Main results
The Council adopted general approaches regarding the draft regulation establishing Horizon Europe, the EU’s framework programme for research and innovation for the years 2021-2027, and the draft decision establishing the specific programme implementing Horizon Europe.

Today’s agreement is an important step forward towards final adoption of Horizon Europe. We now need to make sure with the European Parliament and the Commission that our forward-looking EU Framework Programme for Research and Innovation can enter into force in the beginning of the next year. This is our joint task for the benefit of the European research and innovation community as well as the competitiveness of the EU.
Anja Karliczek, German federal minister of education and research

Today’s agreement paves the way for finalising the negotiations with the European Parliament for the adoption of the two legal acts before the end of the year.

Agreed text of Horizon Europe regulation
Corrigendum to the agreed text of Horizon Europe regulation
Agreed text of specific programme decision
European Council conclusions, 17-21 July 2020

Compliments of the Council of the EU.
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The European Commission has today published the first EU-wide report on the rule of law. Today’s report includes input from every Member State and covers both positive and negative developments across the EU. It shows that many Member States have high rule of law standards, but important challenges to the rule of law exist in the EU. It also reflects relevant developments stemming from the emergency measures taken by Member States due to the coronavirus crisis. The report covers four main pillars with a strong bearing on the rule of law: national justice systems, anti-corruption frameworks, media pluralism and freedom, and other institutional issues related to the checks and balances essential to an effective system of democratic governance.
The aim of the new Rule of Law Report is to enlarge the existing EU toolbox with a new preventive tool and kick-start an inclusive debate and rule of law culture across the EU. It should help all Member States examine how challenges can be addressed, how they can learn from each other’s experiences, and show how the rule of law can be further strengthened in full respect of national constitutional systems and traditions.
European Commission President Ursula von der Leyen said: “The rule of law and our shared values are the foundation of our societies. They are part of our common identity as Europeans. The rule of law protects people from the rule of the powerful. While we have very high rule of law standards in the EU, we also have various challenges. The European Commission will continue working with the national authorities to find solutions, to guarantee people’s everyday rights and freedoms.”
Vice-President for Values and Transparency, Věra Jourová, said: “Today we are filling an important gap in our rule of law toolbox. The new report for the first time looks at all Member States equally to identify rule of law trends and help to prevent serious problems from arising. Each citizen deserves to have access to independent judges, to benefit from free and pluralistic media and to trust that their fundamental rights are respected. Only then, can we call ourselves a true Union of democracies.”
Commissioner for Justice and Consumers, Didier Reynders, said: “The new Rule of Law Report is the start of an open and regular dialogue with every Member State, a way in which we can share good practices and pre-empt challenges before they become entrenched. The goal is to instil a real rule of law culture across the European Union, and trigger a genuine debate at national and EU level.”
Key findings on the rule of law situation in Member States

Justice systems

A number of Member States are undertaking reforms to strengthen judicial independence and are reducing the influence of the executive or legislative power over the judiciary. This includes Member States where judicial independence has traditionally been seen as high or even very high. The country specific assessments show that judicial independence remains an issue of concern in some Member States, some of which have led to infringements or Article 7(1) proceedings. Ensuring justice systems are fit for the digital age is also an EU-wide challenge and the current pandemic has provided additional impetus to accelerate necessary digital reforms.

Anti-corruption frameworks

Several Member States have adopted comprehensive anti-corruption strategies, while others are in the process of preparing such strategies. Effective implementation and monitoring remain key to ensure progress. Many Member States have also taken, or foresee taking, measures to strengthen their corruption prevention and integrity framework, and some Member States have adopted measures to strengthen the capacity of the criminal justice system to fight corruption. On the other hand, the effectiveness of criminal investigations, prosecution and adjudication of corruption cases, including high-level corruption, is still a challenge in several Member States.

Media freedom and pluralism

EU citizens broadly enjoy high standards of media freedom and pluralism. Especially during the coronavirus pandemic, media have proven essential in fighting disinformation. The report nevertheless raises concerns about effectiveness and adequate resources, as well as risks of politicisation of media authorities in some Member States. Some country assessments have further identified cases where serious concerns have been raised regarding political pressure on media. Lastly, journalists and other media actors face threats and attacks in relation to their work in a number of Member States, although some countries have also developed practices and set up structures and measures to support and protect journalists.

Institutional checks and balances

Institutional checks and balances are at the core of the rule of law, ensuring that power exercised by one state authority is subject to democratic oversight. In a number of Member States, constitutional reforms have been initiated to strengthen institutional checks and balances. Many Member States have also established systematic policies for involving stakeholders and ensuring that structural reforms are the product of a broad discussion within society. At the same time, the report shows that excessive use of accelerated and emergency legislation can give rise to rule of law concerns. Across the EU, civil society continues to be a key actor in defending the rule of law, and in most Member States, there is an enabling and supporting environment for civil society. However, there are examples of civil society facing serious challenges in some Member States as a result of legislation limiting access to foreign funding or smear campaigns.
Emergency measures taken in the coronavirus context
The pandemic is still ongoing and emergency regimes or emergency measures are still in place in a number of Member States. The report points to some of the issues that have arisen in the national debates and the legal and political response to the crisis. For example, changing or suspending customary national checks and balances can pose particular challenges to the rule of law. At the same time, there are several good examples of where national court rulings or the involvement of ombudspersons had a positive impact on emergency measures taken. The Commission will continue its monitoring until emergency measures are phased out.
Next steps
The Rule of Law Report will feed into the wider debate on the rule of law at the European and national levels. The Commission looks forward to engaging with the European Parliament and the Council on rule of law issues and considers that this report provides a solid basis for further inter-institutional work.
The Commission also invites national parliaments and national authorities to discuss this report, including its country chapters, and seek support from one another as an encouragement to pursue reforms and an acceptance of European solidarity. Relevant national and EU-level stakeholders should also be involved.
Based on the outcome of the dialogue around the 2020 edition and drawing on experiences gained in the first year of the functioning of the European Rule of Law Mechanism, the Commission will start preparing the 2021 report, carrying forward the momentum to make the rule of law more resilient in our democracies.
Background
The first annual Rule of Law Report is one of the major initiatives of the Commission’s Work Programme for 2020, and part of the comprehensive European Rule of Law Mechanism announced in the Political Guidelines of President von der Leyen. It is the result of close dialogue with national authorities and stakeholders, and covers all Member States on an objective and impartial basis. The qualitative assessment carried out by the Commission focuses on significant developments since January 2019 and ensures a coherent approach by applying the same methodology to all Member States, while remaining proportionate to developments.
The report is part of the new annual rule of law cycle – the Rule of Law Mechanism. The Mechanism is a yearly cycle to promote the rule of law and prevent problems from emerging or deepening further. The goal is to focus on improving understanding and awareness of issues and significant developments, as well as to identify rule of law challenges and help Member States find solutions with support from the Commission and the other Member States, as well as stakeholders including the Venice Commission.
The objective of the Mechanism is preventive. It is separate from the other elements in the EU’s rule of law toolbox, and does not replace the Treaty-based mechanisms for the EU to respond to more serious rule of law related issues in Member States. These tools include infringement proceedings and the procedure to protect the founding values of the Union under Article 7 of the Treaty on European Union. It is also different from the proposed budget conditionality procedure, which aims to protect the EU budget in situations where the Union’s financial interest might be at risk due to generalised deficiencies of the rule of law in a Member State.
Compliments of the European Commission.
The post Rule of law: First Annual Report on the Rule of Law situation across the European Union first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

It is a pleasure and a privilege to speak to you today under the aegis of the Bruegel Institute. Your contributions to the debate on Europe do not go unnoticed; they have an impact.
European strategic autonomy. Or sovereignty? Or strength? We all know that concepts and words can take on different connotations depending on the context. Today I’d like to concentrate on the substance behind the words. But first of all, I’d like to avoid laying myself open to a common accusation by saying: autonomy is not the same as protectionism. Quite the opposite! Allow me to try and explain why.
You will recall that Paul-Henri Spaak said, ‘There are only two types of country in Europe: small countries… and countries which are small, but don’t yet know that they are.’ One could equally say that Europe is a major player, but doesn’t yet know that it is.
The last three decades, as we have continued to build the European Union, have brought the creation of the single market, the Schengen area, the euro, the great enlargement… And finally, the Treaty of Lisbon, which consolidated our institutional framework.
Each of these stages has strengthened the European Union and its autonomy. These developments have given us a huge market, and an area of freedoms which has become the world’s largest trading bloc.
And they have given rise to the widely-acknowledged ‘Brussels effect’ so well described in Anu Bradford’s book. However, the ‘Brussels effect’ is not the bureaucracy of which we are so often accused. Rather, it is the ability to spread rules and standards across the globe, which earns admiration beyond the boundaries of the EU. Just as Molière’s Monsieur Jourdain speaks in prose without realising it, Europeans have become a world power without realising it.
Our climate diplomacy is a prime example. We are at the vanguard of the fight against climate change. In 2018, a few pioneering countries committed themselves to carbon neutrality by 2050. After that came the struggle to win people over, the mobilisation of civil society and young people for the climate. And in December 2019, with the support of Ursula von der Leyen’s Green Deal, the 27 member states made the 2050 commitment for the entire European Union. Then we firmly conveyed this message to China, including at our recent summit with Xi Jinping. His announcement at the UN last week of China’s 2060 commitment crowns a real diplomatic success. And, of course, we must remain vigilant as to its implementation.
So why is it more important now than ever for us to choose strategic autonomy for Europe?
Because the globalised world has changed radically since the end of the Cold War. And because an arc of instability has emerged around us.
To the east, the natural and harmless extension of the European democratic space has been brutally halted by Russia in Ukraine. Russia saw it as a major geopolitical threat. That cost Ukraine part of its territory and brought a war in the east that is constantly destabilising the country. Although the context is different, the events in Belarus again highlight the challenge at Europe’s eastern borders.
In the Eastern Mediterranean we face tensions and unpredictable developments. Libya and Syria are centres of insecurity and instability. Greek and Cypriot sovereignty are coming under pressure. Our relationship with Turkey is being severely tested. This is why the next European summit will be dedicated to adopting a strategic European position in relation to the region. I have proposed holding a multilateral conference on the Eastern Mediterranean to address issues including maritime boundaries, energy, security and migration.
To the south, Africa. In Europe and among Europe’s leaders, I can feel how much the perception of Africa is changing. Africa’s energy and vitality open up the prospect of an unprecedented alliance. It is up to us, the leaders of Africa and Europe, to make it happen.
To the west, Brexit. In the wake of the referendum, the European Union was shaken by the result. It was a choice in favour of national sovereignty that felt like a failure in the construction of Europe.
Where do things stand today? The United Kingdom has had to come to terms with our quiet strength. The truth of the matter is that the British are faced with a dilemma. What type of society do they want? Would they rather maintain high standards (in health and safety, food, the environment, etc.)? Or do they want to lower their standards, exposing their farmers and businesses to unfair, cut-throat competition from other parts of the world? The answer to that question will determine what level of access we can grant to our internal market.
When it comes to our alliance with the United States, beyond our values and historical ties, we cannot ignore an increasing number of geopolitical choices that run contrary to Europe’s interests. Weakening multilateralism. Withdrawing from the Paris Agreements. Pulling out of the Iran nuclear deal. Flirting with protectionism… these are not mere details. We are, and we wish to remain, a steadfast and loyal ally of the United States. We hope that it’s mutual.
Lastly, China, where our approach is one of engagement. China is an indispensable player when it comes to meeting global challenges such as climate change and COVID-19. But on trade and the economy, we are in the process of rebalancing our relationship: we want more of a level playing field, more reciprocity. On the issue of human rights, we will not look the other way, and we are prepared to promote our values.
If Europe faces complex challenges, that is not because it is weak, despite what some might claim. It is because Europe ranks among the world’s foremost strategic powers.
At times when Europe has appeared too weak, or indeed too soft, it was not necessarily because others were stronger. Often, it was because we underestimated just how much influence we had.
Europe has this unfortunate habit of self-flagellation, even when taking robust action. But the reality is that our heated debates and apparent confrontations are part and parcel of our decision-making. That is something to be proud of. We are not North Korea. We are a group of democracies, with public debate guaranteeing the legitimacy of our decisions.
Proof of this ability to overcome differences and set a course came in response to COVID-19, when the EU seized upon the ‘momentum’ created by the pandemic. The 1 800 billion euro mobilised in July is the fuel that will power our strategy for resilience and for environmental and digital transformation. That decision will go down as a key moment in history.
We are capable of rising to the challenges we face in Europe. Now it is our duty to use that capability in our external relations.
Our strategic autonomy must pursue three objectives. One: stability. Two: disseminating our standards. And three: promoting our values.
Stability first and foremost means physical security. It also means environmental security: air quality, access to drinking water, protection of biodiversity, respect for the planet and for the human species…
It also means economic and social security. That calls for a favourable environment for investment and trade, both within our market and with the rest of the world. Upholding fair market conditions and reciprocity with our trading partners is one of our priorities. We advocate free and open economies, and we are opposed to protectionism. But access to our large market cannot be given away for free. The lower your compliance with standards, the more restricted your access. Whether you’re leaving our Union, or building closer ties with it.
Economic security also means securing our supply of critical resources: medical products, rare earth elements… And also microprocessors, which are so essential for our digital sovereignty – this is another key aspect of our strategic autonomy, which is vital for our digital transformation.
Stability also means managing our migration policies in an orderly and lawful way, with respect for human dignity. We will have a lot of work to do on this issue.
Our second objective is to safeguard our ability to set standards. That ability is a key factor contributing to Europe’s current power. Our standards on the use of chemical substances ensure that toys produced around the world are safe. Our General Data Protection Regulation sets the global standard for the protection of privacy online. Likewise, our definition of hate speech, and pressure from us to eradicate it, are what pushed the big platforms to start ridding the internet of that scourge.
We also see the degree to which climate is a new strategic front where Europe can win the battle of standards. By pioneering environmental technologies and setting the relevant standards, we will achieve two goals: taking the lead in that field, and helping to win the fight against global warming.
This actually illustrates my third objective. The strength of our economic and social model lies in the fact that it is founded, in a way which is unique, on the bedrock of our values. It gives us great legitimacy and makes us hugely attractive in the eyes of many partners around the world.
We must draw further strength from that foundation, so that we can forge a more peaceful, a more humane and a fairer world. Leading the fight against global warming, upholding fair rules on trade, fighting for fairer taxation… All this is in our interest, and in the universal interest.
We have solid instruments at our disposal. We must make more use of them and we must make better use of them.
First, we have financial resources. The recent decision on the recovery package is key in this regard. Then there are the European competences. Used wisely, they can have a major impact. Trade agreements, development aid, economic governance, financial market supervision, an industrial strategy, a digital agenda, a space strategy… And of course the euro, which needs to have its international role developed. Policies on sanctions and visas are a sovereign instrument which we can also mobilise.
Let’s be honest. There is room for improvement in terms of coordinating and harmonising these instruments for our international strategy. Our High Representative is a super-Minister for Foreign Affairs. That is the letter and the spirit of Lisbon. He is fully committed to the role. His experience and his skill are assets. It is my hope that as Vice-President of the European Commission and President of the Foreign Affairs Council, he will have all the political space needed to further our shared interests.
And his is not an easy task, since in foreign policy unanimity is required. This issue of unanimity is, as everyone knows, regularly discussed. And my opinion on it is nuanced. It is true that requiring unanimity slows down and sometimes even prevents decision-making. But this requirement pushes us to work unremittingly to unite the Member States. And this European unity is also our strength. Unanimity promotes a lasting commitment by the 27 countries to the strategies which have been developed together. So I wonder: would abandoning unanimity really be such a good idea? Are there not other, more relevant reforms which would allow us to move more quickly on the international stage without losing the added value of our unanimity?
My modest experience is as follows. Very often, in recent months, I have found that what seemed to be significant divergences between Member States were quickly worn away through substantive discussion. This was the case with China. Political preparations have in just a few months allowed us to define a common position that is now being put forward by all. It will be the same on the Eastern Mediterranean and on Belarus. I am confident that here, too, we will express common positions which will draw their strength from our unity. The major decisions taken on the budget and the recovery fund are further illustrations of this certainty: political confrontation and the exchange of substantive arguments are an indispensable part of the process of democratic debate. This is what gives decisions their legitimacy.
Trust and personal respect also play a key role, which is why I encourage interaction – in various formats, sometimes informal – as much as I can. Unity does not develop spontaneously. It takes work, tenacity and constant, unwavering commitment.
Defence is not an EU competence like any other. I am aware of the various national sensitivities. I believe that deepening common defence is necessary, and is not an ideological obsession but a matter of common sense. This project must be carried out within NATO. This is the purpose of the strategic partnership between the EU and NATO. Permanent structured cooperation and the European Defence Fund, for which we have just earmarked 7 billion euro, are fully in line with this ambition. And I applaud Jean-Claude Juncker and Federica Mogherini, whose strategic leadership in this area has not yet been fully appreciated.
The European Union is inherently a positive, open and tolerant force. We know that free and fair trade contributes to societies’ development. Our benign and humanistic values inspire our project of transformation. Climate neutrality and digital sovereignty are opening up new spaces for human intelligence, innovation and democratic debate. Our objectives are ambitious and demanding: peace and prosperity. And this is exactly why we must make better use of all aspects of our power, be more consistent in the use of our tools. True to our values, realistic, less naive… A power working for a world that is more respectful, more ethical, and more just. Sovereignty, independence, empowerment… Whichever word you use, it’s the substance that counts. Less dependence, more influence. Effective strategic autonomy is the credo that brings us together to define our destiny, and to have a positive impact on the world.
Thank you.
Contact:

Barend Leyts, Spokesperson for the European Council President | press.president@consilium.europa.eu

Compliments of the European Council.
The post ‘Strategic autonomy for Europe – the aim of our generation’ – speech by President Charles Michel to the Bruegel think tank first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Loretta J. Mester; and Randal K. Quarles.
Voting against the action were Robert S. Kaplan, who expects that it will be appropriate to maintain the current target range until the Committee is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals as articulated in its new policy strategy statement, but prefers that the Committee retain greater policy rate flexibility beyond that point; and Neel Kashkari, who prefers that the Committee indicate that it expects to maintain the current target range until core inflation has reached 2 percent on a sustained basis.
Compliments of the U.S. Federal Reserve Board.
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The Council on September 25, 2020 approved €87.4 billion of financial support to 16 member states in the form of EU loans under SURE – a temporary EU instrument to mitigate unemployment risks during the COVID-19 crisis.
The support will help the member states finance the severe increase in public expenditure incurred as of 1 February 2020 as a result of the use of national short-time work schemes and similar measures, including for self-employed persons, and some health-related measures in response to the pandemic. SURE is one of the three safety nets, worth up to €540 billion, that were agreed by the Eurogroup on 9 April 2020 and subsequently endorsed by the EU leaders to protect workers, businesses and sovereigns.
“SURE forms an important part of our response to the unprecedented challenges that the COVID-19 crisis has created. Member states’ considerable interest in this instrument confirms its significance and true added value for workers and companies. Millions of workers across the EU will benefit from this instrument. This is a clear signal that Europe is stronger together.” – Olaf Scholz, Germany’s Federal Minister of Finance and Vice Chancellor
Financial support under SURE is granted to member states as follows:

Belgium –  €7.8 billion
Bulgaria – €511 million
Croatia – €1 billion
Cyprus – €479 million
Czech Republic – €2 billion
Greece – €2.7 billion
Italy – €27.4 billion
Latvia – €193 million
Lithuania – €602 million
Malta – €244 million
Poland – €11.2 billion
Portugal – €5.9 billion
Romania – €4.1 billion
Slovakia – €631 million
Slovenia – €1.1 billion
Spain – €21.3 billion

Other member states can still present their requests for financial assistance. Up to €100 billion can be provided under this EU instrument.
SURE loans are backed by the EU budget and guarantees provided by member states according to their share in the EU’s GNI, for a total amount of €25 billion.
The guarantee agreements with the Commission have been finalised.
Next steps
The Commission will now raise funds on international capital markets on behalf of the EU and provide them as back-to-back loans to the member states that requested the loans.
Compliments of the Council of the European Union.
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The European Commission has today launched a new Customs Union Action Plan setting out a series of measures to make EU customs smarter, more innovative and more efficient over the next four years. The announced measures will strengthen the Customs Union as a cornerstone of the Single Market. They also confirm its major role in protecting EU revenues and the security, health and prosperity of EU citizens and businesses.
In her political guidelines, President von der Leyen announced that the Customs Union needed to be taken to the next level, in particular, by ensuring an integrated European approach to customs risk management, which supports effective controls by EU Member States. Today’s Action Plan does just that.
Paolo Gentiloni, Commissioner for Economy, said: “The EU Customs Union was one of the first concrete achievements of European integration and for more than five decades it has helped to protect Europeans and keep trade flowing across our borders – which are only as strong as their weakest link. Today, new challenges mean that we need to make our customs rules smarter and ensure they work better for Member States, citizens and legitimate businesses. This calls for improved use of data, better tools and equipment, and more cooperation within the EU and with customs authorities of partner countries. It also requires better foresight, so that EU customs can face the future with confidence. Today, we set out how we will take our Customs Union to the next level.”
Today’s Action Plan includes a number of initiatives in areas such as risk management, managing e-commerce, the promotion of compliance and customs authorities acting as one:

Risk management: the Action Plan focuses in particular on ensuring greater availability and use of data and data analysis for customs purposes. It calls for intelligent, risk-based supervision of supply chains and for establishing a new analytics hub within the Commission for collecting, analysing and sharing customs data that can inform critical decisions, help customs authorities identify weak points at the EU’s external borders and manage future crises.

Managing e-commerce: in this regard, and in order to tackle the new challenges of e-commerce, obligations on payment service providers and online sales platforms will be strengthened to help fight customs duty and tax fraud in e-commerce.

Promotion of compliance: the upcoming ‘Single Window’ initiative will make it easier for legitimate businesses to complete their border formalities in one single portal. It will allow for more collaborative processing, sharing and exchange of information and better risk assessment for customs authorities.

Customs authorities acting as one: the Action Plan details the roll-out of modern and reliable customs equipment under the next EU budget. A new reflection group formed of Member States and business representatives will be set up to help prepare for future crises and challenges such as unanticipated global developments and future business models.

The EU Customs Union
The EU Customs Union – which in 2018 celebrated its 50th anniversary – forms a single territory for customs purposes, where a common set of rules are applied. Within the EU Customs Union, EU Member States’ customs authorities are responsible for performing a wide and increasing range of controls.
Therefore, EU customs have an important role to play in supporting the EU’s economy and future growth. Customs need to facilitate increasing amounts of legitimate trade as quickly and seamlessly as possible. At the same time, authorities are continuously engaged in fighting growing levels of fraud and smuggling of illicit or unsafe goods. Customs are also playing a vital role in our recovery from an unprecedented health crisis. Since the start of the coronavirus pandemic, EU customs authorities and officials have been at the heart of essential tasks such as facilitating imports of protective equipment, while weeding out counterfeit products like fake masks and counterfeit medicines at the EU’s external borders.
It has become apparent in recent years that Member States’ customs authorities are struggling with the challenges of performing their various roles. Major challenges such as the current public health emergency, the consequences of the UK’s departure from the EU’s Single Market and Customs Union, and the rise of digitalisation and e-commerce will continue and may even increase. To make their full contribution to the wellbeing of all EU citizens and trade facilitation, our customs authorities must be equipped with cutting-edge technical equipment and analytical capacities that allow customs to better predict risky imports and exports. Enhanced customs cooperation with major international trade partners such as China will support our efforts to facilitate trade and, at the same time, ensure effective controls.
Background
The EU’s Customs Union has developed into a cornerstone of our Single Market, keeping EU borders safe, protecting our citizens from prohibited and dangerous goods such as weapons, drugs and environmentally harmful products, while facilitating EU trade with the rest of the world. It also provides revenues for the EU budget. But recently it has become clear that smarter ways of working are needed to allow customs authorities to manage their long and growing list of responsibilities.
The Action Plan benefited from an innovative foresight project on “The Future of Customs in the EU 2040” that worked to create a shared and strategic understanding among key stakeholders of ways to deal with current and future challenges for customs and to generate a vision for how EU customs should look in 2040.
Compliments of the European Commission.
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ECB phasing out secured marketable assets other than asset-backed securities, legislative covered bonds and multi-cédulas as collateral
Application process and acceptance criteria for external credit assessment institutions clarified
Amendments to treatment of breaches with respect to own fund requirements and reporting on capital ratios

The European Central Bank (ECB) has today published amendments to its guidelines on the implementation of monetary policy in the Eurosystem, applicable from 1 January 2021.
The amended guidelines implement a decision taken by the Governing Council on 13 December 2019 whereby secured marketable assets other than asset-backed securities and covered bonds would no longer be accepted as Eurosystem collateral. Under the amended guidelines, the ECB will also phase out non-legislative covered bonds (i.e. contractual covered bonds) from the Eurosystem collateral framework. This means that by 1 January 2021 all covered bonds remaining in the collateral framework will be legislative covered bonds or multi-cédulas.
The guidelines also clarify the application process and acceptance criteria for external credit assessment institutions in the Eurosystem credit assessment framework.
They furthermore amend the Eurosystem monetary policy counterparty framework with respect to the treatment of confirmed breaches of minimum own funds requirements and breaches of the obligation to report information on capital ratios within the required deadlines.
Guidelines ECB/2020/45, ECB/2020/46, ECB/2020/47 and Decision ECB/2020/48 are available on the ECB’s website and will be published in 23 official EU languages in the Official Journal of the European Union.

Guideline amending Guideline (EU) 2015/510 on the implementation of the Eurosystem monetary policy framework
28 September 2020: Guideline amending Guideline (EU) 2016/65 on the valuation haircuts applied in the implementation of the Eurosystem monetary policy framework
28 September 2020: Guideline amending Guideline ECB/2014/31 on additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral
28 September 2020: Decision amending Decision (EU) 2020/187 on the implementation of the third covered bonds purchase programme

Compliments of the European Central Bank.
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Keynote address by François Villeroy de Galhau, Gouverneur de la Banque de France, Official Monetary and Financial Institutions Forum webinar, 25 September 2020 |
Good morning and welcome to this webinar, jointly organized by the Official Monetary and Financial Institutions Forum and the Banque de France. What better way to demonstrate the digital transformation than holding an event in cyberspace. It has been common in recent years to hear about disruptive technologies but over the past 6 months, information technology has instead been a crucial source of continuity in a highly disrupted world.
Digitalization is one among many factors transforming central banking and this will be my broader theme this morning. The ECB Strategic Review rightly launched by Christine Lagarde, with an explicit list of challenges[ii], is the opportunity to reflect on how the Eurosystem should respond to them.
The shocks that have hit the economy in the past decade have been unprecedented, but in hindsight, many long-term structural shifts were occurring that have caused the unstable and complex situation we face today. Global natural interest rates had already been falling since the early 1980s driven by the demographic transition and risk-aversion in key emerging markets. Digitalisation and globalisation, combined, have been pressing for “lowflation”. Financial vulnerabilities were also steadily, but invisibly, rising since the so-called Great Moderation. Indeed, it seems that excess demand now shows up in asset prices before wages or inflation, complicating the trade-offs between price stability and financial stability.
However, it would be remiss of me not to briefly mention the short-term challenges that we currently face.
Confronting this unprecedented Covid crisis, we acted boldly and rapidly, using all the tools at our disposal and inventing new ones such as the PEPP. By doing so, we successfully avoided both fragmentation and deflation. That said, inflation is not yet where we would like it to be, back towards 2% over the medium term. Have no doubt about our determination to act as much as needed, and about our capacity to act. Again this Autumn, we are hearing chatter about the ECB running out of ammunition. It proved completely wrong in March, and it remains wrong today. If needed, the ECB has ample room for manœuvre. By the way, the yesterday’s take up (EUR 174 bn) of our TLTRO-3 confirms the attractiveness and the adequacy of this innovative tool. We decided to keep a steady hand in the last Governing Council due to the continuity of our economic forecasts. But steady hands are not tied hands: we have free hands for the future.

Let me now come to the ECB’s strategic review, on which work has restarted after the peak of the Covid crisis. It is more extensive than the FOMC’s as it will cover, among many things, structural change; climate change; financial stability; and the effects of digitalization. The Eurosystem will take its time, as the Fed did, to consider the different alternatives. What professional economists find theoretically appealing may not be either easily applicable or comprehensible to the general public. What financial markets expect in the short run is not always consistent with long-term economic objectives.
But let me try today to share some preliminary thoughts on four key questions:

Is there such a difference between a dual mandate and the ECB’s two-tiered mandate?
How could we clarify the inflation objective?
What about the “second pillar” of the ECB and is there a link with the so-called “secondary” objectives?
Last but not least, how can we improve communication with the general public and economic actors?

My aim obviously is not to give you conclusive answers to these four questions but to highlight important elements of the debate. The Fed’s conclusions are a significant part of it but one shouldn’t assume that the ECB will simply follow suit. Other contributions – such as the ECB Listens exercise, our academic roundtables, Sintra or the current review of the Bank of Canada – are also important and differences are not always where expected.

Is there such a difference in mandates?

For most observers, including politicians, this is the most striking issue: the Fed has a dual mandate, including price stability and maximum employment, and the strategy review shifted its emphasis to the latter. The ECB, meanwhile, has a primary objective of price stability, according to the Treaties.
Of course it is our duty to stick to the Treaties and our strategic review won’t deviate an inch from them. However let me only remind you that our legal mandate is not, as often assumed, a purely “single mandate”: it is rather a two-tiered one  that includes at least two other objectives without prejudice to price stability: “to support the general economic policies in the Union” contributing among other aims to a “social market economy, aiming at full employment and social progress”[iii]; and “the stability of the financial system”[iv]
Furthermore, I would argue that there is less of a difference between a dual mandate and flexible inflation targeting than people think: noticeably, the measures we have taken to offset the effects of negative shocks such as the Global Financial Crisis or the sanitary crisis have a direct effect on growth and employment. As far as demand shocks are concerned, the monetary policy prescriptions are the same. In principle there are conflicts when there are supply shock but inflation targeting central banks also tend not to react to temporary supply shocks but respond only if there are signs of second-round effects.
The ECB also takes note of estimates of the natural rate of unemployment but recognizes that these are subject to enormous uncertainty – like estimates of all other “natural” variables. The ECB would not tighten policy based solely on an estimated unemployment gap.

How could we clarify the price stability objective?

The main substantive change by the FOMC is the introduction of an inflation make-up strategy. Rather than being solely forward-looking, the FOMC will, or could, now correct for past inflation shortfalls. Let us here also discuss the areas of continuity as Jay Powell did in his speech of 27 August[v] – and the possible differences:

The Fed confirmed our common strategy of inflation targeting and it has kept 2% as its numerical goal. This “conceptual  convergence” remains a cornerstone of modern central banking.
Average inflation targeting is a flexible tactic, possibly temporary, within a wider strategy of keeping inflation sustainably where expected. Still more importantly in my view, the inflation target should be perceived as flexible, symmetric and medium term. Allow me to be a bit more specific about these three requirements.

flexible is the most obvious one. We cannot guarantee to achieve precisely our numerical objective either all the time or straight away.

Symmetric means that our numerical objective is a target and not a ceiling. As a consequence we might be ready to accept inflation higher than 2% for some time, without mechanically triggering a tightening of our monetary stance. Commentators sometimes attribute a perceived asymmetry to our current definition of price stability “below, but close to, 2%”. The Governing Council has frequently re-affirmed its commitment to symmetry – as it stands in our Introductory Statement since Mario Draghi. Nevertheless, we should examine whether the current formulation casts doubt on this.

medium term means that we should judge our inflation performance over a long enough period. We shouldn’t forget what Jean-Claude Trichet often stressed as an optimal performance in the first years of the euro. “Over these 12 years, the average annual inflation rate in the euro area has been 1.97%. We have achieved price stability in the euro area over what has already been quite a long horizon.”[vi] As I said in previous occasions[vii], our medium-term target needs to be viewed in two ways: it has to be forward looking to guide inflation expectations, but it cannot ignore the past either. All this is not explicit average inflation targeting ex ante, but would achieve very similar outcomes ex post. We will have to discuss that.

We will also have to discuss the precise formulation of our inflation objective, in at least two respects: the “below but close to” as already mentioned and the measure of inflation we use. Continuity is a positive asset but the inclusion of “owner-occupied housing” in the HICP is frequently, and somewhat rightly, suggested by the general public. As you are aware, the preferred inflation measure of the Fed, the PCE index, includes these expenditures.
Last but not least, our inflation objective while clarified should also be credible. I will come back to this with my fourth question about communication.

What about the second pillar of the ECB and is there a link with “secondary objectives”?

For many, the history of the second pillar of monetary analysis of the ECB seems to be coming to an end. Born as the first pillar in 1999 and coming at the time from the strict following of monetary aggregates by the Bundesbank – and the Banque de France as well –, it became the second pillar after 2003, passing behind the economic analysis of the inflation outlook. And due to the fact that it has progressively fallen into disuse, many suggest we should now call time on it during our strategic review.
Is it that sure? Isn’t there another alternative path, more adequate than letting it disappear? There are three possible reasons:

The second pillar allows a cross check on the analysis of inflation.
We could possibly introduce a focus on nominal aggregates, whereas the first pillar focuses by its nature on prices and volumes.
Finally, it would allow reference to some of the “secondary” objectives of the ECB, including financial stability.

In our discussion to come, I believe we could study two types of aggregates:

Financial aggregates, from the perspective of financial stability, and potentially looking more closely at the assets of financial institutions including non-banks (such as their provision of credit in the broadest sense) rather than at their liabilities only (including money, as in the past).
Other economic aggregates, starting with nominal GDP, which has the virtue of combining real growth and prices – two variables that statisticians sometimes have difficulties separating in our measures. But also employment and income distribution, which respond to the demands of the Treaties as well as to the expectations of the public.

Allow me some remarks on the substance of these “secondary” objectives. To achieve financial stability, in an ideal world, we would have a box of macroprudential tools that could maintain financial stability whatever the monetary policy stance. However, in practice our set of macroprudential tools is comparatively limited. We need a monetary policy strategy that reflects this reality. We should go beyond the old debate of “separation principle” versus “ leaning against the wind”. I advocate a median way, which we could call “coordinated” or “integrated”.[viii] We have now a range of unconventional monetary instruments and our objective should be to pick the right combination that delivers the necessary accommodative monetary stance while minimizing of adverse side-effects on financial stability. TLTRO’s and the tiering system we use today for refinancing the Eurozone banks are two good examples in this respect.
On climate change, the emphasis put by Christine Lagarde[ix] herself is welcome and totally warranted. In my view, the fight against global warming is already an imperative for us under our price stability mandate: not only will the effects of climate change have significant repercussions on future inflation and growth, but they are already having an impact now. We could implement our climate decisions in no more than 3 to 5 years, which would make us pioneers among major Central banks.

How to improve communication with the general public?

My final remarks concern communication. Central banks have come a long way in being transparent about their decisions and explaining their reasoning. However, our communication is too often addressed to a narrow group of people – the media, the markets and economists. We need to do a better job of reaching the general public. And this means two changes of paradigm:

it is not only a question of democratic accountability – however essential this remains –, it is also key for our economic efficiency. Better-informed firms and households will also make better decisions and ones more aligned with our strategy, I will come back to it.
Secondly, we should evolve from a narrow objective of “transparency” to a wider objective of “clarity”. This means focusing on what is heard rather than what is said: we cannot merely “publish and go”. As Tiff Macklem, my Canadian colleague, says “Public communications should be in plain language and free of jargon. We should speak as public servants and peers, not as oracles delivering messages from an ivory tower.”[x] And effective speaking also requires active listening.  At the start of next year, consistent with the ECB endeavours, we will host a number of “Banque de France listens” events in all regions to hear what French citizens and SMEs think about inflation and monetary policy. We will then adjust our communication depending on what we hear.

Let me elaborate on the economic stakes of this communication. Our inflation targeting policy will be significantly more efficient if economic agents, be they households or businesses, do actually understand it, accept it and believe it. Hence it should be seen as clear, legitimate and credible. I insisted earlier on clarification (question 2), let me now conclude with legitimacy and credibility.
One of the most difficult challenges for a central bank with a price stability mandate is how to explain a positive inflation objective. The general public often does not understand why a central bank would deliberately try to increase inflation. We need to explain better that although our price stability objective is defined in terms of HICP inflation, we are actually seeking a general average increase in all nominal variables, including wages and nominal GDP. Few people spontaneously want an increase in consumer prices, but most do want an increase in their nominal incomes. Furthermore, households, firms, financial institutions and governments enter nominal contracts (negotiate wages, take out mortgages, buy sovereign debt etc) based on expected inflation. If actual inflation is higher or lower than these expectations, then wealth and income are transferred from one group to the other. The best way to be neutral is to announce a target that can efficiently guide expectations.
To a non-economist, price stability would imply targeting zero inflation. However, we need to explain why targeting zero inflation is not ideal. Real wage adjustments can be necessary to maintain competitiveness and sustain employment and this real adjustment is easier to achieve with a positive inflation rate. This is still more important in a monetary union in which real adjustments are necessary to maintain internal balance. The effective lower bound (ELB) on nominal interest rates would also be reached more frequently, putting a constraint on the use of monetary policy. But I do acknowledge that using the ELB argument at, say a family lunch on Sunday, is easier said than done.
Last but not least, credibility. Here, households and firms have mixed feelings: they believe that actual inflation is much higher than central banks and statistics institutes claim; and they doubt we will deliver the “close to 2%”in the future. Distrust is too often the name of the game. Here, let us again listen and speak. First listen to the inflation expectations of households and firms: we don’t measure them properly today, although they are of the essence for economic transmission of monetary policy, as households and firms are the actual price- and wage-setters.  Indeed, their price expectations are quite different from those of financial markets we tend to focus on.
Listen and then speak: once a central bank has committed to a target, it must use every tool available to deliver on it and explain clearly that the transmission of the monetary impulse to the economy entails some delays. We are all convinced that a credible inflation objective makes stabilizing inflation easier because the objective anchors inflation expectations. Let us convince our fellow citizens of our determination, “in plain language” – I hope my remarks today help somewhat to initiate this essential debate we will have to conduct and conclude in our ECB strategy review.
Thank you for your attention.
Contacts:

Mark Deen (mark.deen[at]banque-france.fr)

Déborah Guedj (deborah.guedj[at]banque-france.fr)

Compliments of the Banque de France.

Références

[i]I would particularly like to thank Nathalie Aufauvre, Matthieu Bussière, Olivier Garnier, Ivan Odonnat and Adrian Penalver for their help in preparing this speech.[ii] https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200123~3b8d9fc08d.en.htmlhttps://www.ecb.europa.eu/press/inter/date/2020/html/ecb.in200124_1~a226a06d7a.en.html[iii] Article 3.3 of the Treaty on the European Union.[iv] Article 127.5 of the Treaty on the Functioning of the European Union.[v] https://www.federalreserve.gov/newsevents/speech/powell20200827a.htm[vi] at the Evangelische Akademie Tutzing, Bavaria, 13 November 2010.[vii] https://www.banque-france.fr/sites/default/files/medias/documents/2020.05.25_sep_en_cl.pdf[viii] https://www.banque-france.fr/sites/default/files/medias/documents/bdf-pse_2019_09_20_vf_cl.pdf[ix] https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200227_1~5eac0ce39a.en.html[x] https://www.bankofcanada.ca/2020/08/imperative-for-public-engagement/

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Statement | 25 September 2020 | Brussels
“The Commission has decided to appeal before the European Court of Justice the General Court’s judgment of July 2020 on the Apple State aid case in Ireland, which annulled the Commission’s decision of August 2016 finding that Ireland granted illegal State aid to Apple through selective tax breaks.
The General Court judgment raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases. The Commission also respectfully considers that in its judgment the General Court has made a number of errors of law. For this reason, the Commission is bringing this matter before the European Court of Justice.
Making sure that all companies, big and small, pay their fair share of tax remains a top priority for the Commission. The General Court has repeatedly confirmed the principle that, while Member States have competence in determining their taxation laws taxation, they must do so in respect of EU law, including State aid rules. If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the European Union in breach of State aid rules.
We have to continue to use all tools at our disposal to ensure companies pay their fair share of tax. Otherwise, the public purse and citizens are deprived of funds for much needed investments – the need for which is even more acute now to support Europe’s economic recovery. We need to continue our efforts to put in place the right legislation to address loopholes and ensure transparency. So, there’s more work ahead – including to make sure that all businesses, including digital ones, pay their fair share of tax where it is rightfully due.”
Compliments of the European Commission.
The post Statement by Executive Vice-President Margrethe Vestager on the EU Commission’s decision to appeal the General Court’s judgment on the Apple tax State aid case in Ireland first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.