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Resilience of global supply chains: Challenges and solutions

25-11-2021

The growing importance of global supply chains has fundamentally changed the way the global economy and goods manufacturing are organised. While trade conducted through global supply chains has fallen somewhat as a share of total trade since the 2008-2010 global financial and economic crisis, more than two-thirds of international trade still involves transactions made possible by such chains. The EU is profoundly involved in these production chains, more so than most other countries, and significantly ...

The growing importance of global supply chains has fundamentally changed the way the global economy and goods manufacturing are organised. While trade conducted through global supply chains has fallen somewhat as a share of total trade since the 2008-2010 global financial and economic crisis, more than two-thirds of international trade still involves transactions made possible by such chains. The EU is profoundly involved in these production chains, more so than most other countries, and significantly more than both the United States and China. The pandemic disrupted many supply chains at its outbreak, and the subsequent economic recovery, the strongest on record, led to enormous further strain on the global supply system; surging demand, coupled with shortages of workers, ships, containers, air cargo space and clogged ports, created a 'perfect storm'. Supply chain bottlenecks are starting to weigh on the economic recovery, slowing growth and leading to delays, holding back the manufacturing sector and fuelling inflation. The EU had recognised its strategic dependence on some foreign inputs even before the pandemic, and had started to seek ways to increase its autonomy – a quest which has been accelerated by the impact of the coronavirus. To improve the resilience of supply chains, the EU is applying a policy mix that aims to increase domestic capacity, diversify suppliers and support the multilateral rules-based trade environment; it has also enhanced its cooperation with the US on supply chains. Other like-minded countries apply a similar policy mix, focusing on supporting reshoring or nearshoring. While this situation is not ideal, global supply chains are hard to reconfigure, and increasing their resilience is a time-consuming and costly process. Moreover, most experts predict that reshoring or nearshoring will be of limited importance. With time, though, resilience may improve through international cooperation, diversification and the accelerated uptake of digital technologies.

Taxing the digital economy: New developments and the way forward

26-10-2021

On 8 October 2021, the OECD announced that, following years of intense negotiations, 136 countries had finally reached an agreement on how to tackle the tax policy challenges arising from the digitalisation of the economy. A growing realisation that these challenges cannot be addressed by the existing tax system – over a century old – helped achieve the breakthrough. With this, one of the main questions pertinent to the digital economy – how to fairly tax businesses that rely on intangible assets ...

On 8 October 2021, the OECD announced that, following years of intense negotiations, 136 countries had finally reached an agreement on how to tackle the tax policy challenges arising from the digitalisation of the economy. A growing realisation that these challenges cannot be addressed by the existing tax system – over a century old – helped achieve the breakthrough. With this, one of the main questions pertinent to the digital economy – how to fairly tax businesses that rely on intangible assets and have no or only an insignificant physical presence in the tax jurisdictions where they operate – seems to have been answered. The EU and other international bodies have been discussing these issues for some time. In March 2018, the EU introduced a legislative package on the fair taxation of the digital economy. It contained proposals for an interim and a long-term digital tax. However, there was no immediate political agreement in the Council. As finding a global solution at the OECD level or a coordinated EU approach was not yet feasible at the time, some Member States started designing or implementing their own digital taxes, which gave rise to trade tensions. The two-pillar solution agreed under the auspices of the OECD will put an end to this fragmentation. Pillar One would reallocate taxation rights concerning the largest and most profitable multinationals, and Pillar Two would introduce a global minimal corporate tax rate. While the consensus has been broadly welcomed, the new rules have also sparked controversy, particularly regarding their impact on developing countries, their complexity and their resilience to possible circumvention. The agreement will be presented for endorsement during the G20 Leaders' Summit scheduled for 30-31 October 2021 in Rome. This Briefing updates a previous one from March 2020.

EU-US Trade and Technology Council: New forum for transatlantic cooperation

27-09-2021

In December 2020, the European Commission proposed the creation of the EU-US Trade and Technology Council (TTC), to facilitate trade, expand investment, develop compatible standards, boost innovation and strengthen the partners' technological and industrial leadership. The TTC also aims to 'lead values-based digital transformation'. Meanwhile, trade between the EU and US continues and is as important as ever, manifested in the fact that, together, they form the largest bilateral economic relationship ...

In December 2020, the European Commission proposed the creation of the EU-US Trade and Technology Council (TTC), to facilitate trade, expand investment, develop compatible standards, boost innovation and strengthen the partners' technological and industrial leadership. The TTC also aims to 'lead values-based digital transformation'. Meanwhile, trade between the EU and US continues and is as important as ever, manifested in the fact that, together, they form the largest bilateral economic relationship in the world, with the largest global data flows across the Atlantic. However, in recent years, transatlantic trade and technology policy relations have been marked by low levels of cooperation and a number of sources of tension. The 2021 change of administration in Washington nevertheless reinvigorated the relationship between the two. The TTC was formally launched during the EU-US Summit on 15 June 2021. High-level politicians will guide the Council, while the groundwork will be carried out in ten working groups, comprised of experts from both partners. They will cover issues such as common standards, resilient supply chains, tech regulation, global trade challenges, climate and green tech as well as investment screening and export controls. The establishment of the TTC has been widely welcomed by stakeholders and the think-tank community as an important step towards bridging existing gaps and moving on with a forward-looking agenda, focused on strategic areas and new ways of cooperation. While there is a genuine will to work together on common challenges, some difficult issues such as unresolved issues from the past and different approaches to regulating digital markets persist, and it remains to be seen whether the TTC will lead to the creation of an ambitious joint policy that influences trade and technology worldwide. The first meeting is due to take place on 29 September 2021 in Pittsburgh, Pennsylvania.

Distortive foreign subsidies regulation: A level playing-field for the single market

30-06-2021

With public financing of enterprises on the rise globally, and substantially increased as a result of the pandemic, subsidisation has become an issue of growing concern in competitive markets. In May 2021 the European Commission published a proposal for a regulation on distortive foreign subsidies. It follows a 2020 white paper that identified gaps in the trade laws and put forward ways to close them. The draft regulation aims to tackle those foreign subsidies that have a distortive effect on the ...

With public financing of enterprises on the rise globally, and substantially increased as a result of the pandemic, subsidisation has become an issue of growing concern in competitive markets. In May 2021 the European Commission published a proposal for a regulation on distortive foreign subsidies. It follows a 2020 white paper that identified gaps in the trade laws and put forward ways to close them. The draft regulation aims to tackle those foreign subsidies that have a distortive effect on the single market. It proposes to do so by giving the Commission powers to investigate subsidies granted by non-EU public authorities to companies operating on the internal market. If these are found to be distortive, the Commission will be able to apply redressive measures. The regulation proposes three new tools: two are notification-based, enabling the Commission to: investigate foreign subsidies in companies' mergers and acquisitions; and investigate the bids in large public procurement procedures, involving third-country government support. The acquirer or bidder will be required to give ex-ante notification of external financial contribution. The third tool is an ex officio tool enabling the Commission to take the initiative to investigate other market situations. As co-legislators, Parliament and Council will now begin analysing the proposal. First edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative procedure.

Harnessing the new momentum in transatlantic relations: Potential areas for common action during the Biden presidency

10-06-2021

The transatlantic relationship has been witnessing a significant injection of renewed enthusiasm and policy activity since Joe Biden became President of the United States in January 2021. This paper focuses on three important issues on the rapidly evolving transatlantic policy agenda, exploring their potential for generating, in effect, new 'common global goods' during the Biden presidency. First, it looks at pathways towards developing some kind of 'transatlantic green deal', taking climate action ...

The transatlantic relationship has been witnessing a significant injection of renewed enthusiasm and policy activity since Joe Biden became President of the United States in January 2021. This paper focuses on three important issues on the rapidly evolving transatlantic policy agenda, exploring their potential for generating, in effect, new 'common global goods' during the Biden presidency. First, it looks at pathways towards developing some kind of 'transatlantic green deal', taking climate action, trade and climate diplomacy in the round. Second, it analyses the comparative fabrics of US and European societies through the triple lens of violent extremism, the rule of law and technological disruption. Third, the prospects for 'crisis-proofing' the transatlantic space for the future are examined by looking at defence, health security and multilateralism. The paper also explores some potential avenues for closer transatlantic parliamentary cooperation, building on the already strong relationship between the European Parliament and the US Congress.

Supporting the single market beyond 2020

03-06-2021

The single market programme is a new, dedicated €3.7 billion (in 2018 prices) or €4.2 billion (in current prices) programme for the 2021-2027 period supporting the single market. It is particularly aimed at empowering and protecting consumers, and enabling Europe's many small and medium-sized enterprises (SMEs) to take better advantage of a well-functioning single market. On 3 May 2021, the Regulation establishing the programme entered into force, with retroactive application from 1 January 2021. ...

The single market programme is a new, dedicated €3.7 billion (in 2018 prices) or €4.2 billion (in current prices) programme for the 2021-2027 period supporting the single market. It is particularly aimed at empowering and protecting consumers, and enabling Europe's many small and medium-sized enterprises (SMEs) to take better advantage of a well-functioning single market. On 3 May 2021, the Regulation establishing the programme entered into force, with retroactive application from 1 January 2021. The new programme aims to strengthen and streamline the governance of the EU's internal market. It will support the competitiveness of enterprises, and promote human, animal and plant health and a safe food chain, as well as financing European statistics to provide reliable data relevant to the single market. The proposal consolidates and streamlines a wide range of activities that were previously financed separately, and bundles them into one programme. The aim is to create benefits in terms of flexibility, simplification and synergies, and eliminate overlaps.

Digital Europe programme: Funding digital transformation beyond 2020

26-05-2021

The Digital Europe Programme is a new financial support tool for the 2021-2027 period, aimed at bolstering the digital transformation of society, the economy and public administrations in the EU. With a financial envelope of €7.6 billion (in current prices), a figure 17.5 % lower than the initial Commission proposal, it will build up digital capacity and infrastructure and support a digital single market. The programme will operate mainly through coordinated and strategic co-investments with the ...

The Digital Europe Programme is a new financial support tool for the 2021-2027 period, aimed at bolstering the digital transformation of society, the economy and public administrations in the EU. With a financial envelope of €7.6 billion (in current prices), a figure 17.5 % lower than the initial Commission proposal, it will build up digital capacity and infrastructure and support a digital single market. The programme will operate mainly through coordinated and strategic co-investments with the Member States in the areas of high-performance computing and data processing, artificial intelligence in the public and private sectors, cybersecurity and trust, advanced digital skills and deployment, best use of digital capacities and interoperability. On 11 May 2021, the regulation establishing the programme entered into force, with retroactive application from 1 January 2021. The programme, dedicated to supporting the digitalisation of Europe and achieving digital sovereignty, is the first-ever such financial instrument at the EU level. Furthermore, in the context of recovery from the pandemic, Member States must allocate at least 20 % of the recovery funds to projects that digitalise their economies and societies. Third edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative procedure.

Critical raw materials in EU external policies: Improving access and raising global standards

12-05-2021

Lithium and cobalt (used in rechargeable batteries) and rare earth elements (used in wind turbines) are some of the critical raw materials (CRMs) – raw materials of critical importance – for the EU. Global demand for CRMs is rising, yet the export restrictions imposed by the resource-rich countries intensify the competition for these materials. To boost its access to CRMs, the EU has a dedicated strategy based on three pillars: two internal ones (increasing domestic sourcing and circularity) and ...

Lithium and cobalt (used in rechargeable batteries) and rare earth elements (used in wind turbines) are some of the critical raw materials (CRMs) – raw materials of critical importance – for the EU. Global demand for CRMs is rising, yet the export restrictions imposed by the resource-rich countries intensify the competition for these materials. To boost its access to CRMs, the EU has a dedicated strategy based on three pillars: two internal ones (increasing domestic sourcing and circularity) and an external one, which is mostly about securing supply from third countries. The external pillar of the EU CRMs policy is implemented across a number of other policies, mainly that on trade and development. It also involves deploying raw materials diplomacy. Through its trade policy, the EU seeks to implement its priorities by eliminating trade barriers through bilateral, regional and multilateral agreements, and safeguarding its interests through more assertive tools such as WTO dispute settlement and trade defence instruments. Through its development policy, the EU seeks to secure and diversify its access to CRMs, while promoting sustainable standards, good governance and responsible sourcing. It is also advancing its agenda through international fora (e.g. the UN and the OECD) and dialogues with numerous partners. The EU has also passed laws that help to make global supply chains and finance in the extractive sectors more transparent. In 2020, the European Commission adopted a CRMs action plan mostly based on existing strands of external action. It introduces several novel ideas, notably launching new strategic partnerships with both developed and developing nations, which are focused on extraction, processing and refining of CRMs. In its recent strategies, the EU has also clearly indicated its interest in greening the supply chains and achieving open strategic autonomy as regards CRMs. The success of these will also depend on global cooperation, adequate funding and reconciling differences with resource-rich countries.

Critical raw materials for the EU: Enablers of the green and digital recovery

18-12-2020

The pandemic has highlighted the risk involved, including for the EU, in relying heavily on external suppliers. The EU's 30 critical raw materials (CRMs) combine two characteristics: they are strategically important for its industry and economy, and there are high risks associated with securing their supply. The notion of strategic autonomy, which has been gaining track recently, calls for a more autonomous and independent EU policy, also in the area of CRMs. Importantly, the core of the EU's response ...

The pandemic has highlighted the risk involved, including for the EU, in relying heavily on external suppliers. The EU's 30 critical raw materials (CRMs) combine two characteristics: they are strategically important for its industry and economy, and there are high risks associated with securing their supply. The notion of strategic autonomy, which has been gaining track recently, calls for a more autonomous and independent EU policy, also in the area of CRMs. Importantly, the core of the EU's response to the pandemic has been to use it to transform its economy and society. The twin transition to a green and digital future relies particularly on the safe and diverse supply of CRMs. In its journey to a low-carbon economy, the EU should however make sure it does not replace its reliance on fossil fuels with a reliance on CRMs. While secure access to CRMs has been on the EU agenda for many years, the European Commission has eagerly stepped up its policy in this area since the beginning of its current term, and in September 2020 delivered a new package of measures. These included a new action plan for CRMs that supports initiatives in four main areas: i) developing resilient value chains for EU industrial ecosystems; ii) supporting sustainable and environmentally friendly domestic mining and processing of raw materials in the EU extraction (with priority given to former coal-mining regions); iii) weakening dependency on primary CRMs through better circular use of resources, environmentally friendly products and innovation; and iv) diversifying supply with sustainable and responsible sourcing from third countries. The EU has also launched the European Raw Materials Alliance, joining together the industry, researchers, Member States and civil society to close the main gaps in the value chains. The European Parliament has been a long-standing supporter of boosting all the elements of CRMs value chains to ensure the security of supply and weaken unwanted dependencies.

Important projects of common European interest: Boosting EU strategic value chains

12-11-2020

Article 107(3)(b) of the Treaty on the Functioning of the European Union provides for the possibility of approving state aid for 'important projects of common European interest' (IPCEIs). These provisions have been used very rarely until recently. A specific framework enabling the creation of IPCEIs, originally only in the areas of research, development and innovation, and environmental protection has been in place for 15 years, yet only four such projects have been notified to and assessed by the ...

Article 107(3)(b) of the Treaty on the Functioning of the European Union provides for the possibility of approving state aid for 'important projects of common European interest' (IPCEIs). These provisions have been used very rarely until recently. A specific framework enabling the creation of IPCEIs, originally only in the areas of research, development and innovation, and environmental protection has been in place for 15 years, yet only four such projects have been notified to and assessed by the Commission so far. The first two – in the area of infrastructure – were partially annulled by the Court of Justice, and the Commission opened in-depth investigations to examine their compatibility with State aid. One of those concluded that the aid was legal, the other is ongoing. The next two were launched successfully in the areas of strategic value chains for microelectronics and batteries. After this rather modest start, there seems to be strong momentum to create more IPCEIs, including in the context of the debate on how to foster the emergence of 'European champions'. The marked political shift towards greater technological sovereignty and strategic autonomy within the EU has been given further impetus with the outbreak of the coronavirus pandemic, which disrupted global value chains and highlighted the case for a more self-sufficient EU model. IPCEIs may be useful tools for creating complex new value chains that have the potential to ensure the EU's long-term competitiveness and economic growth. A growing number of governments, experts and organisations have been calling for the simplification of current rules to make IPCEIs more frequently and widely used. The European Parliament would also like to see the requirements for the IPCEIs streamlined to allow smaller industrial research projects also to acquire IPCEI status. In its 2021 work programme, the European Commission announced the revision of the current IPCEI framework planned for the fourth quarter of the year.

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29-11-2021
The Mutual Defence Clause (Article 42(7) TEU) in the face of new threats
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SEDE
29-11-2021
Competitiveness of EU agriculture
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AGRI
30-11-2021
Eliminating Violence against Women - Inter-parliamentary committee meeting
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FEMM

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