Welcome to Better Europe’s weekly update on EU Affairs.
COMMISSION CAN’T SEE THE FOREST FOR THE TREES
The rules to prevent products from deforestation to be sold in Europe will apply one day — perhaps that is the only positive message to come out of the Commission’s readjustment of the anti-deforestation rules published this week. That is legal certainty that EU companies will appreciate. Unless your company is importing leather onto the EU market oncourse, and had started to prepare for application of the rules. In fact, it is much more effective to lobby against the rules, as luxury leather bags producers have been doing for the past year. As a result of their effort, the Commission now proposes to take the sector out of scope, compared to a previous draft from last year. Unless of course, the Parliament or Member States reject the final list of sectors to be adopted by the Commission this summer. Legal certainty? Not if campaign groups get citizens to massively tell politicians they want the rules to change. A rejection would further kick the can down the road and would make the current timeline that foresees application as of 30 December this year unfeasible. The date was pushed back already twice: first for simplification reasons, then because the Commission’s TRACES IT system was not ready for handling billions of submissions. A system that was due to be re-opened a few weeks ago but is still offline. But perhaps the law’s biggest impact has already been made in run-up to application, as the Commission believes: “the Regulation has already prompted positive changes in both the public and private sectors, bringing greater transparency to supply chains and opening new market opportunities for deforestation-free products”.
THE NEVER-ENDING STORY OF CENTRAL FINANCIAL SUPERVISION
Something that is no-brainer for banks since the financial crisis now two decades ago, is still very difficult for financial market infrastructure operators. If we’ve given up on having a dozen stock exchanges in Europe in the interest of competition and prefer to see one European champion stand up against the American and Chinese champion, the relevant market is European, and supervision should be European. But that’s hard for politicians who defend a national interest, who want the European champion to be their national champion, and are on the hook on their own when things go wrong, as the risk of the Russian assets held by Euroclear in Belgium have shown. European leaders keep repeating they want a Savings and Investment Union, to ensure capital is raised in Europe and stays here, to finance the needs of the green and digital transition and of the security and defence industry. So, what is the solution? Step by step, while we wait for the next financial crisis, and only move the supervision of some entities to ESMA, the EU’s financial market supervisor in Paris. Its chair Verena Ross told MEPs this week that there are too many market infrastructures in the EU, and further market consolidation is needed to reduce fragmentation. Most MEPs would love to give EMSA more power — left and right. But Member States are again pulling the breaks, led by Luxembourg and its industry that prefer a local supervisor that understands the specifics of the market over a ‘monster‘ in Paris. Perhaps the conclusion is that only a crisis will create the momentum to really shake things up, fifteen years after trying half-baked central supervision.
SINGLE TRAIN TICKETING MIGHT FINALLY LEAVE THE STATION
We’ve heard it for decades. It is easier to book flights from Krakow to Auckland than a train ticket from Berlin to Budapest. Already in 2022, then-Commissioner Timmermans said he was “sick of it” and that the Commission would force European railroad companies to organise single ticketing if they would not launch a system before the end of that year. A broken promise, but four years later, some of that is finally happening, as the Commission plans to adopt its package on Passenger rights, and present a Single Digital Booking and Ticketing Regulation (SDBTR). What’s at stake? It’s not just connecting APIs to each other so that you can book your trip in one go. The bigger problem are the passenger rights during the trip itself — unlike airlines, railway companies typically only operate on their own terrorist and adjacent countries, and have limited capacity to help smoothen your journey two or three operators later. A cancelled local train in Belgium might make you miss a train to Germany and ultimately a night train somewhere in Italy, but where does the responsibility of the Belgian railways for that local train delay end? Railway operators have for years managed to hide behind the concept of contracts of carriage, a lottery where technical reasons determine how many PDF tickets show up when you book a longer international trip. And yes, if the first ticket you receive is for a cancelled local train, you are at the mercy of goodwill agreements that go by fancy names as HOTNAT and AJC to determine when and at what price you will arrive. All of this doesn’t help you as a consumer, and it doesn’t help the planet to move to more sustainable forms of transport either.