Unusually mild temperatures under a typically grey Brussels sky mirror this week in EU policy: there has been good progress on critical issues such as the future of UK membership of the EU and on the EU-US data privacy transfer, but the socio-economic and political environment remains challenging.
The Winter 2016 Economic Forecast just released by the Commission indicates that growth is now more likely to turn out worse than originally forecast, mainly due to external factors such as slower growth in China and other emerging market economies, persistently low inflation rates, weak global trade and geopolitical and policy-related uncertainty. In the euro area, growth is projected to increase to 1.7% this year from 1.6% last year, and to 1.9% in 2017. For the EU as a whole, economic growth is forecast to remain stable at 1.9% this year and rise to 2.0% next year.
On the political front, this week in Brussels has been marked by two compelling EU developments of different nature and scope, but equal consequence for people and businesses. Both are the fruit of lengthy bilateral negotiations culminating this week in important - but provisional - deals that will continue to keep policy makers, the public and regulatory affairs professionals busy for the next few months. The first concerns the framework for a re-settlement of the UK’s membership within the EU, setting a precedent that may impact the EU’s core mission well beyond the UK itself. The second sets up a new transatlantic “privacy shield” for the processing of personal data, directly impacting the operations of at least 4,000 companies, from social networks to financial and HR data processing. The new privacy shield, replacing the EU-US “safe harbor” agreement that was declared illegal by the European Court of Justice last October, will reduce the legal uncertainty around the processing of individuals’ personal data on both sides of the Atlantic and should reassure European citizens on an issue of specific concern to them.
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After several months of intense exchange between the EU and the UK Government, and a busy weekend spent by David Cameron in Brussels, the President of the European Council Donald Tusk has publicly disclosed the terms of a draft agreement that addresses the requests of British PM for reform of the UK’s position within the EU club. The details of the deal will continue to be negotiated by EU diplomats from all Member States until the eve of the summit of Heads of State or Government that will take place next 18 and 19 February in Brussels. There, European national leaders are expected to back the deal and pave the way for the referendum in UK. The in/out referendum is expected at the end of June and, depending on the outcome of the vote, will be followed by the necessary legislative adaptation of some specific EU laws.
The most controversial and politically sensitive issue included in the draft agreement, which has already been backed by the Commission, several national leaders and by most political groups in the European Parliament – with the exception of the extreme Eurosceptics - concerns the introduction of an “emergency brake” on social welfare payments to EU migrants. The measure allows for a temporary halt to in-work and social benefits for EU migrants for a maximum of four years, and on the condition the UK can prove its welfare system has been overwhelmed by the arrival of migrants. Less controversial, but nonetheless a notable new option in the EU law-making process is the introduction of a “red card” mechanism that will allow EU national parliaments to block, renegotiate or amend, through the Council of the EU, the Commission’s proposals if rejected by a majority of 55% of national parliaments. Overall, the EU-UK deal appears more like a quick fix than a thorough restructuring of the EU project. Hopefully, the debate around this deal will lead to a more ambitious change of mindset and strategic thinking on the future of the EU’s mission and operations.
On the data privacy front, the other deal of the week, the details are still in the process of being finalized by the European Commission. The national data privacy authorities, meeting in Brussels to examine the broad terms of the draft EU-US deal, have welcomed the agreement but are still waiting to examine the Commission’s decision - expected by the end of February - before formulating their definitive opinion on it. The new framework focus on three key elements: stronger obligations placed on US companies handling Europeans' personal data; written assurances from the US administration that public authorities’ access to data for law enforcement and national security reasons will be subject to well defined limitations, safeguards and oversight mechanisms, as well as the availability of several possibilities of redress in the US for EU citizens who believe their data has been misused.
As is the case for any change in the EU, the devil is in the detail. So let’s wait to scrutinize the nitty-gritty of the deals carefully when they are made available and cut through any propaganda.