Institutional Response

European Commission

• Economic impact: The European Commission published a second report on the estimated impact of COVID-19 on trade. According to the publication, the EU-27 might see a reduction of imports between 11% and 14%, and a reduction in exports of 9% to 15%. According to the Commission, “this amounts to a reduction in extra-EU27 exports between €282 and €470 billion and a decrease in extra-EU27 imports between €313 and €398 billion (goods and services combined).
• Strategic stockpile: The Commission proposed to increase the rescEU stockpile which had been created under the Civil Protection Mechanism. The move is to address problems which surfaced during the current pandemic, Commissioner Lenarčič argued, and would expand the rescEU budget to €2 billion over 2021-2027. The funds would be used to create strategic reserves for emergencies such as pandemics, but also forest fires, bio and chemical hazards, and other major incidents.
• Strategic Funding: The European Commission adopted a new Strategic Investment Facility aimed at providing funding to industries strategic to the European Union. The mark lies at €150 billion to be provided to companies in the defense, space, digital, health, and green tech sectors. To access funding, companies need to have a registered office in the EU and be substantially active in the EU as well.
• Solvency Support: The Commission adopted a regulation to support companies and sectors hardest hit by the pandemic. Funding would be raised through a €31 billion guarantee by the Commission, which is supposed to mobilise up to €300 billion in private investment. Those investments would then be channeled to struggling companies via national development banks or special facilities. The instrument aims to balance out inequalities in Member States’ firepower for state aid. The criteria to access funding are aligned with the Commission’s priorities for green and digital transition.
• State Aid: Since this newsletter was published last, the Commission approved a number of Member State state-aid applications under the temporary framework for state aid. Below is an overview, and here are all the details.
  • The Netherlands: €13 million guarantees to SMEs
  • Finland: €600 million guarantees for maritime countries
  • Italy: €12 million for agri sector
  • Estonia: €4 million rent compensation for business
  • Latvia: €800.000 for tour operators affected
  • Luxembourg: €260 million for affected companies
  • Czech Republic: €184 million rent compensation for business; €36.3 million for agri sector
  • Ireland: €250 million for micro and small companies to restart activities
• Council (and other ministerial bodies)
  • German Council Presidency Priorities: German Permanent Representative to the EU, Michael Clauss, has outlined the Presidency’s set of priorities for when Germany will take over from Croatia in July. Our colleagues at Cambre attended the online event and have all the details. Germany wants to bring the Council back to its working capacity and hopes to be able to host physical meetings with seconded personnel as of September. Still, social distancing rules will only allow for 30% of usual working capacity. Video meetings are problematic for confidentiality reasons and do not allow for personal side-discussion and deals. Germany also wants to focus on overcoming the impact of the pandemic, with a focus on the imminent new MFF and recovery instrument. Other files mentioned include Brexit, the Green Deal, and Migration, as well as the Conference on the Future of Europe.
• International Organisations
  • US and World Health Organisation (WHO): The European Union has asked the United States to reconsider their decision to withdraw from the WHO. In a press statement, the Commission stressed that the EU continued to support the WHO and provided additional funding, and that Members agreed to comprehensively evaluate the performance of the “international health response” to the pandemic to strengthen future preparedness. For this, “participation and support of all” is needed, the statement reads, with a view to the US.
  • Technology Access Pool: The WHO has launched an initiative called Technology Access Pool, designed to enhance access to intellectual property and other COVID-19 related scientific data. The mechanism will centre around five items: sharing genome sequences; sharing clinical trials data; incentivising providers of funding to mandate equitable access to results; licensing innovative, COVID-19 related products using the Medicines Patent Pool; and increasing the use of collaborative innovation tools.
• (Former) Member States
  • Italy: Italian PM Conte has expressed discontent with neighbouring states who keep their borders closed towards Italy, while opening for other Member States in bilateral agreements. Conte calls those measures “discriminatory” and said Italy was working to abolish those restrictions. Italy opened its borders to EU tourists on 3^rd June (source: POLITICO).
  • Belgium: The country will begin to open up on 8^th PM Wilmes said that from then on, only a selection of activities will remain prohibited. Restaurants and cafes will be allowed to open again, religious services will be resuming, as well as gatherings such as weddings, as long as they comply with certain restrictions. Social distancing rules will also remain in place, requiring a distance of 1.5 metres between people. On the 15^th June, Belgium will also open its borders to Schengen countries again (source: POLITICO).

Tackling the Virus

• Inclusive Vaccine Alliance: The Netherlands, Italy, Germany, and France have joined in an “Inclusive Vaccine Alliance” to negotiate with developers and producers of a potential COVID-19 vaccine to ensure affordability as well as prioritising European production capacity. According to a statement by the Netherlands, the initiative was talking to promising candidates as well as the Commission to support vaccine production in Europe.
• Pooling vaccine finance: Gavi, the Vaccine Alliance, has launched a new mechanism called COVAX. The initiative aims to support the development of vaccines through pooled financial contributions by participating countries. The strategy is to negotiate with a range of different potential producers which would have been able to supply a vaccine in the past. If a successful vaccine is produced by those partners, the partaking countries would receive a predetermined amount to fight COVID-19. Such mechanisms were in the past used to secure access to vaccines for low-income countries, but COVAX is open to any country wishing to become involved. The European Commission pledged €300 million.
• Compulsory licensing: Commissioner Phil Hogan has said that the EU could resort to compulsory licensing if necessary, to ensure equitable and universal access to a COVID-19 vaccine. In a letterto EP INTA chair Bernd Lange (Germany, S&D), Hogan made clear that the international rules on IP allowed for this in the context of the pandemic. According to POLITICO, the pretext to the letter was set by MEPs, who demanded that Hogan confirm that the EU was applying trade rules and agreements in a way that promoted global access.

Other

• Unemployment: European unemployment statistics have only changed marginally in April, Eurostat reported. According to the agency, both the EU rate as well as euro countries’ unemployment grew by 0.2% compared to March, to 6.6% and 7.3% respectively. Across the EU, Member States employed unemployment mitigation programmes.
• Automotive
  • The International Automobile Federation (FIA) welcomed the Commission’s budget and recovery proposal. According to the group, clean mobility was to be included in the proposal, with consumers put “at its centre”. Specifically, FIA calls to provide consumers with vehicle information on environmental performance to facilitate the shift to clean urban mobility.
  • The European Automobile Manufacturers’ Association (ACEA) has expressed disappointment over the proposed Recovery Package. Huitema, Director General of ACEA remarked that the Recovery Package remained “quite brief and vague on […] the recovery of the European auto industry.” Instead, the auto industry needed clarity and required the Commission to deliver.

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