What to expect from Juncker’s final year

Regardless of who follows in his footsteps as Commission President, Jean-Claude Juncker aims to point the European Union in a direction of reform and unity that brings it ever closer to becoming a federal entity.

That at least is the conclusion from the Commission’s 2018 work programme unveiled on October 25, which includes 26 new initiatives like creating a Eurozone finance minister, banking union, reforming the EU’s long-term budget, ending the tax veto, a new pan-EU cyber-security agency, and addressing the spread of fake news.

The programme covers the final full year of the Juncker Commission, which the former Luxembourg prime minister promised would be his sole term. As one of the last European leaders who still believes in the EU federal ideal, his time in office has been characterised by a defiant call to European unity even as the winds of populism have swirled around the bloc. Now that the worst of the political and economic crises appear to have abated, Juncker has talked of building on the “momentum of confidence” to accelerate integration, with his 2018 programme reflecting his bold ambitions. “Europe is regaining its strength, and we must take advantage of this renewed momentum,” he said.

Much of Juncker’s vision for the EU had already hinted at during his State of the Union address in September. “We have already put on the table 80 percent of the proposals we promised when this Commission took office. The priority must now be on turning proposals into law, and law into practice,” he said.

Speaking at the European Parliament in Strasbourg, his First Vice-President Frans Timmermans promised that the “limited number of new proposals” would be delivered by May 2018, so that the legislative work in the Parliament and in the Council of Ministers can be finished before the May 2019 European elections.

EU Economy Minister

The stand-out proposals will be unveiled in December, when the Commission will present a series of economic reforms, including a new “democratically accountable” EU economy and finance minister who could order Eurozone member states to make structural reforms.

This is linked to plans for the EU’s long-term budget, the Multiannual Financial Framework, measures to transform the European Stability Mechanism into a European Monetary Fund, and to integrate the fiscal compact into EU law.

However, Aaron measures are still more modest than French President Emmanuel Macron’s proposal earlier in October for a Eurozone budget representing “several points” of GDP. Juncker’s plans would only be within the existing financial framework, whereby the EU’s budget is around 1% of GDP, and would also cover structural reforms in the member states and pre-accession support for countries aiming to become Eurozone members.

Tax avoidance

One of the major Juncker Commission campaigns has been against big business tax avoidance, with many multinational companies accused of re-routing their profits via the bloc’s low-tax states. Planned taxation measures, slated for next year could cost the veto powers of the EU’s smaller states. All 28 EU members currently need to back tax changes, a condition that has allowed low-tax states like Luxembourg, Ireland or Malta to block reforms.

The Commission will overcome this by using a clause in Article 48 of the Lisbon Treaty allowing decision-making by qualified majority in sectors where unanimity is usually the rule. This is the so-called passerelle clause, which the Commission wants to use for “important single market questions” like the common consolidated corporate tax base, on VAT, fair taxes for the digital industry and the financial transaction tax. The move was already endorsed by at the EU summit on October 19-20, and while it could upset low-tax states, they could still block the use of the passerelle clause.

On top of the 26 new initiatives, there are some 66 pending proposals and ongoing legislative negotiations in the work programme that the Commission wants agreement on before December 2018. These include revision of the Posted Workers Directive, copyrights reforms, new climate targets for 2030 and screening of foreign direct investments.

Circular Economy, Clean Energy, food supply and more

Other proposals aim to improve the EU food supply chain, extending the remit of the European Public Prosecutor’s Office to tackle terrorism, an action plan on Financial Technology (FinTech) that includes a framework on crowdfunding, and a proposal “addressing online platform challenges as regards the spreading of fake information”.

The Commission has already released plans for the Circular Economy and Clean Energy, so the work programme aims to deliver on both, dealing with legal, technical or practical bottlenecks at the interface of chemical, product, and waste legislation. Likewise, the programme aims to follow on the Security Union plans, particularly in the interoperability between EU information systems for security, border and migration management, revising the Visa Information System, as well as overhauling residential and travel documents.

The Commission also suggests that 18 ongoing legislative proposals should be withdrawn or repealed, as negotiations are either stuck or are out-of-date.

For some of the EU’s critics, this represents a juggernaut on the road to an EU superstate. The most vocal of these will be in Britain, which is due to leave the EU at the end of March 2019, about three months before Juncker’s replacement is chosen. The more serious challenges will come from amongst the EU27, with some – especially the non-euro members in eastern Europe – already warning that it could lead to a two-tier EU.

The work programme also reflects the changing international environment since the election of Donald Trump as US President last year. Apart from a small reference to the US economy, none of the new policy initiatives mention the US or the transatlantic partnership. This is a significant change from the days when the planned Transatlantic Trade and Investment Partnership (TTIP) was a Brussels priority.

China, which is arguably now as powerful on the world stage as the US, does not appear in the document either. On the other hand, India, Japan and Russia are part of the 2018 programme. This ties in with the September initiative on Screening Foreign Direct Investment in the EU, a move to ensure that the EU’s strategic economic sectors are given special protection.

Ultimately, as Timmermans noted, the work programme is about keeping the EU’s focus stays on the things where European action has most added value. “The European Union will be judged not on the number of directives and regulations we adopt, but on the tangible results our policies deliver to our citizens and businesses,”he said. That judgement is still to come.

Authors: Leo Cendrowicz | Elizabeth De Bony | Venetia Spencer

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