Key issues in the European Council : state of play in October 2020.
Date: 2020-12-01
Institutions: Directorate-General for Parliamentary Research Services
Subjects: EU activity, EU policy, European Council, operation of the Institutions

ISSN: 2600-0121 

Key issues in the 
European 
Council  
State of play in 
October 2020 

STUDY 

EPRS | European Parliamentary Research Service 

Authors: Suzana  Anghel, Izabela Bacian, Ralf Drachenberg, Annastiina Papunen 
European Council Oversight Unit 
PE 654.193 – October 2020 

EN 

 
Key issues in the 
European Council:  
State of play in  
October 2020 

Study 

The role of the European Council is to 'provide the Union with the necessary 
impetus for its development' and to define its 'general political directions 
and  priorities'.  Since  its  creation  in  1975,  the  European  Council  has 
exercised considerable influence over the development of the European 
Union, a process enhanced by its designation as a formal institution of the 
Union under the Lisbon Treaty in 2009. 

The European Council Oversight Unit within the European Parliamentary 
Research Service (EPRS) monitors and analyses the activities, commitments 
and  impact  of  the  European Council, so  as  to  maximise  parliamentary 
understanding of the political dynamics of this important institution. 

This  EPRS  publication,  'Key  issues  in  the  European  Council',  which  is 
updated every quarter to coincide with European Council meetings, aims 
to provide an overview of the institution's activities on major EU issues. It 
analyses twelve  broad  policy  areas,  explaining  the  legal  and  political 
background, the main priorities and orientations defined by the European 
Council and the results of its involvement to date, as well as some of the 
future challenges in each policy field. 

EPRS | European Parliamentary Research Service 

 
 
 
 
 
 
 
 
AUTHORS 

Suzana Anghel, European Council Oversight Unit 
Izabela Bacian, European Council Oversight Unit 
Ralf Drachenberg, European Council Oversight Unit 
Annastiina Papunen, European Council Oversight Unit 

This  study has  b een drawn up  by  th e Europ ean Council Oversight  Unit  of  the  Directorate  for  Impact 
Assessment and European Added Value, within the Directorate-General for Parliamentary Research Services 
(EPRS) of the Secretariat of the European Parliament. 

To contact the authors, please email: EPRS-EuropeanCouncilOversight@europarl.europa.eu.  

LINGUISTIC VERSIONS 

Original: EN 

Manuscript completed in October 2020.  

DISCLAIMER AND COPYRIGHT 

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background material to assist them in their parliamentary work. The content of the document is the sole 
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position of the Parliament. 

Reproduction  and  translation  for  non-commercial  purposes  are  authorised,  provided  the  source  is 
acknowledged and the European Parliament is given prior notice and sent a copy. 

Brussels © European Union, 2020. 

PE: 654.193 
ISSN 2600-0121
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Key issues in the European Council: State of play in October 2020 

Introduction 

Established as  an  informal summit meeting  in  1975,  the  European Council  became  a  formal 
European Union institution, with a full-time President, in 2009, on the entry into force of the Treaty 
of Lisbon. It consists of the Heads of State or Government of the 27 EU Member States, the President 
of the European Council and the President of the European Commission (Article 15(2) of the Treaty 
on  European Union  (TEU)).  The  latter  two  individuals  have no  voting rights. Meetings of  the 
European Council are normally also attended by the High Representative of the Union for Foreign 
Affairs and Security Policy. The President of the European Parliament is 'invited to speak' as the first 
item on the European Council's agenda, followed by an exchange of views (Article 235(2) of the 
Treaty on the Functioning of the EU, TFEU). At its formal meetings, normally four per year, the 
European Council adopts 'conclusions' that are aimed at identifying policy priorities and action to 
be taken by the Union as a whole. 

The European Council's role is to 'provide the Union with the necessary impetus for its development 
and  define the  general political  directions and priorities' (Article 15(1)  TEU).  It  cannot exercise 
legislative functions. At the beginning of the 2014-2019 and the 2019-2024 institutional cycles, the 
European Council also adopted an agenda of strategic priorities, designed to guide the work of the 
European Union over the five-year period. 

With  the  EU  only  just  coming  out  of  a  period  of  economic  and  financial  crisis,  and  with 
unemployment still high, the 2014-2019 strategic agenda made economic issues the top priority. 
Subsequently, unprecedented domestic and global challenges, and notably the prospect of the UK's 
withdrawal from the EU (combined with a rise of populism and anti-EU sentiment), have triggered 
a debate on the future of Europe. As a result, previous objectives have been somewhat re-shaped in 
order to respond more effectively to public expectations and concerns, as well as to bind the EU-27 
closer together. EU leaders thus used the occasion of the 60th anniversary of the Rome Treaties in 
March 2017 to issue a finely tuned set of policy orientations for the Union for the next 10 years. The 
Rome Agenda encompasses four broad chapters − a  safe and secure Europe, a prosperous and 
sustainable Europe, a social Europe and a stronger Europe on the global scene − which should shape 
the action of the Union over a decade.  

Reflecting the  orientations set in  the Rome Declaration, the  new  2019-2024  strategic agenda, 
adopted by the Heads of State or Government at their meeting in June 2019, defines migration and 
the protection of citizens as the top priorities for action in the upcoming five years. Then, comes the 
development of a stronger economic base, including the fight against unemployment, followed by 
climate change and  social issues. Finally, it  looks to increase the EU's influence and  defend its 
interest in the world. The four core priorities set out in the 2019-2024  strategic agenda broadly 
correspond to the concerns of EU citizens, as indicated by the 2019 standard Eurobarometer. 1  

The outbreak of the coronavirus pandemic in early 2020 and the prospect of a protracted economic 
recession of  an  unknown length  and  severity has,  however, prompted EU  Heads  of  State  or 
Government to review the above priorities in order to provide for a coordinated approach and joint 
action to tackle the crisis. They met virtually on a number of occasions, with their attention shifting 
first to pandemic-related crisis management, and then to the more medium-term recovery process. 

At their first video-conference dedicated to the management of the health crisis, on 10 March 2020, 
the 27 EU Heads of State or Government, alongside the Presidents of the European Commission and 
the European Central Bank and the High Representative of the Union for Foreign Affairs and Security 
Policy, agreed to work together along four main axes, with a view to: i) limiting the spread of the 

1 No standard  Eurobarometer has  been published in 2020 to date. The  European  Parliament carried out a public opinion 

survey in the midst of the coronavirus  crisis that shows  a shift in priorities on the part of the European  public. 

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virus; ii) providing medical equipment; iii) promoting research, for instance on development of a 
vaccine; and iv) tackling the socio-economic consequences of the crisis. The EU leaders underscored 
the need for a joint European approach and close coordination with the European Commission in 
combating the pandemic. 

Given the serious human, economic and social consequences of the health crisis, criticism has been 
directed towards the lack of overall preparedness in combatting the pandemic across the EU, and 
the lack of coordination among Member States at the start of the outbreak. Indeed, EU leaders have 
acknowledged that the EU needed to become better at 'developing its executive capacity and at 
managing crises in a coordinated fashion'. 

Following the immediate crisis-management phase, the European Council therefore shifted its focus 
more towards the medium-term recovery process, with the aim of relaunching and transforming 
the EU's economies. In a 'Joint Statement of the Members of the European Council' adopted on 
26 March 2020, EU leaders mandated the Presidents of the European Council, Charles Michel, and 
the European Commission, Ursula von der Leyen, to put forward a roadmap for recovery.  

Submitted on 21 April, the recovery plan places particular emphasis on the opportunities offered by 
the green transition and digital transformation, which are expected to foster new forms of growth 
and contribute to a more innovative and resilient EU. This dual transformation has been given a 
central role in the EU's medium- to long-term action, and forms part of a broader ambition aimed at 
achieving 'European strategic autonomy'. Charles Michel has mentioned the concept of strategic 
autonomy several times in recent months; most prominently, on 28 September, when he stated that 
'European strategic autonomy – these are not just words. The strategic independence of Europe is 
our new common project for this century. It's in all our common interest'. This concept has now been 
formally endorsed by the European Council, which presented it as 'a key objective of the Union' in 
its 1-2 October 2020 conclusions. 

As regards the funding for the EU recovery process, this will come from a newly established recovery 
fund, Next Generation EU (NGEU), set up as a temporary mechanism and linked to the 2021-2027 
multiannual financial framework (MFF). Yet, it was only after months of remote meetings that the 
European Council was  able  to convene again in  person to  discuss the  financial package. After 
intense negotiations throughout a four-day meeting from 17-21 July, EU leaders managed to reach 
a political agreement on the 2021-2027 MFF and NGEU. Together, the two instruments amount to 
€1 824.3 billion, with €360 in loans and €390 billion in grants making up the latter. The package is 
now subject to final negotiations between the co-legislators, Council and Parliament, albeit with 
inconclusive results thus far.  

In addition to its horizontal priority-setting role as defined in Article 15(1) TEU, the European Council 
is also tasked with identifying the Union's strategic interests, determining the objectives of, and 
defining general guidelines for common foreign and security policy (Article 26 TEU). Following a 
request by EU leaders, the then High Representative, Federica Mogherini, presented an EU global 
strategy, which the European Council welcomed in June 2016. The strategy sets five broad priorities 
for the EU external action in coming years: the security of the Union, state and societal resilience to 
the East and South, an integrated approach to conflict and crisis, cooperative regional orders, and 
global governance for the 21st century.  

Furthermore, the European Council defines the strategic guidelines for legislative and operational 
planning in the area of freedom, security and justice (Article 68 TFEU). For the period until 2019, the 
priorities for the European Union in the area of freedom, security and justice, were to 'better manage 
migration  in  all  aspects;  prevent  and  combat  crime  and  terrorism;  [and]  improve  judicial 
cooperation among EU countries'. Following the outbreak of the migration crisis, and a series of 
terrorist attacks on European soil,  key strategic documents, notably the European agenda on 

II 

Key issues in the European Council: State of play in October 2020 

security and the European agenda on migration, were adopted in 2015, either at the request or with 
the endorsement of the European Council. A new  set of  'strategic guidelines for legislative and 
operational planning' were expected to be adopted by the European Council at its meeting of 26-27 
March  2020.  Since  the  meeting had  to be  postponed following the coronavirus outbreak, the 
adoption of these guidelines will probably occur later in the course of the year.  

The European Council has also to 'consider each year the employment situation in the Union and 
adopt conclusions thereon, on the basis of a joint annual report by the Council and the Commission' 
(Article 148 TFEU). 

Its decisions are taken mainly by consensus, but in certain cases, the European Council can also 
decide  by qualified  majority. For example, the  President of the  European Council is elected  by 
qualified majority vote for a once-renewable term of two and a half years. The President's role is 'to 
ensure the preparation and continuity of the work of the European Council in cooperation with the 
President of the  Commission', chair its  meetings, 'facilitate cohesion and consensus within the 
European Council', and to ensure 'the external representation of the Union on issues concerning its 
common foreign and security policy, without prejudice to the powers of the High Representative of 
the Union for Foreign Affairs and Security Policy' (Article 15(5) TEU). The first two full-time Presidents 
of the European Council, Herman Van Rompuy and Donald Tusk, served five years each between 
2009 and 2019. The third permanent President of the European Council, Charles Michel, began his 
mandate at the beginning of December 2019. 

While not directly accountable to the European Parliament, the President of the European Council 
presents a report to the  Parliament after each  meeting of  the  Heads of  State or  Government 
(Article 15(6)(d) TEU). Usually this takes the form of a declaration in person, followed by a plenary 
debate. 

As a result of both the UK's decision to leave the Union and the Leaders' Agenda proposed by the 
previous European Council President, Donald Tusk, in 2017, aimed at 'reinvigorating and enriching' 
the institution's work 'by engaging directly on politically sensitive issues', the working method and 
formations of the European Council have evolved substantially. In recent years, members of the 
European Council have met in five different formats: 

• 
• 

• 
• 
• 

the EU-27 Heads of State or Government meet quarterly in the regular European Council meetings; 
from 2016 to 2019, the EU-27 (leaders of all EU Member States except the UK) met, first informally 
and then, from April 2017, in the European Council (Article  50) format, to discuss Brexit; 
the EU-27 have in recent years held informal summits  at least twice a year; 
the EU-27 (or EU-28) – for two years from October 2017 – participated in Leaders' Meetings; 
the EU-27 have met at several inclusive Euro Summits. Participation in Euro Summits is usually 
restricted to the leaders of euro-area countries, but the President of the Euro Summit (currently 
also President of the European Council) can invite other leaders as well. 

'Leaders' meetings', which were designed to enable a leaders' discussion to take place on a specific 
topic, have, at least until now, been a key feature of the 'Leaders' Agenda'. Unlike regular European 
Council meetings, such discussions are based, not on draft conclusions, but on short notes prepared 
by the President. The idea is to have an open, relatively unstructured debate on controversial but 
highly consequential issues, with a view to facilitating agreement at a follow-up European Council.  

The 2019-2024  strategic agenda was prepared in very much the same way, by using the working 
method developed under the Leaders' Agenda. Just ahead of the 2019  European elections, the 
EU-27 met on 9 May 2019 in the Romanian city of Sibiu to assess the implementation of previous 
policy objectives and to reflect informally on future EU action over the coming five years. The EU 
leaders' discussion was informed by President Tusk's Leaders' Agenda note, 'Strategic agenda 2019-

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2024  –  Outline', which  provided a  first overview of  the topics for future action. The  2019-2024 
strategic agenda was then adopted at the June 2019 formal European Council.  

The process consisting of first holding an informal or inconclusive discussion on a topic and then 
seeking to adopt conclusions at a subsequent meeting has been kept in the new Leaders' Agenda 
presented by President Charles Michel at the special European Council meeting of 1-2 October 2020. 
The idea is that, 'where no immediate conclusions are drawn, the outcome of the debates will be 
reflected  in  later  conclusions'. The new  Leaders' Agenda sets out a  work programme for the 
European Council, with a timetable for meetings of Heads of State or Government between October 
2020 and June 2021. Whether special notes will be prepared or implementation reports drawn up 
remains to be  seen. However, Mr  Michel  did  mention the possibility of  using smaller formats, 
involving only some EU leaders, to prepare the discussions in the European Council itself.  

As to the substance of the new Leaders' Agenda, it puts strong focus on the 'green transition and 
digital transformation', as well as on 'Europe's role in the world', which are also core priorities in the 
2019-2024  EU Strategic Agenda. As regards Europe's role in the world, Charles Michel intends to 
structure the approach to discussions on external relations, notably through a series of strategic 
debates on relations with key partners. However, in the listing of issues for discussion included on 
the Leaders' Agenda, a number of EU priority topics are missing, notably the Conference on the 
Future of Europe, the rule of law,  and migration. The absence of the latter issue is all  the more 
surprising as the European Commission has just recently presented its new pact on migration and 
asylum.  

Owing to the sensitivity of the issue and because EU leaders have not thus far been able to agree on 
the distribution of migrants beyond the Member State of arrival, migration has been absent from 
the European Council’s meeting agendas in 2019 and 2020. However, EU discussions on migration 
have resurfaced recently, following the fire that destroyed the Moria refugee camp on the Greek 
island of Lesbos. The issue is therefore likely to be brought up at the European Council in the coming 
months. Indeed, when presenting the Leaders' Agenda, Mr Michel  underlined that this working 
programme was a flexible tool that could be updated as circumstances required.     

Altogether, the European Council has been active during the coronavirus crisis, and the institution 
has taken a digital leap, holding video-meetings throughout much of the recent period. This new 
form of meeting in a context of lockdown has enabled EU leaders to take joint action to tackle the 
crisis.  Considering the  particular nature  of  the  European Council  however,  and  notably  the 
importance of small bilateral meetings on the side-lines for achieving agreements, video-meetings 
are unlikely to replace physical meetings fully when crucial decisions are on the agenda. In such a 
format, EU leaders tend to be more cautious and to keep to their written statements, because the 
confidentiality of discussions is not ensured and participation is (de facto) broader than in formal 
physical  meetings. As shown  by  the  process that  led  to  the  political  agreement on the  new 
MFF/NGEU in July 2020, a physical meeting – which involves forms of peer pressure and, in the case 
of the July meeting, what amounted to a 'ban on leaving Brussels' – remains the most effective way 
of achieving an agreement among Heads of State or Government.  

IV 

Key issues in the European Council: State of play in October 2020 

Table of contents 

Introduction  __________________________________________________________________  I 

1. A comprehensive migration policy ______________________________________  7 

2. Protecting citizens _________________________________________________  13 

3. Respecting EU values and democracy___________________________________  20 

4. A strong and vibrant economic base  ___________________________________  28 

5. Digital sovereignty _________________________________________________  35 

6. Deepening economic and monetary union  ______________________________  43 

7. Fair competition within the EU and globally ______________________________  51 

8. Moving towards a carbon neutral continent by 2050 _______________________  57 

9. Upholding EU interests and values in the world ___________________________  61 

10. An inclusive Europe creating opportunities for all_________________________  65 

11. Greater responsibility for our defence__________________________________  73 

12. Free and fair trade  ________________________________________________  77 

V 

 
 
 
 
 
 
EPRS | European Parliamentary Research Service 

Table of figures 

Figure 1: Focus on migration as part of the European Council conclusions  _________________ 9 

Figure 2 – Attention paid to Protecting citizens as part of the European Council conclusions           
2014-2019 ___________________________________________________________________ 15 

Figure 3 – References to different topics related to EU values and democracy raised by EU     
Heads of State or Government during their Future of Europe debates in the EP 2018-2019 ___ 22 

Figure 4 – European Council role in the EU policy cycle  _______________________________ 24 

Figure 5 – What do you use the internet for? ________________________________________ 42 

Figure 6 – Monitoring by the European Council of the Syrian crisis  ______________________ 63 

Figure 7 – Interaction between CARD, PESCO and the EDF _____________________________ 74 

Table of tables 

Table 1 – Treaty articles on the role of the European Council in the area of freedom, security and 
justice  _______________________________________________________________________ 8 

Table 2 – Treaty articles on the role of the European Council in the area of freedom, security and 
justice  ______________________________________________________________________ 14 

VI 

Key issues in the European Council: State of play in October 2020 

1. A comprehensive migration policy 

A. Background 

With the outbreak of the migration crisis in 2015, migration has been for some years the main policy 
area addressed by the European Council over the last years. It took the European Council a series of 
meetings to  develop  a  comprehensive approach to  migration policy,  which  'combines  more 
effective control of the EU's external borders, increased external action and the internal aspects'. 
Some of the most notable outcomes of this approach were the creation of the European Border and 
Coast Guard and the EU-Turkey statement.  

Migration policy is one of the main policies in the wider area of justice and home affairs (JHA). 2 The 
European Council has an important strategic role in JHA, including on the issues of immigration, 
asylum, border protection, police and judicial cooperation, which are now discussed regularly at 
meetings of Heads of State or Government. 

This was not always the case. Cooperation at EU level in the field of JHA, and migration in particular, 
was not originally envisaged in the Treaty of Rome; and this policy area was one of the last in which 
the EU received legislative competences. Justice and home affairs issues have only been discussed 
at EU level since the entry into force of the Maastricht Treaty in 1993, albeit in intergovernmental 
format. The Tampere European Council of  15-16 October 1999, devoted exclusively to JHA, was 
crucial for the development of this EU policy area, as the objective of creating an EU area of freedom, 
security and justice was then placed at the 'very top of the political agenda'. The European Council's 
role  in  reaching  this objective  was  enshrined in  the Lisbon Treaty, which  also  introduced the 
ordinary legislative procedure for all aspects of the JHA area.  

Migration policy is the subject of increased attention at European Council meetings both because 
its role in this area has been strengthened in the treaties, and because many of the issues touch on 
core competences of the nation state (e.g.  protecting external borders), meaning that Member 
States wish to deal with them at the highest level. Nevertheless, the prominence of migration policy 
is mostly crisis-related.  

The activities of  the European Council on the migration crisis has proceeded through different 
phases. Initially, the focus was clearly on 'saving lives' in the Mediterranean Sea. During this phase 
some of the more prominent commitments made by the European Council included increasing the 
financial resources for operations Triton and Poseidon; the objective to disrupt people-trafficking 
networks, to provide frontline Member States with additional resources; to create relocation and 
resettlement schemes and the  establishment of 'hotspots'. Subsequently, the focus  shifted to 
dealing with the unprecedented number of migrants arriving in Europe, in particular via the Western 
Balkans route. The main commitments of the European Council during this period were to reinforce 
dialogue and cooperation with countries of origin and transit, in particular Turkey, and organise a 
conference on the Western Balkans route. Afterwards, the focus shifted again to concentrate on 
protecting the EU's external borders. Consequently, the European Council's main decisions were to 
create an integrated border management system; strengthen Frontex's capacity through enhancing 
its mandate and the development of a European Border and Coast Guard. Following the closure of 
the Western Balkans route and the EU-Turkey statement, a 95 % reduction in detected illegal border 
crossings into the EU has been observed since October 2015. 

2 The terms 'justice and home affairs' (JHA) and  'area of freedom, security and  justice' will be used interchangeably. 

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While many initiatives have been successfully initiated or supported by the European Council (such 
as improved cooperation with third countries on migration), one area where little progress has been 
noted to date is the reform of the Common European Asylum System (CEAS). While this issue could 
have been dealt with in the Council with the use of qualified majority voting, this legislative matter 
was declared a matter for the EU Heads of State or Government. However, until now, the European 
Council has failed to find unanimous agreement, due to very different views on what to do with 
refugees and asylum seekers once they arrive on EU territory, and the reform of the CEAS is still 
outstanding. An improved CEAS becomes even more relevant in light of the ongoing fighting in 
Syria and the arrival of a new wave of refugees in Europe via Turkey.  

B. Legal basis for European Council action  

While the European Council 'shall not exercise legislative functions' (Article 15(1) TEU), a  special 
procedure can be found in  Article 82(3) TFEU, Article 83  (3) TFEU and Article 87(3)  TFEU, which 
provides the possibility for any Member State to request that a draft directive, in the area of criminal 
justice or police  cooperation respectively, be referred to the European Council. In  that case, the 
discussion in the European Council would need to lead to a consensus rather than qualified majority 
voting (QMV) in the Council. 

Table 1 – Treaty articles on the role of the European Council in the area of freedom, security 
and justice 

Treaty article 

Topic 

Action /role 

68 TFEU 

Area of freedom, security and justice 

Define the strategic guidelines for legislative and 
operational planning. 

82(3) TFEU 

Judicial cooperation in criminal 
matters 

Refer a draft directive to the European Council to be 
decided by consensus. 

83(3) TFEU 

the establishment of common  rules 
for certain criminal offences 

Refer a draft directive to the European Council to be 
decided by consensus. 

86(1) TFEU 

European  Public Prosecutor's Office 
(EPPO) 

Refer a draft directive for establishing the EPPO to the 
European  Council to be decided by consensus. 

86(4) TFEU 

European  Public Prosecutor's Office 
(EPPO) 

Adopt a decision to extend the powers of the EPPO to 
include serious crime having a cross-border dimension. 

87(3) TFEU 

Police cooperation 

Refer draft measures to the European  Council to be 
decided by consensus. 

Solidarity clause if a Member State is 
the object of a terrorist attack or other 
disaster 

The European  Council shall regularly assess  the threats 
facing the Union in order to enable the Union and its 
Member States to take effective action. 

222 TFEU 

Source: EPRS. 

Article 68 TFEU, in particular, gives the European Council an important role in the area of freedom, 
security and justice, mandating it to define the strategic guidelines for legislative and operational 
planning within this area. New 'strategic guidelines for legislative and operational planning' within 
the area of freedom, security and justice are expected to be adopted by the European Council at 
one of its meetings in spring 2020. 

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Key issues in the European Council: State of play in October 2020 

C. European Council focus on migration policy 

Migration has been the subject of increased attention at European Council meetings, both because 
its role in this area has been strengthened in the treaties, and because many of the issues touch on 
core  competences of  the  nation state (e.g.  providing security for  citizens,  protecting external 
borders), meaning that Member States wish to deal with them at the highest level. 

Migration dominated the European Council agenda from the outbreak of the migration crisis in 2015 
until late 2018.  Between January 2015 and October 2018,  EU-28  Heads of State or Government 
discussed migration at  21  of  their  25  formal  and  informal meetings. Additionally, EU  leaders 
discussed  migration with  leaders  of  third  countries  and  strategic partners at  the  High-level 
Conference on the Eastern Mediterranean – Western Balkans Route on 8 October 2015, the Valletta 
Summit on 11-12 November 2015 and the EU-Turkey Summit on 29 November 2015. 3 

Figure 1: Focus on migration as part of the European Council conclusions 

Migration crisis

Migration

50%

40%

30%

20%

10%

0%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

With the reduction of migrant arrivals and subsequent decrease in importance of migration on the 
EU agenda, the European Council has also reduced the attention it pays to migration, which for the 
first time since 2015, was not addressed at any European Council meeting in 2019 or 2020 so far. 

D. Strategic orientations  

The most recent standard Eurobarometer (from November 2019) indicates that migration remains 
the biggest concern for European citizens. Therefore, the pledge made by EU Leaders in the Sibiu 
Declaration that they would 'protect [their] citizens and keep them safe' was not surprising.  

In pursuit of this strategic role, at its meeting of 20-21 June 2019, the European Council agreed on 
the strategic agenda of key priorities for the next five years. The European Council's strategic agenda 

3 Various other meetings on migration, including either the European Council President and/or the European  Commission 
President with a group of EU Heads  of State or Government, also took place.   

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2019-2024 focuses on four priorities, one of which is protecting citizens and freedoms,  which covers 
most issues in the area of JHA.  

The main strategic orientations for the comprehensive migration policy are: 

•  Effective control of the external borders; 
•  Enhanced cooperation with countries of origin and transit; and 
•  An effective asylum policy. 

A clear shift of focus can be observed in the 2019-2024 strategic agenda compared to the 2014-2019 
strategic agenda. Previously, migration was also associated with positive effects such as addressing 
skill shortages, but since the outbreak of the migration crisis, the issue of migration relates mainly 
to the management of migration flows and border control. The new policy issues, which have been 
added under migration in the new 2019-2024 strategic agenda, include the need to 'fight human 
trafficking', 'ensure effective returns', and to 'find consensus on the Dublin regulation' and to ensure 
'the functioning of Schengen'. At the same time, the 'cooperation with third countries', 'fighting 
irregular/illegal migration', 'asylum policy' and  'border control' policy  issues are  being  further 
pursued. 

The upcoming new 'strategic guidelines for legislative and operational planning' within the area of 
freedom, security and justice will  outline in  more detail  the main strategic goals in the field  of 
migration policy for the coming years.  

E. Noteworthy commitments: specific requests and follow-up 

European border and coast guard 
The European Border and Coast Guard (EBCG) is an example of how quickly an initiative can be 
adopted if  it  receives the backing of  the EU  Heads of  State or Government. In June  2014,  the 
European Council, in the context of the long-term development of Frontex, called for 'a study into 
the possibilities of a European border guard'. Progress accelerated in October 2015, when EU leaders 
referred to enhancing the mandate of Frontex and the development of an EBCG system. Following 
the publication of the Commission's proposal on 15 December 2015, and the European Council's 
call for 'swift adoption and implementation' at its meeting in June 2016, the European Parliament 
and the Council  adopted the EBCG Regulation in a  record time of  just nine months. Following 
various requests by  the  European Council  in  2017  to  strengthen the  EBCG,  the  Commission 
published its new proposal in September 2018, which EU Heads of State or Government discussed 
at the Informal European Council meeting of 20 September 2018. According to President Tusk, in 
Salzburg, EU leaders shared their determination 'to take forward the Commission's proposal as a 
priority'. According to  President Tusk, Heads  of  State  or  Government agreed to prioritise the 
Commission's proposal for a strengthened European Border and Coast Guard, even though further 
discussions regarding issues of sovereignty and the size of Frontex are required. Consequently, at 
the October 2018  European Council,  EU  leaders invited  co-legislators to examine the  proposal 
swiftly. On 6 December 2018, Council reached a partial political agreement, strengthening the role 
of the EBCG in supporting Member States regarding the return of irregular migrants. However, the 
Council did not yet agree on the proposal of the Commission to increase the staff of the EBCG to 
10 000. The European Parliament's Committee on Civil Liberties, Justice and Home Affairs adopted 
its report on 11  February 2019. On 1  April 2019,  the Council confirmed the informal agreement 
reached between representatives of the European Parliament and the Romanian Presidency of the 
Council on a regulation on the European Border and Coast Guard, which is designed to increase the 
staff of the EBCG up to 10 000 by 2027. Parliament voted on 17 April 2019 and the Council adopted 
the text on 8 November 2019.  

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Key issues in the European Council: State of play in October 2020 

EU-Turkey cooperation on migration 
Since the extraordinary European Council meeting of 23 April 2015, at the outset of the migration 
crisis, EU-Turkey cooperation on migration has been a permanent feature of EU Heads of State or 
Government discussions on migration. It was addressed in all but one of the following 16 European 
Council meetings on migration, which also produced written conclusions or statements. The first 
meetings on migration in 2015 called for increased cooperation with Turkey and reinforced dialogue 
with the country at all levels. Subsequently, the European Council of 15-16 October 2015 welcomed 
the  EU-Turkey  joint  action  plan,  which  was  activated  at  the  EU-Turkey  meeting  on 
29 November 2015 by EU Heads of State or Government and the Turkish Prime Minister at the time, 
Ahmet Davutoğlu. In return for the EU's strengthened support for refugees in Turkey, European 
Council President Donald Tusk expected to see 'an immediate and substantial reduction of irregular 
migrants' arriving in Europe. The EU  notably committed to an initial  €3  billion financial  support 
package,  intensifying  the  EU-Turkey  bilateral  relationship, and  opening  new  chapters  in  the 
accession negotiations. Following another meeting on 7  March  2016,  between  EU  and Turkish 
leaders, this cooperation was further deepened by the  EU-Turkey statement of 15 March 2016, 
designed to 'end the irregular migration from Turkey to the EU'. As part of the EU-Turkey statement, 
Turkish and EU leaders agreed on the return of all new irregular migrants coming from Turkey to the 
EU, the resettlement of Syrians from Turkey to the EU, the acceleration of  the visa liberalisation 
roadmap and an additional €3 billion for the Facility for Refugees in Turkey. Shortly afterwards, when 
assessing the implementation of the agreement, President Tusk observed, 'a sharp reduction of the 
illegal migration flows across the Aegean'. At subsequent European Council meetings, EU Heads of 
State or Government reiterated their commitment to the EU-Turkey Statement and called for its 'full 
and non-discriminatory implementation'. This was reiterated on 4 March 2020 by Charles Michel at 
his meeting with the President of Turkey, Recep Tayyip Erdoğan.  

Reform of the Common European Asylum System 
The reform of the Common European Asylum System (CEAS) has been an ongoing challenge, with 
the European Council attempting to bridge the gap between the different Member States' views, 
with some insisting on 'relocation', while others propose 'effective solidarity' (i.e. showing solidarity 
in  ways  other  than  taking asylum-seekers, for  example  by  providing more  financial  support). 
Originally, the European Council tried to put pressure on Member States, by issuing deadlines by 
which Member States should agree on reform of the CEAS, such as at its meeting of 15 December 
2016 and the meeting of 9 March 2017. As this did not produce the desired result, the European 
Council now only asks the rotating Council Presidency, 'to continue working on this issue' and/or 
commit itself 'to return to the issue' at a later meeting. The European Council meeting of 19 October 
2017 committed itself to 'return to this matter at its meeting in December, and will seek to reach a 
consensus during the first half of 2018'. Although EU Heads of State or Government did address the 
reform of the CEAS at their Leaders' meeting in December 2017, they have not been able to reach 
consensus so far. One year later, at its meeting of 13-14 December 2018, the European Council called 
'for further efforts to conclude negotiations [...] on all  parts of  the Common European Asylum 
System'. This issue  is  expected  to  return to the  agenda of  the  European Council  in  2020.  On 
23 September, the European Commission presented its new pact on migration and asylum. This pact 
includes:  a  proposal to  introduce screening  of  third-country nationals  at external borders; an 
amended proposal on the establishment of 'Eurodac' for the comparison of biometric data for the 
effective  application  of  regulation on  asylum;  an  amended  proposal to  establish  a  common 
procedure  for  international  protection  in  the  Union;  a  proposal  on  asylum  and  migration 
management (replacing the 2016 Dublin proposal); Commission guidance on the implementation 
of EU rules on the definition and prevention of the facilitation of unauthorised entry, transit and 
residence; a proposal addressing situations of crisis and force majeure in the field of migration and 
asylum; a  recommendation on an EU  mechanism for preparedness and management of crises 

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related to migration; a recommendation on legal pathways to protection in the EU; and a roadmap 
for  its implementation. Now that the  new  pact  on  migration and asylum has been presented, 
migration is expected to return to the European Council agenda. 

F. Challenges ahead and outlook  

Despite the progress made, notably with 'the number of detected illegal border crossings into the 
EU [...] brought down by 95 % from its peak in October 2015', and the political agreement found on 
many policy issues by the Heads of State or Government, such as on the European Border and Coast 
Guard, discussions remain very sensitive.  

Owing to the sensitivity of the issue and because EU leaders have not thus far been able to agree on 
the distribution of migrants beyond the Member State of arrival, migration has been absent from 
the European Council’s meetings in the 2019 to 2020 period. Recently, EU discussions on migration 
have resurfaced, following the fire that destroyed the Moria refugee camp on the Greek island of 
Lesbos. On 15 September, President Michel visited the Moria camp, and called for 'progress to have 
more convergence in the framework of [the EU's] asylum policy', while  acknowledging that the 
debate in the Member States would be difficult. 

Following the presentation by the European Commission of its new pact on migration and asylum 
on 23 September 2020, it can be expected that the European Council will at some stage return to 
the issue of  migration and try to  overcome some of  the  fundamental disagreements between 
Member States regarding issues such as the relocation of asylum seekers.  

Current  challenges  due  to  the  coronavirus  crisis  include,  in  particular,  efficient  migration 
management at EU level,  the presence of  the virus among migrants, delays in the relocation of 
unaccompanied minors, and the manner in which Member States implement rules on asylum and 
return and restrict the fulfilment of resettlement pledges.  

As presented at the video-conference of home affairs ministers on 5 June 2020, the German EU 
Presidency, which  chairs  the  Council  from  1  July  to  31  December  2020,  stressed in  its  work 
programme that it wanted to focus on moving forward on the reform of the EU migration and 
asylum policy during its presidency.  

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Key issues in the European Council: State of play in October 2020 

2. Protecting citizens 

A. Background 

The  numerous terrorist attacks across Europe since  2015,  together with  the  growing security 
concerns of EU citizens, placed protection of citizens high on the European Council agenda. The 
concept of protecting citizens by and large refers to internal security policy, which itself is part of 
the wider area of justice and home affairs (JHA). 4 As shown in the various Eurobarometer surveys, 
terrorism was the number two concern for European citizens between end of 2015 and end of 2018. 

The  European Council has an important strategic role to play  in  JHA, notably on the issues of 
immigration, asylum, border protection, police and judicial cooperation, which are now discussed 
regularly at meetings of Heads of State or Government. 

This was not always the case. Cooperation at EU level in the field  of JHA, and internal security in 
particular, was not originally envisaged in the Treaty of Rome; and this policy area was one of the 
last  in  which  the  EU  received  legislative competences. Only since  the  entry into  force  of  the 
Maastricht Treaty in 1993 have JHA issues been discussed at EU level, albeit in intergovernmental 
format. The Tampere European Council of 15 to 16 October 1999, devoted exclusively to JHA, was 
crucial for the development of this EU policy area, as the objective of creating an EU area of freedom, 
security and justice was then placed at the 'very top of the political agenda'. The European Council's 
role  in  reaching  this objective  was  enshrined in  the Lisbon Treaty, which  also  introduced the 
ordinary legislative procedure for all aspects of the JHA area.  

Internal security issues are the subject of increased attention at European Council meetings both 
because its role in this area has been strengthened in the treaties, and because many of the issues 
touch on core  competences of  the nation state (e.g. providing security for citizens,  protecting 
external borders), meaning that Member States wish to deal with them at the highest level.  

However, first and foremost the prominence of internal security is crisis-related. Following major 
terrorist attacks in Europe, the European Council often either held an extraordinary meeting on the 
topic or devoted significant time to the issue at a previously planned meeting. After the Charlie 
Hebdo attacks, for example, after which millions of people had expressed their solidarity with the 
victims (through the 'Je suis Charlie' movement), an informal European Council meeting was held on 
12 February 2015. The October 2015 European Council conclusions illustrate this, as they called for 
the EU to 'devise technical solutions to reinforce the control of the EU's external borders to meet 
both migration and security objectives, without hampering the fluidity of  movement'. At that 
meeting, Heads of State or Government adopted a statement on anti-terrorism measures, vowing 
to take stronger measures against terrorist threats in the coming months. Subsequently, following 
the terrorist attacks in Paris on 13 November 2015, security, although previously not included in the 
agenda, became one of  the main discussion points at the 17  and 18  December 2015  European 
Council meeting.  

While the internal security and migration policy fields were usually clearly separated in European 
Council  discussions,  the  two  areas  have  over  recent  years  been  increasingly  linked.  The 
October 2015  European Council conclusions illustrate this, as they called  for the  EU  to  'devise 
technical solutions to reinforce the control of the EU's external borders to meet both migration and 
security objectives, without hampering the fluidity of movement'. This can be explained by the fact 
that EU agencies (e.g. Frontex) active in the field of external EU border protection, as well as many 

4 The terms 'justice and home affairs' (JHA) and  'area of freedom, security and  justice' will be used interchangeably. 

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technical instruments (e.g. Schengen information system) used for that purpose, contribute to both 
fighting irregular migration and ensuring internal security. Most recently this intersection was 
observed at the informal European Council meeting of 20 September 2018. 

In addition to the trends of recent years, the recent outbreak of the coronavirus pandemic has had 
an impact on a number of policy areas falling under the 'protecting citizens' priority. This is the case 
first and foremost of border management, with the Schengen system seriously challenged as a 
result of  uncoordinated border closures. It  is  also  the  case  for  cybercrime and  disinformation 
activities, however, a rise increase in which has been observed in connexion with wider use of digital 
tools during the lockdown.  

B. Legal basis for European Council action  

While the European Council 'shall not exercise legislative functions' (Article 15(1) TEU), a  special 
procedure can be found in  Article 82(3) TFEU, Article 83  (3) TFEU and Article 87(3)  TFEU, which 
provides the possibility for any Member State to request that a draft directive, in the area of criminal 
justice or police  cooperation respectively, be referred to the European Council. In  that case, the 
discussion in the European Council would need to lead to a consensus rather than qualified majority 
voting (QMV) in the Council. 

Table 2 – Treaty articles on the role of the European Council in the area of freedom, security 
and justice 

Treaty article 

Topic 

Action /role 

68 TFEU 

Area of freedom, security and justice 

Define the strategic guidelines for legislative and 
operational planning. 

82(3) TFEU 

Judicial cooperation in criminal 
matters 

Refer a draft directive to the European Council to be 
decided by consensus. 

83(3) TFEU 

the establishment of common  rules 
for certain criminal offences 

Refer a draft directive to the European Council to be 
decided by consensus. 

86(1) TFEU 

European  Public Prosecutor's Office 
(EPPO) 

Refer a draft directive for establishing the EPPO to the 
European  Council to be decided by consensus. 

86(4) TFEU 

European  Public Prosecutor's Office 
(EPPO) 

Adopt a decision to extend the powers of the EPPO to 
include serious crime having a cross-border dimension. 

87(3) TFEU 

Police cooperation 

Refer draft measures to the European  Council to be 
decided by consensus. 

222 TFEU 

Solidarity clause if a Member State is 
the object of a terrorist attack or other 
disaster 

The European  Council shall regularly assess  the threats 
facing the Union in order to enable the Union and its 
Member States to take effective action. 

Source: EPRS. 

Article 68 TFEU gives the European Council an important role in the area of freedom, security and 
justice, mandating it  to define  the strategic guidelines for legislative and operational planning 
within this area. New 'strategic guidelines for legislative and operational planning' within the area 

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Key issues in the European Council: State of play in October 2020 

of freedom, security and justice are expected to be adopted by the European Council at one of its 
meetings in spring 2020. 

C. European Council focus on internal security 

Between June 2014 and October 2018, internal security and/or terrorism were discussed at 13 out 
of the 29 meetings of the European Council and the topic mentioned in the conclusions and/or in 
statements thereafter. At  eight  of  these meetings, internal security  and/or terrorism featured 
prominently in the discussions, leading to a spike in attention paid to the issues in the European 
Council conclusions (see Figure 2). 

Figure 2 – Attention paid to Protecting citizens as part of the European Council conclusions 
2014-2019 

14%

12%

10%

8%

6%

4%

2%

0%

2014

2015

2016

2017

2018

2019

Internal security

Disinformation and hybrid threats

Source: EPRS 

EU  Heads of  State or Government increased the attention they paid to internal security and/or 
terrorism, mainly following major terrorist attacks in Europe. Then, the European Council either held 
an extraordinary meeting on the topic  or devoted significant time to the  issue at a  previously 
planned meeting.  

Following the Charlie Hebdo attacks, for example, after which millions of people had expressed their 
solidarity with the victims (through the 'Je suis Charlie'  movement), an informal European Council 
meeting was held on 12 February 2015. At that meeting, Heads of State or Government adopted a 
statement on anti-terrorism measures, vowing to take stronger measures against terrorist threats in 
the coming months. As mentioned previously, the meeting of 17 and 18 December 2015, following 
the terrorist attacks in Paris in November 2015, constitutes a clear example of major agenda change, 
with  the  European Council  dedicating  significant  time  to  internal  security  and/or  terrorism, 
although the issues had not originally been foreseen on the agenda.  

While attention to traditional areas of internal security, such as terrorism, has reduced over the most 
recent years (2018-2020), in the absence of major terrorist attacks across the EU, in late 2018 and 
early 2019 EU Heads of State or Government devoted substantial attention to new internal security 
issues such as disinformation and hybrid  threats  (see Figure 2). 

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D. Strategic orientations  

The most recent standard Eurobarometer (from November 2019) indicates that terrorism remains 
among the top five concerns of European citizens, having been number two for many years. In the 
context of terrorist attacks and the need to provide a response to the fears expressed by Europeans, 
most of the strategic documents adopted by the European Council over the last years, have included 
important elements on internal security. In the Rome Declaration EU  leaders pledged to  work 
towards  'a  safe  and  secure  Europe  [...]  determined  to  fight  terrorism and  organised crime'. 
Subsequently, in Sibiu, EU leaders committed to protect [their] citizens and keep them safe. 

This focus on 'protecting citizens' was then cemented in the 2019-2024 strategic agenda, with the 
priority' protecting citizens and freedoms', which covers most issues in the area of JHA, featuring as 
first priority for the  next five  years. Protecting  citizens,  which  corresponds to the policy  area of 
internal security, is one of the main objectives within the priority 'protecting citizens and freedoms'. 

The main strategic orientations in the 2019-2024 strategic agenda for protecting citizens are: 

•  Fight against terrorism and cross-border crime; 
•  Resilience against natural and man-made disasters; 
•  Fight against cyber-crime and hybrid threats. 

In the 2019-2024  strategic agenda, the area of internal security policy also saw a number of new 
additions, namely 'resilience to natural and man-made disasters', 'malicious cyber activities', 'hybrid 
threats and disinformation'. The 'fight against terrorism and cross border crime' was continued as a 
policy issue from the 2014-2019 strategic agenda. 

These  strategic  orientations will  be  further  detailed  as  part  of  the  upcoming new  'strategic 
guidelines for legislative and operational planning' within the area of freedom, security and justice. 
Moreover, in 2020, the Council is expected to adopt a new EU internal security strategy, which will 
then most likely be discussed by the European Council. In the meantime, the European Commission 
presented the new 'Security Union Strategy' for the 2020 to 2025 period, which is based on four 
strategic priority actions: 1) a future-proof security environment; 2) tackling evolving threats: 3) 
protecting Europeans from terrorism and organised crime; and  4)  a  strong European security 
ecosystem. 

E. Noteworthy commitments: specific requests and follow-up 

Over recent years, the majority of commitments and meetings in the field of internal security were 
related to the fight against terrorism. Many European Council meetings discussed this matter and 
issued commitments both at a general level and regarding specific issues, such as the prevention of 
radicalisation, ending terrorist financing and dealing with foreign fighters.  

'Fighting the illicit trafficking of firearms' 
A noteworthy commitment in this area is the issue of 'fighting the illicit trafficking of firearms', which 
provides a good example of involvement of the European Council in the policy cycle in general. EU 
leaders usually begin by setting strategic priorities before calling for a specific action or proposal 
(legislative or non-legislative); they then discuss and/or endorse an action or proposal; and later, 
they comment on the adoption or implementation of this action or proposal, or refer to a previous 
decision. 

In February 2015, the EU Heads of State or Government called for increased 'cooperation in the fight 
against illicit trafficking of firearms, including by a swift adaptation of the relevant legislation'. This 

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Key issues in the European Council: State of play in October 2020 

was followed up by the European Commission's proposal 'amending Council Directive 91/477/EEC 
on control of the acquisition and possession of weapons' of 18 November 2015, and the 'EU action 
plan against illicit trafficking in and use of firearms and explosives of 2 December 2015'. 

On  15 December 2015,  the  European Council  called  on  the  Council  to  'rapidly  examine  the 
Commission proposals on combatting terrorism and on  firearms'. Subsequently the European 
Council  meeting  of  15 December 2016  welcomed  the  political  agreement  between  the  co-
legislators on the counter-terrorism directive as an important step that should be followed by 'swift 
adoption of  the  proposal on  firearms'. The  co-legislators adopted this piece  of  legislation on 
24 May 2017. 

Prevention of radicalisation and the phenomenon of foreign fighters 
The current strategic guidelines for the area of JHA, adopted in June 2014, addressed the prevention 
of  radicalisation and  the  phenomenon of  returning foreign  fighters,  i.e.  individuals  who  join 
insurgencies abroad and whose primary motivation is ideological or religious rather than financial.5 
While the prevention of radicalisation was already part of various European Council conclusions in 
the 2000s,  a  sense of  urgency reached the level  of  EU  Heads of  State or  Government, who, in 
August 2014 called, at their special European Council meeting, for determined action to stem the 
flow of foreign fighters. They called for 'accelerated implementation of the package of EU measures 
in  support of Member States' efforts, as agreed by  the Council since June 2013,  in  particular to 
prevent radicalisation and extremism, share information more effectively – including with relevant 
third countries, dissuade, detect and disrupt suspicious travel and investigate and prosecute foreign 
fighters'. At that point, EU Heads of State or Government also pledged to review this matter at their 
meeting in December 2014, but did not do so until the extraordinary European Council meeting on 
terrorism in  February 2015,  following  the  Charlie  Hebdo  attacks. The  notion that  'preventing 
radicalisation is a key element in the fight against terrorism' is an essential part of the EU's internal 
security strategy, and the  need  to  prevent radicalisation was  repeated at  various subsequent 
European Council meetings in 2016, 2017 and 2018. 

Fight against disinformation 
Mentioned for the first time by the European Council in 2015 in relation to Russian activities, the 
fight against disinformation has become an important issue for Heads of State or Government in the 
area of protecting citizens since the June 2018 European Council. From that date, numerous formal 
European Council meetings (October 2018, December 2018,  March 2019  and June  2019)  have 
addressed the issue and stressed the need to 'protect the Union's democratic systems and combat 
disinformation'.  

Fighting disinformation has also  become  an  important dimension of  the  EU  response to the 
coronavirus crisis. In their joint statement of 26 March 2020, the Members of the European Council 
stressed that they would 'resolutely counter disinformation with transparent, timely and fact-based 
communication' on  what  they were  doing  and  thus 'reinforce the  resilience  of  our societies'. 
Consequently,  the  European  Commission  is  attempting  to  combat  disinformation  on  the 
coronavirus  pandemic by providing authoritative sources and separating fact from fiction.  The 
Council has created a similar webpage, outlining the existence and spread of false or inaccurate 
information and listing reliable alternative sources of information. 

5 See Foreign fighters: Member State responses and EU action, EPRS, European Parliament, 2016. 

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Internal and external border management during the coronavirus crisis 
One of the main reactions by Member States and the EU to the pandemic has been to enact travel 
restrictions within the EU and towards third countries, putting the Schengen border system under 
severe pressure. 

External border management 
At their video conference of 17 March 2020, EU Heads of State or Government agreed to 'reinforce 
the external borders by applying a coordinated temporary restriction of non-essential travel to the 
EU for a period of 30 days'. They thereby endorsed the Commission's communication and guidelines 
of the previous day. Subsequently, on 30 March 2020 the Commission adopted guidance on how to 
implement temporary travel restrictions, facilitate repatriations from across the world, and deal with 
people whose visas had lapsed as a result of travel restrictions. Since then, the Commission has 
assessed the application of the temporary restriction on non-essential travel to the EU three times 
(on 8  April, on  8  May and again on 6  June). In  these assessments, the Commission invited the 
Member States to prolong – in a coordinated manner – the application of the travel restriction on 
non-essential travel from third countries into the EU by another 30 days, i.e. first until 15 May 2020, 
then until 15 June and then again until 30 June. On 30 June, the Council adopted a recommendation 
on the gradual lifting of the temporary restrictions on non-essential travel into the EU, which was 
modified on 7 August to lift the restrictions for more third countries.  

Internal border management 
Individual Member States had already temporarily reintroduced border controls to stop the spread 
of the coronavirus. As the various national measures often differed in scope and nature this created 
a legal uncertainty in the Schengen area. Subsequently, in its video-conference of 17 March, the 
European Council endorsed the Commission's proposed border management guidelines, aimed at 
establishing a coordinated approach to border management. 

At their  video-conference of 26  March  2020,  the  Members of the  European Council asked the 
President of  the Commission and the  President of  the European Council to start working on a 
roadmap, accompanied by an action plan, to prepare an exit strategy and a comprehensive recovery 
plan.  On  16  April,  Charles  Michel  and  the  President  of  the  European  Commission, 
Ursula von der Leyen, presented the first part of the roadmap to the European Parliament, focusing 
on the coronavirus crisis exit strategy. Put forward the previous day, this joint European roadmap 
aimed at coordinating the lifting of  containment measures across  the EU and recommended a 
'phased approach for the opening of our internal and external borders', eventually restoring the 
normal functioning of the Schengen area. More specifically, it recommended lifting internal border 
controls in a coordinated manner, and reopening external borders and allowing EU access to non-
EU residents in a second stage. This was followed up on 13 May with a set of Commission guidelines, 
notably on how to gradually lift travel restrictions. It detailed criteria for and phases in a coordinated 
approach to lifting internal border controls and restoring freedom of movement.  

The start of the autumn has seen a sharp rise in Covid-19 cases in many EU Member States, with 
some countries having reintroduced restrictions, or even closed borders to foreigners, while others 
still had the measures in place from before the summer. On 4 September 2020, the Commission 
proposed a Council recommendation outlining common criteria and thresholds for deciding on 
whether to introduce restrictions to free movement; it includes the mapping of common criteria 
using an agreed colour code; a common approach to the measures applied to people moving to 
and from areas that are identified as being higher risk; and commitments to provide the public with 
clear and timely information. During a meeting of the General Affairs Council on 22  September, 
Member  States  'expressed  broad  support for  the  proposed approach  to  the  collection  and 
presentation of data  by  the European Centre for Disease  Prevention and Control (ECDC),  and 

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Key issues in the European Council: State of play in October 2020 

stressed the importance of clear and timely communication between Member States and to the 
public'. The Council subsequently adopted the recommendation during its meeting of 13 October. 

F. Challenges ahead and outlook  

In its political guidelines, the European Commission announced numerous initiatives in the area of 
internal security, including  one  aimed  at  extending  the  competences of  the  European Public 
Prosecutor's Office, a decision which needs to be taken by the European Council. 

In  its original work programme for 2020,  the European Commission announced a 'new security 
union strategy' for the second quarter of 2020, and an initiative aimed at strengthening 'Europol's 
mandate' as well as a new 'EU strategy towards the eradication of trafficking in human beings' by 
the end of the year. Consequently, these topics would then most likely also receive attention from 
the European Council. Other issues related to the protection of citizens, which are expected to return 
to the European Council agenda, are the fight against disinformation, cybercrime, hybrid treats, the 
functioning of Schengen, the improvement of cooperation and information sharing as well as the 
implications of  technological developments on internal security. Following the outbreak of the 
coronavirus pandemic, the European Commission presented an adjusted work programme for 2020 
on 27 May. In addition to the challenges of external and internal border management, two direct 
consequences  of  the  coronavirus  crisis  regarding  the  area  of  protecting  citizens  are  rising 
cybercrime in all Member States and a growing level of disinformation.  

The coordination between EU Member States of national measures limiting free movement during 
the  Covid-19  pandemic  remains a  challenge. This  is  the  case,  not only  due  to  the  temporary 
reintroduction of internal border controls within the EU, but also because Member States have not 
yet agreed on Common criteria and thresholds to decide when to introduce internal border controls. 
The European Council will continue to discuss the coordination of national measures to deal with 
the virus and restrictions on intra-EU movement over the next months. 

As presented at the  video-conference of Home Affairs Ministers, 5  June  2020,  the  German EU  
Presidency, which chairs the Council from 1 July -31 December 2020, stressed in its work programme 
that it wanted to focus on strengthening EU internal security and fighting terrorism. 

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3. Respecting EU values and democracy 

A. Background 

'The Union is founded on the values of respect for human dignity, freedom, democracy, equality, 
the rule of law and respect for human rights' (Article 2 TEU). 

In  times of 'fake news', alternative facts and emerging threats to our democratic system, it is  of 
critical importance to strengthen support for EU values and the rule of law. This is not only valid for 
forces external to the EU, but also within. Over recent years, some Member States' changes to their 
national legal and political system, notably Poland and Hungary, have been deemed a clear risk of a 
serious breach of EU values by the European Commission and the European Parliament. 

EU Heads of State or Government pledged in the May 2019 Sibiu Declaration to 'uphold our shared 
values and  principles  enshrined in  the  Treaties. They  reiterated this pledge  in  the  2019-2024 
strategic agenda, which states that 'the EU shall defend the fundamental rights and freedoms of its 
citizens, as recognised in the Treaties, and protect them against existing and emerging threats'.  

Defending EU values and democracy goes hand in hand with improved awareness and involvement 
of EU citizens in EU policy-making. 

Going back as far as the Maastricht Treaty, when EU citizenship was established, EU institutions have 
attempted to increase the citizen engagement. Eurobarometer statistics show that between 2010 
and 2016, EU citizens had mixed feelings about the 'way democracy works in the EU', after being 
very positive in the previous years. Moreover, since 2004, EU citizens had instead the feeling that 
their voice did not count in Europe, a feeling which was further strengthened during the years of 
the economic and financial crisis.  

As part of their reflection period following the Brexit referendum, EU Heads of State or Government 
concluded in their 2016  Bratislava Declaration that they 'need to improve communication with 
citizens'. This message was reiterated in the 2017 Rome Declaration, in which EU leaders pledged 'to 
listen and respond to the concerns expressed by our citizens and will  engage with our national 
parliaments'.  

The end of 2016 saw a turning point: from then on citizens' positive views as to whether their voice 
counts in Europe steadily increased, reaching a majority in 2018-2019. At the same time, a strong 
increase in citizens' satisfaction, from a previous low, with the way 'democracy works in the EU' 
culminated with a high turnout for the 2019 European Parliament elections (51 %).  

However, the outbreak of the coronavirus pandemic in early 2020  has had a  notable impact on 
citizens' views on the Europe Union in certain Member States, with a perceived feeling of lack of 
solidarity felt  in  some of  the countries worst hit  by  the virus that  will  need  to  be  addressed. 
Meanwhile,  in  addition  to  affecting  the  well-being  of  EU  citizens  and  the  EU  economy, the 
coronavirus crisis has also been accompanied by threats to democracy and the rule of law. In recent 
months, a  number of  Member States have  introduced extraordinary measures to address the 
pandemic, not all of which were undisputed. Measures of this kind could have a negative effect on 
the oversight role of  national parliaments, the independence of  the judiciary, the  right to  free 
speech, press freedom, and the equal  treatment of citizens. Indeed,  observers  have  warned of 
possible scenarios in the medium term including 'much more nationalism, .... [and] more resort to 
authoritarian rule', if the EU fails to address the need for solidarity. 

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Key issues in the European Council: State of play in October 2020 

The conference on the Future of Europe, now expected to be launched in the second half of 2020, 
will show whether the EU can take another step towards greater citizen engagement, and work on 
the issues that are of concern to its people.  

B. Legal basis for European Council action  

•  Article 3(1) (TEU) states that 'the Union's aim is to promote peace, its values and the well-being 
of its peoples'. Article 3(2) TEU further specifies this and indicates that 'the Union shall offer its 
citizens an area of freedom, security and justice without internal frontiers [...]. 

•  Article 7 of the Treaty on the European Union (TEU) outlines two specific procedures to safeguard 
the values of Article 2 TEU: one preventive (Article 7(1) TEU) and one sanctions (Article 7(2) and 
(3) TEU. The European Council has an important role under the sanctions procedure, as it 'may 
determine the existence of a serious and persistent breach by a Member State of the EU's values'. 
So far the European Council has never declared the existence of such a breach of EU values, and 
the sanctions procedure under Article 7(2) and (3) TEU has thus never been triggered. 

•  Article 10 TEU: Member States and citizens are the two sources of the EU's legitimacy. Whilst in 
accordance  with  Article  10(2)  TEU  citizens  are  'directly  represented at  Union  level  in  the 
European Parliament' and have a 'have a right to participate in the democratic life of the Union 
(Article 10(3) TEU, the Member States are represented by their Heads of State or Government in 
the European Council (Article 10(2) TEU. This provision gives the European Council an indirect 
legitimacy but a specific role in the institutional framework.  

•  Article 11  TEU: The institutions shall, by appropriate means, give citizens and representative 
associations the  opportunity to make known  their  views  in  all  areas of  Union  action. The 
European Council is amongst the institutions concerned by this provision.  

•  Article 68 TFEU gives the European Council an important role in the area of freedom, security 
and  justice,  mandating it  to  define  the  strategic guidelines for  legislative and  operational 
planning within  this area. New  'strategic guidelines for legislative and operational planning' 
within  the  area of  freedom, security and justice had  been expected  to  be  adopted by the 
European Council in the spring of 2020. 

C. European Council focus on EU values and democracy 

While the European Council has addressed issues related to EU values and democracy in its main 
strategic documents (see below) it has hardly addressed them at all as part of its regular meetings 
and these topics do not appear in their conclusions. The one noteworthy exception is the area of 
disinformation, which received a fair amount of attention over recent years (see below). 

Contrary to the absence of these topics in the regular European Council meetings, EU Heads of State 
or Government addressed EU values and democracy at great length during the series of Future of 
Europe debates in the Parliament plenary sessions between January 2018 and April 2019.  

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Figure 3 – References to different topics related to EU values and  democracy raised by EU 
Heads of State or Government during their Future of Europe debates in the EP 2018-2019 

20
18
16
14
12
10
8
6
4
2
0

Source: EPRS. 

All of the 20 speakers referred to EU citizens, while some also addressed issues such as the rule of 
law, subsidiarity or Treaty revision (see Figure 3).  

Of the six overall messages all speakers addressed in common within the framework of the Future 
of Europe debates, two referred to EU values and democracy: 

• 

• 

the importance of  European values and the need  to defend them, both within the  EU and 
externally; 
the  need  to  involve  citizens  more  actively  in  the  EU  process and  decision-making and to 
highlight to citizens the benefits of the EU and to deliver on their priorities. 

D. Strategic orientations  

In the 2017 Rome Declaration, the EU-27 Heads of State or Government, the European Parliament 
and  the  European  Commission  stressed  that  the  European  Union  is  founded  on  'common 
institutions and strong values, a community of peace, freedom, democracy, human rights and the 
rule of law, a major economic power with unparalleled levels of social protection and welfare'. In the 
subsequent 2019 Sibiu Declaration, EU leaders pledged to 'protect our way of life, democracy and 
the rule of law' and 'uphold our shared values and principles enshrined in the Treaties'. 

The 2019-2024 strategic agenda, elevated the priority of 'protecting citizens and freedoms' to the 
top position for EU leaders. Respecting EU values  and democracies,  is one of the main objectives as 
part of  the  priority 'protecting citizens and freedoms'. The main strategic orientations for this 
particular field are the following: 

•  Upholding the rule of law 
•  Citizens and EU decision-making 
•  Fighting disinformation 

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Key issues in the European Council: State of play in October 2020 

EU leaders committed to delivering on these priorities stating that 'our Institutions will  work in 
accordance  with  the  spirit  and  the  letter  of  the  Treaties. They  will  respect the  principles  of 
democracy, rule of law, transparency and equality between citizens and between Member States'. 

E. Noteworthy commitments: specific requests and follow-up 

Fighting disinformation 
The European Council mentioned the need to fight disinformation for the first time in March 2015, 
in the context of Russian disinformation campaigns. Since then, EU Heads of State or Government 
have widened the focus, seeing it  as an integral part of  its  objective of protecting the Union's 
democratic systems. It addressed disinformation, in one way  or another, at all  formal European 
Council meetings between June 2018 and June 2019.  

In June 2018, the European Council invited the High Representative and the Commission to present 
an action plan for a coordinated EU response to the challenge of disinformation. Subsequently, in 
October 2018, EU Heads of State or Government gave further impetus to the issue by stressing that 
the Commission's work on 'election cooperation networks, online transparency, protection against 
cybersecurity incidents, unlawful data manipulation and fighting disinformation  campaigns  [...] 
deserve  rapid  examination  and  operational  follow-up  by  the  competent  authorities'.  In 
December 2018,  the  European Council stressed that 'the spread of deliberate, large-scale, and 
systematic disinformation, including as part of hybrid warfare, is an acute and strategic challenge 
for our democratic systems. It requires an urgent response that needs to be sustained over time, in 
full  respect of  fundamental rights'. It  invited  the  Council  'to  continue work  on  the  issue  [of 
disinformation] and to report back to the European Council in March 2019'.  

In March 2019, it welcomed 'the important work accomplished in this respect in the past months, 
[calling]  for  further  enhanced  coordinated  efforts  to  address  the  internal  [...]  aspects  of 
disinformation and protect the European and national elections across the EU'. At the same time, it 
called 'for continued and coordinated efforts to safeguard the Union's democratic systems and to 
combat the  immediate and  long-term threats posed by disinformation, as an  integral part  of 
strengthening the EU's resilience against hybrid threats'. In June 2019, it called 'for sustained efforts 
to raise awareness, increase preparedness and strengthen the resilience  of our democracies to 
disinformation'. 

Fighting disinformation has also become an important part of the EU response to the coronavirus 
pandemic. As part of their joint statement of 26 March 2020, the Members of the European Council 
stressed that they would act resolutely to 'counter disinformation with transparent, timely and fact-
based communication' on what they were doing and thus 'reinforce the resilience of our societies'. 
Consequently, the European Commission is combating disinformation on the coronavirus crisis by 
providing authoritative sources and separating fact from fiction. The Council has created a similar 
webpage,  outlining  the  existence  and  spread  of  false  or  inaccurate  information and  listing 
alternative reliable sources for information. 

Securing free elections 
With a view to European Parliamentary elections in May 2019, the European Council raised the issue 
of ensuring free elections. Even if also related to disinformation, the topic concerned the European 
democratic system more specifically. This topic provides a typical example of the European Council's 
involvement in the policy cycle. 

23 

 
 
 
EPRS | European Parliamentary Research Service 

Figure 4 – European Council role in the EU policy cycle 

in 

fundamental 
the 

At  its  18  October 2018  meeting, the 
European Council called 'for measures 
to  protect  the  Union's  democratic 
systems and  combat  disinformation, 
the  context  of  the 
including 
upcoming European elections, in full 
rights'. 
respect  of 
Following 
European 
Commission  worked  intensively  on 
this 
issuing 
guidelines for the conduct of the 2019 
EU  elections.  In  March  2019,  the 
European Council  provided  affirmed 
the  process  by 
ownership  of 
'welcoming 
important  work 
accomplished  in  this  respect  in  the 
past months', thereby endorsing the 
actions which had taken place. It then 
provided  scrutiny of  the  process  by 
aspects  where 
outlining 
implementation  could  be  improved 
and  called  'for  further  enhanced  coordinated efforts  to  address  the  internal  [...]  aspects  of 
disinformation and protect the European and national elections across the EU'.  

including 

aspect, 

this, 

the 

the 

Conference on the Future of Europe 
At its 12-13 December 2019 meeting, the European Council considered the idea of a Conference on 
the Future of Europe starting in 2020 and ending in 2022. It recalled 'that priority should be given to 
implementing the strategic agenda agreed in June [2019], and to delivering concrete results for the 
benefit of our citizens'. The conference should contribute to the development of policies  in the 
medium and long-term so that the EU can better tackle current and future challenges. It should build 
on the citizens' dialogues over the past two years and provide for broad consultation of citizens. It 
added that it needed to be 'an inclusive process, with all  Member States involved equally'. The 
European Council stressed that the process should 'involve the Council, the European Parliament 
and the Commission, in full respect of the interinstitutional balance and their respective roles as 
defined in the Treaties'.  

The  European Council mandated the Croatian Council Presidency 'to work towards defining a 
Council position on the content, scope, composition and functioning of such a conference and to 
engage,  on  this  basis,  with  the  Parliament  and  the  Commission'. Since  then,  the  European 
Parliament and the European Commission have presented their views on the planned conference. 
The Council debated its vision on the Conference at the General Affairs Council on 28 January 2020 
and at the Coreper meetings of 5 February 2020, 12 February 2020 and 14 February 2020, albeit 
without reaching a definitive position thus far. 

Coronavirus crisis and EU values 
Not only is the pandemic affecting the well-being of EU citizens and of the EU economy, it is also 
accompanied by threats to democracy. EU leaders have stressed on numerous occasions that any 
measures taken to address the coronavirus crisis must uphold EU values. In their joint statement of 
26  March 2020,  the  Members of the European Council stressed that they would  do everything 

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Key issues in the European Council: State of play in October 2020 

necessary 'to protect [their] citizens and overcome the crisis, while preserving our European values 
and way of life'. 

In recent months, a number of Member States have introduced extraordinary measures to address 
the coronavirus crisis, not all of which have been undisputed. On 31 March, Commission President 
Ursula von der Leyen, stressed that 'it is of utmost importance that emergency measures are not at 
the expense of  our fundamental principles and values as set out in  the Treaties' and that 'any 
emergency measures must be limited to what is necessary and strictly proportionate'. The European 
Commission is monitoring the application of emergency measures in all Member States closely.  

In a statement on 1 April, 18 Member States expressed their concern at recent developments. They 
stressed that, while it was legitimate for Member States to adopt extraordinary measures 'to protect 
their citizens and overcome the crisis', they were 'deeply concerned about the risk of violations of 
the principles of rule of law, democracy and fundamental rights arising from the adoption of certain 
emergency measures'. Subsequently, at their meeting on 6 April, EU justice ministers assessed the 
extraordinary measures that had been adopted since the outbreak of the pandemic, and the impact 
of the crisis on their justice systems. They agreed that 'any extraordinary measures taken should be 
in line with the fundamental values of the Union'.  

The perceived threat to EU values and democracy resulting from the coronavirus crisis was also 
underlined by the European Parliament. It passed a resolution on 17  April emphasising that 'all 
measures taken at national and/or EU level must be in line with the rule of law, strictly proportionate 
to the exigencies of the situation, clearly related to the ongoing health crisis, limited in time and 
subjected to regular scrutiny'. Parliament deemed 'totally incompatible with European values' both 
the decision of the Hungarian government to prolong the state of emergency indefinitely, authorise 
the government to rule by decree without time limit, and to weaken the emergency oversight of the 
Parliament, and the steps taken by the Polish government – namely changing the electoral code 
against the judgment of constitutional tribunal and provisions laid by law. 

The European road map for recovery, issued on 21 April by Ursula von der Leyen and Charles Michel, 
stated that 'the core principles and values on which the Union is based must remain at the centre of 
our approach. Respect for the rule of law and human dignity is the best way to ensure a strong, 
robust and inclusive recovery of our societies'.  

On 22 April, the Council exchanged views on relaxing coronavirus-related measures at national and 
European level as well as on the proportionality of the measures taken in response to the public 
health  crisis,  bearing  in  mind  the  need  to  uphold  fundamental rights  and  the  rule  of  law. 
Subsequently, on 23  April,  at  the  video-conference of  EU  Heads of  State or  Government, the 
European Council President, Charles Michel,  concluded that 'We have to draw lessons from the 
Covid-19 crisis to become more resilient, more efficient and effective. Respect of core European 
values is the best way to ensure a strong, robust and inclusive recovery of our societies'. 

The European Council will continue to discuss the coordination of national measures to deal with 
the pandemic at its upcoming meetings in the autumn. 

F. Challenges ahead and outlook  

Differing from the European Council, the European Commission, in its political guidelines for 2019-
2024, places great emphasis on EU values and democracy by dedicating one of its main priorities, 'a 
new push for European democracy' to this area. The Commission outlined numerous projects in this 
area; it notably referred to an initiative relating to the mechanism aimed at ensuring respect of the 
rule  of  law  within  the  Member  States;  to  a  right  of  initiative  for  the  European Parliament; 
improvement of the lead candidate system for the election of the Commission's President; review 

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of the appointment and/or election process for the presidents of the institutions; as well as the 
creation of transnational lists. Many of these topics are likely to be discussed as part of the upcoming 
Conference on the Future of Europe, which had initially been expected to begin on 9 May 2020 and 
could also be discussed at European Council level.  

As part of their joint statement of 26 March 2020, the Members of the European Council, stressed 
that 'we must also draw all the lessons of the present crisis and start reflecting on the resilience of 
our societies when confronted with such events. In that respect, the time has come to put into place 
a more ambitious and wide-ranging crisis management system within the EU'. The lessons learned 
from the coronavirus crisis, in particular on cooperation among Member States and between them 
and the EU institutions, could take an important place in the upcoming conference on the future of 
Europe. Several of those attending of the video conference of the General Affairs Council on 26 May 
supported this view, and the Council Presidency is hoping to agree on the Council's position on the 
conference as soon as possible. 

Regarding the rule of law, on 17 September 2020, the European Parliament called on the Council to 
'resume the formal hearings' concerning the on-going Article 7(1) TEU procedure against Poland 
and to extend the scope of the procedure in order to include several deficiencies as regards the 
respect for fundamental rights and the democratic principle. Similarly, Parliament called  on the 
Commission 'to address a clear risk of a serious breach by Poland of the values on which the Union 
is founded', through expedited infringement procedures and interim measures before the European 
Court of Justice. The two on-going Article 7(1) TEU procedures were again included on the General 
Affairs Council  agenda, with  the  Commission updating the Member States representatives on 
22 September on the developments in Poland and Hungary since the end of last year. 

During the State of the Union debate in the European Parliament, European Commission President, 
Ursula von der Leyen, stressed that 'breaches of the rule of law cannot be tolerated' and that the 
Commission' will ensure that money from [the EU]  budget and Next  Generation EU (NGEU) is 
protected against any kind of fraud, corruption and conflict of interest'. As part of the European 
Council's political agreement on the MFF of 21 July 2020, EU Heads of State or Government agreed 
to introduce 'a general regime of conditionality' in order 'to tackle manifest generalised deficiencies 
in the good governance of Member State authorities as regards respect for the rule of law when 
necessary to protect the sound implementation of the EU budget, including NGEU, and the financial 
interests of the Union'. 

On 30 September, the EU Commission published its first ever annual rule of law report, presenting 
both the rule of law situation in the EU and an assessment of the situation in each Member State. 
The German EU Presidency indicated that it would conduct a political rule of law dialogue in the 
Council on the basis of the Commission's first annual rule of law report. The dialogue will include an 
annual discussion on the  report as a  whole  and  its  horizontal aspects as well  as  a  half-yearly 
discussion on the first country-specific chapters of the report, so that all Member States are covered 
in turn. 

Another item that can  clearly be  envisaged is  the European democracy action plan, which  the 
European Commission announced in its work programme for 2020 for the last quarter of 2020. 

As presented at the video-conference of home affairs ministers on 5 June 2020, the German EU 
Presidency, which  chairs  the  Council  from  1  July  to  31  December  2020,  stressed in  its  work 
programme that it wanted to focus on how to ensure resilience and trust in EU justice systems, 
access to justice, and respect for victims' rights, and also address disinformation and hate speech. 
Work will continue on ongoing legislative proposals, including e-evidence, and the setting up of 
EPPO. 

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Key issues in the European Council: State of play in October 2020 

The  main  topics  discussed  at  an  informal  meeting  of  Justice  Ministers  on  6  July  were 
i) 'strengthening democracy in the age of Covid-19 – countering disinformation and hate speech' 
and ii)  'managing the coronavirus pandemic in liberal democracies governed by the rule of law', 
testifying  that  the  German  Presidency  gives  high  priority  to  countering disinformation and 
protecting the rule of law. 

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4. A strong and vibrant economic base 

A. Background 

The EU single market of 440 million people and 27 countries is now 27 years old. Free movement of 
goods, services, people and capital has, according to experts, led to 'between 8 % and 9 % higher 
GDP  on average for the EU'. The single market is in many ways a success story, but barriers and 
obstacles persist, which prevent the reaping of its full  benefit. Removing them is a vital task in 
today's highly competitive world, where Europe is hampered by, for example, slow economic and 
productivity growth, an ageing population and a lack of RDI investment. Climate change and rapid 
technological transformation also pose challenges to European competitiveness. 

The Covid-19 coronavirus pandemic has severely disrupted the four freedoms on which the single 
market is built. In addition to human suffering, the pandemic has led to the closure of European 
borders, put societies in lockdown, disrupted supply chains and caused severe damage to European 
industry  and  businesses,  especially  small  and  medium-sized  enterprises  (SMEs).  Before  the 
coronavirus outbreak, the  European Council  was  expected  to  discuss  strengthening the  EU's 
economic base as one of the main items on the agenda of the March 2020 meeting. Ahead of that 
meeting, 15 Member States published a joint contribution on the topic. The regular March meeting 
was postponed; instead, EU Heads of State or Government focused on responding to the severe 
impact of the crisis. As emphasised by the European Council President, Charles Michel, on 15 April: 
'The crisis we are facing is huge and unprecedented. ... The internal market has been damaged. ... 
The first priority is to repair the internal market and make sure that it can function properly'. In that 
context, the industrial strategy, SMEs, the digital agenda, the European Green deal and climate 
change are all important priorities for the Heads of State or Government to address.  

Pointing to the vulnerabilities revealed in the course of the crisis, and notably the dependency on 
third countries for certain strategic products, EU leaders have underlined the need to secure the EU's 
'strategic autonomy'. This concept is mentioned in the joint roadmap to recovery document, in 
which it is defined as a 'need to produce critical goods in Europe, to invest in strategic value chains 
and to reduce over-dependency on third countries in these areas'. Building a resilient infrastructure 
that can withstand unforeseen 'black swan' events is also essential. European Council President 
Charles Michel reiterated this in his speech to the European Parliament on 13 May and called for a 
renewed focus on 'Made in Europe'. On 8 September, he called strategic autonomy 'the goal number 
one  for  our generation'. Furthermore, the European Council  stated on  1-2  October 2020  that 
'achieving strategic autonomy while preserving an open economy is a key objective of the Union'. 

A strong economy is vital for the European Union as it helps improve welfare and create jobs, and 
gives  Europe  a  prominent  role  on  the  global  stage.  The  European  Council  identified  the 
strengthening of the European economic base as one of its priorities in the 2019-2024  strategic 
agenda. According to the Heads of State or Government, a solid foundation needs to be laid by 
strengthening the single market, creating a future-oriented industrial policy, addressing the digital 
revolution and ensuring fair and effective taxation. As a crucial component of this policy, investing 
in  the  future  is  also  prominent  in  the  strategic  agenda:  supporting skills  development and 
education, increasing research efforts and encouraging both public and private investment are all 
important elements in preparing the EU  for future challenges and opportunities. This objective 
appears more crucial than ever in the context of the pandemic. 

The European Council discussed the single market and related topics a year ago, at its March 2019 
meeting. EU  leaders  indicated  that  a  strong economic base  should  be  'achieved through an 
integrated approach addressing the current and  emerging global,  technological, security and 

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Key issues in the European Council: State of play in October 2020 

sustainability challenges, and connecting all relevant policies and dimensions'. The Heads of State 
or Government called  for action on  the single  market, and pressed for further deepening and 
strengthening measures. At the same March meeting, they asked the European Commission to 
present a long-term action plan for better implementation and enforcement of single market rules, 
and a long-term vision for the EU's industrial future. Further action on ensuring fair and effective 
taxation, and stepping-up investment in research and innovation were also underlined.  

The new European Commission addressed many of these topics in its political guidelines for the 
next  five  years, in  the  initial  work programme for 2020  and  in  its updated version, which  was 
presented on 27 May 2020. In September 2019, the Finnish Presidency of the Council of the EU had 
already presented a presidency report entitled 'Vision for  a  long-term strategy on sustainable 
growth', which analysed topics linked to strengthening the economic base. Furthermore, the annual 
sustainable growth strategy 2020, published before the coronavirus crisis, looks at topics affecting 
growth in Europe. 

EU leaders came back to these topics at their meeting on 1-2 October 2020. They emphasised the 
importance of achieving strategic autonomy at EU level and stressed the need to get back to a fully 
functioning single market as soon as possible. The need to accelerate the digital transition and make 
EU industries more competitive globally also featured prominently on the agenda. The EU leaders 
will return to these topics at their regular spring meeting in March 2021. 

B. Legal basis for European Council action 

A strong and vibrant economic base is such a multifaceted topic that many parts of the Treaty on 
the Functioning of the European Union (TFEU) apply. For the general principles, Articles 4(2)(a), 26 
and 27 (on internal market), and 114 and 115 (on approximation of laws) are relevant. When looking 
at the general principles of EU industrial policy, Article 173 TFEU (on industry) applies. For innovation 
policy, the key TFEU articles are 173  (on industry) and 179  and 190  (on research, technological 
development and space). In the case of tax policy, several provisions apply, depending on the type 
of taxation in question.  

However, none of  the above mentioned articles address the role of  the European Council. The 
general provision that can be used in this case is Article 121(2) of the Treaty on the Functioning of 
the European Union (TFEU) where it says that 'the European Council shall, acting on the basis of the 
report from the Council, discuss a conclusion on the broad guidelines of the economic policies of 
the Member States and of the Union'. Furthermore, the European Council has an important role in 
the European Semester process, and in that context 'identifies the main challenges facing the Union 
and the euro area and gives strategic guidance on policies' (recital 14, Regulation 1175/2011). 

C. Strategic orientations 

According to the European Council strategic agenda 2019-2024, 'a strong economic base is of key 
importance for Europe's competitiveness, prosperity and role on  the  global  stage and for  the 
creation of jobs'. Some of the most important aspects of making the EU economic base stronger 
include: 

Strengthening the single market 
The EU single market turns 30 in three years. It is a unique success story that has helped goods, 
services, capital and people move freely both physically and online. Even though great advances 
have  been  made  over  the  decades,  barriers persist. In  March 2019,  EU  leaders  stressed that 
remaining obstacles should be removed and no new ones created. At that meeting, they stated that 

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the 'single market should be further deepened and strengthened, with particular emphasis on the 
development of a service economy and on mainstreaming digital services'. The strategic agenda 
2019-2024  further underlines the need to deepen and strengthen the single market and its four 
freedoms. The European Parliament has been a strong supporter of the single market, and in its 
December 2018 resolution on the single market package, the Parliament called on the Commission 
'to ambitiously plan single market actions' in view of the 2019-2024  term, and on the European 
Council 'to commit to a new pledge to complete the single market by 2025, including a new public 
timetable for actions, as European leaders did in 1985'. The European Commission published a single 
market barriers communication on 10 March 2020, as well as an action plan for single market rules 
enforcement aimed at making the single market more robust. 

The coronavirus crisis has posed an unprecedented challenge for the EU single market, as the free 
movement of people and goods has been heavily disrupted by lockdowns and internal EU border 
closures. Further problems have been caused by internal export bans on medical equipment, and a 
lack of solidarity between Member States in this unprecedented situation. The European Council 
president has said that repairing the internal market is now the first priority, as it is 'the beating heart 
of economic development and therefore of the European Union's capacity for social cohesion'. The 
European Council discussed the single market at its meeting on 1-2 October 2020 and urged a return 
'to a fully functioning single market as soon as possible'. However, beyond returning to the pre-crisis 
situation, EU leaders also want to strengthen and deepen the internal market further. 

In the spring of 2020, with the aim of moving from crisis to recovery, the European Council asked 
President  Michel  together with  Commission President Ursula  von  der  Leyen  to  prepare  two 
roadmaps − one for lifting the containment measures, published on 15 April, and one focused on 
recovery, published on 21 April ahead of the European Council video meeting on 23 April. Speaking 
in the European Parliament plenary on 13 May, Michel called on all the Member States to 'reopen 
their internal borders as soon as possible' to revive European economies and tourism. Many borders 
were opened in the summer of 2020, with the help of the Commission website Re-open EU and a 
series of guidelines. Yet, new travel restrictions were soon reinstated in response to the resurgence 
in the number of coronavirus cases in different parts of the EU and throughout the world. 

An industrial policy fit for the future 
To tackle the European competitiveness challenges, France and Germany joined forces in early 2019 
and, in a Franco-German Manifesto, outlined their views for a European industrial policy fit for the 
21st century. They called for strategic thinking, unity and clear objectives for 2030, and underlined 
that sizeable investments in innovation as well as adaption of the regulatory framework, including 
effective measures to protect EU technologies, companies and markets, were needed. The European 
Council discussed the topic at its March 2019 meeting and invited the Commission to present, by 
the end of the year, a long-term vision for the EU's industrial future that addresses 'the challenges 
European industry faces, touching upon all relevant policy areas'. The Commission included the 
topic in its 2020 work programme, and published the strategy entitled 'A New Industrial Strategy for 
Europe' on  10  March  2020.  The  strategy  builds on work  done  beforehand, such as  the  2017 
Commission communication on a renewed EU industrial policy strategy. A linked document, the 
new SME strategy, was presented at the same time. 

The coronavirus pandemic has disrupted the normal operations of EU industries and put many 
businesses under severe economic strain. In his intervention in the European Parliament plenary in 
April, the European Council President, Charles Michel, underlined the need for a strong industrial 
strategy to beat the crisis.  Furthermore, on 24  April, the  European Parliament's Committee on 
Industry, Research and Energy called for a structured industry recovery plan, with support tailored 

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Key issues in the European Council: State of play in October 2020 

for each sector. The Commission's 'letter of intent', which accompanied the yearly State of the Union 
address on 16 September 2020, envisages an update to the EU industrial strategy in 2021. 

At the same time, the concept of 'strategic autonomy', mentioned in the roadmap to recovery, in 
the  European  Parliament's April  resolution and  in  Charles  Michel's  speech  to  the  European 
Parliament plenary on 13 May, is gaining momentum. The concept points to the need for the EU to 
be less dependent on third countries, to produce critical goods in Europe and to invest in resilient 
infrastructure as well as strategic value chains. President Michel has mentioned strategic autonomy 
several times over recent months; most prominently in September when he stated that achieving 
this objective was 'goal number one for our generation'. 

Fair and effective taxation  
Taxation has been a very visible topic in the EU in recent years. The European Parliament has set up 
several special committees on the topic, TAXE, TAX2, TAX3, the PANA committee of inquiry, and now 
a new subcommittee on tax matters (FISC). They have all looked into tax evasion, tax avoidance and 
aggressive tax planning, which according to some estimates could cause a loss to the EU of as much 
as €1 trillion in tax income annually.  

The issue of taxation is particularly topical in the current situation. Whereas in times of crisis such as 
the coronavirus pandemic, government financial input and investment is more necessary than ever, 
at the same time, tax revenues may dwindle as a result of reduced economic activity, with a severe 
financial risk involved for certain Member States. 

The question of digital taxation is closely linked with lost taxes. In  its June 2018  conclusions the 
European Council said that the 'fight against tax avoidance, evasion and fraud must be vigorously 
pursued  both  at  global  level  (notably  in  the  Organisation  for  Economic  Co-operation  and 
Development) and within  the  EU'.  Commission President Ursula von der Leyen, in  her political 
guidelines, outlined that: 'I will ensure that taxation of big tech companies is a priority. I will work 
hard to ensure the proposals currently on the table are turned into law.  Discussions to find  an 
international solution are ongoing, notably at the OECD. However, if by the end of 2020 there is still 
no global solution for a fair digital tax, the EU should act alone.' This determination is also reflected 
in  Executive  Vice-president Vestager's mission letter: 'You will  coordinate the  work  on  digital 
taxation to find a consensus at international level by the end of 2020 or to propose a fair European 
tax.' 

International digital taxation negotiations are ongoing at OECD level, but have been delayed by the 
coronavirus pandemic and the United States' decision in  July  2020  to withdraw from the talks. 
Commission President Ursula von der Leyen stated in her  2020  State of  the Union  speech on 
16 September 2020 that: 'We will spare no effort to reach agreement in the framework of OECD and 
G20. But let there be no doubt: should an agreement fall short of a fair tax system that provides long-
term sustainable revenues, Europe will  come  forward with  a  proposal early next  year'. In  her 
accompanying letter of intent sent to European Parliament President David Sassoli and to German 
Chancellor Angela Merkel, who holds the rotating Presidency of the  Council, President von der 
Leyen pointed to a 'legislative proposal for a digital levy' as one of the key initiatives for 2021. 
European Council President Charles Michel reiterated the EU's intention in his UN General Assembly 
speech: 'The European Union is also committed to advancing overall tax fairness, in particular in the 
digital sector. Large-scale activities carried out in this area can no longer escape fair taxation. The 
European Union is committed, alongside the OECD and the G20, to international cooperation to 
correct this injustice'. At its meeting on 1-2 October 2020, the European Council announced that it 
would 'assess the situation regarding the work on the important issue of digital taxation' in March 
2021. 

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D. Noteworthy commitments: specific requests and follow-up 

Improving the business environment for SMEs: 99 % of the businesses in the EU are small and 
medium-sized enterprises (SMEs). 6 They are the backbone of European economy: a large share of 
European gross value added stems from their activities. At the same time, SMEs are often affected 
disproportionately  by  the  costs  of  existing  and  new  regulation  compared  to  their  bigger 
competitors. In addition, they generally face greater difficulties in accessing capital and expanding 
their  activities  to  international markets. In  its  March 2019  conclusions, the  European Council 
highlights that 'due regard should be paid to an improved business environment for SMEs' and in 
its 2019-2024 strategic agenda that 'investing in our future also means encouraging and supporting 
public and private investment, including in infrastructure, to finance the growth of our economy 
and  our  businesses,  including  SMEs'.  In  her  political  guidelines,  Commission  President 
von der Leyen expresses the intention to  create large  innovators out of  small  businesses, and 
commits to putting forward a dedicated SME strategy that reduces red tape and eases market access 
for SMEs.  

The  strategy in  question, entitled 'An  SME  strategy for a  sustainable and  digital  Europe' was 
presented by the Commission on 10  March 2020.  It  focuses on  three large themes: i) capacity-
building and support for the transition to sustainability and digitalisation; ii) reducing regulatory 
burden and improving market access; and iii) improving access to financing. 

SMEs have been hard-hit by the impact of the coronavirus and the resulting lockdowns. In his speech 
to  the  European Parliament plenary in  April,  the  European Council  President, Charles Michel, 
highlighted the crucial importance of supporting SMEs in this situation, and stressed the role of the 
new SME strategy in the recovery. 

Digital taxation: In the digital age, earning profit in a country no longer necessarily requires setting-
up factories or offices on the ground, but can be effected by offering products or services through 
digital platforms. This results in the difficulty of localising value creation, and as a result, the ensuing 
taxation questions become increasingly complicated. Multilateral talks with a two-pillar structure 
are ongoing at OECD level, with the aim of developing a global solution to fair digital taxation by 
the end of 2020. At the same time, France has been discussing the topic with the United States, 
which has a very strong 'big tech' digital presence around the world. However, many questions 
remain  open.  The  United Kingdom  (UK),  an  important  actor in  the  field  of  digital  taxation, 
introduced a unilateral digital services tax in April 2020, which will remain in force as long as there 
is  no  multilateral model to replace it.  The  European Council has pressed for ensuring fair and 
efficient taxation, and the new European Commission has stressed that 'if by the end of 2020 there 
is still no global solution for a fair digital tax, the EU should act alone'. 

Increasing research and innovation efforts: The EU leaders stated in March 2019 that 'in order to 
remain  globally  competitive in  key  technologies and strategic value  chains,  the  EU  needs  to 
encourage more risk-taking, and step up investment in research and innovation'. According to the 
Europe 2020 strategy adopted in 2010,  3 % of  the EU's GDP  should be invested in research and 
development in 2020. The latest 2017 figures from Eurostat show that, with a 2.06 % investment 
level, the goal was still far from being met. At the EU level, the 9th edition of the Union's framework 
programme for research and innovation, Horizon Europe, is under preparation. The co-legislators 
have  achieved  a  partial  provisional agreement on the  new  programme before the  European 
elections in 2019, and Horizon Europe is now waiting for the overall multiannual financial framework 

6 SMEs  employ fewer than 250 persons and have an annual turnover not exceeding €50 million, and/or an annual  balance 
sheet total not exceeding €43 million. 

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budget  numbers. The  European Innovation Council  (EIC),  which  was  already  piloted  by  the 
European Commission, is an integral actor in turning 'scientific discoveries into businesses that can 
scale up faster'. The idea behind the EIC links well with the Commission guidelines for this five-year 
legislative cycle, which also mention the intention of turning small businesses into large innovators. 
In parallel to the EIC, the EU is fostering innovation through the European Institute of Innovation 
and Technology (EIT). The co-legislators are currently working on a new EIT  legislative package. 
Furthermore, the Commission work programme envisages actions for 2020  aimed at increasing 
research  and  innovation efforts,  such  as  the  communication  on the  future  of  research  and 
innovation and the European Research Area and the communication on Horizon Europe research 
and innovation missions (expected for the fourth quarter of 2020). 

As part of the common European response to the coronavirus outbreak, the European Commission 
has mobilised €1 billion under Horizon 2020, and launched several special measures to tackle the 
coronavirus pandemic in the EU and abroad. These actions address, inter alia, the development of 
diagnostics, treatments and vaccines, and the enhancement of infrastructures and resources that 
enable research. The EU and its partners hosted an international online pledging conference on 
4 May to raise funds for diagnostics, treatments and vaccines to fight the coronavirus. The event 
managed to raise €7.4 billion for the cause, of which €1 billion was pledged under the EU's Horizon 
2020 programme. The Commission announced on 31 August that it would join the Covid-19 Vaccine 
Global Access Facility (COVAX). 

E. Challenges ahead and outlook 

In just six months, the unexpected 'black swan event' of the coronavirus crisis has changed Europe 
as we  know it. External and internal borders have been closed, lockdowns implemented, supply 
chains  interrupted, planes  grounded, businesses faced  with  serious  financial  difficulties  and 
unemployment on the rise. Returning to 'normal' as we knew it in January and February 2020 may 
take a long time and, according to estimates, will not be possible before a safe and effective vaccine 
is made widely available. The beating heart of  the EU  economy, the single market with its four 
freedoms, has endured a great shock, and repairing and upgrading it is high on the EU leaders' 
agenda. The  idea also features in  the Franco-German initiative for European recovery from the 
coronavirus crisis, in  which  the two countries propose to enhance 'EU  economic and industrial 
resilience and sovereignty' and give a 'new impulse to the single market'. 

One of the hardest hit sectors with the gloomiest recovery prospects is the EU travel and tourism 
industry, which contributed 3.9 % to EU GDP in  2018. The World Tourism Organization, UNWTO, 
reports that in 2020, international tourist numbers could be down by 60 to 80 %. On 13 May, the 
Commission published guidance on  how  to  resume travel and  tourism in  the  EU  safely,  and 
European Council President Charles Michel called on Member States to reopen internal EU borders 
as soon as possible to revive EU economies and tourism. The borders had re-opened to some extent 
during the 2020 summer season, with the help of the Commission's guidelines and the Re-open EU 
website, but the resurgence of cases amid fears of a second wave has prompted new closures and 
partial lockdowns around Europe. 

The concept of strategic autonomy, that includes reducing overdependence on third countries and 
producing essential items in Europe, has gained momentum during the crisis. It is mentioned as one 
of the building blocks for future recovery in the joint EU roadmap for recovery. This ties in closely 
with implementation the new industrial strategy. European Council President Charles Michel has 
referred to the concept on several occasions, and on 8 September he emphasised that: 'European 
strategic autonomy – these are not just words. The strategic independence of Europe is our new 
common project for this century. It's in all our common interest'. 

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In  addition  to  the  acute  coronavirus crisis,  the  twin  transition of  climate  change  and  rapid 
digitalisation progress will  bring  about many  challenges  for  the  Union's economic  base,  but 
opportunities will also arise. The European Council has committed to transforming the EU into a 
climate-neutral continent by 2050; this will require significant efforts from all the actors and at all 
levels of society. The European Green Deal proposal, published in December 2019, aims at providing 
the strategic and legal framework for the changes that are needed to achieve the climate goals and 
to  prevent  the  projected  worst-case  scenarios  from  happening. 
Increasing  European 
competitiveness has also been considered when designing the package.  

Fast progressing digitalisation will,  like  climate  change, have  a  profound impact on  European 
societies and on  the EU  economic base in  the  coming years. To respond to this and to  other 
challenges  European industry is  facing,  the  European Council,  in  its  March  2019  conclusions, 
requested the Commission to propose a long-term vision for the EU's industrial future by the end of 
2019. That deadline passed, but the Commission included the strategy in its work programme for 
2020,  and  a  communication entitled 'A new  industrial strategy for Europe' was  published on 
10 March 2020. The strategy will be updated in 2021 to take account of the impact of the coronavirus 
pandemic. 

Demographic change is  also a critical  phenomenon shaping European societies. Europe has an 
ageing population with nearly one fifth aged 65 or more. This will pose a challenge for the European 
economy and also for the creation of  a strong and vibrant economic base, as the share of  the 
population at  working  age  (15-64 years)  is  forecast  to  decrease  from  333 million  in  2016  to 
292 million in 2070 (these numbers date from 2018 and therefore include the UK in the projection). 
The 2019 EPRS demographic outlook for the European Union states that: 'Demography matters. The 
economy, labour market, healthcare, pensions, the environment, intergenerational fairness and 
election results – they are all driven by demography'. Indeed, EU leaders underline in the strategic 
agenda  that  strengthening  the  economic  base  also  requires  addressing  the  demographic 
challenges that the Union faces. 

With a view to a discussion on strengthening the EU economic base, which had been expected at 
the now postponed March 2020 European Council, 15 Member States, 7 known as the 'friends of the 
single market', published a joint letter on making the single market fair, open and competitive. The 
letter  stated that: 'The EU  needs to  focus  on  improving its  competitiveness, productivity and 
enabling value creation in  all  economic activities and strategic value chains that are crucial for 
sustainable growth and wellbeing'. It goes on to list actions needed, such as a level playing field, a 
truly borderless single market for services and better implementation and enforcement of rules. 
Although the March 2020  discussion on strengthening the EU  economic base was postponed, 
pursuing this objective now appears more urgent than ever. EU leaders revisited this topic at their 
meeting on 1-2 October 2020. They notably highlighted the importance of a strong economic base, 
of  returning the  single  market to  its  fully  functional  state  and  of  addressing the  remaining 
weaknesses, while raising the level of ambition. The European Council is expected to return to these 
topics at the March 2021 meeting. 

7  The  15 Member  States  are: Austria,  Czechia,  Estonia,  Finland,  Latvia,  Lithuania,  Luxembourg,  Malta,  the Netherlands, 
Poland,  Portugal, Slovakia,  Slovenia, Spain  and Sweden. 

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5. Digital sovereignty 

A. Background 

For decades, Moore's law about the number of transistors in a chip doubling every two years has set 
the pace and framework for technological development. Even though some experts suggest the law 
is now dead that and computing power will no longer fuel innovation in the same way as before, 
not everyone shares the view. With 5G and 6G, artificial intelligence, robotics, quantum computing, 
blockchain  and  other  advanced  and  emerging  technologies, the  digital  revolution is  rapidly 
changing the way Europeans live their daily lives. The transition opens many possibilities, but also 
poses challenges. It is therefore of utmost importance for the European Union to be proactive and 
stay ahead of developments.  

Establishing and maintaining Europe digital sovereignty in a world where many want to lead the 
technology race, has been a priority for the European Council. The US, backed up by influential tech 
giants, and China, supported by state aid, are strong players in the global setting, and there are 
concerns that technological development might become dominated by these two powers and their 
GAFAM (Google, Apple, Facebook, Amazon, Microsoft) and BATX (Baidu, Alibaba, Tencent, Xiaomi) 
companies. As the Commission stresses: 'Europe needs to be a strong, independent and purposeful 
digital player in its own right'. EU Heads of State or Government are fully aware of the opportunities 
and  challenges  of  artificial  intelligence,  5G  and  other  new  technologies in  helping  to  create 
wellbeing, growth and jobs. Data use and data protection, intellectual property rights, privacy and 
cybersecurity are all important topics to be considered in this regard. EU leaders also place strong 
emphasis on a  human-centred  approach  and on 'the environment of trust' that needs to  exist 
broadly across society and the economy, so that the new technologies can live  up to their full 
potential and be compatible with European democracy. 

The European Council usually discusses issues related to the digital single market and topics linked 
with research and new technologies at its spring meeting. In March 2019,  the Heads of State or 
Government stressed that the 'EU needs to go further in developing a competitive, secure, inclusive 
and ethical digital economy with world-class connectivity'. They also underlined that 'in order to 
remain  globally  competitive in  key  technologies and strategic value  chains,  the  EU  needs  to 
encourage more risk-taking, and step up investment in research and innovation'.  

This year, following the unexpected and unprecedented outbreak of the coronavirus pandemic, the 
regular European Council spring meeting was postponed; part of the regular work was on hold while 
the EU Heads of State or Government focused on tackling the acute crisis. On 21 April 2020, the 
President of the European Council, Charles Michel, and the President of the European Commission, 
Ursula von der Leyen, presented a joint roadmap for recovery outlining key areas of action to enable 
the EU to respond to the crisis in the medium term. As digital tools and remote connections have 
been crucial for governments, businesses, and private individuals alike during the crisis, the EU 
leaders have emphasised the major role of the digital transformation in the future recovery work, 
alongside the green transition. Digital transition is also mentioned as being key to recovery in the 
Franco-German paper on an initiative for European recovery from the coronavirus crisis, published 
in May 2020, which calls for an acceleration of digitalisation. Furthermore, in its conclusions from 
the 1-2  October meeting, the European Council called  for 20 %  of the  Recovery and Resilience 
Facility (RRF), part of the recovery package, to be earmarked for digital transition.  

With a view to the new institutional cycle, the European Council adopted its 2019-2024 strategic 
agenda in June 2019, setting priorities for the next five years, and the Commission presented its 
political  programme. Digital  transformation and completing  the  digital  single  market already 

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featured prominently on the political agenda before the start of the pandemic and it is likely that 
the strategic importance of these policy priorities will  continue grow still more. To illustrate this 
trend, mobile applications and artificial intelligence (AI) have been used to combat the virus. Most 
of Europe, and the world, has taken a major digital leap during the lockdown period that is expected 
to have a lasting effect. 

B. Legal basis for European Council action 

While the EU has been working on developing a more integrated European digital economy since 
the mid-1990s, the concept of the digital single market is not mentioned in the treaties. The parts 
entitled 'internal market', especially Articles 26 and  27, of the Treaty on the Functioning of the 
European Union (TFEU) apply. However, the European Council is not specifically mentioned in these 
articles, as decision-making in  the  single market and digital  single market areas fall  under the 
ordinary legislative procedure with European Parliament and the Council of the European Union 
acting as co-legislators. Therefore, its role in the area of the digital single market is to 'define general 
political directions and priorities', which is the core role envisaged for the European Council in Article 
15(1) if the Treaty on the European Union (TEU). 

In addition, under Article 121(2) of the TFEU, 'the European Council shall, acting on the basis of the 
report from the Council, discuss a conclusion on the broad guidelines of the economic policies of 
the Member States and of the Union'. The European Council also plays an important role in the 
European Semester process where it does a horizontal review early each year and 'identifies the 
main challenges facing the Union and the euro area and gives strategic guidance on policies' (recital 
14, Regulation 1175/2011). The Heads of State or Government also endorse the country-specific 
recommendations, usually in June, before the Council adopts them, usually in July. 

C. Strategic orientations 

In its 2019-2024 strategic agenda, adopted in June 2019, the European Council states that 'over the 
next few years, the digital transformation will further accelerate and have far-reaching effects. We 
need to ensure that Europe is digitally sovereign and obtains its fair share of the benefits of this 
development'. Making Europe fit for the digital age has been taken on board by the new European 
Commission as one of the six overarching priorities. As one of the most quickly developing fields at 
the moment where the potential gains are significant, a number of important proposals are in the 
pipeline  on  the  digital  front. Yet  potential looming challenges are also  great and  need  to be 
addressed. 

Over recent years, the European Council has raised many aspects of digital sovereignty. Currently, 
the strategic orientations in this field put emphasis on the following: 

Digital single market 
Put forward in 2015, the digital single market strategy stresses the need to complete the EU digital 
single market as soon as  possible. Although this objective was reiterated in  the 2017  midterm 
review, progress was not conclusive. Thus, in  its March 2018  conclusions the European Council 
called for 'increased efforts to deliver, before the end of the current legislative cycle, on the single 
market strategy, the Digital single market strategy [...]'. And, in December 2018, it underlined the 
'the need  for  the  single market to evolve  so  that it  fully  embraces the digital  transformation, 
including Artificial Intelligence, the rise of  the data and service economy, connectivity, and the 
transition to a greener economy'. Then, at the March 2019 European Council, EU leaders reiterated 
that 'the single market should be further deepened and strengthened, with particular emphasis on 
the development of a service economy and on mainstreaming digital services'.  

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The EPRS end-of-term assessment on the progress made on the Juncker Commission's ten priorities 
highlights that the digital single market strategy has been successful when looking at the numbers, 
i.e. in terms of files adopted and initiatives launched. However, the study finds that 'some voices 
have  been  more critical,  claiming  that the  strategy has failed to  live  up  to  its  initial  promise, 
sometimes lacking boldness and watering down more politically difficult solutions that may have 
achieved more in terms of market integration'. 

The  Commission President,  Ursula  von  der  Leyen,  has  promised  to  deliver  in  this  field  and 
announced in her political guidelines: 'A new Digital Services Act (that) will upgrade our liability and 
safety rules for digital platforms, services and products, and complete our Digital single market'. 
According to the Commission's revised 2020 work programme, the publication of the digital services 
act  is  envisaged for  the  fourth  quarter of  the  year. In  its  report on  the  topic,  the  European 
Parliament's Committee on Internal Market and Consumer Protection (IMCO) states that new rules 
are needed to frame the responsibilities of digital service providers, address risks faced by users and 
boost innovative services across the EU. Parliament's Committee on Civil Liberties, Justice and Home 
Affairs (LIBE) and its Committee on Legal Affairs (JURI) have also worked on the topic.   

On  19  February 2020,  the  Commission published a communication entitled 'Shaping Europe's 
digital future', in which it stresses the importance of technology that works for people in an open, 
democratic and sustainable society. In her 2020 State of the Union speech, European Commission 
President Ursula von der Leyen stressed that 'we must make this Europe's Digital Decade'. A 'digital 
package' including proposals on high-performance computing and fast network connectivity was 
published  a  few  days after  the  speech.  A  follow-up  communication entitled 'Europe's Digital 
Decade: 2030 Digital Targets' is planned for 2021. 

Building a data economy 
To compete successfully in the big data era, the EU needs to make it easier for companies to access 
vast amounts of data, and great computing power is needed to process and put this data to work. 
In the strategic agenda 2019-2024, EU Heads of State or Government highlighted that 'we need to 
ensure that Europe is digitally sovereign and obtains its fair share of the benefits of this development 
[...] to this end, the EU must work on all aspects of the digital revolution and artificial intelligence: 
infrastructure, connectivity, services, data, regulation and investment'. Previously, in their March 
2019  conclusions, they also  called  for a  'forward-looking  digital policy, fit  for  an age  of  digital 
transformation and the rise of the data economy.' At the same meeting, EU leaders also stressed that 
'special emphasis should be placed on access to, sharing of and use of data, on data security and on 
artificial  intelligence,  in  an  environment of  trust'. In  line  with  its  2020  work  programme, on 
19 February 2020, the Commission published a European strategy for data that answers the request 
from EU leaders.  

The  EU  leaders  discussed  the  data  economy  in  a  very  concrete  way  at  their  meeting  on 
1-2 October 2020. They stressed the need to make high-quality data easily available, to promote and 
enable better sharing and pooling of data and to ensure the interoperability of European data. The 
creation of common European data spaces in strategic sectors was welcomed. They also supported 
the idea of establishing European cloud services with the aim of storing and processing European 
data  in  Europe.  Charles  Michel  coined  the  phrase  'stored  in  Europe'  in  his  recent  speech. 
Furthermore, the Heads of  State or  Government called  for  the  development of  secure public 
electronic identification (e-ID) for EU use. 

Contact tracing and warning mobile applications, fuelled by data, are likely to play an important role 
in the fight against coronavirus, as shown in the EU roadmap to lifting coronavirus containment 
measures, published on 15 April. However, there are privacy concerns, and the EU Member States 
together with the Commission have developed a toolbox, published on 16 April, to make sure these 

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apps are fully compliant with EU rules. An accompanying guidance document on data protection 
was released at the same time. In addition, on 13 May, the Commission issued a common approach 
on the topic. Uptake of these apps has varied greatly – in France only 2 % of the population had the 
app a month after its launch, whereas in Finland a third of the population downloaded it in the first 
week. 

Artificial intelligence and frontier technologies 
'Can machines think' was Alan Turing's question in a paper published in the 1950s, which launched, 
in a way, the age of artificial intelligence (AI). Since then AI has taken big leaps forward, and it is 
already present in many everyday items such as Apple's Siri assistant or Netflix recommendations 
on what to watch next. In the coming years, the range of applications for AI will only widen and 
reach many sectors from healthcare to farming. Several times over the past years, Heads of State or 
Government have highlighted the importance of artificial intelligence and new frontier-pushing 
technologies, such as high-performance computing. At their latest meeting on 1-2 October 2020, 
the EU leaders stated that 'the EU needs to be a global leader in the development of secure and 
ethical artificial intelligence'. In their 2019-2024  strategic agenda, they underlined that 'EU must 
work on all aspects of the digital revolution and artificial intelligence: infrastructure, connectivity, 
services, data, regulation and investment'.  

Following up on the topics raised by the European Council, the new Commission points out in its 
political guidelines for the next five years that 'to lead the way on next-generation hyperscalers, we 
will invest in blockchain, high-performance computing, quantum computing, algorithms and tools 
to allow data sharing and data usage. We will jointly define standards for this new generation of 
technologies that will become the global norm'. A white paper on artificial intelligence, published 
on 19 February 2020, and building on the 2018 AI communication 'Artificial intelligence for Europe', 
is one of the early tangible outputs. 

During the coronavirus crisis, AI has been used, for example, for medical imaging, wearable sensors 
and tracking the spreading of the disease. There are, however, data protection and privacy concerns 
that will need to be addressed. Experts indicate that there are still many questions to be answered 
before AI can be fully helpful in fighting a pandemic.  

D. Noteworthy commitments: specific requests and follow-up 

Inclusive and ethical digital economy: EU leaders underline in their strategic agenda the need for 
'development of  the  service  economy and  the  mainstreaming of  digital  services'. The  Digital 
Services Act  is  one of  the  actions stemming from these discussions. Proposed by Commission 
President von der Leyen in her political guidelines, it aims to deepen the Digital single market by 
upgrading the liability and safety rules for digital platforms, services and products. It is mentioned 
as one of the 'making it happen' actions in the 'New Industrial Strategy for Europe' published by the 
Commission on 10 March 2020. The proposal for the act itself will be published during the fourth 
quarter of 2020. 

Digitisation of European economy: EU leaders have underlined many times over the past years, 
also in the strategic agenda, the need to address the digital revolution and to work on all its aspects. 
The  Digital  Europe programme, aimed at encouraging the uptake of  digital  technologies and 
developing EU's strategic digital capacities, is one of the recent concrete steps in this regard. The 
programme is part of the MFF package for 2021-2027. Initially, when it presented its proposal in 
2018, the Commission had set aside €9.2 billion in funding for the programme. The budget was cut 
significantly in  the following  compromise proposals, however, sparking doubts, notably in the 
European Parliament, as to whether the programme could operate efficiently with a lower-than-

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envisaged budget. As a result of the coronavirus crisis and the necessary actions and funding, on 
27 May 2020, the Commission submitted an updated MFF proposal, on which the European Council 
reached a  political  agreement (MFF and recovery package) at its  meeting in  July  2020.  In  the 
agreement, pending consent of the European Parliament, the budget share allocated for the digital 
Europe programme is only €6.8 billion, significantly lower than the original Commission proposal of 
€9.2 billion. Considering the significant role 'digital' is expected to play in the coming years, notably 
in  the  recovery effort, and the rapidly progressing digital transition, with many global powers 
wanting to take the lead, the Parliament is concerned that the low level of funding earmarked in the 
latest proposal could jeopardise the EU's digital agenda commitments and priorities. 

Access,  sharing  and  the  use  of  data:  Data  is  created both by  people  and  machines, and its 
generation is expected  to  grow steeply, especially  once  the  internet of  things (IoT)  has  been 
mainstreamed. Furthermore, President  Michel  stated  that  'industrial data  will  be  the  fuel  of 
tomorrow's digital developments'. The European Council has in  recent years called  on  several 
occasions for the free flow of data to be ensured, and in March 2019, they notably underlined that 
'special emphasis should be placed on access to, sharing of and use of data, on data security [...]'. 
Also the strategic agenda 2019-2024 mentions data in the context of artificial intelligence and digital 
revolution. The political guidelines put forward by Commission President Ursula von der Leyen put 
strong emphasis on data and big data; the document states, inter alia, that 'we will invest in [...] tools 
to allow data sharing and data usage' and 'data and AI are the ingredients for innovation that can 
help  us  to  find  solutions  to  societal  challenges,  from  health  to  farming,  from  security  to 
manufacturing'.  

On 19  February 2020, the Commission published a European strategy for data. The strategy was 
endorsed by the European Council at  its meeting on 1-2  October 2020.  It  states that data can 
empower the EU and can help it make better decisions. The vision outlined in the strategy indicates 
that data should flow freely in the EU; that the EU rules and values must be respected; and that rules 
on access to data should be clear and fair. The appendix of the strategy outlines the next concrete 
steps that will be taken on the data front, such as the European Open Science Cloud and actions for 
financial  data. There  was  a  public  consultation with  800  contributions on the  topic,  and  the 
Commission is expected to publish legislative proposals on data in the coming months.   

A  European  approach  to  artificial intelligence: At its meeting in  October 2017, the European 
Council asked the Commission to put forward, by early 2018,  a European approach to artificial 
intelligence. The Communication, which was published in April 2018, has three main aims: i) being 
ahead of technological developments and encouraging uptake by the public and private sectors, ii) 
preparing for socio-economic changes brought about by AI, and iii) ensuring an appropriate ethical 
and legal framework for AI. Based on this, the Commission and Member States published in late 
2018  a coordinated plan aimed at 'increasing investment, making more data available, fostering 
talent and ensuring trust'. In their strategic agenda 2019-2024, EU Heads of State or Government 
stressed that the 'EU must work on all aspects of digital revolution and artificial intelligence'; in this 
context, European Commission President von der Leyen tasked Commissioner Breton with working 
on  'a  coordinated European approach on  artificial  intelligence'.  The  new  white  paper  on  AI, 
published on 19 February 2020, is a part of this continuum. 

The white paper highlights trust, privacy protection, human-centric approach, European values and 
the need for quality data to prevent biases. It states that 'an ecosystem of excellence' should be 
created to help develop AI and increase its uptake. The Commission organised a public consultation 
on the white paper that gathered over 1 200 responses from stakeholders. The contributions will 
feed into the legislative proposals that are to follow. According to the Commission's initial work 
programme for 2020, the legislative proposals were going to be  published by the end of 2020. 

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However, the work programme was updated on 27 May 2020 in response to the coronavirus crisis, 
and the proposals were postponed until the first quarter of 2021. 

As a response to the increasing interest in and importance of the topic, the European Parliament has 
set up a  special  committee on artificial intelligence  in  a digital  age (AIDA). During its one-year 
mandate that started in September 2020, the committee is expected to produce 'a holistic approach 
providing a common, long-term position that highlights the EU's key values and objectives relating 
to artificial intelligence in the digital age'. 

Security of 5G networks: The European Council stated in March 2019 that it looks forward 'to the 
Commission's recommendation on a  concerted approach to the security of  5G  networks'. The 
recommendation was published a few days after the European Council meeting. Since then, the 
security of 5G networks, and especially the involvement of the Chinese technology giant Huawei in 
building the networks, has been a widely discussed topic, notably following the move by the US to 
block  Huawei  from  its  market  and  to  encourage  its  allies  to  adopt  a  similar  approach.  On 
29 January 2020, the Commission published the EU toolbox on 5G cybersecurity, in which it outlined 
a set of key actions to ensure the security of the networks, such as limiting dependency on a single 
supplier and assessing the risk profile of supplies. The multivendor approach has been interpreted 
by Huawei as meaning that it will be able to take part in building the European 5G networks. The 
Commission has called on the Member States to 'take concrete and measurable steps' to implement 
key toolbox measures. EU leaders discussed 5G at their meeting on 1-2 October 2020 and stressed 
that 'potential 5G suppliers need to be assessed on the basis of common objective criteria' and asked 
the Member States to send their national plans on the roll-out of 5G to the Commission to 'ensure 
the rapid deployment of 5G across the EU'. 

During the coronavirus crisis, disinformation linking 5G technology to the virus outbreak has led to 
arson attacks against 5G masts in several countries. 

E. Challenges ahead and outlook 

The world has changed drastically in the first half of 2020. The pandemic has brought large parts of 
the globe to a standstill, with closed borders, lockdowns, social distancing and people working 
mainly from home. The importance of the digital environment and remote connections has grown 
for both work and personal purposes, and in many societies an unprecedented digital leap has taken 
place. EU leaders have underlined that digital transformation must also play a key role in the road 
to recovery. 

In her 2020 State of the Union speech on 16 September 2020, Commission President Ursula von der 
Leyen stated that 'we  will  invest 20 %  of  Next Generation EU on digital', and European Council 
President  Michel  echoed  this  in  a  speech  on  29  September.  The  European  Council  further 
emphasised this at its 1-2  October meeting and called for: 'At least 20 % of the funds under the 
Recovery and Resilience Facility [...to] be made available for the digital transition, including for SMEs.' 

The  digital  environment is  developing  at  a  high  speed,  with  new  possibilities  and  services 
mushrooming seemingly overnight. With legislative processes often taking years to complete, it is 
often challenging for institutions and regulators to keep up with the digital innovation cycle. Many 
tech giants are now calling for the global policy-makers to regulate them. In that context, one of the 
key questions is how to establish future-proof regulations, which encourage innovation and help 
citizens to reap the benefits of the new and existing technologies, whilst also, proactively preventing 
the negative side-effects of  the digital  boom. It  is also vitally  important to make sure that the 
different pieces of legislation touching on the same topics are compatible and work well together. 

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Financing digitalisation and innovation is also a major challenge for the European Union. The digital 
Europe programme, which has been put forward as a part of the multiannual financial framework 
for 2021-2027, aims at developing the EU's strategic digital capacities and encouraging deployment 
of digital technologies. The intended goals are ambitious, but the budget allocation less so; in the 
July 2020 political agreement on the MFF and recovery fund, the European Council earmarked only 
€6.8 billion for the programme, a significant cut compared to the Commission's initial proposal of 
€9.2 billion. Moreover, the digital Europe programme is not the only issue; the EU is also suffering 
from a wider research, development and innovation (RDI) funding challenge. It is likely that the 3 % 
research and development investment goal set by Europe 2020 strategy will not be achieved by 
2020, as the latest figures from Eurostat indicate that only 2.06 % of EU GDP had been invested in 
research and development in 2017. The lack of RDI funding is a challenge in the global setting, in 
which competition, especially from US and China, is particularly fierce. 

The US and China both have strong innovation cultures backed up by global tech giants. A possible 
challenging scenario derived from this, would be a  bipolar world with respect to standards and 
systems, dominated by these two leaders. Being proactive in  the face  of  the digital revolution, 
actively supporting innovation and striving for technological sovereignty are vital for the European 
Union in the digital age. Commissioner Thierry Breton has taken a strong stance on this and assured 
that 'Europe has everything it needs to lead the technology race'. 

Data has been compared to oil – a highly sought-after commodity. However, the World Economic 
Forum  suggests  that,  as  oil  resources  are  diminishing,  and  data  and  its  use  are  growing 
exponentially, the comparison is no longer valid. In  just the last two years, 90 % of  all  the data 
existing in the world was generated, and the speed of data creation will only increase in the future 
with, for example, the internet of things. In this context, the use of data and data protection, as well 
as privacy questions, are clearly of high importance. Europe has already been active in this field by 
creating,  for  example,  the  General  Data  Protection  Regulation (GDPR).  But,  as  technological 
development is progressing at an unprecedented speed, keeping up to date will  be vital. In this 
context, the European Commission published the European strategy for data in  February 2020, 
aimed at  tackling the  challenges and making use of  the  existing and  emerging opportunities. 
Industrial data is something that many are now looking at with great interest as it is viewed as the 
possible fuel for tomorrow's digital developments. Data is also likely to play an important role in 
ending the lockdown phase after the coronavirus crisis, as it powers the mobile applications that 
will be used to monitor and trace infections. 

President von der Leyen declared in  her  2020  State of  the Union  speech: 'We must make this 
Europe's digital decade. We need a common plan for digital Europe with clearly defined goals for 
2030,  such  as  for  connectivity, skills  and  digital  public  services. And  we  need  to  follow  clear 
principles:  the  right  to  privacy  and  connectivity,  freedom  of  speech,  free  flow  of  data  and 
cybersecurity'. A related communication is expected as one of the key actions for 2021. An important 
initiative in this respect is the creation of a European e-ID, which was called for by EU leaders at their 
meeting of 1-2 October 2020.   

As the European Union grows more digital, and at the same time, the population ages, the digital 
divide is an important factor to take into account. According to experts, older people are often less 
confident to use electronic devices and services, and need more help in using them. Another digital 
divide factor to take into account, in addition to users' age, is the relatively big differences between 
the EU Member States. Eurostat has found that, for example, in 2018, e-mail use was one of the most 
common internet activities carried out by EU citizens; but, that while 94 % of Danish people use e-
mails, for Bulgaria the figure amounts to only 40 %. These big  differences in technology uptake 
between Member States can be  challenging when going forward with  the digital transition. In 

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September 2020,  the Commission published a  digital education action plan  to enhance digital 
competences across the EU. 

Figure 5 – What do you use the internet for? 

Source: Eurostat. 

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6. Deepening economic and monetary union 

A.  Background  

Since the beginning of the year, a virus that was unexpected by most people caused the world 
economy to  come  to  a  standstill and locked  societies  down  around the globe.  The  Covid-19 
coronavirus put the whole European Union in crisis mode and caused exceptional additional costs 
to Member States. The journey to recovery has now begun, but it may be a long one, as the virus 
has not vanished; the start of the autumn has seen a new rapid increase in the number of cases. 
Finalising a safe and effective vaccine, which may help to bring things back to 'normal', is likely to 
take some time. Since the outbreak of the pandemic, the Heads of State or Government have met 
on several occasions to provide a short- and medium-term response to the crisis and to set priorities 
for the EU's recovery strategy. 

According to forecasts, this unprecedented situation is likely to prove even more severe than the 
financial crisis that shook the European economies and euro area to the core more than a decade 
ago. Work on strengthening economic and monetary union (EMU) took significant strides forward 
during and after the financial crisis, and it is worthwhile looking back at lessons learned, as some 
elements of the current discussions, regarding eurobonds and solidarity for instance, are the same 
as before. 

In the wake of the financial crisis, deepening EMU and making it more resilient to shocks became a 
key priority for EU decision-makers. During the height of  the crisis a  decade ago, the European 
Council held several extraordinary meetings to tackle urgent challenges, but after the acute threat 
subsided, the leaders had more time to reflect on the past developments and on future action 
needed to build trust in EMU and to try to avoid a similar crisis in the future.  

The Four Presidents' Report in 2012 and the Five Presidents' Report in 2015 outlined ideas on how 
to develop EMU after the crisis: they proposed more coordination, common standards and joint 
decision-making. According to the presidents, the final stage of a 3-stage process suggested in their 
report, a deep and genuine EMU, should be reached by 2025. Some of their proposals have been 
realised, such as launching the Capital Markets Union, but others, such as completing the Banking 
Union or setting up a euro area treasury, are yet to be achieved. 

One of the concrete institutional developments following the start of the financial crisis 10 years ago 
was the creation of the Euro Summit, which gathers Heads of State or Government of Eurozone 
countries at least biannually to discuss economic policies and their coordination. It was born out of 
a suggestion by the French President Nicolas Sarkozy in 2008, and was formalised by a Treaty on 
stability,  coordination  and  governance  in  2013.  The  process  developed  further  when  the 
Commission presented its package on  deepening EMU  at  the  end  of  2017,  and  Euro Summit 
President Donald Tusk actively steered the conversation with a Leaders' note on developing the 
EMU in 2018. The Euro Summit work is now led by its new President, Charles Michel, who is also 
President of the European Council. There have not been any Euro Summit meetings in 2020 thus far; 
but the new Leaders' Agenda announces a Euro Summit in parallel with the regular meeting of 
Heads of State or Government on 10-11 December 2020.  

Another highly visible change established in response to the financial crisis was the creation of the 
European Semester process, initiated by the European Council in 2010 as a part of a wider reform of 
the EU economic governance. The objective is to coordinate policies and address challenges head-
on  to  ensure sound public finances  and prevent excessive  macroeconomic imbalances, whilst 
boosting investments and structural reforms. 

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In the new 2019-2024 five-year legislative cycle, both the European Council and the Euro Summit 
see the deepening of economic and monetary union as an essential endeavour for the European 
Union. Before the shock of the coronavirus hit Europe and the world with full force, the EU economy 
had been growing for seven consecutive years, but the pace of growth had been relatively slow and 
the biggest challenges to the European economies came from geopolitical and trade tensions.  

The economic outlook for 2020 is now dramatically different. As a result of the 'great lockdown' the 
International Monetary Fund expects the world economy to contract by 4.9 %, the biggest drop 
since the Great Depression in the 1930s. The Commission's summer economic forecast shows even 
bleaker  figures  for  the  EU  and  the  eurozone −  with  output contracting by  8.3 %  and  8.7 % 
respectively, figures that are worse than during the financial crisis. For 2021, both the IMF and the 
Commission are predicting partial recovery, but it remains to be seen what shape the upturn will 
take − V, U, W or L: these are the curve shapes with which the economists label recessions. The V 
shape is considered the best option by experts; a sharp drop followed by an equally sharp rise. 

Completing banking union  and  the  capital  markets union, building  the  fiscal  capacity of  the 
Eurozone and strengthening the role  of  the  euro on  the  global  stage were  amongst the key 
objectives that the Heads of State or Government were highlighting before the crisis, and will, most 
likely, continue to be crucial in the aftermath of the crisis. These aims are clearly emphasised in the 
European Council's 2019-2024 strategic agenda as well as in the European Commission President 
Ursula von der Leyen's Agenda for Europe, put forward ahead of  her election by the European 
Parliament. 

B. Legal basis for European Council action  

Article 121(2) of the Treaty on the Functioning of the European Union (TFEU) provides that 'the 
European Council shall, acting on the basis of the report from the Council, discuss a conclusion on 
the broad guidelines of the economic policies of the Member States and of the Union'. 

The European Council also has an important role in the European Semester process. Early each year, 
it carries out a horizontal review and 'identifies the main challenges facing the Union and the euro 
area and  gives strategic guidance on policies'  (recital  14,  Regulation 1175/2011).  Furthermore, 
usually in June, the Heads of State or Government endorse the country-specific recommendations 
(CSRs). This is done before the Council adopts the CSRs, which happens usually in July. 

During the coronavirus crisis, the 'solidarity clause' in Article 122 TFEU has been used as legal basis 
for some of  the actions taken to tackle the crisis and support the EU  economy in  the recovery 
process. Paragraph 2 states that 'where a Member State is in difficulties or is seriously threatened 
with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, 
the  Council,  on  a  proposal from the  Commission, may grant, under certain conditions, Union 
financial  assistance to the  Member  State concerned'. The  European Council is  not  specifically 
mentioned in this article. 

C. Strategic orientations 

The European Council states in its strategic agenda 2019-2024 that: 'We must ensure that the euro 
works for our citizens and remains resilient, deepening the Economic and Monetary Union in all its 
dimensions,  completing  the  Banking  and  Capital  Markets  Union  and  strengthening  the 
international role of the euro.' 

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Fiscal capacity of the eurozone and resilience of EMU 
The  Hague  summit of  1969  was  a  defining  moment for  the  EMU,  as  the  Heads  of  State  or 
Government defined Economic and Monetary Union as a new objective for European integration. 
Officially EMU came into being with the ratification of Maastricht Treaty in 1992. Since then, as a 
result of progressive integration over the years, EMU, in particular the single currency, the euro, has 
grown to become the most tangible symbol of European integration. Within the euro area, the 
coordination of economic and fiscal policies between Member States, an independent monetary 
policy by the European Central Bank (ECB), and single rules for as well as the supervision of euro area 
financial institutions were progressively developed.  

The  resilience of  EMU  was put to  the test in  the years of  the financial  crisis. When some euro 
countries lost market access during the sovereign debt crisis, there was a  real  risk of the  euro 
breaking up, which would have had serious consequences on the EU as a whole. Since then, EU 
leaders have placed special emphasis on the deepening of EMU and enhancing its resilience to risks 
and shocks. The asymmetric nature of EMU is something that Heads of State or Government are 
specifically focusing on; this asymmetry refers to the fact that the Maastricht Treaty had federalised 
monetary policy, but left economic policy within the hands of the Member States.  

The Eurozone budget, the Budgetary Instrument for Convergence and Competitiveness (BICC), was 
seen  by experts  as one  way  of  increasing the  stability of  the Eurozone, especially in  times  of 
recession.  The  Euro  Summit  mandated  the  Eurogroup  in  December  2018  to  work  on  the 
instrument's 'design,  modalities  of  implementation and  timing'  based  on  earlier  discussions. 
Member States have had different views on how to make the euro area more crisis-proof and how 
to build the instrument to achieve that. Some countries favour the risk-sharing approach with a 
sizeable common budget; others put emphasis on structural reforms and risk-reduction. The latest 
BICC proposal was based on the risk reduction approach, and it aims at making the euro area more 
resilient by strengthening competitiveness and economic convergence. EU leaders expected the 
BICC to come into force together with the next multiannual financial framework (MFF) for 2021-
2017.  However,  the  pandemic  forced  a  change of  plan,  and  the  idea  of  BICC  has now  been 
incorporated into the recovery package proposed by the Commission on 27 May 2020 and agreed 
on by the European Council on 17-21 July 2020. 

The coronavirus crisis has had an unprecedented impact on the euro area, with economic output 
expected to decrease by 8.7 % in 2020, more than during the financial crisis a decade ago. The shock 
to EU economies has been symmetrical, but the recovery might not be. Economy Commissioner 
Paolo Gentiloni has stressed that this potential development posed a threat both to the eurozone 
and to the single market.  

The discussions on financial solidarity and on how to fund the crisis and recovery package have not 
been fluid. One example of this is the Eurogroup video-conference meeting in inclusive format on 
7-9 April, which was originally scheduled to last for one day only but had to be prolonged. Finding 
an agreement between countries that were advocating for different ways to support those countries 
most in need proved to be more complicated than initially foreseen. The gridlock was caused mainly 
by  differing  views  on  'corona bonds', which  Italy  in  particular was  backing  strongly and  the 
Netherlands was vehemently against, as well as on the macroeconomic conditions accompanying 
European Stability Mechanism (ESM) loans, which some countries, spearheaded by Italy, considered 
to be too strict. Setting up a temporary Recovery Fund also proved challenging because of differing 
approaches, leading EU ministers to ask the European Council for guidance. However, considering 
these differences in views, EU  leaders decided to move the issue to the Commission's table and 
tasked it  with  analysing the exact  needs and producing a  proposal as rapidly as possible. The 
Commission published its proposal on 27  May  2020  and  the European Council agreed on the 

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package at its meeting of 17-21 July 2020. The final negotiations with the European Parliament are 
now ongoing, albeit with inconclusive results thus far. 

Another challenging factor during the coronavirus crisis has been the German federal constitutional 
court's critical ruling on the European Central Bank's bond buying programme, which has met with 
mixed reactions. 

Completing the banking union and the capital markets union 
The Roadmap towards banking union, published by the European Commission in 2012,  aims at 
ensuring strong and well  supervised EU banks to break the 'vicious circle  between  banks and 
sovereigns' and to prevent any crisis similar to the one that broke out in 2007 in the future. The 
Banking Union has three pillars - two of them existing: the Single Supervisory Mechanism (SSM) and 
the Single Resolution Mechanism (SRM), and one not yet in force: the European Deposit Insurance 
Scheme (EDIS). In  December 2018,  the Eurogroup stated that work on a roadmap for EDIS  had 
started with the aim of beginning political negotiations; and a high-level working group (HLWG) 
was tasked to work on the next steps. In December 2019, the HLWG proposed a roadmap to the 
Eurogroup, and the Euro Summit tasked the Eurogroup to 'continue work on all elements of the 
further strengthening of the banking union, on a consensual basis'. The objective of completing 
EDIS is included in the Commission guidelines, and the assignment was originally given to Executive 
Vice-President Dombrovskis, but since certain tasks were reshuffled in September 2020 following 
the  resignation  of  Trade  Commissioner  Phil  Hogan,  it 
is  the  incoming  Commissioner 
Mairead McGuinness who takes on this portfolio. EDIS, and the banking union in general, were 
discussed at the September Eurogroup meeting at which broad agreement could be observed on 
the 'need to push forward in an overall manner' and to 'make further progress on this during the 
year'. Strengthening the banking union is also part of the Eurogroup work programme up to June 
2021. 

In 2015, the Commission adopted an action plan for building a capital markets union (CMU). The 
main aim of CMU is to ease access to funding for businesses, especially SMEs, and thereby, to create 
growth  and  jobs  in  Europe.  It  also  contributes to  the  stability  of  the  EU  financial  system, 
complements the Banking Union, and makes the financial system more resilient towards risks and 
more competitive on the world stage. The midterm review in 2017, and the yearly progress reports, 
the latest one published ahead of the European Council meeting in March 2019, state that, even 
though progress has been made, a number of proposals still remain to be finalised. In its March 2019 
conclusions, the European Council underlined that 'further steps should be taken to deepen the 
Capital Markets Union'; it reiterated the objective of completing the CMU in its strategic agenda. The 
EU finance ministers discussed capital markets union at their meeting in December 2019, and set 
out in  an annex  several measures for the Commission high-level forum on CMU  to  assess and 
explore. The high-level forum started its work in November 2019 and was expected to deliver policy 
recommendations  in May 2020,  but the final  report was only published on 10  June 2020.  The 
Commission work programme for 2020 envisages initiatives aimed at deepening CMU, such as the 
recently published new action plan on capital markets union.  

Strengthening the international role of the euro 
The euro, launched on 1 January 1999, is currently the second most important currency in the world 
after the US dollar. On its 21st anniversary, it is the currency of 19 countries and 340 million EU 
citizens. In the strategic agenda 2019-2024, EU leaders stress that the euro must work for the citizens 
and  remain resilient, and  that its  international role should be  strengthened. Making the  euro 
stronger in the international sphere would, for example, lower the interest rates paid by European 
consumers and companies, and guarantee a more reliable access to finance for European businesses 

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and governments. European Central Bank data from June 2020 suggest that 'the international role 
of the euro remained stable' in 2019.  

In December 2019, the Euro Summit stated that 'progress in these areas [of deepening EMU, ESM 
reforms, strengthening the banking union and BICC] will also enhance the international role of the 
euro, which should be commensurate with the global economic and financial weight of the Union'. 
Work on strengthening the euro in the international financial setting is of high importance for the 
Commission: ahead of the December 2018  Euro Summit, it published a communication entitled 
'Towards a stronger international role of the euro', and, in 2019, the Commission President stated in 
her  guidelines: 'I  want  to  strengthen the international role of  the  euro, including  its  external 
representation. A strong, integrated and resilient capital market is the best starting point for the 
single currency to become more widely used internationally.' Commission President von der Leyen 
tasked Executive Vice-President Dombrovskis with this responsibility, the aim to make the euro a 
strategic asset for the Union and stronger on the global financial stage. According to his updated 
mission letter  of  September 2020,  'this will  include  increasing the  global  use  of  the  euro for 
payments, as a reserve currency and for debt issuance'. The Commission work programme states 
that  there  will  be  non-legislative  action  on  strengthening  Europe's  economic  and  financial 
sovereignty in the fourth quarter of 2020. 

D. Noteworthy commitments: specific requests and follow-up 

Budgetary  instrument for convergence  and  competitiveness  (BICC):  After the financial crisis, 
many high-level contributions were submitted, notably the Four Presidents' Report in 2012 and the 
Five  Presidents' Report in  2015,  suggesting ways  of  making  the  euro  more  crisis-proof. The 
December 2012  European Council agreed on a  'Roadmap for the completion of EMU'  in which 
mutually  agreed  contracts for  competitiveness and  growth,  and  solidarity mechanisms were 
mentioned. As a  result, the Commission published a  communication on the Convergence and 
Competitiveness Instrument (CCI) in 2013. However, CCI did not gather enough political support, 
and in the end there was no legislative proposal.  

The discussions on the euro area budget have continued over the years, and in December 2018 the 
Euro Summit asked the Eurogroup to work on the 'design, modalities of implementation and timing 
of a budgetary instrument for convergence and competitiveness for the euro area'. There have been 
two camps in the talks – the countries advocating for risk-sharing, and the countries that are in 
favour of a risk-reduction approach. The countries favouring risk-sharing as a solution have spoken 
for a sizeable common budget to support investment and economic growth in times of recession; 
and  those  opting  for  risk-reduction would  rather strengthen competitiveness and  economic 
convergence between the Member States to reduce the risk of instability in the euro area, and do 
this without creating a mechanism involving significant financial transfers between countries. When 
creating the current proposal for a euro area budget, EU leaders have put more emphasis on the risk 
reduction aspect.  

In December 2019, the Euro Summit asked the Eurogroup to find solutions for the financing of the 
BICC based on the October 2019 term sheet, so that the mechanism can become operational with 
the multiannual financial  framework for 2021-2027.  The  Eurogroup  stated in its  February 2020 
meeting that the size of the BICC will be decided in the context of the MFF, and that there could be 
a possible intergovernmental agreement (IGA) for transferring additional voluntary contributions 
into the BICC if so required. In the context of the current coronavirus crisis, the Eurogroup President, 
Mário Centeno, stated initially concerning the BICC that there was a strong case to reflect on its 
potential role and rethink its size. However, the idea of  BICC has now been incorporated in the 
Commission's recovery package, and Mr Centeno has said 'the spirit of BICC as a money for reforms 

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and investment instrument is well embedded in the new tool of the recovery and resilience facility 
(RRF)'. The European Council agreed on the recovery package at its meeting on 17-21 July 2020. 

Resilience of the banking sector:  Before the financial crisis 12 years ago, some European banks 
had been involved in risky lending and business practices, and as the effects of the United States 
(US)  subprime crisis  started to move  across the Atlantic, rescuing banks caused problems for 
European governments in the form of rising debt levels. This, in its turn, resulted in a sovereign debt 
crisis.  To  avoid  a  similar  disastrous situation in  the  future, EU  leaders have  been  focusing on 
improving the resilience of the banking sector. Stress tests have been used to analyse how banks 
would fare in different economic hardship scenarios. Many measures have been put into place – 
such as the single supervision and the single rulebook. A banking union has been set up since the 
crisis,  with  two  pillars,  the  Single  Supervisory  Mechanism  (SSM)  and  the  Single  Resolution 
Mechanism (SRM), already existing, and the European Deposit Insurance Scheme (EDIS), still  in 
preparation. Heads of State or Government have been calling for the further strengthening of the 
banking union,  as  recently as  the  December  2019  Euro  Summit, and  work is  ongoing in  the 
Eurogroup on that front. 

In  response to the coronavirus crisis, several measures  have been put  in  place  concerning the 
banking sector. One of them is the banking package that was put forward by the Commission on 
28 April 2020,  to facilitate bank lending. The main aim of the package is to help  banks provide 
funding for citizens and companies during the pandemic so as to mitigate the economic impact of 
the crisis. 

European  Stability Mechanism reform: As new tasks have been suggested for the ESM, the ESM 
Treaty and supporting documents need to  be  revised. These new  tasks, including a  common 
backstop for the Single Resolution Fund (SRF), outlined in two documents – term sheet and terms 
of reference – were endorsed by the Euro Summit in December 2018.  The Eurogroup proposed 
changes to the ESM treaty in June 2019; the Euro Summit took note of this and asked the Eurogroup 
to continue working on the matter so that a full package could be agreed by in the end of the year. 
In December 2019, the Eurogroup reported to the Euro Summit that it had 'reached an agreement 
in principle, subject to the conclusion of national procedure'; the Euro Summit then asked finance 
ministers of the Eurozone to continue working on the ESM reform and said that they would return 
to the matter in June 2020 at the latest. However, the Euro Summit has not convened in 2020 as the 
focus has been on the coronavirus crisis response and recovery. The Eurogroup is taking the work 
forward and discussed the topic at its meeting of 11 September 2020. The outcome of its work will 
most likely be discussed at the Euro Summit scheduled for December 2020. 

The ESM can play an important role in the coronavirus crisis and recovery effort, even though some 
countries most hit by the crisis, in particular Italy, have reservations concerning its use. At its meeting 
on 9 April, the Eurogroup proposed to establish a 'Pandemic Crisis Support [instrument], based on 
the existing ECCL precautionary credit' of the ESM to provide the euro area Member States with 
financing  for  direct  and  indirect  healthcare, cure  and  prevention-related costs. The  European 
Council endorsed the proposal, and then the Eurogroup, at its meeting on 8 May discussed the 
features and standardised terms, with a  view  to making the instrument operational as soon as 
possible. This credit line has been working since 15 May. 

Recovery  Fund: The Eurogroup had a conference call to discuss the coronavirus crisis on 4 March 
and underlined its commitment to providing coordinated responses and appropriate ready to use 
tools. In its videoconference meeting on 26 March, the European Council tasked the Eurogroup with 
presenting proposals within two weeks, which the Eurogroup did on 9 April, and, as a part of the 
'comprehensive economic  policy  response', the  idea  of  a  recovery fund  was  presented. The 
Eurogroup stated that 'such a fund would be  temporary, targeted and commensurate with the 

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extraordinary costs of the  current crisis and help  spread them over time through appropriate 
financing'. However, EU finance ministers could not agree on the way to finance the fund and asked 
for guidance from the  EU  Heads of  State or Government. The latter was  not able  to  reach an 
agreement either, however, and asked the Commission to analyse the different needs and present 
a proposal. The fund was expected to amount to €1.5 trillion and have a link with EU's 2021-2027 
long-term budget (MFF). Commission President Ursula von der Leyen outlined the plans of the 
Commission during the European Parliament plenary on 13 May. The European Parliament, in a 
resolution of 15 May called for 'the new 'recovery and transformation fund' to be €2 trillion, to be 
financed 'through the issuance of long-dated recovery bonds' and to be 'disbursed through loans 
and, mostly, through grants, direct payments for investment and equity'. Parliament also stated that 
the new fund should come on top of the MFF and should not affect the 'existing and upcoming' 
programmes in a negative way. The following week, on 18 May, France and Germany presented a 
joint initiative for European recovery, in which they proposed to set up an ambitious recovery fund 
of €500 billion at EU level for solidarity and growth. The Commission's €750 billion proposal, entitled 
'Next Generation EU', was published on 27 May and, according to President von der Leyen, 'of that 
total, €500 billion would be distributed in grants and €250 billion in loans passed on to Member 
States'. The European Council discussed and agreed on the recovery fund package in its meeting of 
17-21 July 2020, and negotiations with the European Parliament to finalise the package are ongoing. 

E. Challenges ahead and outlook 

Before the coronavirus crisis hit Europe and the world, economic outlooks (IMF, OECD, Commission, 
EPRS) forecasted slow growth for Europe and the euro area for the next two years. The greatest 
economic uncertainty was caused by geopolitical and trade tensions; the shock caused by the 
world-wide pandemic, which has made GDP  figures plummet worldwide, did  not feature in the 
forecasts. 

Since the coronavirus crisis began, the various actors, including the IMF and the Commission, have 
updated their forecasts for 2020 several times, and the outlook is gloomy: the world economy will 
contract by 4.9 % in 2020, the biggest drop since the 1930s, and both eurozone and EU GDP will take 
a deep dive this year with an expected decrease in output of 8.7 %  and 8.3 % respectively. Both 
forecasts predict a partial recovery for 2021, but this largely depends on how quickly the situation 
will  be  able  get back  to 'normal', notably on when  a  safe and effective  vaccine  will  be  widely 
available.  

The European Council has been active during the crisis, and, like many actors, has taken a digital 
leap with its video-meetings. This new form of meetings has enabled EU leaders in a context of 
lockdown to take joint action to tackle the crisis. Considering the particular nature of the European 
Council  however, and  notably the importance of  small  bilateral meetings on  the  side-lines in 
achieving agreements, video meetings are unlikely to replace physical meetings fully when crucial 
decisions are on the agenda. In such a format, EU leaders tend to be more cautious and keep to their 
written statements since  the  confidentiality of  discussions is  not ensured and  participation is 
broader than in formal physical meetings. After months of remote meetings, the European Council 
was able to convene again in person on 17-21 July when EU leaders discussed and reached a political 
agreement on the MFF and the recovery package. It is, however, notable that the Euro Summit has 
not had any meetings, physical or via video-conference, since December 2019.  

The MFF and the recovery package, also referred to as 'Next Generation EU' (NGEU), agreed on by 
the EU leaders in July, are now subject to final negotiations between the co-legislators, Council and 
Parliament. The current 2014-2020  EU  funding period runs until the end  of the year, and if  the 
negotiations are not concluded soon, there is a risk that new EU programmes will not be able to 
start on time at the beginning of 2021, which may have an adverse effect on the EU economy. The 

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President of the European Central Bank, Christine Lagarde, already emphasised the need for a swift 
agreement back in June and stressed that 'the faster the package is agreed, the better for the EU 
economy'.  

Work on the banking union and the capital markets union seems to be gaining new momentum. 
The  new  Commissioner  in charge of  the portfolio, Mairead  McGuinness, has been tasked with 
completing the banking union and speeding up work on the capital markets union. The Eurogroup 
discussed the banking union at its September meeting, and the Commission published an action 
plan to boost the European Union's capital markets union on 24 September. 

Building trust in the euro, especially in the international context, and strengthening its global role 
are important objectives for the European Council. Achieving these goals would give  the EU a 
stronger standing in the global setting as well as more 'financial autonomy' and, for example, ease 
access to funding for European governments and companies. There has been some debate on 
whether the coronavirus crisis could provide an opportunity to boost the euro as a global currency, 
the conclusion being that such a development would require a strong EU recovery from the crisis. 
As requested by the European Council, a number of initiatives can be taken – some of them already 
in the pipeline – to improve the euro's international standing – its use as reserve and investment 
currency, international exchange markets, debt and  loan markets, key sectors and as invoicing 
currency.  

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7. Fair competition within the EU and globally 

A. Background 

Increasing  competition  from  major  economic  players,  global  trade  tensions  and  growing 
protectionist trends have given new impetus to the move towards a more integrated and assertive 
economic,  competition and  trade  policy  for  the  EU.  The  recently  adopted industrial strategy 
highlights, in particular, the impact of the twin ecological and digital transitions on society and the 
importance of ensuring that competition rules remain fit for purpose. EU leaders have underlined 
the essential role of industry as a major driver for growth, employment and innovation in Europe 
and have called for a mainstreaming of industrial competitiveness across all EU policy areas. The 
strategic agenda for the period 2019-2024  calls for ensuring fair competition within the EU and 
globally, promoting market access, mitigating external risks and securing Europe's strategic supply 
chains.  

However,  the  coronavirus pandemic  has  affected  the  EU  economy as  a  whole,  at  all  levels, 
businesses, jobs and households alike. In this context, public support has been essential in ensuring 
the  availability  of  sufficient  liquidity  to  preserve  the  continuity  of  economic  activities.  The 
Commission has acknowledged the urgent need for support and has recognised that aid could be 
used to compensate for damage caused by exceptional events, e.g. a pandemic, in accordance with 
Article 107(TFEU). The temporary State aid framework, adopted in March 2020, has allowed flexible 
enforcement of  EU  State aid  rules, therefore broadening the possibilities for public  support at 
national level.  Alongside the measures that Member States have already taken, on  this  basis, 
including grants, tax advantages, and subsidised public loans, Member States can also allow for the 
recapitalisation of companies facing  economic difficulties,  however, subject to  safeguards. The 
European Council has supported the Commission's adaptation of EU State aid rules and stressed 
that the Member States need the 'flexibility to do everything that is necessary'. 

B. Legal basis for European Council action 

  Article 15 of the Treaty on the European Union (TEU): The European Council shall provide the 
Union with the necessary impetus for its development and shall define  the general political 
directions and priorities thereof [...]. 

  Protocol  No  27  on  the  internal market  and  competition where  it  is  made  clear  that  fair 

competition is included in the objective of the internal market in Article 3(3) TFEU; 

  Articles 101-109 of the Treaty on the Functioning of the European Union (TFEU). 
  Articles 37, 106 and 345 (TFEU) for public undertakings and Articles 14, 59, 93, 106, 107, 108 and 
114  (TFEU) for public  services, services of general interest and services of  general economic 
interest; 

  Merger Regulation (Regulation (EC) No 139/2004). 

C. Strategic orientations 

The  March 2019  European Council laid  down a  number of  strategic guidelines that have been 
reiterated and  reinforced in  the  strategic agenda  for  2019-2024.  A  strong economic  base  is 
considered of key importance for Europe's competitiveness, prosperity and role on the global stage 
as well  as for the creation of jobs. This requires an integrated approach connecting all relevant 
policies and dimensions, including a deepening of the Economic and Monetary Union and of the 
single market, an assertive industrial policy, a forward-looking digital policy, a robust trade policy 

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and  an  updated  competition framework to  keep  step  with  technological and  global  market 
developments. 

D. Noteworthy commitments: specific requests and follow-up 

Ensuring a level playing field: updating the EU competition framework 
In December 2018, following the 6th ministerial conference of Friends of Industry, 18 EU Member 
States acknowledged the need to adapt European industry to a changing global environment. They 
called for a competition policy able to foster the emergence of strategic value chains and urged for 
a revision of State aid rules allowing European players of international scale to emerge. Following 
the decision of the Commission, in early 2019, to prohibit the merger of French and German rail 
businesses, Alstom and Siemens, some concerns surfaced as to the merger assessment and the 
Commission's considerations, particularly taking into account ever-rising global competition (in this 
case, China). In February 2019, France and Germany, signatories to the Friends of Industry statement, 
called  for  the  development of  a  genuine  European industrial  policy,  along  the  same  lines, 
emphasising the need for an updated competition framework to ensure the EU's competitiveness 
on the global market.  

The Franco-German manifesto called for an examination of rules on merger control and State aid for 
companies, and a right of appeal of the Council on competition policy decisions. They were later 
joined  by  Poland  in  calling  for modernised rules in  merger control, to take account of  global 
competition, including by examining the trade and industrial policies of competitors, the level of 
state intervention (e.g. subsidies) and more flexibility in determining the relevant market.  

Some of these proposals subsequently fed into discussions at the March 2019 European Council, at 
which  EU  leaders  called  for  a  long-term vision  for  the  EU's industrial future and  for  updated 
competition rules. As already proposed in a previous joint communication, 8 the Commission was 
invited to assess existing EU legislation and explore how to address the distortive impact of foreign 
state ownership and State aid financing in the internal market. While trade defence instruments 
address subsidies that affect prices of imported products, they do not cover all the potential effects 
of unfair subsidies or support by third countries, in the case of acquisitions or mergers.  

In this respect, the Commission welcomed the proposal by the Dutch government in a 'Non-paper 
on strengthening the level playing field  in  the internal market', published in December 2019.  It 
favoured an approach whereby any company, whether EU or non-EU, if liable to distort competition, 
would be  subject to an investigation of its procedures (e.g. transparency in accounting) with a 
possibility to prohibit certain market behaviours if deemed abusive. As previously announced, in 
June 2020,  the Commission published a white paper setting out different options for addressing 
distortive subsidies; the public consultation took place between June and September 2020. This 
initiative is particularly relevant today considering the negative impact of the health crisis on the 
economy, which will likely weaken many EU companies and make them vulnerable to acquisitions 
by foreign, subsidised competitors.  

Regarding the overall competition policy framework, following the 2012 reform of EU state rules, 
more than 97 % of all State aid measures are implemented by Member States without prior approval 
by the Commission. In January 2019, the Commission announced it would evaluate the EU State aid 
rules (also those adopted as part of its 2012 reform) to determine whether they continue to be fit 
for purpose ('fitness checks'). A review of competition rules applicable to horizontal cooperation 

8 European  Commission  and HR/VP contribution to the European  Council, EU-China  – A strategic outlook, 12 March 2019. 

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agreements9 and  to  vertical  agreements is  also  under  way,  with  the  latter  finalised  in  early 
September. Revised State aid guidelines for the emissions trading system (ETS) were also issued in 
September 2020,  reducing  the  compensation rate and also  the  number of  eligible  sectors. In 
December 2019,  the  Commission announced it would  review  the way  in  which  markets were 
defined in  antitrust and merger cases. The consultation process on the revision of the notice on 
market definition opened in June 2020 and will end in October.  

The  emergence  of  the  digital  economy,  and  in  particular,  digital  platforms,  with  inherent 
characteristics e.g.  absence  of  borders, multiple  services  in  one  'ecosystem', data  protection 
concerns, has changed the nature of markets. Consequently, a growing number of  voices have 
called for an assessment of current legislation to take account of the new digital business models. 
In a letter to Commissioner Vestager, in February 2020, the ministers of the economy of France, 
Germany, Italy and Poland stressed the need for more scrutiny of digital platforms and specifically 
for a regulatory framework to avoid such companies distorting competition. On 2 June 2020, the 
Commission launched a public consultation on the various policy options for an ex-ante regulatory 
framework setting out 'clear obligations and prohibited practices' for digital platforms acting as 
gatekeepers, as well  as potential remedies where 'necessary and justified'. At the same time, in 
parallel, the Commission will explore the creation of a new competition tool to address structural 
problems that cannot be tackled under the remit of Articles 101(TFEU) and 102  (TFEU), such as 
monopolisation by non-dominant companies that nevertheless have market power. 

Ensuring a level playing field: Strengthening policy instruments to address unfair 
trade practices 
In light of an increasingly protectionist trading environment, improving access to third countries' 
markets will continue to play an important role in maintaining Europe's competitiveness. Protecting 
the EU's industry from unfair trade practices has become especially important at a time when certain 
partners are not playing by the same rules. Modernisation of trade defence instruments (TDI) and 
enhanced oversight over foreign direct investment across the EU have thus featured high on the 
leaders' agenda in recent years.  

Legislation on TDI, aimed at protecting EU companies from dumped or subsidised imports, was 
revised in 2018, and now allows for the imposition of higher anti-dumping and anti-subsidy duties. 
In addition, enhanced cooperation between Member States and the Commission, will allow for a 
careful assessment of situations where certain foreign direct investments may present a risk  in terms 
of security or public order. On 26 March 2020, the Commission issued additional guidance urging 
Member States to make full use of their investment screening mechanisms to address cases where 
the acquisition of European companies by non-EU investors would present a risk, in particular in 
healthcare (e.g.  production of  medical  or  protective equipment) or  related industries such as 
research establishments (e.g. developing vaccines). 

Regarding  market  access,  discussions  resumed  this  year  on  an  international  procurement 
instrument. The aim is  to increase the EU's  leverage when negotiating access to procurement 
markets in third countries. The instrument would allow the Commission to open an investigation, 
and  if  any  alleged  discrimination against EU  companies were  to  be  proven, it  would  lead  to 
consultations with the third country concerned, and ultimately, price penalties could be applied to 
the tenders originating there. Progress on this file had slowed down however in the context of the 
public  health crisis. This  resulted not only from the limited meeting possibilities, but also from 

9  Horizontal agreements  refer to  agreements between  companies  operating  at  the same  level in  the market  whereas 
vertical  agreements  refer  to  agreements  between  companies  operating  at  different  levels,  such  as  producer  and 
distributor. 

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existing political sensitivities regarding the file. However, at their meeting on 1-2 October 2020, EU 
Heads of State or Government called for more progress to be achieved. 

Chief Trade Enforcement Officer Denis Redonnet – appointed on 24 July 2020 – will be responsible 
for  improving compliance with,  and  enforcement of, the EU's  trade agreements, including on 
market access and sustainable development commitments. More concretely, a new system would 
allow stakeholders (e.g. companies, trade associations) to register violations of trade and sustainable 
development commitments by trading partners. During an exchange of views  in  the European 
Parliament's Committee on International Trade, on  24  September 2020,  Mr  Redonnet, further 
mentioned the creation of an 'anti-coercion instrument' to deter, and if necessary, counterbalance 
coercive actions by third countries. 

Ensuring a level playing field: Reforming the World Trade Organization 
The World Trade Organization (WTO) has been under significant pressure in recent years due to the 
US blockage of nominations of members to the WTO Appellate Body, second and highest instance 
of WTO dispute settlement system. Since December 2019, the Appellate Body has only one member 
left and can no longer accept any new appeals. Underlying issues behind the current challenges 
faced by the WTO include: i)  the difficulty of reconciling different economic models, notably the 
liberal market economies such as the US with the state-led economic model of China; ii) the lack of 
a definition of what constitutes a developing country, which under the WTO rules, enables countries 
to claim special and differential treatment. Questions have thus been raised as to whether the WTO 
rules are still fit to address today's economic realities, e.g. digital trade, and whether they still allow 
its  members  to  effectively  counter  unfair  trade  practices.  The  June  2018  European  Council 
addressed this issue and  invited  the  Commission to work together with  like-minded partners 
towards  a  reform  of  the  institution  in  its  three  areas:  rule-making,  dispute  settlement and 
monitoring.  

On 24 January 2020, the EU and 16 WTO members 10 agreed to develop a multi-party interim appeal 
arrangement (MPIA), based on Article 25  of the WTO Dispute Settlement Understanding, which 
allows for the use of arbitration as an 'alternative means of dispute settlement'. The agreement 
became effective on 30 April and, on 31 July, the MPIA became operational following the submission 
of  a  list  of  arbitrators  to the  WTO.  In  the  absence  of  a  functional  WTO  Appellate  Body, the 
Commission also announced in December 2019 amendments to the EU Enforcement Regulation, to 
ensure that the EU is able to enforce international trade rules in circumstances where the WTO is no 
longer  in  a  position to  deliver  binding  dispute-settlement decisions. The Council  adopted its 
position on 8  April 2020,  supporting the Commission's proposals to impose sanctions such as 
customs duties, quantitative restrictions on imports or exports of goods, and measures in the area 
of  public  procurement, in  situations  not  covered previously by the regulation. In  this way, the 
Commission is able to retaliate fairly if a trade partner imposes WTO-incompatible trade measures 
while blocking the WTO dispute settlement process. Interinstitutional negotiations on the file began 
on 17 July 2020. 

In light of the ongoing WTO reform, trilateral talks bringing the EU, Japan and the US together have 
also been taking place, this in parallel with initiatives to address trade distorting practices of non-
market economies, such as subsidies and State aid. In this respect, on 14 January 2020, the three 
agreed that the  current list  of  subsidies prohibited under the  WTO rules  was  insufficient and 
proposed to add new types of subsidies to the WTO Agreement on Subsidies and Countervailing 

10  Australia,  Brazil,  Canada,  China,  Chile,  Colombia,  Costa  Rica,  Guatemala,  Republic  of  Korea,  Mexico,  New  Zealand, 
Norway,  Panama,  Singapore, Switzerland, and Uruguay. 

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Measures. In addition, they underlined the need to clarify the concept of 'public body' 11 as defined 
under current WTO rules since its current definition undermines the effectiveness of subsidy rules. 

The Covid-19 virus outbreak has however led to the postponement of the June 2020 WTO Ministerial 
Conference by one year. The health crisis has led some countries to impose export restrictions or 
prohibitions on essential goods, such as medical equipment or food (grains). WTO reports in April 
2020  indicated that 80 countries had taken such measures, with the immediate consequence of 
endangering the  supply  of  vital  supplies  to  those  most in  need.  The  Commission has  been 
monitoring Member  States'  measures  and has  worked  towards  removing  barriers  since  the 
beginning of the crisis. Certain countries have called for a removal of tariffs on medical products, 
especially those related to infectious diseases, and the EU has temporarily waived tariffs on medical 
equipment. In this context, on 15 June 2020, at the meeting of the Ottawa Group 12 on WTO reform, 
the EU Trade Commissioner presented the EU's proposals to facilitate trade in healthcare products, 
opening the possibility for a plurilateral agreement open for all WTO members to opt in. 

Ensuring a level playing field: fair and effective taxation  
Profits made by digital companies are often not taxed where they are generated because, presently, 
tax liability is based on 'permanent establishment', namely, the place where business activities are 
physically carried out.  Following an  increasing criticism regarding the taxation of  large  digital 
companies, the European Council recognised the need to adapt taxation systems and ensure that 
all companies pay their fair share of taxes. EU leaders have endorsed Commission proposals in this 
area, as well as supporting discussions on the reform of international tax rules at the OECD level. In 
2018, the European Commission put forward two proposals for fair and effective taxation of the 
digital economy: a short-term solution, to be delivered by an interim digital services tax on revenues 
from certain digital  services, and a  permanent reform of the corporate tax rules, based on the 
concept of  'significant digital presence'. However, the Council gave preference to work towards 
reaching a  global solution at  OECD level  until end  of  2020  and  postponed the work on  these 
proposals. In the meantime, several Member States, such as France and Italy introduced national 
taxation measures, modelled largely on the Commission proposal on the digital services tax.  

The OECD has been pursuing work under two pillars: (i) the re-allocation of some taxing rights to 
market jurisdictions, regardless of physical presence, and, (ii) the mitigation of risks stemming from 
the  practices of  profit-shifting to jurisdictions where they can be  subjected to  no  or very low 
taxation. Under pillar  one, potential solutions are being examined by the Council to determine 
where tax should be paid and what portion of profits should be taxed; under pillar two, a system will 
be designed to ensure that multinational enterprises pay a minimum level of tax. A broad outline of 
a unified approach on pillar one has been agreed as the basis for further negotiations at the end of 
January 2020, followed by the endorsement by the G20 finance ministers on 23 February 2020. In 
July, the G20 Finance Ministers mandated the OECD to develop a blueprint on the design of the two 
pillars ahead of their next meeting on 15-16 October 2020; they were published on 12 October 2020. 

E. Challenges ahead and outlook 

While  the measures adopted by  Member States under the temporary  State aid  framework are 
temporary in  nature and  compatible  with  Article  107  (TFEU),  concerns have  been  expressed 
regarding the  difference  in  Member  States' capacities to  make  use  of  State  aid  and  possible 

11  Under  the WTO  Agreement on  Subsidies  and  Countervailing  Measures,  the existence of  a  subsidy  is  contingent  on 
whether it is given 'by a government or any public body within the territory of a Member'. 
12 Australia, Brazil, Canada,  Chile, European  Union,  Japan,  Kenya,  South  Korea, Mexico, New Zealand,  Norway,  Singapore 

and Switzerland. 

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distortion of competition in the long  term, especially regarding company recapitalisations. The 
European Council has welcomed the flexibility  of the State aid regime and stressed that 'Europe 
could also support efforts to prevent insolvency of viable businesses across the EU'. EU leaders also 
acknowledged at their videoconference last April that 'not all have suffered in the same way, not all 
have the same leverages to use and not all regions will be able to restart their economies quickly'.  

Regulation of the digital economy remains a top priority on the EU agenda, with a focus on the rules 
governing the access to, use and storage of data. Following the February 2020  European data 
strategy where the Commission proposed the establishment of nine EU sectoral data spaces, the 
next step will be the creation of a common data governance framework, concerning interoperability 
and rules on the use and re-use of public data sets. The European Council welcomed the European 
common data spaces and prioritised the development of the health data space as early as 2021.  

These developments are especially  relevant given the market power of  large digital  platforms, 
where a small number of players accumulate large amounts of data, gathering important insights 
and competitive advantages from the data they hold. In this context, a digital services act package, 
recently endorsed by the European Council, will set out, on one side, ex-ante rules for gatekeeper 
digital platforms; and on the other, a new framework harmonising the role and obligations of digital 
services across the EU, ensuring respect of fundamental rights and correct enforcement across EU 
Member States. In addition, a proposal on a data act will also be released in 2021, to establish the 
conditions for better access and control of industrial data. 

Regarding merger control, the Commission will examine the possible effects on competition of 
large-scale data accumulation through acquisitions and the utility of data-access or data-sharing 
remedies. With respect to State aid, the Commission will also look into the relationship between 
public support to undertakings (e.g. for digital transformation) and the reduction of competition 
distortions  through  data-sharing  requirements 
for  beneficiaries.  At  their  meeting  on 
1-2 October 2020, EU leaders also emphasised the importance of ensuring the interoperability of 
European  data  and  enabling  the  sharing  and  pooling  of  data.  Commission  President 
Ursula von der Leyen indicated in her letter of intent to European Parliament President David Sassoli 
and Chancellor Merkel, on 16 September 2020, that a broader review of competition policy would 
be undertaken in 2021, focused on the digital aspects of competition law. 

Regarding the OECD talks on tax reform, the departure of the US from the negotiations over the 
summer and the launch of investigations by the Office of the US Trade Representative into digital 
service fees in 10 countries, including a five EU Member States, have raised concerns. Reaching a 
consensus at international level before the end of  the year appears rather difficult at this stage; 
however, should no agreement be found before the end of 2020, the Commission will propose a 
European tax as early as next year. The European Council supported the imposition of a digital levy 
at its meeting in July 2020, which was then once more confirmed by Ursula von der Leyen in her 
letter of intent in mid-September. 

As to WTO reform, following the resignation of WTO Director General Robert Azevedo, a year before 
the  end  of  his  mandate, the  nomination  procedure for  the  next  Director  General  unfolded 
throughout September with two candidates now shortlisted, Ngozi Okonjo-Iweala of Nigeria and 
Yoo Myung-hee of South Korea. A consensus will be needed among all WTO members. The choice 
of candidate will be particularly important as the next WTO Director General will need to serve as a 
bridge-builder in the current context of an increasingly challenging trading relationship between 
the US and China. Policy wise, the Commission aims to finalise a review of EU trade policy before the 
end of the year, and to launch a broad initiative on WTO reform. 

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8. Moving towards a carbon neutral continent by 2050 

A. Background  

The European Council adopted new guidelines on climate action at its December 2019 meeting, 
with all EU Member States but one, Poland, endorsing the 'objective of achieving a climate-neutral 
EU by 2050'. In the interim, Poland has updated its 2040 energy roadmap and the government has 
expressed its 'commitment' to the principle of 'climate neutrality', without, thus far, confirming the 
2050 target. There is consensus among the EU institutions – European Parliament, European Council 
and European Commission - that climate change represents a threat and that climate action is a key 
priority for the EU for the years to come.  

The European Council, in its 2019-2024 strategic agenda, recognised that the EU must engage 'in an 
in-depth transformation of its own economy and society to achieve climate neutrality'. Similarly, the 
European Commission recognised the importance of streamlining climate action across the entire 
spectrum of EU policies. The European Green Deal announced by European Commission President 
Ursula von der Leyen when presenting her agenda for Europe is the dedicated instrument for this 
purpose. Several new initiatives have been put forward under the European Green Deal, some of 
which are already in motion. This is for example the case with the proposal for a European Green 
Law, which will  create a legally binding framework allowing undertaking the necessary steps to 
meet the objective of achieving climate-neutrality by 2050.  

In a recent resolution on the European Green Deal, the European Parliament stressed that 'a legally 
binding EU commitment to climate neutrality by 2050 at the latest will be a powerful tool to mobilise 
the necessary societal, political, economic and technological forces transition'. Parliament stressed 
that Member States will  have a  key role  to play in  this transition process and that the  level  of 
ambition corresponding to both 2030 and 2050 targets should be raised further.  

EU leaders have addressed climate and energy regularly at their meetings in recent years. Climate 
change has usually been a topic for the October European Council, allowing EU leaders to focus on 
the preparation of the annual United Nations Conference of Parties (COP). This pattern changed in 
2019,  when  EU  leaders addressed climate change at each  of  their four regular meetings. Such 
sustained monitoring allowed them to take stock of progress made in implementing climate targets 
set by the European Council for the period 2014-2020, to set new objectives, as well as to consider 
progress made in fulfilling commitments undertaken under the Paris Agreement on Climate Change 
(hereinafter, the Paris Agreement). EU leaders reaffirmed on several occasions the Union's ambition 
to take a leading role in the implementation of the Paris Agreement and in the fight against climate 
change,  through, inter  alia,  sustained EU  climate  diplomacy  action.  These  elements  are  also 
prominent in the strategic agenda 2019-2024 where more attention is given to climate issues in 
comparison to energy security, an area more in the spotlight in the previous strategic agenda 2014-
2019. 

The European Council committed to maintaining climate on its agenda during the first half of 2020. 
Yet, the coronavirus outbreak shifted the attention of EU leaders, first to crisis management, and 
then to crisis recovery. The focus on crisis recovery has brought climate-related issues back under 
the  spotlight of the  European Council, with  one,  possibly two, discussions on climate  change 
expected to take place amongst Heads of State or Government in the autumn of 2020. The roadmap 
for recovery − presented jointly by European Council President Charles Michel  and Commission 
President Ursula von der Leyen at the request of the European Council following the coronavirus 
outbreak − confirmed the European Green Deal's centrality to the EU's medium to long-term action. 
Funding would come from a newly established recovery fund, Next Generation EU (NGEU), set up as 

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a temporary mechanism and linked to the upcoming MFF. The European Parliament considers the 
amounts agreed by the European Council for the upcoming MFF and the NGEU to be too low to 
enable the EU to meet its own level of ambition in several policy areas, including climate.  

As a result of the outbreak, the European Commission updated its original work programme for 
2020; maintaining or delaying various Green Deal related initiatives. There is also indication that 
legislative work  linked to  the  European Green Deal  could  take place  at  a  slower  than initially 
envisaged path. Academics have argued that the EU needs to address the coronavirus crisis and the 
long-term ongoing climate crisis simultaneously. They have warned that prioritisation of the former 
at the expense of the latter would have long-term consequences for both the EU and the Member 
States.  

B. Legal basis for European Council action  

•  Article 15(1) of the Treaty on the European  Union (TEU): The European Council defines 'the 
general political directions and priorities' of the EU, including for climate and energy. The Lisbon 
Treaty expressly introduced an interdiction for  the European Council to  'exercise legislative 
functions'. 

•  Article 15(4)TEU: European Council decisions on climate and energy are taken by consensus 
whilst  Council  decisions  are  taken  by  qualified  majority  voting  (QMV)  (Articles  191 
and 194 TFEU).  

•  Article  121  of  the  Treaty  on  the  Functioning  of  the  EU  (TFEU):  The  European Council, 
following a report from the Council based on a recommendation from the Commission, shall 
'discuss a conclusion on the broad guidelines of the economic policies of the Member States and 
of the Union'. This provision applies to the energy market, the completion of which is a perennial 
European Council priority.  

C. Strategic orientations  

The  European Council's  strategic  agenda  2019-2024  and  the  programme  presented by  the 
European Commission President, Ursula von der  Leyen, placed  climate  action  among the top 
priorities of the next five years. The European Green Deal presented in December 2019 focuses on 
both climate and environment protection challenges. Work will most likely focus on the following 
priority areas: 1) achieving climate neutrality by 2050; 2) developing the energy union to allow for 
sustainable, affordable and secure energy; 3) becoming a world leader in circular economy and 4) 
preserving Europe's natural environment. The roadmap for recovery − the medium to long-term 
recovery strategy adopted in response to the coronavirus outbreak − confirms the EU's commitment 
to invest, as a matter of priority, in green transition and digital transformation. In her 2020 State of 
the Union address, Commission President Ursula von der Leyen stressed that the EU needed to be 
ambitious and to consider increasing the emissions reduction target for 2030 to 'at least 55 %'.  

D. Noteworthy commitments: specific requests and follow-up 

Implementation of the Paris Agreement  
The  Paris Agreement establishes a new  global climate  regime from 2020  onwards. It commits 
signatories to limit global warming to well below 2 degrees Celsius, aspiring to keep it to 1.5 degrees 
above pre-industrial levels. It thus endeavours to stem climate change as a global threat to security 
and, for that purpose, encourages all parties 'to put forward their best efforts through 'nationally 
determined contributions' (NDCs) and to strengthen these efforts in the years ahead'. Participating 
countries report  regularly  on  their  emissions and  implementation progress, whilst  collective 

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progress, on a  global  scale,  will  be  evaluated every  five  years. The  European Council  set  the 
implementation of the Paris Agreement as one of its main climate and energy priorities. This requires 
both domestic EU  and  international action. The  two dimensions have been  intertwined in  the 
European Council conclusions for the past few years.  

With  respect  to  the  EU  domestic dimension, based  on  the  European Council  guidelines,  the 
European Commission has put forward several packages of climate and energy legislation. Most of 
them have been adopted by the co-legislators during the 2014-2019 legislature and are currently 
implemented (for example, the directive 'on the promotion of the use of energy from renewable 
sources'). Several new initiatives put forward by the European Commission President von der Leyen 
have  been  or  are  about  to  be  developed.  This  includes  the  recently  presented proposals for 
regulations establishing a Just Transition Fund and a European Climate Law, as well as the new 'Farm 
to Fork Strategy'.  

As far as the external dimension is concerned, the European Council called for 'strong coordinated 
action through active European climate diplomacy ahead of the COP21 in Paris'. The principle of 
active European diplomacy on climate has been pursued constantly ever since, with the Foreign 
Affairs Council (FAC) adopting successive sets of conclusions. In its February 2016 conclusions, the 
Foreign Affairs Council agreed on the main lines that the EU was to pursue in its efforts to counter 
climate change; it was to do so in close cooperation with international partners in a multilateral 
framework, including  through development cooperation mechanisms and  regular  diplomatic 
dialogue. In 2018, EU climate diplomacy action efforts focused on the Talanoa Dialogue conducted 
under the auspices of the  UN  in  preparation for the COP24  in  Katowice in  December 2018.  In 
Katowice, a 'rulebook' on implementing the Paris Agreement was finally agreed, which the European 
Council acknowledged in its December 2018 conclusions. It has also committed to provide further 
guidelines on 'the overall direction and political priorities' for the EU's climate action in  2019. In 
December 2019, the European Council has called on the High Representative and the Commission 
to continue to privilege climate  diplomacy as a  tool allowing  the Union to  play a  leading role 
worldwide  in  the  fight  against climate change.  More recently, Charles Michel  emphasised the 
essential role of climate diplomacy in ensuring that the EU acts as a leader in the fight against climate 
change.   

Energy security 
As early as 2011, the European Council identified security in energy supply as a key element for the 
EU's overall security, and stressed the importance of coherent EU external action in  the field  of 
energy. It also called  for increasing transparency towards the EU institutions and other Member 
States when one country is negotiating a cooperation agreement in the field of energy on a bilateral 
basis with third countries. In 2013,  EU leaders recognised the importance of diversifying energy 
sources, including types and suppliers, in order to reduce external dependency risks.  

The emergence of the crisis in Ukraine in 2014 led the European Council to consider energy security 
at several of its meetings that year. It reiterated its previous calls for 'energy dependency reduction', 
stressed the importance of maintaining affordable energy prices, and  mandated the European 
Commission to explore means to address the energy dependency challenge. In response, in 2014 
the European Commission presented the European energy security strategy and, more recently, in 
2016, the 2030 framework for climate and energy and the energy package.   

The formulation and implementation of energy policy remains in the hands of EU Member States. 
Diverging views persist on the way forward in the diversification of energy supply sources. Speaking 
in the context of the future of Europe debate, several Heads of State or Government have outlined 
the importance of reducing energy dependence by increasing the share of domestic renewable 
energy  and  other  types  of  energies  with  a  low  carbon  footprint.  Polish  Prime  Minister 

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Mateusz Morawiecki has openly challenged the Nord Stream 2 project, pointing at the high risk of 
increasing dependency on Russia. His colleague, Andrej Plenković, Prime Minister of Croatia, has 
stressed the strategic importance of energy supply diversification, including through liquefied 
natural gas (LNG) terminals such as the one Croatia is currently building on the island of Krk.  

Experts consider liquefied natural gas (LNG), also envisaged by the European Council in its March 
2014 conclusions, as a means to diversify supply sources and mitigate existing dependency risks. 
Forecast analyses for the period beyond 2020 show that the US and Australia will become the main 
LNG exporters. LNG currently comes at a higher cost than natural gas supplied through pipelines.  

EU Member States individually and collectively are net importers of energy products. The products 
they import most are crude oil (70 %) and natural gas (20 %). In both cases, Russia remains the main 
external partner with a share of 40.6 % of total external imports of natural gas and 28 % of total 
external imports of crude oil (figures for the first semester of 2018). It is followed by Norway as the 
second main supplier, with 38.8 % of natural gas imports and 11 % of crude oil.  

E. Challenges ahead and outlook  

Climate change, a top priority for the 2019-2024 strategic agenda, is likely to remain an important 
issue on the European Council agenda during the autumn of 2020 and in the years to come. Some 
Member States have explicitly called for a more ambitious approach to fighting climate change. In 
order to effectively pursue 'the objective of achieving a climate-neutral EU by 2050', the EU needs 
to allocate  sufficient financial means. In  this light, the  funding of  the  European Green Deal,  in 
particular the Just Transition Mechanism, remains a key element of the ongoing MFF negotiations. 
When addressing the European Council, the European Parliament President, David  Sassoli, was 
particularly resolute in stressing the importance of allocating the necessary financial means in the 
upcoming  2021-2027  MFF  to  meet  the  priorities  announced  by  the  European Commission, 
including its European Green Deal.  

Climate change and energy security represent two major security threats the EU will need to assess 
and face in a boarder context of threats with which it will be confronted with in the coming years. A 
fine balance between climate diplomacy action and energy security preservation will have to be 
articulated in an increasingly volatile geopolitical environment, where the EU will have to preserve 
its strategic transatlantic partnership and face an increasingly assertive Russia. 

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9. Upholding EU interests and values in the world 

A. Background 

The security landscape has strongly deteriorated in the EU's neighbourhood in the past half-decade, 
both in the south and in the east. This has led the European Council to devote much of its attention 
to monitoring crises in the (MENA) Middle-Eastern and North African countries, such as Libya and 
Syria, as well as in the eastern neighbourhood, in particular in Ukraine, and more recently, in Belarus. 
In parallel, the European Council has continued to deal with 'pressing international issues', such as 
Turkey's drilling activities in the eastern Mediterranean or the situation in Nagorno-Karabakh. The 
fragile situation in the western Balkans also remains a matter of concern. 

The Heads of State or Government have also considered Russia's growing assertiveness, including 
its role in the Ukrainian and Syrian crises as well as its disinformation activities. They have discussed 
the downing of flight MH17 and have called repeatedly for a transparent investigation.  

Transatlantic relations have attracted even more of  the  European Council's attention since the 
Trump administration came to power in 2017. The progressive rejection of multilateralism has led 
the US  to denounce landmark agreements on disarmament and climate change, as  well  as to 
gradually disengage from the United Nations (UN), including its Human Rights Council. As indicated 
in  the  EU  global strategy, multilateralism remains the pillar  of  EU  foreign policy  action. In  this 
context, the  European Council has  regularly affirmed the EU's  support for multilateralism and 
confirmed the Unions' commitment to an international trade policy, fully supportive of WTO rules 
(see Chapter 8), and to the full implementation of the Paris Climate Agreement (see Chapter 12).  

More recently, in March 2019,  EU leaders held a debate on 'overall relations' with China. On this 
occasion, the European Commission issued a paper presenting its vision for relations with China. It 
identified  10  priority  actions linked  to  a  broad range  of  domains, including  climate  change, 
connectivity, trade and industrial policy, and thereby called for the 'full unity' of the Member States.  

The EU will continue to face a volatile international situation in the years to come, accentuated by 
the coronavirus pandemic, which has brought new risk factors. This will most probably bring EU 
leaders to  continue to  consider external relations issues regularly at their meetings, including 
bilateral and  multilateral cooperation aspects. The 2019-2024  strategic agenda anticipates this 
development by identifying foreign affairs among the priority areas for action in the years to come.  

B. Legal basis for European Council action  

Foreign affairs remain the embodiment of the  intergovernmental method in the  EU. Decisions 
pertaining to foreign and security policy are taken unanimously within the European Council. A few 
Treaty-based exceptions, such as the appointment of the High  Representative of the Union for 
Foreign and Security Policy (hereinafter, the High Representative), allow for the use of qualified 
majority voting (QMV). Based on Article 31 TEU, the European Council can also decide by unanimity 
to extend the list of foreign policy items to which  QMV applies, with the exception of decisions 
having military and defence implications, where Treaty change is required. 

General  orientations  for foreign  and security  policy 

•  Articles  15, 16(6), 22, 24  of the  Treaty  on  European  Union (TEU):  the  European Council 
identifies 'the Union's strategic interests' and 'objectives' and sets out strategic orientations for 
the EU, including for matters of foreign, security and defence policy.  

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•  Article 24(1) TEU: the EU's common foreign and security policy (CFSP), of which defence is an 

integral part, is 'defined and implemented by the European Council and the Council'.  

European  Council preparation  and decision-making 

•  Article 16(6) TEU: the Foreign Affairs Council, in cooperation with the President of the European 
Council,  prepares and ensures the follow-up of  the European Council foreign, security and 
defence policy meetings. 

•  Articles  15 TEU: the European Council President 'ensures the external representation of the 

Union' in a way that does not hamper the action of the High Representative. 

•  Articles  18, 22, 24, 31 TEU: unanimity is required in  the European Council for foreign and 
security policy decisions, unless qualified majority applies (for example, when appointing the 
High  Representative). Under Article 31(3),  the  European Council can,  by  unanimity, extend 
qualified majority voting to more foreign policy areas than those identified in Article 31(2) TEU. 
In his 'state of the Union' address of September 2018, former European Commission President, 
Jean-Claude Juncker, called for the use of this treaty mechanism and for the extension of QMV 
to cover more foreign policy areas, including civilian CSDP operations. 

•  Article 26 TEU: the President 'shall convene an extraordinary meeting of the European Council' 
with the objective of defining 'strategic lines' should the international situation so require. On 
several occasions, extraordinary meetings have been convened to discuss foreign policy matters 
(for example, Ukraine in  2014), while  defence has been considered only at regular European 
Council meetings.  

C. Strategic orientations 

The European Council's strategic agenda 2019-2024 identifies the promotion of European interests 
and values in the world as one of the main priorities for the years ahead. There is an increase of 7 % 
in attention paid to foreign and security policy in the strategic agenda 2019-2024 in comparison to 
the 2014-2019 agenda. This can be explained by the rise of international volatility as well as by the 
growing awareness amongst EU leaders that 'the EU needs to pursue a strategic course of action and 
increase its capacity to act  autonomously  to safeguard its interests'. In  this context, EU  leaders 
decided that, in the next years, priority will continue to be given to four strategic orientations: 1) 
promotion of EU strategic interests; 2) a European perspective for those 'European States able and 
willing  to join' the EU; 3) an ambitious neighbourhood policy; and 4) engagement with partners. 
Work on these orientations has been ongoing since 2016 as part of the implementation of the EU 
global strategy. More recently, by initiating the 'strategic compass' exercise, the EU and the Member 
States have agreed to determine and assess the threats and risks they are collectively facing.  

•  Promotion of EU strategic interests: EU leaders put strong emphasis on the need for unity and 
coordination, two prerequisites for a 'more assertive and effective' foreign and security policy. 
To  protect  economic,  political  and  security interests, the  EU  needs  to  overcome the  silo 
approach, leverage all policies and address internal and external challenges in a coordinated 
manner. In  this  context, priority would  be  given  to  countering disinformation, supporting 
sustainable development, supporting a robust trade policy as well as to boosting an active EU 
climate diplomacy.  

•  European  perspective  for those  'able  and willing to join' the  EU: On 5 February 2020, the 
European Commission published a communication on 'Enhancing the accession process – A 
credible EU perspective for the Western Balkans.' In this communication, it underlined the merit-
based nature of the accession process and indicated that thematic clusters, including several 
negotiating chapters, will be open for negotiation as a whole, with the aim of rendering the 
accession negotiation process more dynamic. Ahead of the 5-7 May 2020 Zagreb Summit, the 

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European Commission will also present its view on how to step up cooperation with the Western 
Balkans. 

•  An  ambitious  neighbourhood  policy:  European  Commission  President  von der Leyen, 
underlined that 'working hand in hand with our neighbours and our partners' is vital for the EU. 
In  the first quarter of 2020,  the European Commission is expected to present a new Eastern 
Partnership strategic document outlining 'a new set of long-term policy objectives'. The EU will 
support the post-coronavirus recovery efforts of 10 enlargement and neighbourhood countries 
by providing €3 billion in macro-financial assistance.  

•  Engagement  with partners:  EU  leaders stressed that engaging 'on an equal  footing' with 
partners both bilaterally and multilaterally is a key element of a dynamic, effective and 'robust' 
EU foreign and security policy. To this end, it is expected that the review of regional and country-
related strategies, initiated as early as 2016  as part of  the implementation of the EU  Global 
Strategy, will continue. In her agenda for Europe, European Commission President von der Leyen 
called  for  a  comprehensive  strategy on Africa, which  was  put forward in  March 2020.  Most 
recently, in her 2020 'State of the Union' speech, Ursula von der Leyen stressed that 'Europe must 
deepen and refine its partnerships with its friends and allies'. She stated that the EU cherished 
the transatlantic alliance and was ready to strengthen bilateral relations with the US in several 
areas, including 'trade, tech or taxation'.  

The roadmap for recovery − jointly presented by European Council President Charles Michel and 
European Commission President Ursula von der Leyen at the  request of the  European Council 
following the coronavirus outbreak − confirmed the EU's commitment to 'multilateralism and a 
rules-based international order', and underlined the Union's 'responsibility' to help shape a global 
response to the pandemic.  

D. Noteworthy commitments: specific requests and follow-up 

Supporting a 'lasting political solution' in Syria 
For almost a decade, the European Council has been monitoring developments in the Syria crisis, as 
shown in Figure 6. Between March 2011 and February 2013, Syria was a permanent feature on the 
meeting agendas of EU leaders, who called repeatedly for a regime change. This phase of active 
monitoring was followed by two years (March 2013 to April 2015) during which the crisis in Syria 
was monitored at the level of the Foreign Affairs Council, with the European Council intervening 
sporadically.  Emphasis  was  placed  on  the  renewal  of  sanctions  and  the  disbursement  of 
humanitarian aid. 

Figure 6 – Monitoring by the European Council of the Syrian crisis  

Source: EPRS. 

The outbreak of the migration crisis in April 2015 meant that the European Council again entered 
into an active monitoring phase, during which the EU leaders devoted most of their attention to the 

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humanitarian situation in Aleppo; this lasted until December 2016. The period between April 2015 
and December 2016 was also characterised by intense diplomatic activity, with the EU energetically 
supporting an UN-brokered political solution in line with the 2012 Geneva Communiqué. In several 
of  its  resolutions, the  European  Parliament  called  for  the  cessation of  hostilities  and  urged 
negotiating parties to 'intensify work for a lasting political settlement in Syria'.  

A new phase of Foreign Affairs Council monitoring began in January 2017. It coincided with a loss 
of pace in the Geneva peace talks and a long series of talks in Astana, held under the auspices of 
Turkey, Russia and Iran, and to which the UN is party. Since January 2017, the EU has reaffirmed its 
support for a negotiated political solution, condemned the use of chemical weapons and renewed 
sanctions imposed on the Syrian regime.  

More recently, in October 2019, the European Council entered a new phase of active monitoring of 
the Syrian conflict. This development is largely due to Turkey's unilateral military action in North East 
Syria and the mounting critical humanitarian situation in the Idlib area. The latter aspect led EU 
leaders, in February 2020, to adopt a declaration calling for a political solution to the crisis and asking 
for the situation in Syria to be  brought to the attention of the International Criminal Court. The 
coronavirus outbreak  in March  2020  resulted in  a  greater focus by  the  European Council  on 
pandemic-related crisis management and on the recovery process, although the Foreign Affairs 
Council continued to monitor ongoing crises in the EU's close neighbourhood. This included a close 
look at the preparatory work conducted with a view to the fourth annual Brussels Conference on 
the future of Syria held by video-conference on 30 June 2020.  

A European perspective for the western Balkans 
The western Balkans featured regularly on the agenda of the European Council in recent years. The 
agenda was dominated by counter-terrorism cooperation, by the need to stem migration on the 
western  Balkan route  and,  more  recently,  by  enlargement. As  the  regional security  situation 
deteriorated in early 2017, analysts spoke of no clear political commitment to the region, pointed to 
the stagnation of reforms and stressed the fragility of the political and security situation. At the same 
time, they warned of the danger of having the western Balkans turn their back to the European 
project unless a clear commitment was made on the region's European future. 

The European Council held a debate on the regional situation in the western Balkans in March 2017. 
The debate was of two-fold importance: 1) it reaffirmed the European perspective of the Western 
Balkans and 2) placed  enlargement back on the political  agenda of the EU.  At the end of 2019, 
however, the enlargement process was in stalemate with several Member States in the European 
Council opposing the opening of accession negotiations with North Macedonia and Albania, while 
France was calling for a revision of the enlargement rules.  

Visiting both Albania and North Macedonia in January 2020, European Council President Charles 
Michel stressed that the 'destiny of the western Balkans, must be oriented entirely towards Europe.' 
A  month  later,  in  February  2020,  the  European  Commission presented a  new  approach  to 
enlargement with  its  communication on  'Enhancing the  accession  process  –  A  credible  EU 
perspective for the Western Balkans',  the aim of  which was  to further streamline the accession 
process.  Subsequently, on  26  March  2020,  EU  leaders  endorsed  the  General  Affairs  Council 
conclusions, which green-light - under stricter country-related conditionality rules - the opening of 
accession negotiations with Albania and North Macedonia, albeit without indicating a clear date for 
their  start. More recently, in  July  2020,  the  European Commission submitted the 'negotiating 
frameworks', which still need to be validated by Member States in Council. In her 2020 'State of the 
Union' address, Ursula von der Leyen underlined that 'the western Balkans are part of Europe – and 
not just  a  stopover on the Silk  Road', thus confirming the region's European perspective. The 
European Commission will soon present, in line  with the outcome of the May 2020  EU-Western 

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Balkans summit, a new economic development agenda for the whole region. EU and western Balkan 
leaders are expected to take stock of progress made in implementing both the 2018 Sofia and the 
2020 Zagreb Declarations when meeting in the first half of 2021. 

Strategic debate on relations with Turkey 
Turkey has increasingly been in the spotlight of the European Council in recent years due to its illegal 
drilling activities in the eastern Mediterranean as well as in relation to its assertive behaviour and 
involvement in crises and conflicts in  its wider neighbourhood, including Libya, Syria and, more 
recently, Nagorno-Karabakh. The issue of greatest and most direct concern for the EU is the situation 
in the eastern Mediterranean, where a dangerous escalation occurred during the summer of 2020. 
Charles Michel and Ursula von der Leyen as well as the High Representative/Vice-President of the 
Commission (HR/VP) Josep Borrell have called repeatedly for dialogue and de-escalation.  

The deterioration of the human rights situation in Turkey, including threats to the country's secular 
traditions such as the unilateral decision to modify the status of Hagia Sofia, have also raised concern 
within the EU and in the Member States. Accession negotiations have been 'frozen' since 2018. Over 
the 2014-2020 period, Turkey has received roughly €3.2 billion of pre-accession assistance, funding 
that could be discontinued during the 2021-2027  period. Yet Turkey maintains its EU candidate 
country status and remains a partner for the EU in a series of areas, including migration. Through its 
sustained contribution to NATO, Turkey remains a strategic ally to 21 of the 27 EU Member States.  

Against this backdrop, at its special meeting on 1-2  October 2020, the European Council held a 
strategic debate on EU relations with Turkey, during which it called on Turkey to keep dialogue open 
with both Greece and Cyprus and to refrain from unilateral actions in its neighbourhood. In this case, 
the  EU  would  commit  to  'launch  a  positive  political  EU-Turkey  agenda'  focused  on  the 
'modernisation of the customs union', on trade, and on cooperation on migration, on the basis of 
the  EU-Turkey Statement of 2016.  In  the  reverse situation, the Heads of  State or  Government 
committed to  use  all  available  EU  tools. This  includes,  based on  Article  215  TFEU,  restrictive 
measures (sanctions) and the possibility to reduce  and even  interrupt economic relations and 
financial aid. An assessment of the situation is expected, at the latest, by the end of 2020. 

E. Challenges ahead and outlook 

The EU will continue to face a volatile security situation in its neighbourhood in the years to come. 
In this context, the European Council will have to play its Treaty role to the full and continue to set 
strategic guidelines for foreign policy action. This requires a regular assessment of the threats and 
risks the European Union is faced with, as requested by several Heads of State or Government, in the 
'Future of Europe' debate in the European Parliament plenary. It would also require regular collective 
debates on relations with Russia and China rather than one-off reactions to their actions. Finally, it 
would also require an in-depth reflection on how to preserve strategic relations with the US, in a 
context where the not insignificant risk of continuously drifting apart persists.  

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10. An inclusive Europe creating opportunities for all 

A. Background 

The implementation of the European Pillar of Social Rights (Social Pillar), proclaimed in 2017, is an 
important priority for EU leaders, as also highlighted in the strategic agenda 2019-2024, with the 
Social Pillar designed to serve as a 'compass for a renewed process of upward convergence towards 
better working and living conditions in the European Union'. The twin transitions, digital and climate 
while expected to bring significant opportunities, in terms of job creation and new business models 
and markets, will ineluctably present challenges to the EU's social model. Policies will need to be 
'shaped in a way that embodies our societal values, promotes inclusiveness, and remains compatible 
with our way of life', the strategic agenda reads. 

Since the beginning of  the year, the outbreak of the coronavirus pandemic and its exponential 
spread have, however, impacted heavily national health systems with the EU leaders fully engaged 
in crisis management. The prospect of a protracted economic recession, of unknown length and 
severity, has prompted the European Council to take a coordinated approach and joint action to 
cope with the crisis, especially given the lack of coordination among Member States in the early days 
of  the  crisis.  EU  leaders have  underscored the need for  a  joint  European approach and close 
coordination with the European Commission to combat the pandemic. 

On 13 March 2020, the Commission unveiled a comprehensive economic response to the pandemic 
including, inter alia,  more flexible  State aid  rules, the use of  Stability and Growth Pact  clauses 
enabling  exceptional  expenditures  and  an  immediate  release  of  unallocated  funding.  More 
specifically, the Coronavirus Response Investment Initiative (CRII) allows for the disbursement of 
€37 billion from the European structural and investment funds to fight the virus outbreak. Member 
States are using unallocated amounts in 2020 to accelerate investments related to the epidemic in 
three main areas: health, support for SMEs' working capital and funding of short-term employment 
schemes.  

In addition, the Coronavirus Response Investment Initiative Plus (CRII+) introduces extraordinary 
flexibility in the use of cohesion policy funds (e.g. transfers between funds and between regions) 
and provides support for the most deprived, by changing the rules for the Fund for European Aid to 
the Most Deprived (FEAD). Extending the scope of the EU Solidarity Fund to include a public health 
crisis  component will  mobilise up  to  €800  million  this year,  while  the  European Globalisation 
Adjustment Fund will support dismissed workers and the self-employed with up to €179 million. On 
27 May 2020, the Commission presented the REACT-EU package (Recovery Assistance for Cohesion 
and the Territories of Europe) which, once approved by co-legislators, will provide €55 billion in 
additional funding for the crisis response. 

B. Legal basis for European Council action  

Article 15 of the Treaty on the European  Union (TEU): The European Council, when fulfilling its 
Treaty  role  of  'defining  general  political  directions  and  priorities' will  consider  the  following 
provisions of general application: 

•  Article 8 (TFEU): In all its activities, the Union shall aim to eliminate inequalities, and to promote 

equality, between men and women. 

•  Article 9 (TFEU): In defining and implementing its policies and activities, the Union shall take into 
account requirements linked to the promotion of a high level of employment, the guarantee of 

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adequate social protection, the fight against social exclusion, and a  high level of  education, 
training and protection of human health. 

•  Article 10 (TFEU): In defining and implementing its policies and activities, the Union shall aim to 
combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or 
sexual orientation. 

Employment policy 
•  Article 3(3)(TEU) and Articles 8-10, 145-150, 156-159 and 162-164 of TFEU. 
•  Article 148(1) TFEU: 'The European Council shall each year consider the employment situation in 
the Union and adopt conclusions thereon, on the basis of a joint annual report by the Council 
and the Commission'. 

Social policy, including fight against poverty, social exclusion and discrimination 
•  Article 3 (TEU), and Articles 9, 10, 19, 45-48, 145-150 and 151-161 of TFEU. 
•  Article 153  (TFEU) allows  the EU  to  act in  the wider  area of  equal opportunities and equal 
treatment in matters of employment and occupation, and within this framework Article 157 
TFEU, authorises positive action to empower women. 

Education, vocational training and culture 
•  Article 3 (TFEU) and Articles 165-167 (TFEU). 

Equality between men and women 
•  Articles 2 and 3(3)(TEU)), Article 153 (TFEU), Art. 157(TFEU), Art. 19(TFEU), Art. 8 (TFEU). 

Health 
•  Article 168 (TFEU) and Article 114 (TFEU). 

C. Strategic orientations 

In the 2017  Rome Declaration, EU Heads of State or Government have pledged their support for 
working together for a 'social Europe', which: 'promotes economic and social progress as well as 
cohesion and convergence; respects the diversity of national systems and the role of social partners; 
promotes equality between women and men as well  as rights and equal  opportunities; fights 
unemployment, discrimination, social exclusion and poverty; where young people receive the best 
education and training; and which preserves our cultural heritage and promotes cultural diversity'. 

While these objectives are reiterated in the strategic agenda for 2019-2024, they are now placed in 
the context of the transition to a carbon neutral economy. 'The EU can and must lead the way, by 
engaging  in  an  in-depth  transformation of  its  own  economy and  society  to  achieve  climate 
neutrality. This will have to be conducted in a way that takes account of national circumstances and 
is socially just'. This will require that careful attention be paid to maintaining high standards of social 
protection and inclusiveness of labour markets, as well as a high level of consumer protection and 
food standards, but also that good access be ensured to healthcare. 

D. Noteworthy commitments: specific requests, and follow-up 

Fighting the coronavirus pandemic 
Following the designation of the virus outbreak as a pandemic by the World Health Organization 
(WHO), the EU Heads of State or Government met several times throughout March and April to agree 
on a coordinated approach to the crisis. At their first video-conference on 10 March 2020, the 27 EU 

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Heads of  State or Government, alongside the presidents of the Commission and the European 
Central Bank and the HR/VP, agreed to work together along four main axes: 1) limiting the spread of 
the virus; 2) providing medical equipment; 3) promoting research e.g. the development of a vaccine; 
and 4) tackling the socio-economic consequences of the crisis.  

Regarding the immediate consequences of the public health emergency, EU leaders called on the 
Commission to assess existing stocks of medical equipment and to propose ways of remedying 
shortages across the EU, with Member States invited to coordinate and provide necessary data. 
Since February, the Commission has launched five joint procurement exercises with Member States 
in  order  to  acquire  protective  equipment  and  medical  devices.  Moreover,  it  adopted  an 
implementing  regulation  temporarily  prohibiting  the  export  of  certain  personal  protective 
equipment to ensure 'adequacy of supply in the Union', which ceased to apply in May, since it had 
served its purpose. 

On 19 March 2020, the Commission announced the creation of a stockpile of medical equipment 
under the rescEU initiative, part of the Union's civil protection mechanism, to allow for swift delivery 
of supplies across the EU where most needed. In addition, it set up a clearing house for medical 
equipment to identify available  supplies. However, despite improvements, medical equipment 
shortages have not been fully resolved. Member States have been asked to provide a clear overview 
of their medical supply needs, production capacities and stockpiles of essential equipment.  

While testing capacity has improved across the EU since the beginning of the crisis, as called for by 
the European Council, testing policies and methodologies have differed greatly among Member 
States. This  situation has  led  the  Commission to  work  together with  the  Member  States on 
developing a common testing strategy across the EU. Following a number of meetings held over 
the summer, on 18 September 2020, the Commission published recommendations for a common 
EU approach to Covid-19 testing.  

The  European  Council  has  notably  highlighted  its  commitment to  support research  for  the 
development of a  vaccine available to all  in  the shortest time possible. First of all,  18  research 
projects  were  selected  in  March  2020  to  develop  diagnostics,  treatments,  vaccines  and 
preparedness for epidemics, followed by 8 more projects on innovative diagnostics and treatments. 
Recently, 23 were shortlisted under the Horizon 2020 framework. Agreements to secure a vaccine 
have so far been signed with pharmaceutical companies AstraZeneca, Sanofi and GSK and Janssen 
Pharmaceutica NV. The special European Council on 1-2 October 2020 invited the Council and the 
Commission to step up their coordination efforts and work on the development and distribution of 
a vaccine at EU level. 

Fighting youth unemployment, social exclusion and poverty  
Addressing inequalities, affecting young people in particular, remains an important objective and 
the strategic agenda cautions against the potential ramifications of inaction in the long term with a 
risk of generational, territorial and educational divides developing across the EU. The current public 
health emergency and the lockdowns put in place across all EU Member States will inevitably have 
an impact on the labour market. The impact will most likely affect certain sectors disproportionately 
and, to a larger extent, those employed under non-standard employment contracts e.g. platform 
workers and the self-employed. International Labour Organization estimates indicate that the crisis 
could increase Europe's unemployment by 7.8 % in the second quarter of 2020 (12 million full-time 
workers). The Commission's spring economic forecast, issued in May 2020 pointed to an increase in 
unemployment in the euro area from 7.5 % to 9.5 %, before declining again to 8.5 % in 2021. Across 
the EU, the unemployment rate would rise from 6.7 % in 2019, to 9 % in 2020, and then fall to around 
8 % in 2021. 

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While employment levels had recovered significantly over the past decade (since 2009), high levels 
of unemployment among young people led to the launch of a number of initiatives endorsed by 
the European Council, including the Youth Guarantee and the Youth Employment Initiative. While 
youth unemployment had decreased in relative terms from its peak of 24 % in 2013 to less than 15 % 
in 2019 – youth unemployment rates before the health crisis still remained high in the EU, with more 
than 30 % in several countries, double the overall unemployment rate (less than 7 %).  

In this context, one year ago, Commission President von der Leyen committed to turning the Youth 
Guarantee into a permanent instrument to fight youth unemployment. As announced, a proposal 
for a  Council recommendation as well  as a  communication on the  reinforcement  of the Youth 
Guarantee were published in July 2020. The Youth Guarantee would now be available to a wider 
age group including all those under the age of 30. The initiatives aim to address the specific needs 
of young people more effectively, including gaps in  social protection, given that young people 
increasingly enter the labour market through temporary and atypical contracts. Work is also under 
way to develop a monitoring framework on access to social protection and to chart the range of 
benefits across different forms of employment for young people. 

Increased investments in people's skills and education will  be needed, not only to upgrade the 
digital skills of new entry workers, but also to reskill those already on the labour market. With half of 
the current workforce expected to update their skills in the next five years, the Commission released 
an updated skills agenda for Europe in July 2020 and issued an updated digital education action 
plan in late September 2020. 

Social protection and inclusive labour markets  
Following the proclamation of the Social Pillar, a number of proposals have been put forward to 
revitalise the  social acquis.  A  total of 24  proposals were adopted in  the  social field  during the 
previous Commission mandate. However, an action plan on the implementation of the Social Pillar, 
the creation of a European social security number (ESSN) and the adoption of the proposal aiming 
at  the  coordination of  social  security  systems remain  outstanding. Regarding the  ESSN,  the 
Commission is currently drafting a new proposal that could apply to mobile workers in the first 
instance, while interinstitutional negotiations resumed in late September on the coordination of 
social security systems.  

The creation of an unemployment insurance scheme has gained momentum as one of the priorities 
on the Commission's agenda with a proposal expected before the end of the year. Gaps in social 
protection have been highlighted by recent research over the 2008-2018 period. These indicate that 
32 % of temporary full-time workers and 39 % of temporary part-time workers in the EU do not have 
access to unemployment benefits. Moreover, close to 55 % of self-employed workers are unable to 
access benefits from such schemes. Given an increasing number of layoffs across Europe as a result 
of the coronavirus lockdowns, on 2 April 2020, the Commission made a proposal for a European 
mechanism for temporary support to mitigate unemployment risks in an emergency (SURE), which 
became operational on 22 September 2020. While this temporary solution would allow companies 
to keep people in  their jobs, a  longer-term solution would still be  necessary, as stressed by EU 
Commissioner for Jobs, Nicolas Schmit.  

The creation of an unemployment insurance scheme was discussed at the Eurogroup meeting in 
December 2018, in the context of discussions over a euro area budget. While no agreement was 
reached at  that time on  the  need  and design of  such a  scheme, it  was  agreed that technical 
discussions would  continue.  The  increased  interest in  this  issue  has  followed  the  Meseberg 
Declaration, in June 2018, in which France and Germany agreed to make concrete proposals for a 
European Unemployment Stabilisation Fund before the European Council meeting of December 
2018. 

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Fair working conditions 
Both the Employment, Social Policy, Health and Consumer Affairs meeting in December 2019 as well 
as the Tripartite Social Summit in October 2019 addressed the need to adjust the social acquis to 
rapid changes in the labour market, in particular those brought about by digitalisation and transition 
to a carbon neutral economy. Digitalisation, and, in particular, the use of artificial intelligence, is 
expected to substantially impact the number of jobs but also their nature. These changes may make 
it more difficult to ensure that all workers benefit from fair and dignified working conditions.  

Commission  President  Ursula  von  der  Leyen  identified  minimum  wages  and  employment 
conditions of workers in the platform economy as a top priority for this year, and reiterated her 
support during her  State of  the  Union speech in  September. EU  Commissioner  Nicolas Schmit 
indicated that any future EU legal instrument on fair minimum wages would respect 'Member States' 
and social partners' competences, as well as national traditions of wage bargaining'. Social partners 
however remain divided over the shape such an instrument should take, namely a directive or a 
non-binding recommendation. A proposal on a minimum wage is expected to be published on 
28 October 2020. 

Regarding the working conditions of digital platform workers, a Platform Work Summit expected in 
September 2020 was postponed. However, the Commission will propose measures to improve the 
working  conditions  of  digital  platform  workers  in  2021.  The  health  emergency  has  further 
highlighted the vulnerability of these workers, with regard to the lack of clarity over the nature of 
their employment status (employed or self-employed status varying by country) and their uneven 
access to social protection schemes.  

Empowering people: Education and culture 
The European Council's strategic agenda has emphasised the importance of education and training 
for  both  the  economy and  the  society and  called  for  more  investment in  people's skills  and 
education. At the December 2017 European Council, following a discussion on a leaders' agenda 
note on education and culture, EU leaders set out a number of work strands to guide the work of 
the  institutions  and  the  Member  States  for  the  next  years.  These  have  included,  notably, 
strengthening strategic partnerships among universities (European  Universities), facilitating the 
recognition  of  academic  diplomas,  stepping  up  youth  mobility  (Erasmus+),  participation  in 
educational activities (European Student Card), improving digital skills and language learning.  

These objectives contribute to the implementation of the  European Education Area, which the 
Commission has set out to achieve by 2025. A communication on the European Education Area was 
released in late September 2020. Moreover, as part of the Skills Agenda for Europe, the Commission 
adopted  a  proposal  for  a  Council  recommendation  on  vocational  education  and  training, 
supporting, inter alia, the establishment of 50 centres for initial training of young people and for up- 
and reskilling of adults. 

The cultural and creative sectors have been among the sectors most hit by the lockdown as a result 
of  the pandemic. While  these sectors benefit from assistance under the  Coronavirus Response 
Investment Initiative, the SURE instrument and the Temporary Framework on State aid, pandemic-
related restrictions imposed on these sectors are likely to remain a burden for the foreseeable future. 
Having already called for a doubling of the budget for the Creative Europe programme even before 
the health crisis, the European Parliament underlined in its resolution in September 2020 that the 
revised MFF proposal presented a 13 % cut to Creative Europe compared with the Commission's 
2018 MFF proposal, a cut that was confirmed by the European Council at its meeting in July 2020. 

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Addressing demographic challenges 
A notable element in the strategic agenda has been a small, but yet very significant reference to the 
need to address demographic change in the EU. Most models used for analysing population trends 
suggest that, in the coming years, the EU's population will continue to age as a result of consistently 
low levels of fertility and extended longevity. On 17 June 2020, the Commission released a report 
on the impact of demographic change on different population groups, and its results will feed into 
a forthcoming green paper on ageing. Public pension systems have come under pressure as life 
expectancy rises and the number of births declines in the EU. In this context, the green paper will be 
addressing the long-term impacts of an ageing society on care and pensions, and the ability of social 
protection systems to deal with the needs of the ageing population.  

Union of equality for all 
Ensuring equality between women and men is both a social imperative and an economic asset, the 
strategic agenda reads. Despite progress in this area, the average EU gender pay gap is 16 % while 
the average pension income gap between women and men is currently at 37 %. The December 2017 
European Council had underlined the need to  prioritise the implementation of the EU action plan 
on the gender pay gap; however since then, EU leaders have not returned to this issue.  

Despite  the  adoption of  the  Pay  Transparency Recommendation in  2014,  measures aimed at 
increasing pay transparency are entirely absent in a third of EU Member States. In its resolution on 
30 January 2020, the European Parliament called for the gender pay gap action plan to be revised 
by the end of 2020 to set clear targets for the Member States to reduce the gap over the next five 
years. Most recently, in the European gender equality strategy (March 2020), but also in the revised 
work programme, the Commission indicated that it would table binding pay transparency measures 
before the end of the year. 

E. Challenges ahead and outlook  

Following intense negotiations, at their meeting on 17-21 July 2020, EU leaders reached a political 
agreement on the 2021-2027 MFF, and a specific recovery instrument to address the impact of the 
pandemic, Next Generation EU (NGEU); together they amount to €1 824.3 billion, with €360 billion 
in loans and €390 billion in grants making up the latter. Member States are expected to prepare 
national recovery and resilience  plans for  2021-2023  in  line  with  the  European Semester. The 
disbursement of grants will however remain conditional on the fulfilment of targets set out in the 
recovery and resilience plans. Some 20 Member States are expected to present drafts of their plans 
in the course of October 2020. 

However, in  its resolution of 17  September 2020,  the European Parliament underlined that the 
revised MFF proposal presented a '20 % cut to the European Solidarity Corps, a 13 % cut to Creative 
Europe and  a  7 %  cut  to  Erasmus+, compared with  the  Commission's 2018  MFF  proposal', a 
reduction that was also confirmed by the European Council in its July agreement. Moreover, the 
funding for the EU4Health programme aimed at strengthening the EU's resilience in  the face  of 
major health threats has also been substantially reduced. These issues have been discussed over 
several negotiation meetings between the European Parliament and the Council’s representatives, 
but without much progress to date. An agreement will be needed before the end of October on 
both the MFF and NGEU 

Given the serious human consequences of the public health crisis, the lack of overall preparedness 
in combatting the pandemic and the lack of coordination among Member States at the start of the 
virus outbreak have been criticised. EU leaders acknowledged that the EU needed to become better 
at 'developing its executive capacity and at managing crises in a coordinated fashion'. Ursula von 

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der Leyen's proposals in her State of the Union speech followed a  similar line, in  particular, she 
supported the strengthening of the mandates of the European Centre for Disease Prevention and 
Control and of the European Medicines Agency. Legislative proposals are due in  late November 
2020. 

Ms von der Leyen deplored the cuts made to the EU4Health programme by the July 2020 European 
Council meeting, a programme intended to help Member States and the EU 'build up capacity and 
preparedness for future health crises'. She  therefore proposed the creation of  a new  agency, a 
European BARDA, to ensure preparedness and resilience in the face of health emergencies. Last, but 
not least, action to enlarge health competences at EU level  was strongly recommended by the 
Commission President as a 'noble and urgent task for the Conference on the Future of Europe', 
whose launch is expected this autumn. 

As argued by the Commission President, supply chain dependencies, notably for pharmaceutical 
products, could be addressed by carrying out 'strategic stockpiling', an issue that was also discussed 
by  the  European  Council  on  1-2  October  2020.  In  their  conclusions, the  Heads  of  State  or 
Government invited the Commission to 'identify strategic dependencies, particularly in the most 
sensitive  industrial  ecosystems  such  as  health,  and  to  propose  measures  to  reduce  these 
dependencies,  including  by  diversifying  production  and  supply  chains,  ensuring  strategic 
stockpiling, as well  as fostering production and investment in Europe'. A  new  pharmaceutical 
strategy, due in November 2020, will  aim to ensure greater access to affordable medicines, enable 
innovation, and also support EU manufacturing capacity for active pharmaceutical ingredients. 

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11. Greater responsibility for our defence 

A. Background  

The  2019-2024  strategic agenda indicates that European defence cooperation (EDC) remains a 
priority for the EU in the years to come. A rolling item on the agenda of the European Council, EDC 
began to gain impetus nearly a decade ago, but the process has accelerated significantly over the 
past four years with the introduction of a series of mechanisms – Permanent Structured Cooperation 
(PESCO), the European Defence Fund (EDF) – aimed at fostering cooperation. Whilst at the start of 
the  period  (2012),  the  European  Council  security  and  defence  conclusions  included  mainly 
statements on the need to strengthen defence cooperation, over time there was a  progressive 
increase in the share of commitments, i.e. concrete policy steps to develop joint initiates in the field 
of defence. This confirmed the European Council's strong political will to move forward in this field.  

A series of push factors have accelerated European defence cooperation during the past decade. 
They include a particularly challenging environment in the EU's neighbourhood, especially in Libya, 
Syria and Ukraine, where crises and conflicts remain unresolved. Moreover, the EU continues to face 
an increasingly assertive Russia and needs to reassure its partners in the Western Balkans of its open 
door policy,  while  it  seeks to  overcome tensions in  transatlantic relations, principally but not 
exclusively, linked to burden-sharing within NATO. The return of power politics, already visible in 
recent years, is likely to be accelerated by the coronavirus crisis. Thus, it is important that EU Member 
States continue strengthening their defence cooperation.  

B. Legal basis for European Council action  

The  treaty provisions outlined above in  this  chapter under section  A.3  also  apply  to  defence 
cooperation. They are complemented by specific provisions, of which some are discussed below: 

•  Article 42(2) TEU: The 'progressive framing of a common Union defence policy' may lead to 
'common defence' should the European Council  'acting unanimously'  so decide. This treaty 
provision remains unimplemented to date, as no action has yet been taken by the European 
Council in support of 'common defence'. 

•  Articles 42(6) and 46 TEU and Protocol No 10: Member States willing to make 'more binding 
commitments' in defence may use permanent structured cooperation (PESCO) for this purpose. 
Successive attempts to activate PESCO remained unsuccessful until December 2017, when 25 EU 
Member States expressed their commitment to the  mechanism and the  European Council 
welcomed its launch.  

C. Strategic orientations  

European defence cooperation continues to be a priority under the European Council's strategic 
agenda  2019-2024.  Five  strategic orientations will  be  pursued  in  the  next  years, namely:  1) 
strengthening CSDP; 2) cooperation with partners, including the UN, NATO, and the African Union; 
3) addressing new security challenges; 4) support for the development of capabilities; and 5) the 
strengthening of the defence industry and the defence market.  

The European Council has already identified these orientations in several of its earlier conclusions 
from December 2012  and 2013.  Work on these strategic orientations is ongoing since and has 
accelerated from 2016 onwards with the adoption of the EU Global Strategy and the subsequent 
'defence  package'.  The latter included three elements which  are currently being implemented, 
namely: 1)  the implementation plan on  security and defence  (IPSD)  offering the  framework to 

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implement the security and defence component of the global strategy; 2) the European defence 
action plan (EDAP)  presented by the European Commission with the aim  of  stimulating better 
spending in  defence  and fostering economies of scale; and  3)  the Council  conclusions on the 
implementation of the EU-NATO joint declaration signed in July 2016 in Warsaw. Furthermore, the 
ongoing 'strategic compass' offers an opportunity for Member States to work jointly to identify and 
assess the common threats and risks to security faced by the EU.  

D. Noteworthy commitments: specific requests and follow-up 

A series of cooperative mechanisms – the coordinated annual review on defence (CARD), PESCO, 
and the EDF – were introduced since 2016, with the aim of enabling EU Member States to jointly 
identify defence capability shortages and, subsequently, to develop new ones. Their interaction is 
presented in Figure 7. Their introduction has boosted the secretarial role of the European Defence 
Agency (EDA), without substantively increasing its resources (financial or manpower). It has also led 
to the creation in the von der Leyen Commission of the Directorate-General for Industry and Space, 
as part of the Internal Market portfolio of Commissioner Thierry Breton. 

Figure 7 – Interaction between CARD, PESCO and the EDF  

Source: EPRS, based on EEAS and EDA data.  

Coordinated annual review on defence  

The  coordinated annual  review  on  defence  (CARD)  is  a  voluntary  mechanism allowing  the 
identification of EU Member State's capabilities and shortfalls. CARD has been in the spotlight of the 
European Council  since  late  2016,  when  the  EU  leaders asked  the  then  High  Representative, 
Federica Mogherini, to make proposals on the elements that would  define the mechanism. The 
CARD modalities were agreed upon in Council in the first half of 2017 and the European Defence 
Agency (EDA) was tasked with the secretariat work. The first CARD trial run took place in 2017-2018, 
based on a methodology developed by EDA. The exercise showed that defence spending was on 
the rise, although its 2017 level remained in real terms lower than the 2005 level. It has also shown 

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disparities between Member States as regards their defence investments. Another area of concern 
was defence  research and technology as Member States were  unable to meet the  undertaken 
collective  benchmark of  2 %  of  total  defence  spending.  A  first  full  CARD  cycle  exercise  was 
conducted in 2019, based on lessons learned from the trial run, and a report is awaited.  

Analysts have welcomed the introduction of CARD, but at the same time, have warned that the 
multiplication of the tasks carried out by the EDA with respect to CARD, as well as in the context of 
PESCO and the  EDF, need to be  accompanied by an  increase in  the resources allocated to the 
agency. The EDA budget, which has been 'frozen' at roughly €31 million for almost a decade on 
account of Member States' diverging views, was increased by 5 % up to €33.6 million for the 2018 
financial  year. A  further increase by 3 %  (€34.7  million)  occurred in  2019,  whilst  no  additional 
increase was agreed for 2020.  

Permanent structured cooperation 
In December 2016, the European Council gave the then High Representative, Federica Mogherini, a 
mandate to present 'elements and options for an inclusive permanent structured cooperation based 
on a modular approach and outlining possible projects' in the months ahead. In June 2017,  the 
European Council 'agreed on the need to launch inclusive and ambitious permanent structured 
cooperation'. EU leaders have then requested a 'common list of criteria and binding commitments', 
a prerequisite to enable the EU Member States to notify their intention to take part in PESCO. By 
December 2017, 25 EU Member States had notified the Council of their intention to join PESCO.  

An initial set of 17 PESCO projects was agreed in March 2018,  followed by two additional sets of 
projects, raising the number of PESCO projects so far to a total of 47. New projects could be added 
and some of the existing ones, following a progress assessment, could be confirmed, re-grouped or 
discontinued. 'Military mobility' is the flagship project – and the only individual PESCO project that 
the European Council has focused on so far. It is also the most inclusive PESCO project, with 24 out 
of 25 Member States participating. It is complemented by two other initiatives developed by the 
European Commission (the November 2017 joint communication on improving military mobility in 
the EU, expected to be funded through the Connecting Europe Facility instrument as a dual-use 
project), and the EU-NATO initiative. The overall aim is to facilitate the rapid movement of military 
capabilities from one side of the continent to the other, if need be.  

European Defence Fund 

From December 2016 onwards, the European Council discussed the European Defence Fund (EDF) 
at each of its meetings dedicated to matters of defence. The EDF, which is part of the European 
Commission's EDAP, is comprised of two windows, one dedicated to defence research and another 
to capabilities.  The research window  is  fully  funded by  the EU  budget. The  capability window 
includes the development of prototypes co-financed by the EU budget (20 %) and Member States 
(80 %),  and an  acquisition dimension fully  funded by  the EU  Member States. In  July  2020,  the 
European Council agreed on an envelope of €7 billion for the EDF under the forthcoming 2021-2027 
MFF;  this  represents  nearly 40 %  less  than  the  amount initially  proposed  by  the  European 
Commission back in 2018, namely €11.4 billion. The European Parliament has on several occasions 
expressed its concern that reduced funding for key projects such as the EDF and military mobility 
would endanger the EU's ability to stand by its level of ambition.  

E. Challenges ahead and outlook  

The European Council has monitored regularly security and defence cooperation progress and will, 
most probably, continue to do so in the years to come. Defence cooperation remains a priority for 
both the  European Council and the European Commission, although only the latter sets work 

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towards a European Defence Union as an objective to attain whilst the former only calls on the EU 
to take 'greater responsibility for its own security and defence, in particular by enhancing defence 
investment, capability development and operational readiness'. 

The political consensus within the European Council on the need to continue developing European 
defence cooperation will be put to the test in the 2021-2027 MFF negotiations. The EU leaders will 
have to confirm their commitment to defence and its budgeted instrument, the EDF, in a context 
where post-coronavirus recovery financial needs might lead to the prioritisation of other policy 
areas. 

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12. Free and fair trade 

A. Background 

In recent years, international trade has gained increasing visibility on the European Council agenda. 
Profound changes have occurred in the global trading landscape, with common rules and standards 
questioned and new actors entering the world stage. A high level of economic interconnectedness 
and the ineluctable rise of emerging economies on the world stage, notably China, have highlighted 
differences across economic systems and divergences over the impact  of  certain  policies  and 
practices in the global economy. Moreover, the United States (US) administration's pursuit of an 
'America first' foreign policy has been accompanied by a trade policy aimed primarily at reducing 
trade deficits with partners. The existential threat the World Trade Organization (WTO), as the core 
of the multilateral trading system is currently facing, and growing trade tensions have translated 
into a highly unstable trading environment, with spill-over effects for economic growth.  

The growing impact of the coronavirus pandemic across the EU has reshuffled political priorities in 
the area of trade policy. The lockdowns put in place across the world as a result of the pandemic 
have led to significant disruptions in production and supply chains, leading to a fall in consumer 
demand, and subsequently, to a fall in global trade volumes estimated at 13-32 % in 2020. The crisis 
has exposed the vulnerability of complex, interconnected and 'just in time' supply chains across 
many sectors, including in health, also highlighted by shortages in personal protective equipment. 
Strengthening the resilience of European companies' supply chains has thus become an important 
issue at EU level, with discussions under way on achieving a balance between reshoring production, 
diversifying supply chains and ensuring adequate stockpiling.  

While the pace of negotiations with trade partners has been slower since the beginning of the year, 
due notably to the coronavirus crisis, relations with the US and China have continued to be high on 
the agenda of  EU Heads of  State or Government this year. European Council President Charles 
Michel has also highlighted relations with Africa as a top priority for his term in office, however the 
pandemic has delayed the sixth European Union-African Union summit as well as the negotiations 
on the revision of the Cotonou Partnership Agreement with African, Caribbean and Pacific countries. 
The potential consequences of the spread of the novel coronavirus across the African continent 
have  highlighted  the  urgency  of  building  a  coordinated global  response to  combating  the 
pandemic. Negotiations on the future trade partnership with the United Kingdom (UK) have not 
progressed much since the first rounds of talks in March 2020; the European Council expects to 
assess the overall situation at its meeting in mid-October. Meanwhile, although the pandemic has 
led to the postponement, for one year, of the June 2020 WTO ministerial conference, the reform of 
the institution remains very much at the top of the agenda. 

B. Legal basis for European Council action  

•  Article 22(1) of the Treaty on the European  Union (TEU): On the basis of the principles and 
objectives set out in Article 21 TEU, the European Council shall identify the strategic interests 
and objectives of the Union. Decisions of the European Council on the strategic interests and 
objectives of the Union shall relate to the common foreign and security policy and to other areas 
of the external action of the Union. 

•  Such decisions may concern the relations of the Union with a specific country or region or may 

be thematic in approach [...].  

•  Article 216(1) of the Treaty on the functioning of the EU (TFEU): The Union may conclude an 
agreement with one or more third countries or international organisations where the Treaties so 

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provide or where the conclusion of an agreement is necessary in order to achieve, within the 
framework of the Union's policies, one of the objectives referred to in the Treaties, or is provided 
for in a legally binding Union act or is likely to affect common rules or alter their scope.  

•  Article 16(6) TEU: The Foreign Affairs Council shall elaborate the Union's external action on the 
basis of strategic guidelines laid down by the European Council and ensure that the Union's 
action is consistent. 

C. Strategic orientations  

'Relations with strategic partners, including our transatlantic partners, and emerging powers have 
to be a key component of a robust foreign policy' the European Council strategic agenda reads. The 
EU is  to take a  holistic approach, redesign and realign its policies  to better cope  with a rapidly 
changing environment. Guaranteeing a level playing field has become the EU mantra, especially 
with respect to trade policy, which has taken centre stage in recent years. EU leaders have therefore 
placed  strong emphasis on 'ensuring fair competition within the  EU  and  on  the global  stage, 
promoting market access, fighting unfair practices, extraterritorial measures and security risks from 
third countries, and securing our strategic supply chains'. In this context, the EU continues to pursue 
'an ambitious and robust trade policy ensuring fair competition, reciprocity and mutual benefits, 
both at the multilateral level in a reformed WTO and in bilateral relations between the EU and its 
partners'. 

The need for the EU to show unity and assertiveness on the global stage can indeed be seen as a 
running thread throughout the European Council strategic agenda. This perspective has been 
further reinforced by the impact of the coronavirus pandemic on national health systems but also 
on economic prospects in the EU. Amidst a rising number of export restrictions and prohibitions on 
vital medical protective equipment and supplies, EU leaders have underlined their commitment to 
international  cooperation  and  multilateral  solutions  in  tackling  the  pandemic,  including  by 
strengthening the 'sustainability' of global integrated value and supply chains. 

D. Noteworthy commitments: specific requests and follow-up 

Leading the WTO reform 
The WTO has been under significant pressure in recent years due to the US blockage of nominations 
of members to the WTO Appellate Body, second and highest instance of WTO dispute settlement 
system. Since December 2019, the Appellate Body has only one member left and can no longer 
accept any new appeals. Underlying issues behind the current challenges faced by the WTO include: 
i) the difficulty of reconciling different economic models, notably the liberal market economies such 
as the US with the state-led economic model of China; ii) the lack of a definition of what constitutes 
a developing country, which under the WTO rules, enables countries to claim special and differential 
treatment. Questions have thus been raised as to whether the WTO rules are still fit  to address 
today's economic realities, e.g. digital trade, and whether they still allow its members to effectively 
counter unfair trade practices. The June 2018 European Council addressed this issue and invited the 
Commission to work together with like-minded partners towards a reform of the institution in its 
three areas: rule-making, dispute settlement and monitoring.  

On 24 January 2020, the EU and 16 WTO members 13 agreed to develop a multi-party interim appeal 
arrangement (MPIA), based on Article 25  of the WTO Dispute Settlement Understanding, which 

13  Australia,  Brazil,  Canada,  China,  Chile,  Colombia,  Costa  Rica,  Guatemala,  Republic  of  Korea,  Mexico,  New  Zealand, 
Norway,  Panama,  Singapore, Switzerland, and Uruguay. 

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allows for the use of arbitration as an 'alternative means of dispute settlement'. The agreement 
became effective on 30  April 2020  and, on 31  July, the MPIA  became operational following the 
submission of a list of arbitrators to the WTO. In the absence of a functional WTO Appellate Body, 
the Commission also announced last December amendments to the EU Enforcement Regulation,  so 
as to ensure that the EU is able to enforce international trade rules in circumstances where the WTO 
is no longer able to deliver binding dispute-settlement decisions. The Council adopted its position 
on 8 April 2020, supporting the Commission's proposals to impose sanctions such as customs duties, 
quantitative restrictions on imports or  exports of  goods, and  measures in  the  area  of  public 
procurement, in situations not covered previously by the regulation. In this way, the Commission is 
able to retaliate fairly if a trade partner imposes WTO-incompatible trade measures while blocking 
the  WTO  dispute  settlement  process.  Interinstitutional  negotiations  on  the  file  started  on 
17 July 2020. 

In light of the efforts to reform the WTO, trilateral talks bringing together the EU, Japan and the US 
have also been taking place, this in parallel with initiatives to address trade distorting practices of 
non-market economies, such as subsidies and state aid. In this regard, on 14 January 2020, the three 
countries agreed that the current list of subsidies prohibited under the WTO rules was insufficient 
and  proposed  to  add  new  types  of  subsidies  to  the  WTO  Agreement  on  Subsidies  and 
Countervailing Measures. In addition, they underlined the need to clarify the concept of  'public 
body' as defined under current WTO rules since its current definition undermines the effectiveness 
of subsidy rules. 

Moreover, the health crisis has led some countries to impose export restrictions or prohibitions on 
essential goods, such as medical equipment or food (grains), which is a matter of great concern. 
WTO reports in April 2020 indicated that 80 countries had taken such measures, with the immediate 
consequence of endangering the supply of vital supplies to those most in need. The Commission 
has been monitoring Member States' measures and has worked towards removing barriers since the 
beginning of the crisis. More recently, certain countries have called for a removal of tariffs on medical 
products, especially those related to infectious diseases, and the EU temporarily waived tariffs on 
medical equipment. In this context, on 15 June 2020, at the meeting of the Ottawa Group14 on WTO 
reform, the EU Trade Commissioner presented the EU's proposal to facilitate trade in healthcare 
products, opening the possibility for a plurilateral agreement open to all WTO members to opt in. 

Ambitious trading relationships with partners  
In recent years, the EU has concluded a number of important trade agreements with a wide range 
of partners, including Canada, Japan, Singapore, Vietnam. Agreements with Mexico and Mercosur 
(Argentina, Brazil, Paraguay, and Uruguay) have been reached and the parties are currently engaged 
in legal revisions of the agreements before their ratification. Negotiations on trade agreements are 
currently under way  with Australia and New  Zeeland, as well  as with Chile  and Indonesia. The 
relaunch of a bi-regional agreement between the EU and ASEAN could be envisaged once a critical 
mass of bilateral deals has been reached. 

EU-US trade talks 
Trade relations with the US have been strained since 2018 following the imposition of additional US 
tariffs on EU steel and aluminium imports. In its investigation conducted under Section 232 of the 
1962 Trade Expansion Act, the US concluded that the import of these products amounted to a threat 
to US national security. In an effort to de-escalate the situation, EU leaders addressed the issue on 
the margins of the Western Balkans summit (May 2018) and agreed to start talks with the US in 

14 Australia, Brazil, Canada,  Chile, European  Union,  Japan,  Kenya,  South  Korea, Mexico, New Zealand,  Norway,  Singapore 

and Switzerland. 

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several areas, provided that the EU were granted a permanent exemption to the tariffs. Despite a 
temporary exemption, to date these tariffs are still in force (and have been extended to derivative 
steel and aluminium products). In February 2019, US President Donald Trump also signalled his 
intention 15 to place tariffs on car and car parts from the EU, which he restated at the Davos World 
Economic Forum in January 2020, although the deadline set by the act to impose tariffs had passed. 

Nonetheless, former Commission President Juncker and US President Trump agreed in July 2018 to 
work  towards a  trade  agreement on  industrial goods,  strengthening cooperation on  energy, 
launching a dialogue on standards as well as reforming the WTO and tackling unfair trade practices. 
In April 2019, the Foreign Affairs (Trade) Council endorsed two negotiating mandates on: 1) a trade 
agreement to remove tariffs on industrial goods,16 excluding agriculture; and 2) an agreement on 
conformity assessment17 allowing  companies  on  both  sides  of  the  Atlantic  to  recognise  the 
technical requirements of the other party, and thus reduce the costs of testing and certification of 
products. Regarding the latter, the  Commission tabled the  EU  proposal on 22  November 2019 
covering several industrial sectors. While negotiations on an industrial goods agreement have not 
advanced, the announcement in August 2020  of  a  tariff agreement on certain goods marks a 
positive step forward in EU-US trade relations. 

EU-US  relations have nevertheless been affected  by  the  withdrawal  of  the  US  from  the  Paris 
Agreement on climate  change, and,  in  particular, by  the  long-standing Airbus-Boeing dispute 
regarding aircraft subsidies. In October 2019, the WTO ruled in favour of the US with regard to EU 
subsidies to Airbus and entitled it to take action against the EU. The US imposed tariffs worth US$7.5 
billion on certain EU goods, e.g. cheese, wine. On 14 February 2020, the US Trade Representative 
announced an additional tariff increase on aircraft imported from the EU from 10 % to 15 %, effective 
on 18 March 2020. In a parallel case, a decision by the WTO on the US subsidies granted to Boeing 
was issued on 13 October 2020, allowing the EU to impose countermeasures worth US$4 billion on 
US goods, according to early reports. 

Lastly, digital taxation has also become a  sore point since France adopted a digital tax  in 2019, 
targeting large technology companies with revenues of more than €750 million; this has led the US 
to  initiate  investigations into digital service  taxes  adopted in  France but  also  across 10  other 
countries including other EU Member States. At the World Economic Forum in Davos in January 
2020,  French  President Emmanuel Macron  and  US  President Donald  Trump had  nevertheless 
reached a temporary truce on the matter. France agreed to suspend the collection of its digital tax 
and the US agreed not to impose tariffs on French goods until the end of 2020; this timeline would 
give time for negotiations on an international agreement on digital taxation within the OECD to 
bear fruit. However in July 2020, the US pulled out of the negotiations heightening concerns that an 
agreement would not be reached before the end of the year.  

EU-China investment relations 
The EU's engagement with China covers a large number of areas (over 60 sectoral dialogues), the 
trade relationship being the most developed area of cooperation. In this area, the EU has since 2013 
been negotiating a Comprehensive Agreement on Investment (CAI) with China to facilitate market 
access for EU investments. The CAI would replace the 26 existing bilateral investment promotion 

15 On 23 May  2018, the US  Department of Commerce  started a Section 232 investigation into US  imports of  cars and  car 
parts. The report was released on 19 February 2019, but was not made public.  
16 Industrial goods encompass  all goods other than those included in Annex I of the WTO Agreement on Agriculture, issued 
on 24 January  2020. 
17 The conformity of a product is assessed  before it being placed on the market, thus the product must meet all legislative 
requirements in the applicable product legislation. Conformity  is assessed  through testing, inspection and  certification. 

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and protection agreements  (BITs) between China and EU  Member States. Thirty-two rounds of 
negotiations have taken place thus far with the EU seeking the opening of key sectors, such as 
telecommunications, information and communication technology, health, financial services and 
manufacturing.  

Following a  virtual EU-China summit on 14  September 2020, Charles Michel and Ursula von der 
Leyen welcomed the 'agreement amongst negotiators' on three points: tackling forced technology 
transfers,  ensuring  that  state-owned  enterprises  compete  on  equal  terms,  and  improving 
transparency  regarding  subsidies.  However,  they  stressed  that  more  work  was  needed  on 
sustainable development commitments and on removing market access barriers in specific sectors 
related to the digital and green transitions, e.g. telecommunications and energy vehicles, but also 
in financial services and agri-food trade. Ursula von der Leyen also urged China to return to the OECD 
Global Forum on Steel Excess Capacity, following its departure in 2019, as concerns have persisted 
in relation to overcapacity in the steel and aluminium industries but also in the high tech sector. 
Regarding WTO reform, as already agreed at the 2019 EU-China annual summit, Ms von der Leyen 
called for more engagement from China on strengthening rules on industrial subsidies.  

On the same day, the EU and China also signed an agreement on geographical indications ensuring 
the protection of around 100 EU and 100 Chinese products. This had been a commitment made by 
China at the 2019 EU-China annual summit, at which a number of objectives were agreed, including 
the conclusion of the investment agreement in 2020 as well as a joint commitment to WTO reform 
and resolving the WTO Appellate Body crisis. Ahead of the European Council March 2019 meeting, 
where EU-China relations were discussed, the Commission and the High Representative for Foreign 
Affairs and Security Policy (HR/VP) put forward a joint contribution ('EU-China: A Strategic Outlook'), 
which outlined their vision of future EU-China relations and proposed 10 actions for endorsement 
by EU leaders. The actions covered the entire spectrum of areas where China and the EU cooperate, 
with almost half of the actions focused on trade and investment.   

Although the European Council did not endorse the communication at the time, the text of the 
conclusions  includes  references  to  the  trade  and  investment  issues  as  outlined  by  the 
Commission/HR/VP, however without singling out China. The following issues have featured on the 
European Council agenda and have remained a high priority throughout 2020:  

•

•

•

adoption  on  an  International  Procurement  Instrument  to  improve  EU  ability  to  access
procurement markets abroad; 
implementation of the framework for screening foreign direct investment, including legislative 
and administrative measures in Member States; 
possible legislation and tools to address distortive effects of foreign state ownership and state
financing of foreign companies on the EU internal market.

More recently, at their meeting, on 1-2 October 2020, EU Heads of State or Government reaffirmed 
the policy approach towards EU-China relations, as set out in the joint communication and called 
for coherent efforts to implement it. The Commission and the HR/VP were asked to prepare a report 
before March 2021. 

EU-Africa relations 
European Council President Charles Michel has made EU relations with Africa a priority for his term 
in office and called for a shared agenda that 'must not be a one-way street, for one-way streets often 
lead to a dead end'. In his speech to Heads of State convened at the 33rd African Union Summit in 
February  2020  he  stressed:  'Europe  is  your  partner  for  trade,  investment,  cooperation  and 
development. [...] We must build a new house to accommodate our many common interests, and 
we must write a new chapter together.'  

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EU foreign affairs ministers discussed EU-Africa relations in December 2019 and in February 2020, 
focusing on all dimensions of the partnership; in March 2020 the Commission and HR/VP unveiled a 
communication 'Towards a comprehensive strategy with Africa' as a basis for discussions ahead of 
the next EU-AU summit at which the strategy would be formally adopted. In June 2020, the Council 
welcomed the communication and adopted conclusions on priorities for the next phase of the EU 
partnership with Africa. 

EU-UK relations 
Following the first round of negotiations on the future EU-UK partnership, in early March 2020, 
frictions became  apparent in a  number of  areas, and in  particular regarding level  playing field 
provisions (e.g. state aid, labour and environmental standards), criminal and judicial cooperation, 
fisheries and the general governance framework. Since the publication of the UK's initial position 
paper on the future partnership in February 2020, little  progress has been made on narrowing 
differences in important areas for the EU, in particular on level playing field provisions, fisheries and 
governance. The UK did however state that it would not seek an extension of the transition period 
beyond December 2020.  

Most  recently, the  EU's  Chief  Negotiator, Michel  Barnier cautioned that  the  UK  government's 
position on State aid, as detailed in  its September 2020 statement 'A new approach to subsidy 
control', would not fulfil  the commitments by the UK as  set out in  the  jointly agreed Political 
Declaration. Moreover, the UK's internal market bill of 9 September 2020 would allow the UK to over-
ride certain provisions in the Withdrawal Agreement, in particular those related to the application 
of the Protocol on Ireland and Northern Ireland with respect to State aid rules and certain customs 
obligations (e.g. waiving exit customs declarations). This would be in clear breach of the terms of 
the Protocol on Ireland and Northern Ireland, which states that EU State aid rules will still apply to 
any UK act affecting trade between Northern Ireland and the EU, and while Northern Ireland remains 
in the UK's customs territory, the Union Customs Code would still apply to flows of goods between 
Northern Ireland and the rest of the UK. The Commission urged the British government to amend 
its internal market bill  before 30  September. This did not occur, prompting the Commission to 
launch an infringement procedure, as the Withdrawal Agreement provides for legal remedies in the 
event of violations of the obligations contained within it. 

Strong and fair trade 

Trade and sustainable development 
Given the  high number of  trade agreements concluded by  the EU  in  recent years, the current 
political  cycle  will  see  significant  attention paid  to  their  implementation. Strengthening the 
enforcement of commitments by third countries, in  particular, regarding trade and sustainable 
development chapters (TSD),  will  continue to  play an  important role, as also  called  for by  the 
March 2018 European Council. The European Parliament in its resolution of 15 January 2020, called 
for 'all international trade and investment agreements to include strong, binding and enforceable 
sustainable development chapters […]. In late April 2020, EU Justice Commissioner Didier Reynders 
indicated that a legislative initiative would be unveiled in 2021, calling on European companies to 
monitor respect for human rights and mitigate negative environmental impacts throughout their 
supply chains. An inception impact assessment was already published in August.  

Moreover, the Commission's proposal for a carbon border adjustment mechanism, has gained a lot 
of traction, with both the European Council President and the European Commission President 
restating their commitment to its creation. The instrument aims at ensuring that EU companies 
compete on a  level playing field  with countries that do not regulate CO2 emissions in a similar 
fashion, by putting a carbon price on imports of certain goods. A public consultation of relevant 

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stakeholders started and the impact assessment was launched. The European Council has called for 
the introduction of such an instrument at the latest by 2023, with a legislative proposal expected in 
early 2021. 

On 21  September 2020,  the Commission also published revised State aid  guidelines for the EU 
emissions trading scheme (ETS) aimed at reducing the risk of 'carbon leakage', where companies 
shift production to countries outside the EU with less ambitious climate policies. While companies 
receive compensation for higher electricity costs within the ETS, as of 2021 the new guidelines will 
reduce the number of eligible sectors, and also the rate of compensation – from 85 % to 75 %. The 
compensation itself meanwhile will be made conditional on efforts towards decarbonisation. New 
EU  Trade Commissioner Valdis Dombrovskis emphasised that the broad objective  would be  to 
gradually phase out free ETS allowances in energy-intensive sectors and to replace them with the 
future carbon adjustment mechanism. 

The Chief Trade Enforcement Officer – appointed on 24 July 2020 – will be responsible for improving 
the  compliance  and  enforcement  of  the  EU's  trade  agreements,  including  on  sustainable 
development  commitments.  More  concretely,  a  new  system  would  allow  stakeholders  (e.g. 
companies,  trade  associations)  to  register  violations  of  trade  and  sustainable  development 
commitments by trading partners. During an exchange  of  views  in  the  European Parliament's 
Committee on International Trade on 24 September 2020, Denis Redonnet, further mentioned the 
creation of an 'anti-coercion instrument' to deter, and if necessary, counterbalance coercive actions 
by third countries. 

E. Challenges ahead and outlook  

Trade policy review and reform of WTO 
The Covid-19 virus outbreak has underscored the need to reassess the resilience and sustainability 
of global value and supply chains. It has notably led to an acknowledgement of the vulnerability 
resulting from an over-reliance on other countries' production of critical goods as emphasised in 
recent statements by the European Council. This has been the case, for instance, with personal 
protective equipment, but also with the supply of active ingredients for the production of certain 
medicines. The delay in the management of the crisis across the EU and the lack of stockpiling of 
vital medical resources has however led to export restrictions by certain Member States, which the 
Commission addressed by adopting an EU-wide framework ensuring adequate supply. 

The European Council acknowledged that the pandemic had shown the 'pressing need to produce 
critical goods in Europe' and 'to invest in strategic value chains' and called for a thorough analysis of 
the  socio-economic ecosystems  and sectors worst affected, to  allow  for  a  targeted response. 
'Investing in clean and digital technologies and capacities' will  be essential in the global race to 
recovery. The reflection  process has already started, with the  launch by  the Commission of a 
strategic review of trade policy, back in June 2020, aiming at 'achieving the right balance between 
a  Europe that is  'open for business' and a Europe that 'protects its people and  businesses'. In 
addition, according to its 2020 adjusted work programme, the Commission will propose an initiative 
for WTO reform, with the proposal expected before the end of the year.  

Following the resignation of WTO Director General Robert Azevedo, a year before the end of his 
mandate, the nomination procedure for the next Director General unfolded throughout September 
with two candidates now shortlisted, the Nigerian, Ngozi Okonjo-Iweala, and South Korean, Yoo 
Myung-hee. A consensus will be needed among all WTO members. The choice will be particularly 
important as the WTO’s new Director General will need to serve as a bridge-builder in the current 
context of an increasingly challenging trading relationship between the US and China. 

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While EU-US talks had slowed down earlier in the year, meetings picked up pace again in April 2020. 
The  EU  Trade Commissioner at the time,  Phil  Hogan,  opened up  the  possibility of  improving 
regulatory transatlantic cooperation on medical devices and pharmaceuticals as well as engaging 
in more 'structural' cooperation with the US on digital trade, in particular on AI. However, while a 
recent 'mini-deal' reducing  and eliminating tariffs on  certain  products (e.g. lobsters) has been 
welcomed by both sides, the  talks on a  broader agreement on industrial goods is  not likely to 
advance this year. 

Regarding the  Airbus-Boeing dispute, the new  EU  Trade  Commissioner, Valdis Dombrovskvis, 
emphasised the EU’s commitment to a strong transatlantic relationship and in this spirit called on 
the US to withdraw or suspend its tariffs on EU products, thus allowing for discussions on a long-
term agreement on aircraft subsidies. Meanwhile, the Commission has shortlisted a number of US 
products that would be subject to countermeasures following the publication of the WTO decision 
in mid-October. Trade Commissioner Valdis Dombrosvkis and Commission President Ursula von der 
Leyen have both called for a new transatlantic agenda and a strengthened bilateral partnership 'be 
it on trade, tech or taxation'. 

As to the conclusion of the EU-China investment agreement before the end of the year, despite 
substantial progress on longstanding  issues,  more work is  needed on  removing market access 
barriers and securing  sustainable development commitments. The Presidents of the  European 
Council and  of the European Commission, Charles Michel and  Ursula von der Leyen, joined  by 
German Chancellor Angela Merkel, as Germany currently holds the rotating Presidency of the EU, 
have stressed that 'high-level political engagement within the Chinese system' is needed to achieve 
a 'meaningful agreement' with substance prevailing over time constraints.  

The pandemic has created new challenges but also opportunities for EU-Africa relations and the 
priorities of the future EU-Africa strategy will probably need to be redefined as a result, with health-
related and wider social aspects given greater attention. Given the heavy strain the pandemic has 
placed on healthcare systems in many African countries, European Council President Charles Michel 
has supported the debt moratorium offered by  G20  countries to  38  African countries and has 
committed alongside  the  Commission President  to  work  with  international partners and  EU 
Member States towards the 'outright cancellation of African debt in response to the consequences 
of this unprecedented pandemic'. EU leaders will  be  discussing EU-Africa relations at their next 
meeting on 15-16 October 2020. 

Following the third meeting of the EU-UK joint committee on 28 September 2020, Commission Vice-
President Maroš Šefčovič called for faster progress on the implementation of the Protocol on Ireland 
and  Northern Ireland,  in  particular on  sanitary and phytosanitary controls; customs-related IT 
systems; and the registration of Northern Irish traders for value added tax purposes. The state of play 
of the negotiations was briefly discussed at the 1-2  October special European Council meeting. 
However the refusal of the UK government to remove the contentious provisions in the internal 
market bill will remain a cause for concern in the coming weeks. European Council President Charles 
Michel has stressed that the 'withdrawal agreement was concluded and ratified by both sides' and 
'it has to be applied in full'. The forthcoming European Council meeting in mid-October 2020 is 
expected to review the state of the negotiations and to discuss preparatory work for all scenarios 
after 1 January 2021. 

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This  EPRS  publication,  'Key  issues  in  the  European 
Council', is updated quarterly to coincide with European 
Council meetings. It aims to provide an overview of the 
institution’s activities on major EU issues, by analysing 
twelve  broad  policy  areas,  explaining  the  legal  and 
political  background  and  the  main  priorities  and 
orientations defined by the European Council in  each 
field.  It  also  assesses  the results of European Council 
involvement in these policy areas to date, and identifies 
future challenges in the various policy fields. 

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This is a publication of the European Council Oversight Unit 
EPRS | European Parliamentary Research Service 

This document is prepared for, and addressed to, the Members and staff of the European 
Parliament as background material to assist them in their parliamentary work. The content of 
the document is the sole responsibility of its author(s) and any opinions expressed herein should 
not be taken to represent an official position of the Parliament. 

ISSN: 2600-0121 
CAT: QA-CF-20-003-EN-N