EU news focus

What has Europe done for you? 10-16 March 2014

EU News Focus

In this week’s edition, you will particularly read about how the EU institutions act to increase online data protection and travellers’ rights, to improve the business climate and fight cross-border crime.

European Parliament

Data protection reform

The EU rules on data protection are nearly 20 years old and the technological progress during this period makes an update necessary. The NSA snooping scandal made it even more urgent. Therefore, MEPs voted an overhaul of the existing rules and ask the Council not to delay an agreement on this issue.

The rules consist in a regulation (i.e., a directly applicable text) on most data protection issues and in a directive on the use of personal data for matters related to law enforcement. Let us note that the regulation obtained much more support than the directive. It would simplify the legal framework for businesses, as there would be only one set of rules (instead of 28 national laws) to apply.

Under the new rules, data on the internet would be better protected. In particular, privacy policies should become clearer and more transparent, and people would have the right to require their data to be totally erased. Moreover, the practice known as “profiling” (“attempts to analyse or predict a person’s performance at work, economic situation, location, etc.”) would be further limited. Internet service providers would need to obtain “the freely given, well-informed and explicit consent of the person” before using personal data.

Firms would have to limit as much as possible the collection of personal data. To transfer this data to third countries, any firm would have to obtain the prior consent of a data protection authority in a Member State and inform the person concerned. Firms breaking the rules would face fines of “up to €100 million, or up to 5% of their annual worldwide turnover, whichever is greater” (this is a massive increase compared to the maximum amount suggested by the Commission: €1 million or 2% of the annual worldwide turnover).

In a separate resolution, let us note that the EP threatened to reject the TTIP (EU-USA trade agreement) if the mass surveillance by the US does not stop.

Increased protection for package holiday travellers

As more and more people book travel services via the Internet, they can create their own “holiday packages”. Therefore, the MEPs believe there is a need to update the rules on package holidays to include online bookings and thus better protect the rights of consumers and make them aware of who is responsible for what.

First of all, the definition of a travel package would be extended and would “encompass most types of travel arrangements made up of various elements, such as flights, hotel accommodation and car hire.” If the travel arrangement does not constitute a package, it should be explicitly stated by the seller.

Among the suggested measures to increase consumer protection, there are an emergency telephone number (also outside the EU), a right to repatriation in case of insolvency of the travel organiser, and guarantees in case of “extraordinary circumstances” (the organiser would cover the costs of up to 5 nights at the hotel for €125/night). In addition, if there are significant changes in the price or in the content of the travel package (quality of hotels, flight time…) after the sale of the package, there would be detailed rules on the right of the consumer to reject the offer or to be offered a similar alternative.

Now, the EP will negotiate with the Council a common version of this draft legislation. Discussions will probably start in June or July.

If you want to read more about the European Parliament’s activity each week, click here.

European Commission

A new approach to insolvency

200,000 businesses become insolvent each year in the EU; among these, a quarter have a cross-border element. More generally, around 50% of businesses do not last for more than 5 years. So, the topic of insolvency is important, especially in the current economic context. Other interesting statistics show that nearly one in five successful entrepreneurs have failed in their first ventures and that the earlier the restructuring process takes place, the more likely the firm will survive.

On Wednesday, the Commission recommended a “new approach to rescue businesses and give honest entrepreneurs a second chance.” The aim is to better prevent insolvency through early restructuring rather than waiting for the liquidation to become inevitable. Indeed, the Commission believes viable businesses should have the opportunity to restructure and stay in business.” Early action would save jobs while creditors would also have increased chances to recover their money. Moreover, entrepreneurs would have quicker “fresh start”, which is also good because “evidence shows that they are more successful the second time around.” Antonio Tajani, the EU Commissioner for Enterprise and Industry, said he wants this new approach to “allow a distinction between honest and dishonest entrepreneurs as this is fundamental to reduce the current stigma of bankruptcy.”

The recommendation of the Commission shall contribute to go towards “a coherent framework for national insolvency rules”. Member States are invited to “facilitate the restructuring of businesses” at an early stage and “without needing to formally open court proceedings.” Businesses experiencing some difficulties should be offered “the possibility to request a temporary stay of up to four months (renewable up to a maximum of 12 months) to adopt a restructuring plan before creditors can launch enforcement proceedings against them”. The Commission also wishes Member States to “facilitate the process for adopting a restructuring plan” and to introduce rules under which entrepreneurs’ debts would be discharged “within a maximum of three years.” Member States are asked to implement this recommendation within a year.

News from the TTIP: negotiators look at how SMEs could benefit from the transatlantic agreement & more…

The EU’s chief negotiator, Ignacio Garcia Bercero, recalled that SMEs (Small and Medium Enterprises) represented 99% of all European firms and declared that the “TTIP would help them expand – generating jobs and growth on both sides of the Atlantic.” The EU and the US also published a common document on how SMEs would benefit from the TTIP.

The negotiators also continued discussions on the three pillars of a prospective agreement. Regarding market access, both sides have already made offers on tariffs but continue kind of pre-negotiations on services and public procurement. On matters of regulation, negotiators, together with experts and regulators from both sides of the Atlantic, discussed regulatory compatibility in some key industries, technical barriers to trade (on which there are written proposals) and sanitary and phytosanitary measures (on which there are no written proposals yet). Finally, on ‘rules’ issues, negotiators talked about environment and labour rules (to further develop existing EU-US agreements), about trade in energy and raw materials, and about customs and trade facilitation (especially important because SMEs are most hindered by such rules).

The negotiators, in particular the EU, also wish to involve stakeholders as much as possible. So, two different meetings took place on Wednesday 12 March, each with dozens of stakeholders “representing business, consumer, labour and environmental groups.”

The next round of talks should take place before the summer in Washington. In the meantime, if you are concerned about the TTIP, or if you simply want to know more about this ambitious initiative, you can visit this webpage set up by the European Commission.

If you want to know more about the Commission’s action, click here.

Council / European Council

A directive on the freezing and confiscation of the proceeds of cross-border and organised crime

The Council adopted on Friday 14 March a new directive “on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union”. The rules will have to be implemented by the Member States within 2.5 years. The UK and Denmark are not taking part.

Under the new rules, it will become easier for national authorities “to confiscate and recover the profits made by criminals from cross-border and organised crime,” especially in complicated situations such as when the person concerned has fled to another country or is very ill (thus impeding a normal process). Judges will have extended powers of confiscation when they are “convinced that the property in question has been obtained through crime.” Confiscation from a third party will also be uniformly regulated in the future. Finally, the directive invites Member States to adopt rules on the use of confiscated property for public interest purposes.

Council conclusions on the social situation in the EU

The Council called for increased coherence between the economic and social policy goals in the EU. It took note of the “legacy of fragile growth”, materialised in particular in “too little and often low quality jobs” and in an increased exposure to poverty and social exclusion (a risk for nearly a quarter of the European population – around 125 million citizens). Poverty increases at more than 2% a year in some Member States and living standards have fallen for “significant parts of the population in some countries.” Finally, 2012 data also shows an increase in inequality in parallel with the rise of unemployment.

Reminding the objective, set in 2010, of lifting 20 million people from the risk of poverty or social exclusion by 2020, the Council acknowledged the failure of this policy so far, because of the difficult economic context, and insisted on strongly reiterating this commitment. To improve the situation, the Council wants to focus the effort on “effective prevention to avoid further worsening of the social situation in the EU, spur human capital investments and support labour market activation.” The adverse effects of necessary major structural reforms need to be preliminarily assessed to be minimised. The Council also recalled that the primary solution to poverty and social exclusion is employment. Therefore, “growth and social investments are needed.” Moreover, “wage and tax policies should allow earnings and social benefits to interact in a way lifting people out of poverty and making work pay.” In addition, “policies should facilitate women’s entry into professional life and boost their labour market participation [and] active labour market policies should be used to enhance the employability of those social groups exposed to long-term unemployment.” Finally, the Council also expressed the need to respect intergenerational solidarity by not creating an excessive burden for the young generation.

For young people, please note another interesting Council text: a recommendation on a Quality Framework for traineeships.

More information about the Council’s work can be found here; for the European Council, click here).

Pierre-Antoine KLETHI

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