| --- | --- |

3.2.1.

| 3.2.2. | Given the persistent unwillingness of current account surplus countries to appropriately expand their own domestic demand, current account deficit countries suffer from a lack of demand. The macroeconomic imbalance procedure (MIP) manages to highlight the problem, but is toothless when it comes to enforcement. Therefore, the implementation of CSRs is particularly weak for MIP recommendations (11). The EESC calls on the European Council to coordinate a macroeconomic strategy in order to achieve an increase of domestic demand in current account surplus countries, resulting in the reduction of national current account surpluses that make up the euro area current account surplus. Within this strategy, current account surplus countries must credibly commit to reducing their surpluses in a permanent and sustainable way. |
| --- | --- |

3.2.2.

| 3.2.3. | As the concrete form of a euro area budget instrument has been taking shape in recent negotiations, it has become obvious that the European Council has failed to agree on a meaningful euro area budget with a stabilisation function. The EESC is concerned that the macroeconomic framework is inadequate at the European level to deal with a future crisis, should the downside risks to economic growth materialise. The EESC asks the European Council to prepare an effective fiscal policy response by Member States to a potential recession together with a monetary policy response by the European Central Bank. |
| --- | --- |

3.2.3.

3.3.   Fiscal policy, public debt, and taxes

| 3.3.1. | The re-evaluation of government bond risk during the crisis of the euro area has introduced an additional factor of divergence. Governments with lower growth rates and higher initial debt must pay higher interest rates on their public debt, based on at times quite inappropriate financial market estimations of their fiscal situation. Attempting to rebuild fiscal buffers prematurely, or in less metaphoric words cutting spending and increasing taxes, as suggested by the Commission for Member States with higher debt, risks again curbing positive private sector dynamics and the still weak growth in some Member States. Setting required fiscal adjustment effort paths for countries with less fiscal space, but only recommendations for countries with more fiscal space, risks the overall euro area fiscal stance not being expansive enough to rein in the large euro area current account surplus. |
| --- | --- |

3.3.1.

| 3.3.2. | In view of the re-evaluation of the role of public debt in times of low interest rates that is taking place among prominent experts on the matter (12), the EESC encourages the European Council to reflect on whether the existing fiscal framework has handicapped the necessary public investment as well as government spending for productivity-increasing purposes such as education, improving skills, life-long learning, health care and social protection (13). As the ECB has demonstrated with its September package, it will stick to its course of very low interest rates for the foreseeable future. This has already resulted, in recent years, in lower interest expenditure by governments. The EESC asks Member States to use these available funds for increased investment. |
| --- | --- |

3.3.2.

| 3.3.3. | The European Commission’s output gap measures that are used to determine the appropriate fiscal stance are increasingly viewed as too pro-cyclical by experts (14). Instead of independently measuring the maximum potential production of an economy through the number of unemployed and the lack of capital, the European Commission’s measure relies too much on past performance (15). As a result, anti-cyclical fiscal policy in good and in bad times is made impossible when countries follow the rules of the Stability and Growth Pact. The EESC recommends that the European Commission together with Member States evaluate their procedure to calculate output gaps in light of these findings. |
| --- | --- |

3.3.3.

| 3.3.4. | For countries that have not been able to profit from economic growth in recent years as much as one would expect, a lack of aggregate demand together with an unfavourable shift in the productive structure of the economy as regards exports have contributed to their weakness in growth. The EESC encourages the European Commission and the European Council to take into account industrial strategy and industrial policy considerations in the European Union for the next cycle of the European Semester. |
| --- | --- |

3.3.4.

| 3.3.5. | As outlined in previous EESC opinions, aggressive tax planning and tax evasion must be prevented by Member States with a focus on tax justice and the financing of government spending. |
| --- | --- |

3.3.5.

| 3.3.6. | The financialisation of the economy has given an undue influence to a select few financial actors over major corporations and the public sector seeking short-term profits and bonuses over the long-term needs of certain companies, their employees, and the regions in which they operate (16). The EESC asks the Commission to investigate the possibility of using the European Semester to promote stakeholder value over shareholder value. Where applicable in Member States, the tax system should be reoriented towards promoting real physical, digital, and sustainable investment as well as investment in people, disincentivising purely financial and speculative purposes. In particular, distortions in the tax system that unduly promote and financially reward the idea of shareholder value should be pointed out and recommended for reform as a CSR. |
| --- | --- |

3.3.6.

3.4.   European Pillar of Social Rights

| 3.4.1. | The EESC welcomes and supports the shift in policy recommendations towards an emphasis on social dialogue, education, skills and training, health, and social protection. The Committee encourages the Commission to proceed with and develop it during the next cycles of the European Semester, particularly on the topic of sufficient minimum wages negotiated in a responsible way by the social partners ensured by law and national collective bargaining agreements. |
| --- | --- |

3.4.1.

| 3.4.2. | The Committee welcomes the fact that the European Commission has paid special attention to how Member States deliver on the dimensions of the European Pillar of Social Rights (EPSR). The Committee recognises the particular added value created by the introduction of the Social Scoreboard indicators which highlight social developments and convergence among the EU Member States as a necessary balance to the traditional focus on economic and finance matters. The EESC encourages the Commission to continue with and develop the weight of the Pillar within the country-specific recommendations as well as consider exploring new Social Scoreboard indicators, for instance new indicators regarding collective bargaining. |
| --- | --- |

3.4.2.

| 3.4.3. | The much slower convergence of salaries across countries than anticipated by European leaders and the Commission has led to stronger migration flows towards countries and regions with more jobs and higher salaries. In principle, this flow of workers towards regions that fare better economically is a key adjustment mechanism within the European Monetary Union. Due to the slow convergence in wages and living conditions, however, migration flows have been stronger than expected. At times, countries have lost a sizeable share of their working-age population to emigration, which may pose a problem for these countries in the medium run should the emigrants not return. Faster real convergence of salaries and living conditions is therefore needed among countries within both the European Union and the European Monetary Union. The EESC asks the Commission to closely report on the state of real convergence and to adapt their policy recommendations to Member States and the Union as a whole to ensure real convergence. |
| --- | --- |

3.4.3.

| 3.4.4. | In the introduction to the Annual Growth Survey 2019, the European Commission praises the fact that growth has resumed in all Member States. Positive GDP growth rates, however, do not necessarily translate to upward social convergence. One tool to achieve the latter is collective bargaining. Therefore, the Committee asks the Commission to broaden the Social Scoreboard indicators to include measures of collective bargaining. |
| --- | --- |

3.4.4.

| 3.4.5. | Implementing recommendations resulting from the EPSR requires adequate financing. It remains unclear how the goals of the European Pillar of Social Rights can be achieved, especially in Member States that are tightly bound by requirements of the Stability and Growth Pact. The EESC recommends that the European Commission and the Council, developing proposals from a previous EESC opinion (17), make efforts to ensure that resources are available, including the use of European Structural and Investment Funds and other EU resources, alongside inputs from private and public sources at national levels. More public investment within Member States can be facilitated by reference to a Golden Rule for public investment with a social objective, which would allow more flexibility in budget rules. Reductions in the EU budget should also be opposed when they would mean less resources for achieving the aims of the European Pillar of Social Rights. The European Union’s plan for investment, supported by the European Fund for Strategic Investments (EFSI) should also be improved, following the criticisms from the European Court of Auditors in January 2019, which pointed to exaggeration in its claimed effects on investment levels (18). |
| --- | --- |

3.4.5.

| 3.5. | With regard to the content of CSRs in the social field and taking a broader view since the inception of the Semester, Member States with low growth and higher public debt have been prescribed recommendations that encourage social devaluation (19). Macroeconomic goals have generally taken priority (20). In view of an uncertain economic outlook, the EESC urges the European Council to ensure that positive social policy goals receive a higher and therefore equal priority in the next years, even in times of economic crisis. |
| --- | --- |

3.5.

| 3.5.1. | Ensuring a good quality of employment remains a challenge. Forms of non-standard employment, such as temporary work, short-hour jobs, subcontracting or platform work, have expanded over the past 10 years in several Member States. While workers’ abilities and educational attainments have increased, the quality of jobs offered has been declining in a number of countries. This is illustrated by increasing levels in some countries of those forced to take temporary or part-time contracts because of the absence of full-time, permanent jobs, as recorded by Eurostat (21). In some cases, these forms of employment may be welcomed by employees, but that is often not the case and new forms of employment also raise questions over provision of life-long learning to temporary and insecure workers. The EESC asks Member States to adopt timely labour protection and social security protection measures, in a European framework, to adapt to emerging forms of employment and an increasingly insecure world of work. |
| --- | --- |

3.5.1.

| 3.5.2. | The social economy plays an increasingly important role in the economy (22). Due to their diversity (cooperatives, mutuals, associations, foundations, social enterprises) they have large potential to contribute to boosting economic and employment growth in Europe and to strongly contribute to social cohesion in the European Union. Unfortunately, the Union has not developed an appropriate legal framework to exploit this potential within the internal market. The EESC asks the Commission to include this topic in their agenda for next term. |
| --- | --- |

3.5.2.

| 3.5.3. | More government and company spending on education may help to avoid unemployment in the current and future digital society, industry and services society demanding highly-qualified personnel. The EESC asks Member States to make use of European funds for reskilling their workforce for the digital age. |
| --- | --- |

3.5.3.

| 3.5.4. | Where justified in the national context, a qualitative reorientation towards a high quality vocational education away from tertiary education can be useful. An overly narrow focus on tertiary degree attainment as in the Social Scoreboard education indicators may inaccurately distort the overall picture. The EESC asks the Commission and Member States to reflect whether educational success can be measured in a better way in the social scoreboard by taking this fact into account. |
| --- | --- |

3.5.4.

3.6.   Social partner involvement

| 3.6.1. | The EESC welcomes the Commission’s intention to deepen the dialogue with social partners and civil society including solidarity institutions, NGOs, universities, and consumer organisations, to further encourage the implementation of country-specific recommendations, including visits to Member States and bilateral and multilateral discussions. |
| --- | --- |

3.6.1.

| 3.6.2. | In this regard, the regular informal exchange and flow of information can be improved. While supplying social partners with necessary preliminary information before major meetings to ensure a productive exchange during meetings is strong on labour market and social inclusion issues, this is not the case for budgetary and fiscal issues. The EESC encourages the Commission to engage in deeper timely and meaningful dialogue with social partners outside of the formally required formal procedures. |
| --- | --- |

3.6.2.

| 3.6.3. | Timely and meaningful involvement of the social partners in the EU Semester can be improved, as the European Commission has rightly observed (23). While the Semester works well on the European level and in some Member States, this cannot be said to be true for all of them. The EESC welcomes the recommendations to various Member States on strengthening social dialogue in the country-specific recommendations and encourages the Member States to implement them. |
| --- | --- |

3.6.3.

| 3.6.4. | Timely access to meaningful information and timely consultations, serious government commitment, and the capacity of social partners are issues that have hampered social partner consultations within the Semester on the national level. The EESC recommends the introduction of minimum standards concerning the consultation of national social partners by national governments at various stages during the European Semester. This includes explaining whether and why governments have deviated from the proposals of social partners. Social partner involvement must also be secured during any follow-up that evaluates the implementation of the proposals. |
| --- | --- |

3.6.4.

4.   Specific recommendations

| 4.1. | As regards the discussion in the Council on the appropriateness of widening the scope of the European Semester to cover social and economic cohesion issues, the EESC strongly supports the decision to include these issues in the Semester (24). The EESC encourages the European Commission and Member States to continue and expand on this path for the next years, which should then also include a response to the climate challenge. The EESC also commends the European Council for calling upon Member States to draw on the Social Scoreboard, the Employment Performance Monitor, and the Social Protection Performance Monitor to guide their convergence efforts. |
| --- | --- |

4.1.

4.2.   Accommodation

| 4.2.1. | In some Member States, house prices have risen in the past years. Rents in some major and medium cities have become so high that they are taking up a strongly increasing share of income. While not the only influence, this is linked to low interest rates as monetary policy works most immediately through the housing market. The ECB’s key interest rates will remain at their current levels (or at lower levels) until there has been a sustained convergence of inflation to its target (of a level sufficiently close to, but below, 2 % within its projection horizon) (25). Moreover, rising rents aggravate the problem of homelessness. The lack of data makes it difficult to closely track the evolution of the homeless in the European Union. The EESC calls on the Member States and the European Commission to improve data collection on the homeless with the goal of better monitoring the number, distribution, and living conditions of the homeless population in the Union. |
| --- | --- |

4.2.1.

| 4.2.2. | To improve the energy and climate balance of housing and other buildings, changes to the tax system as well as other government incentives in Member States can be used to provide better incentives for energy-efficient refitting and new construction. |
| --- | --- |

4.2.2.

4.3.   Other reforms

| 4.3.1. | For several countries, individual reforms mentioned in the CSRs contain the danger of deteriorating social and economic inequality. Pension reforms must not lead to poverty in old age. |
| --- | --- |

4.3.1.

| 4.3.2. | The privatisation of public assets should exclude those of strategic importance and better provided by the public sector, and not occur at a net loss to the state by selling in bad economic times. In principle, essential public services are most efficiently provided by the state due to the absence of a required profit that drives up cost. In cases when the quality and financing of public services does not correspond to the standards that citizens desire, the administrative capacity of providing these services effectively should be improved and the necessary financial resources to do so need to be provided. This does not preclude the possibility that individual countries may come to the conclusion to allow public-private partnerships (PPPs) tailor-made for specific services in a specific contemporaneous situation. In doing so, these PPPs must serve the public interest. Particularly in monopoly or oligopoly markets, they must not be used by special interest groups to extract rents by charging higher than necessary prices or foregoing necessary investments to keep up quality. |
| --- | --- |

4.3.2.

| 4.3.3. | A well-designed industrial policy that serves the needs of the country can increase growth, productivity, well-being, and employment. The EESC emphasises the need for a broad discussion and concrete action on an industrial strategy at the European and Member State levels underpinned by sufficient financial resources that goes beyond a simple adaptation of European competition law to allow more mergers between multinationals. |
| --- | --- |

4.3.3.

Brussels, 30 October 2019.

The President

of the European Economic and Social Committee

Luca JAHIER

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(1)  EESC opinions on the Annual Growth Survey 2019 (OJ C 190, 5.6.2019, p. 24) and on Euro area economic policy (2019) (OJ C 159, 10.5.2019, p. 49).

1

(2)  COM(2019) 500 final.

2

(3)  COM(2019) 500 final, p. 3-4.

3

(4)  Efstathiou, K. and Wolff, G. (2018), ‘Is the European Semester effective and useful?’.

4

(5)  European Economic Forecast. Summer 2019, European Commission.

5

(6)  Mario Draghi, president of the ECB, press conference — introductory statement, Frankfurt am Main, 12 September 2019.

6

(7)  EESC opinion on the Annual Growth Survey 2019, point 3.9.8 (OJ C 190, 5.6.2019, p. 24).

7

(8)  EESC opinion on the Annual Growth Survey 2019, point 1.7 (OJ C 190, 5.6.2019, p. 24).

8

(9)  EIB Investment Report 2018/2019: retooling Europe’s economy.

9

(10)  As laid out in the EESC opinion on the European semester and cohesion policy — towards a new European strategy post-2020 (OJ C 353, 18.10.2019, p. 39).

10

(11)  ‘What drives national implementation of EU policy recommendations?’, Bruegel working paper, issue 04.

11

(12)  Olivier Blanchard, ‘Public Debt and Low Interest Rates’, January 2019, and the German debate on the value of the national debt brake started by Michael Hüther, IW Policy Paper 3/19.

12

(13)  ‘Germany’s even larger than expected fiscal surpluses: Is there a link with the constitutional debt brake?’, Bruegel.

13

(14)  ‘The campaign against “nonsense” output gaps’, Bruegel.

14

The campaign against “nonsense” output gaps

(15)  ‘Why Hysteria Over the Italian Budget Is Wrong-Headed’.

15

(16)  Eric Vatteville in the journal Management & Avenir 2008/4 (No 18), p. 88-103.

16

Management & Avenir

(17)  OJ C 262, 25.7.2018, p. 1.

17

(18)  Special Report No 03/2019 — European Fund for Strategic Investments: Action needed to make EFSI a full success.

18

(19)  Copeland and Daly (2018). The European Semester and EU Social Policy.

19

(20)  Degrye and Pochet (2018). European social dynamics: a quantitative approach.

20

(21)  Eurostat database, ‘lfsa_eppgai’ and ‘lfsa_etgar’.

21

(22)  The social economy institutions and enterprises in Europe constitute over 2,8 million organisations, employing 13,6 million people and accounting for 8 % of EU GDP.

22

(23)  Joint Employment Report from the Commission and the Council, p. 11.

23

(24)  Council Conclusions on the 2019 Annual Growth Survey and Joint Employment Report, 15 March 2019, p. 7.

24

(25)  Mario Draghi, president of the ECB, press conference — introductory statement, Frankfurt am Main, 12 September 2019.

25

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