On 1 July, Sweden handed over the Presidency of the Council of Ministers to Spain for the last full term before the 2024 European elections which will take place under the Belgian Presidency. The Swedish Presidency concluded with a deal on the Data Act setting the rules governing the sharing of data generated through the use of connected products and will allow users to access the data they generate.
Additionally, a surprise political agreement was reached on the core elements of the European Digital Identify Framework (eIDAS) which will enable a secure and trustworthy electronic identification and authentication by means of a personal digital wallet on a mobile phone. Earlier in June, trilogues on the Directive on the Distance Marketing of Financial Services (DMFSD) were also finalised with an agreement on a “withdrawal function”.
You can find more details on this topic here. Ahead of its Presidency, Spain circulated its work programme for the next six months. Unburdened by the negotiations on the Data Act and eIDAS, it will concentrate on its main digital priority, namely the Artificial Intelligence Act, as well as other key files for the e-commerce sector.
Artificial Intelligence Act
Spain is actively involved in the Artificial Intelligence (AI) discussions and has taken the initiative to host the first “AI sandbox” within the European Union. Both the Council and the European Parliament have reached an agreement on their position on the Artificial Intelligence (AI) Act and a first symbolic round of trilogues was held under the Swedish Presidency. The next three-way discussions are scheduled for 18 July, 26 September and 26 October, with a possible fourth round on 22 or 30 November. Spain is very positive about reaching a deal on the file before the end of its Presidency on 31 December.
However, there are disagreement on certain issues including the definition of “high-risk AI” or prohibited practices such as facial recognition which is fully prohibited in the Parliament’s version, contrary to the Council and Commission’s positions. Additionally, foundation models and generative AI have been added in the European Parliament’s text while there is no such mentions in the other negotiating positions. The developments in the field of AI will be presented at the next Assembly of the AI Alliance to be held on the 16 and 17 November in Madrid.
Furthermore, the informal Telecoms Council which deals with the Artificial Intelligence Act will take place on 23 and 24 October 2023. Those meetings will mark the resumption of informal meetings of telecoms ministers, since the Swedish presidency had decided not to organise any.
Artificial Intelligence Liability Directive
Meanwhile, the discussions regarding the Artificial Intelligence Liability Directive (AILD) will be delayed until the new European Commission is appointed. Policymakers are indeed expected to prioritise completing the AI Act before finalising the legislation on AI liability which will be largely dependent on the final provisions adopted under the AI Act. Therefore, it is expected that the Spanish Presidency will not advance a lot on this file.
Product Liability Directive
Spain is aiming at bringing negotiations with the European Parliament on the Product Liability Directive (PLD) to a successful conclusion once the latter has adopted its position. The new legislation will revise the existing Product Liability Directive adopted nearly 40 years ago in 1985 and will bring it up to speed with the digital age, circular economy business models and global value chains.
The proposal introduces new provisions to address liability for products such as digital services that affect how the product works or software. At the European Parliament, the file is in the hands of co-rapporteurs Pascal Arimont (EPP, Belgium) and Vlad-Marius Botos (Renew, Romania) which are accelerating parliamentary work on the file. In its timetable, Spain expects a political agreement on this text at the Justice and Home Affairs Council on 5 December.
This will depend on the Parliament’s ability to swiftly reach a common position in the coming months.
Packaging and Packaging Waste Regulation
The Packaging and Packaging Waste Regulation (PPWR) will update the EU legislative framework for packaging and packaging waste by giving Member States and businesses support to achieve waste reductions targets. The European Parliament is expected to adopt its final position on the PPWR by October. This will put Spain under pressure to have a common approach by then, enabling interinstitutional negotiations to start.
So far, the Council has been divided with some Member States favoring ambitious reuse targets, and others willing to prioritise recycling over reuse. Another area of division comes from certain Member States advocating for maximum harmonisation of requirements and labelling, while others prefer to maintain the flexibility to exceed these standards by imposing higher national ones.
Additionally, there are shared concerns regarding the enforcement of obligations, including issues such as the 40% void space ratio and packaging minimisation. Those divergent positions at the Council may further complicate the negotiations.
Ecodesign for Sustainable Products Regulation (ESPR)
The Ecodesign for Sustainable Products Regulation (ESPR) aims at establishing a broadened framework for setting ecodesign requirements for sustainable products by extending the framework setting ecodesign requirements for energy-related products (Directive 2009/125/EC) to other product groups. On 15 June, the ENVI Committee adopted Rapporteur Alessandra Moretti’s (S&D, Italy) draft report which is expected to be adopted during the July Plenary happening this week in Strasbourg.
When adopted, it will constitute the Parliament’s negotiating position for the upcoming trilogues. Back on 22 May, the Council adopted its General Approach, thereby, inter-institutional negotiations will start by the summer and Spain can realistically hope to reach a deal on this file before the end of its Presidency. The industry ministers, who are responsible for the ESPR will meet in Spain on 24 and 25 July, and then on 25 September and 7 December.
Empowering Consumers for the Green Transition
The Empowering Consumers for the Green Transition Directive (ECGT) will update EU consumer protection rules to empower consumers to act in favor of the green transition and participate in the circular economy. This will be achieved through providing better information on the durability and repairability of certain products to consumers before concluding the contract.
The Council greenlighted its negotiating mandate back on 3 May, while Bilijana Borzan’s (S&D, Croatia) final report was adopted on 11 May. Trilogues on the file kicked off on 1 June and was followed by a second reunion on 26 June under the Swedish Presidency. Spain can realistically hope to get this file over the line during its presidency.
Green Claims & Right to Repair
The co-legislators have yet to finalise their positions on the Right to Repair Directive and on the Green Claims Directive. The Green Claims Directive will set a framework on how companies communicate about the environmental merits of their products, services, or businesses thus allowing consumers to make informed environmental choices. On its side, Right to Repair will lay down uniform rules promoting the repair of goods, with a view to contributing to the proper functioning of the internal market, while providing for a high level of consumer and environmental protection.
Spain is aiming at reaching a General Approach by the beginning of December for the Right to Repair Directive. The environment ministers will hold their informal meeting in Spain on 10 and 11 July and will then meet again in Luxembourg on 16 October, before the final meeting of the year on 18 December.
Corporate Sustainability Due Diligence
The Corporate Sustainability Due Diligence Directive (CSDD) will lay down an EU legal framework on sustainable corporate governance, including cross-sector corporate due diligence along global value chains. The Council and Parliament agreed their positions on 30 November and 1 June respectively, and trilogues kick-started on 8 June under the supervision of the Swedish Presidency.
Negotiations will continue under the Spanish Presidency, nevertheless, the file remains very contentious so there is no guarantee Spain will be able to close it before the start of the Belgian Presidency. Divergences are expected to emerge on thresholds, the scope of the directive, as well as on the director’s duties. The goal of the Council is to formally adopt the new law before the 2024 European elections.
VAT in the Digital Age
VAT in the Digital Age (ViDA) will complement the changes introduced by the VAT E-commerce Package, update the VAT rules for cross-border and adapt them to the digital age. The idea is to utilise technology to reduce administrative burdens and related costs for businesses while at the same time fight tax fraud. The reform is based on three pillars on which the Swedish Presidency has already presented compromise texts.
These were welcomed by the Member State’s delegations as a solid basis for further work. However, some Member States remain very sceptical about certain provisions for the impact they may have on the smaller e-commerce players and the timeframe for implementing the changes. At any rate, the ViDA package will be negotiated as a whole and not split up in different agreements. Even though this aspect could make it hard to reach on the file, the Spanish Presidency took over the discussions and committed to concluding them before the end of the year.
On 17 May, the European Commission proposed a revision of the Union Customs Code (UCC) with a view to modernise and simplify a number of rules and procedures governing goods entering and leaving the Customs Union. The proposal will aim at establishing the EU Customs Authority and the rules, common standards and a governance framework for the establishment of the EU Customs Data Hub. As this will constitute a very important reform, with far-reaching consequences, discussions are expected to be lively.
Indeed, the reform is especially addressed to combat unfair trading practices from non-EU companies that export to the EU to increase customs revenues. Regarding the timeline, the discussions are likely to be finished in 2024, as for now the Council has not started deep conversations. Spain is thereby expected to kickstart and progress on the discussions as much as it can and will most likely hand over the file to Belgium.
Digital Euro & Payment Services Regulation
On 28 June, the European Commission proposed a legislative package on financial and payment services. It includes the much-awaited proposal of a Regulation to establish the Digital Euro, as well as two proposals for the Revision of the Payment Services Directive 2 (PSD2), and a new Proposal for a Regulation on a framework for financial data access. The revised PSD2 will be divided into two new proposals, on one hand a Payment Services Directive 3, and on the other hand a Payment Services Regulation (PSR).
Spain has expressed its willingness to continue deepening the Economic and Monetary Union, and will seek to advance work on the Digital Euro proposal as much as it can. It remains to be seen how fast the work will advance on this file, and how Member States will welcome the proposal.
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