Important reforms on the horizon 28 January 2018 Towards the end of 2017, the presidents of the three EU institutions involved in law-making—Commission, Parliament, Council—signed a Joint Declaration on the EU’s legislative priorities for 2018-19. This is the second time in a row such a document is agreed upon. It signals the commitment of the institutions to complete ongoing initiatives in line with the Union’s current objectives before the conclusion of the current parliamentary term (new elections in May 2019). The accompanying working document encompasses seven areas of policy and includes proposals that are carried over from the previous declaration, as well as some new ones. The domains
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Important reforms on the horizon
Towards the end of 2017, the presidents of the three EU institutions involved in law-making—Commission, Parliament, Council—signed a Joint Declaration on the EU’s legislative priorities for 2018-19. This is the second time in a row such a document is agreed upon. It signals the commitment of the institutions to complete ongoing initiatives in line with the Union’s current objectives before the conclusion of the current parliamentary term (new elections in May 2019).
The accompanying working document encompasses seven areas of policy and includes proposals that are carried over from the previous declaration, as well as some new ones. The domains covered are:
- Security Union
- Real economy and Banking Union
- EU social dimension
- Digital Single Market
- Energy Union and climate
- EU democratic legitimacy
Security is the top priority
Most proposals under heading 1 of the working document are new. This is consistent with the momentum that has been building up over recent months. The main goal is to expand the operational capacity of the Schengen Area. To establish the Schengen Information System so as to improve the exchange of data on criminal matters, border checks, and the return of illegally staying immigrants. To this end, there are proposals to make national databases interoperable, and, more generally, provide the means for cross-border cooperation between law enforcement authorities.
The challenge will be to come up with ways of harmonising standards and laws pertaining to mutual recognition, procedural and criminal law. Ensuring an unencumbered flow of information is one thing. Enacting reform for a genuine area of freedom, security, and justice is another. The most desirable outcome would be to harmonise legal safeguards to a degree that is commensurate with the scope of integration on the law enforcement front. And that is not something that is expected to happen over the next 18 months or so.
Apart from law and order, there are a couple of initiatives about defence policy. Both are regulations. The first aims at establishing a European agency for certain aspects of cyber defence, specifically to manage large scale IT infrastructure. The second is about an industrial development programme for European defence, which is the logical extension of the agreement on Permanent Structured Cooperation.
Migration and asylum remain to be determined
Under heading 2 of the working document, all proposals are carried over from last year’s declaration. If anything, this indicates that there still are outstanding issues to be resolved before moving on to new ones. And, in practice, that correlates with the overly controversial nature of achieving a modicum of desirable uniformity on migration and asylum.
The cumulative effect of the suggested reforms, should they go through, is a more effective, just, and arguably humanitarian, way of handling asylum requests and dealing with migration from third countries. There also are provisions for reinforcing the guarantees of the European Investment Bank, in an effort to further support its development spending outside the Union (which should ideally help create jobs and thus reduce migratory pressures over the long term).
EU Southern countries already have a common position on migration and asylum, as reiterated in the 4th informal South EU Summit. However, the very presence of such a platform hints at wider disagreements. The rest of the Union does not necessarily share the views of the southerners. Solidarity is a prerequisite to any effective reform, especially since migration from third countries is a European phenomenon, even though it may be instantiated locally (such as high levels of migration towards Greece and Italy). Given the differences of opinion and outlook, it would be safe to suggest that progress will be modest at best.
Incremental EMU reform, especially towards banking union
Under heading 3 of the working document, there is a new “proposal to pursue the deepening of the Economic and Monetary Union”. This is neither a regulation nor a directive, which means that it will, at best, result in a weak form of commitment to the cause. Nevertheless, there is much to look forward to. There are proposals for legally binding instruments pertaining to bank leverage, exposure, capital adequacy, recapitalisation, and the like. These are critical to further enhance the European financial system’s regulatory framework, with the hope that systemic risk will be identified and addressed at an early stage.
Among the proposals is a regulation for a European Deposit Insurance Scheme. This is most welcome. Assuming it will go through, it will contribute to the expected singleness of the European banking system in general and of the euro currency area in particular. During the crisis years, there were instances such as in Greece prior and after the capital controls, or in Cyprus following the haircut, where a euro deposited in a domestic bank had a lower perceived value than a euro deposited in, say, Germany. That had to do with a range of factors, including tail risks of a possible euro exit, to the actual constraints of handling money and transactions. A common deposit insurance scheme can prevent such fragmentation, ease concerns and make economically detrimental self-fulfilling prophecies less likely.
Other noteworthy items are about a secondary market for non-performing loans and a framework for EU Sovereign Bond-backed securities. These are not legally binding as they are neither a regulation nor a directive. They do nonetheless signal the intention to continue with concrete measures towards further EMU integration.
EU social dimension remains limited in scope
Heading 4 contains a handful of initiatives about quality of life and the conditions at the workplace. Some offer promise for more to be come, such as the coordination of social security systems, while others address current issues, like the accessibility requirements for products and services.
Treated in their own right, these efforts are praiseworthy. Yet, it is clear that social policy is not high on the agenda. Ideological dispositions notwithstanding, there are practical constraints that would prevent the realisation of any comprehensive plan over the next 18 months. A fully fledged European social policy will require drastic changes, including new institutional arrangements. For instance, an EU unemployment insurance scheme would need a system-wide fiscal capacity, with powers to raise funds and use debt instruments (“eurobonds”), which itself calls for a rethink of the EMU edifice, including its decision-making mechanisms.
The digital single market is under development
There is a mixture of proposals included under heading 5 of the working document. They cover various facets of the movement and safety of data, copyrights, and reinforcing the EU regulatory presence in this domain.
The Commission’s strategy for creating a digital single market was set in motion in mid 2015. It has been boosted by legislation that was already being negotiated in the previous parliamentary term, specifically the abolition of roaming charges and the General Data Protection Regulation (which enters into force in May 2018). The ambition is three-fold: (1) simplify access to online goods and services, (2) develop a regulatory framework that will enable fair competition, and (3) help realise the potential of economic activity in the field.
Disproportionate geolocks and similar restrictions remain the norm. This will not change during the current parliamentary term, even though the pace of reform holds much promise of better things to come.
Energy Union is not just about the technicalities
Heading 6 covers a range of proposals that share a common thread: they all aim at refinements of a highly technical sort. It thus comes as no surprise that, say, migration and asylum make the headlines virtually all the time, while initiatives such as the regulation on risk-preparedness in the electricity sector are seldom talked about. The very nature of policies in this field makes them less newsworthy. Still, the Energy Union and policies impacting the climate are of paramount importance to our daily lives and our future.
That granted, it is worth highlighting the proposed regulation on the Governance of the Energy Union. Its core objective is to streamline the process of information exchange and policy coordination between the national and supranational levels. It seeks to bring together a vast, heterogeneous corpus of existing rules on planning and reporting across related policy areas. There is a total of 50 items affected. Of them 31 are being streamlined, while the rest are to be repealed. In addition, the proposal has provisions for involving other EU institutions in the political processes that are expected to unfold between the Commission and the Member States.
It is clear the governance of the Energy Union is modelled after the Union’s framework for economic governance. Timely information exchange and multi-faceted policy coordination are the main features of that system. Perhaps there is a missed opportunity here. The regulation could benefit from the wealth of ideas available on further reforming the Economic and Monetary Union, which include measures for further democratising economic governance, as well as creating the office of an EU Minister for Finance and the Economy. Why not take a shortcut, to do today what will have to be done in the future?
Democratic legitimacy needs structural changes
As for the Union’s democratic legitimacy under heading 7 of the working document, there are two proposed regulations: (i) on the European citizens’ initiative and (ii) the statute for EU political parties and foundations. Both are necessary for strengthening civil society but otherwise insufficient for refashioning the EU as a modern federal system.
The legitimacy of the EU requires far-reaching reforms in order to reach a high standard. Most of these demand structural changes in the way the EU formulates policy. Lots of ideas are being considered, some of which were documented in the Commission’s reflection papers on the future of Europe. At any rate, such initiatives will only materialise after 2019.
Small steps towards ever closer union
There is much to look forward to in the next 18 months. Most proposals are not as attention-grabbing as some of the news items that make the headlines. Still their importance should not be underestimated.
Each of the seven policy priorities presents a range of opportunities and comes with its own unique challenges.
There clearly is a lot of momentum behind security and defence at the European level. This is a hitherto underdeveloped area of policy. The conditions are now favourable for enacting reforms that will rationalise procedures and make the EU more relevant in the field.
Migration and asylum remain at the forefront of attention and are as controversial as ever. Efforts to improve the Union’s capacity to cater to the needs of asylum seekers without undermining the livelihood of Europeans may be hampered by scepticism on the propriety of enforced solidarity.
On the economic front, the much anticipated overhaul of the Economic and Monetary Union will not happen during this parliamentary term. Instead, there is a host of measures that would further consolidate the regulatory framework for financial institutions. Banking union is an integral part of a viable EMU.
For social issues, the EU prioritises quality over quantity. There are only a few proposals, but each promises to have a positive effect on the lives of individuals.
Regarding the Digital Single Market, the EU is moving in the right direction. Roaming charges have already been abolished. The General Data Protection Regulation will soon come into force. However, much remains to be done. The Union wants to simplify access to online goods and services, provide a level playing field for businesses with digital activities and catalyse economic growth in this domain.
The Energy Union is gradually taking shape. Clean energy and efficiency are high on the list. Something to keep an eye on is the governance of this architecture. The Energy Union is following in the footsteps of the EMU, in that its governance will come in the form of information exchange for the purposes of concerted action in making policy.
As for the Union’s democratic legitimacy, the two proposed regulations are much needed tools in the hands of civil society. The legitimacy of the EU does, nonetheless, require thoroughgoing reforms in order to reach a high standard. That will be the overarching theme of the debate on the future of Europe during the next parliamentary term.