Call for Change: Key EU Policy Decisions After EP Elections

INSIGHTS BRUSSELS
Special EU Elections
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INSIGHTS BRUSSELS .
AFTER THE EP ELECTIONS
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ISSUE #21
Reshuffling leadership,
policies and practices

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Call for change ...........................................................................................................3
Key policy areas for forthcoming decisions..............................................................7
Energy and Environment ...................................................................................................................7
2030 climate and energy framework ............................................................................................................................. 7
Roadmap on energy independence .............................................................................................................................. 7
EU emissions trading system ........................................................................................................................................ 8
Carbon Capture and Storage ........................................................................................................................................ 8
Political positions on Energy issues at a glance............................................................................................................ 9
Financial Services ........................................................................................................................... 10
European Long-Term Investment Funds..................................................................................................................... 10
Institutions for Occupational Retirement Provision (IORP).......................................................................................... 10
Banking structural reform ............................................................................................................................................ 11
Payment Services ....................................................................................................................................................... 11
Insurance products...................................................................................................................................................... 12
Benchmarks used in financial instruments or contracts............................................................................................... 12
Money Market Funds................................................................................................................................................... 13
Corporate Governance Package ................................................................................................................................. 13
Political positions on financial issues at a glance ........................................................................................................ 14
Food and Beverage ........................................................................................................................... 15
Novel food and animal cloning package...................................................................................................................... 15
Animal and plant health package ................................................................................................................................ 15
Organic farming and labelling...................................................................................................................................... 16
Healthcare and Pharmaceutical ...................................................................................................... 17
Medical devices........................................................................................................................................................... 17
Information and Communication Technology................................................................................ 18
Connected Continent Package.................................................................................................................................... 18
Data protection package.............................................................................................................................................. 18
Political positions on Digital issues at a glance ........................................................................................................... 19
Transport..........................................................................................................................................20
The Fourth Railway Package ...................................................................................................................................... 20
Single European Sky II+.............................................................................................................................................. 20
ETS for intercontinental flights..................................................................................................................................... 21
Truck Measures Regulation......................................................................................................................................... 21
eCall ............................................................................................................................................................................ 22
Political positions on Transport at a glance ................................................................................................................. 23
International Trade..........................................................................................................................24
Transatlantic Trade and Investment Partnership (TTIP).............................................................................................. 24
Free Trade Agreement EU-Japan ............................................................................................................................... 25

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Call for change
With the conclusion of the European electoral
round last Sunday evening, the way to a
substantial reshuffling of policy and leadership in
the EU institutions is open.
The results of the European Parliament election
carried out across the 28 European Union
Member States sent a loud and bold message of
change to the Brussels bubble and to several
national policy makers across Europe.
The nature and direction of change demanded by
European voters varies a lot from one country and
party to another. They range from complete
abolishment of the EU system, as pleaded by the
far-right and nationalistic parties who became the
leading political force in UK, France and
Denmark; to those calling for even stronger social
and political EU integration.
Despite the progress made by the anti-EU
parties, the pro-EU bloc remains by far the largest
and is in the position to govern and drive the EU
agenda as well as the appointment of the new EU
institutional leadership. The four pro-European
groups including the Christian democrats (EPP),
the Socialists (S&D), the Liberals (ALDE) and the
Greens (Green-EFA) can count on an
overwhelming majority of 70% of parliamentary
seats and have already excluded any cooperation
with the eurosceptic front.
However, even though the success of the far–
right parties doesn’t give them the numbers to
count in Brussels, they will be able to influence
the EU agenda through the strength acquired
nationally in major countries such as France and
UK, radicalizing the position of these countries in
the EU decision making process.
There are at least four major EU leadership roles
to be renewed. For the presidency of the
European Commission, the most important of
them, where is determinant the indication and
final approuval of the European Parliament but
the choice stays with the 28 Heads of State or
Government, the race has just started (see the
timeline and role of different players in the
decision making process on the right column) The
appointment is likely to be part of a compromise
Source: European Parliament (provisional data update of 27th
May)

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decision on all key EU roles, including the
Presidency of the Council and of the High
representative for External Affairs, where national
interests and personal veto matter at least as
much as electoral results.
On Tuesday evening, heads of state or
government will meet in Brussels for a first
informal dinner summit to discuss the lessons to
be drawn from and implications of the EP election.
All eyes are likely to be on Italian Prime Minister
Matteo Renzi, leader of the centre-left Democratic
Party (PD), who succeeded to gain the trust and
confidence of more than 40% of Italian voters with
a frills free, pro-reform and pro-European
campaign. The Italian members newly elected to
the European Parliament will be the most
important national component of the socialists
and democrats’ group and may well be in the
position to have a much greater influence that in
the past. Meanwhile the determination for on-
going bold reform shown in Italy over the last 3
months may inspire the activity of the next EU
Council Presidency that will be held by Italy until
the end of 2014 starting from 1st
July.
Beyond the choices for leadership, the new
European Parliament will be confronted soon with
critical decisions in key policy areas for business
and citizens, ranging from energy to financial
services, from transport to information and
communication technology. In the following
pages we share a snap-shot of the EP election
results, and a review of the most compelling
political and regulatory decisions to be finalized in
the coming months.
We hope that you will find it useful and
inspirational for your work.
EU 2014 timeline
Leonardo Sforza

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5 key steps for the renewal of EU institutions

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Composition of the European Parliament: Country breakdown
Source: European Parliament (provisional data update of 27th
May)

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Key policy areas for forthcoming decisions
Energy and Environment
2030 climate and energy framework
One of the most compelling dossiers pending
approval by the new European Parliament is the
2030 climate and energy framework. In January,
the European Commission presented a draft
2030 framework, setting up new objectives for the
EU energy policy beyond the current 2020
targets. The proposal sets binding targets for the
reduction in greenhouse gas (GHG) emissions by
40% below the 1990 level as well as for
renewable energy sources with an objective of
reaching at least 27% of EU energy mix by 2030.
The interinstitutional negotiations on the draft
framework started in the first half of 2014.
In its preliminary work, the European Parliament
favoured an ambitious climate and energy
framework and adopted therefore in February a
resolution supporting three binding targets: 40%
for GHG reduction, 30% for renewables and 40%
increase in energy efficiency. While their vote
was not binding, the resolution will be taken as a
basis for the newly elected MEPs to negotiate a
final deal with the Council of Ministers.
On the Council’s side, Member States’
representatives are divided. Ahead of the 2015
International Climate Summit in Paris, Western
European countries support an ambitious
framework, while Eastern European countries
defend industry competitiveness. EU Member
States however agreed to make their position
clear by October at the latest.
Roadmap on energy independence
As a result of the Ukrainia crisis, the European
Commission is set to present by June a roadmap
on energy independence with a view to cut
reliance on Russian imports and increase security
of supply. Based on preliminary work by the
current Greek Presidency of the European
Council, the proposal will put forward measures
to strengthen energy interconnections between
Member States, reduce energy demand , make
use of alternative sources of energy, support the
exploitation of hydrocarbons in the eastern
Mediterranean, diversify natural gas supply
routes and suppliers, complete the internal
energy market and give the EU more power to
speak with a single voice on energy issues with
the rest of the world. The roadmap may also
present measures to review inter-Member States
solidarity mechanisms, along with short-term
measures (such as emergency plans using for
instance reverse flows and storage) and long-
term measures (such as the deployment of
European grids).
Once unveiled, the roadmap on energy
independence will be discussed by the new

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Members of the European Parliament and within
the Council of Ministers.
EU emissions trading system
The reform of the EU emissions trading system
(EU ETS) will be another dossier on the table of
the newly elected Parliament. In January, the
Commission proposed a long-term reform of the
EU ETS with the plan to establish a market
stability reserve at the beginning of the next ETS
trading period in 2021. The reserve would both
address the surplus of emission allowances that
has been built up in recent years and improve the
system's resilience to major shocks by
automatically adjusting the supply of allowances
to be auctioned. This would imply the withdrawal
of allowances if a surplus builds up (more than
833 million allowances) and their release on the
market when there is a deficit (fewer than 400
million allowances).
The creation of such a reserve would operate
entirely according to pre-defined rules which
would leave no discretion to the Commission or
Member States in its implementation. But some
Member States and Members of the previous
Parliament feared that this reserve would
represent a market intervention from the
Commission and called instead to set up a carbon
‘central bank' which would have an independent
regulatory board taking decisions.
On 25 June the European Commission will host a
panel of experts to discuss technical aspects of
the proposed EU ETS market stability reserve.
The European Parliament and the Council of
Ministers will engage in negotiations in the
aftermath of the elections.
Carbon Capture and Storage
Newly elected MEPs will also have to discuss
during their mandate EU support to Carbon
Capture and Storage (CCS) technologies. Under
the provisions of the 2009 CCS Directive, the
Commission is required to review the legal
framework and present a report to the European
Parliament and Council by 31 March 2015,
together with, if necessary, a legislative proposal
to reform the regulatory framework.
Starting the preparatory work, the European
Commission launched on 20 May a public
consultation on the EU legislation related to
Carbon Capture and Storage (CCS). The
consultation, which closes on 2 July, invites
stakeholders to submit their views on the 2009
CCS directive. The main objectives of this review
process are to assess the effectiveness,
efficiency, ease of application and legal
practicality of several of the CCS Directive
provisions, as well as to provide an assessment
on how the enabling policy of CCS at European
level has in practice worked out so far.

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Political positions on Energy issues at a glance

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Financial Services
European Long-Term Investment Funds
Last June, the European Commission unveiled a
draft regulation on European Long-Term
Investment Funds (ELTIFs). These funds should
invest exclusively in businesses that require long-
term commitment, such as infrastructure,
transport or sustainable energy projects. The
Commission’s strategy aims to tackle criticism
that financial markets prefer short-term
speculative investments.
Regarding this dossier, newly elected MEPs will
decide on whether to ratify the proposal made by
their predecessors or restart the legislative
proceeding. Indeed, during the last plenary
session of April, exiting MEPs decided not to
proceed with the final vote in order to leave a
margin of manoeuver to the new Parliament.
Before leaving office, members of the leading
Economic and Monetary Affairs (ECON)
Committee significantly amended the text:
authorization procedures were simplified while
the list of eligible investments was enlarged
especially by including SMEs of up to €1 billion of
market capitalization. Once they established a
common position, the newly elected MEPs will
have to reach a compromise with the Council.
The Commission expects the first European
Long-Term Financing Fund to be set up in 2015.
Institutions for Occupational Retirement Provision (IORP)
In March, the European Commission presented a
set of measures to channel private sources of
financing to long-term investments. The first
package of actions includes: a communication on
crowdfunding, offering alternative financing
options for SMEs, and a revised directive for
occupational pension funds (IORP). The goal of
this draft reform is, first of all, to encourage
European citizens to save for retirement at a time
when the continent’s population is ageing.
Moreover, the Commission aims to improve
governance of pension funds (by introducing new
risk management and internal audit
requirements), transparency (providing detailed
information to consumers) and cross-border
coverage.
Regarding the IORP reform, Members elected in
May will have to start from scratch. Immediately
after the elections they will be in charge to build
a common position and subsequently to reach an
agreement with Member States.
The Commission proposal received mixed
response from associations of pension funds. On
the one hand, they welcomed the fact that the
proposal does not contain new solvency
requirements as well as greater flexibility to
invest in shares. On the other hand, association
representatives expressed concerns that the
proposal was not accompanied by an impact
assessment and that provisions on funding of
cross border schemes were too vague.

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Banking structural reform
In January, the European Commission presented
a draft regulation for structural reforms in the
banking sector. As a key element of this proposal
the new rules would only apply to banks
considered “too big to fail”. To this purpose, the
European Commission already identified around
30 major European banks whose trading
activities exceed certain thresholds and that are
considered too large and interconnected to be
allowed to go bankrupt. The aim of the regulation
is to separate risks associated with banks’ trading
activities from deposit taking function.
According to the Commission proposal, banks
considered “too big to fail” would be obliged to
transfer their high-risk market activities into
separate legal trading entities starting from 2018.
Moreover, the reform also includes a ban on
proprietary trading, a high speculative activity
that consists in trading on own account. This kind
of investments used to account for 15% of market
activities and now accounts for 3%. Finally, the
regulation would introduce rules to increase
transparency of certain financial transactions.
Due to late publication of the proposal, outgoing
MEPs did not manage to launch the review
process. The new Parliament and more
specifically the Members of the Committee for
Economic and Financial Affairs (ECON) will have
to reach a negotiating position on this highly
sensitive dossier.
In the Council, negotiations are also expected to
be difficult: some Member States such as France
and Germany have already implemented reforms
to separate speculative activities. According to
observers, a first informal meeting on this issue
highlighted slightly different views in the Council.
Payment Services
Last July, the European Commission unveiled
the payment services package, which is
composed of a regulation on multilateral
interchange fees (MIFs) and a revised payments
directive (PSD2).
The European Parliament adopted its position on
the package in April, during the last plenary
session. Based on this preliminary work, the
newly elected MEPs will now have to reach a
compromise with the Council.
The MIFs regulation aims to introduce caps to
fees that can be charged for debit or credit card
payments. In their assessment, MEPs introduced
substantial modifications to the text: it was
decided to include commercial cards in the scope
of the regulation while the so called principle of
“honour all cards” rule was removed. This rule
required merchants handling one of the major
cards to accept all cards of the same network.
The PSD2 directive introduces provisions
prohibiting most card surcharges (additional fees
charged when purchasing), decreasing
consumers’ liability for fraud, and strengthening
security. This part of the package remained
similar to the Commission proposal.

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Insurance products
In July 2012, the European Commission
presented a proposal for the revision of the
Directive on insurance mediation (IMD). The aim
of the reform is to reinforce protection of
insurance policyholders by regulating selling
practices for insurance services.
After months of intense negotiations, the
European Parliament adopted in February its
amendments. The new MEPs will now have to
find a compromise with the Council on this
controversial reform.
Former MEPs introduced substantial changes to
the text. The proposal to ban the “tying” practice
(consisting in selling many insurance products in
a package) was reduced to a simple limitation.
According to the text adopted by the Parliament,
consumers should have the right to decide if they
want to purchase the different components
separately or as part of a package and they
should be fully informed about the risk profile of
the services. MEPs also narrowed the length of
insurance products that would be covered by the
reform. MEPs decided to include new
requirements on transparency and conflict of
interest in the scope of the regulation. Consumer
organizations already criticized the Parliament
amendments, stating that the introduced
modifications were insufficient to fully protect
consumers.
The Council is expected to adopt a position in the
coming months in order to start negotiations.
Benchmarks used in financial instruments or contracts
Last September, the European Commission
presented a draft regulation on indices used as
benchmarks in financial instruments and financial
contracts. The initiative of the Commission
followed a series of revelations that traders at
leading banks had sought to benefit from
manipulating their submissions to the London
Interbank Offered Rate (LIBOR). Subsequently
the European Commission heavily fined eight
banks for breaking anti-trust rules. Benchmarks
such as LIBOR or EURIBOR represent average
interest rates that banks would be charged if
borrowing from other banks. They also serve as
a basis for day-to-day contracts such as
households mortgages.
With regards to this very sensitive dossier, newly
elected MEPs will have to reach a common
position before starting to negotiate with the
Council. This objective was missed by their
predecessors due to controversies on two pillars
of the regulation. First of all, Members of the
Economic and Financial Affairs (ECON)
Committee agreed that Commission’s proposal
included too many benchmarks but were unable
to decide which ones to consider systemically
relevant. Moreover, MEPs could not find an
agreement on the division of competencies
between Member States and the European
Securities and Markets Authority (ESMA).
In the Council, negotiations have been quite
intense. The British delegation is strongly

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opposing to attribute binding powers to the ESMA
in case of dispute with national supervisors. The
British government is not likely to accept that the
EU would be responsible for the London-based
LIBOR.
Money Market Funds
Last September, the European Commission
adopted a communication on shadow banking
and a draft regulation on money market funds
(MMFs). These funds invest in short-term debt as
money market instrument issued by
governments, banks or corporates. The
Commission wanted to regulate MMFs because
of their systemic interconnection with the banking
sector and, more specifically, because their
operation has been at the core of international
work on shadow banking. The new rules
proposed aim to improve liquidity management
and stability of money market funds but also to
introduce a legal framework for interactions with
banks.
With regards to this dossier, newly elected MEPs
will have to start from scratch as their
predecessors have been unable to reach a
common position within the Committee for
Economic and Monetary Affairs (ECON). Former
Members clashed particularly on a rule that
would introduce a 3% buffer for certain some
forms of MMFs. Such MMFs would be obliged to
foresee a capital reserve in order to increase
stability in the financial sector. Many MEPS and
banking associations already stated that this rule
would kill MMFs that invest in risky assets.
The negotiations in the Council are proceeding
very slowly as this regulation does not seem to
be a priority for the Greek Presidency. According
to observers it is unlikely that the Parliament and
Member States can reach an agreement before
the end of the year.
Corporate Governance Package
This April, the European Commission presented
a corporate governance package containing a
revised version of the shareholders rights
directive and a draft directive on single-member
companies.
With regards to the shareholders rights directive,
the aim of Commission’s proposal is to improve
transparency of listed companies by enhancing
shareholders rights. Furthermore, the proposal
would oblige companies to disclose information
on their remuneration policies. The most
controversial rule is the one that would give
shareholders the right to approve remuneration
policies for directors in listed companies on
regulated markets.
The second draft directive’s aim is to facilitate
operation of SMEs across the EU. The new rules
would allow the creation of a single-member
private company by any natural person, via
online registration and without any minimum
capital requirement. A similar proposal failed in
2008 because of the opposition of some Member
States.
Newly elected MEPs will start to review the
proposals early this autumn.

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Political positions on financial issues at a glance

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Food and Beverage
Novel food and animal cloning package
Last December, the European Commission
presented a new legislative package composed
of a draft regulation on novel food and two draft
directives on animal cloning. Regarding this
package, the new Parliament will have to start
from scratch as before leaving office, MEPs just
managed to divide responsibilities among the two
relevant Committees: the Committee on
Agriculture (AGRI) will be in charge of the draft
directives on cloning while the Committee for
Environmental Affairs (ENVI) will deal with the
novel food regulation.
The first directive proposes to forbid using
cloning techniques on farm animals; cloning
would only be permitted for research or scientific
purposes.
The second directive aims to regulate food
produced from cloned animal. This part of the
package is certainly the most controversial:
MEPs and consumer organizations already
criticized the Commission’s choice of not
including in its proposal rules measures to ensure
the traceability and labelling of food driving from
descendent of cloned animals. What is more, the
Commission proposal included in general no ban
of such products. This precise issue determined
already in March 2011 the failure of a very similar
proposal.
On this point, the Council already stated that the
labelling of food other than beef and veal should
be conditional on the results of an impact study.
Furthermore, the Commission argues that the
introduction of such rule would oblige the EU to
deny products access to the EU market which
originate from countries that do not apply a
traceability system. According to observers, the
Commission fears that this rule could deteriorate
trade relations with the US while negotiations on
the Transatlantic Trade and Investment
Agreement (TTIP) are ongoing.
The third part of the package aims to introduce
new rules on foods resulting from new
technologies or food not consumed significantly
before 1997 in the Union (novel food). The
Commission’s proposal would establish a new
simplified procedure to evaluate the safety of new
products and update the legal definition of novel
food.
Animal and plant health package
Last May, the European Commission presented
a package consisting of 5 proposed regulations
on animal and plant health. The new measures
proposed by the Commission aim to update and
simplify the current regulatory framework and to
strengthen EU animal and plant health, seeds
and safety rules for a safer food chain.
The most sensitive parts of the dossier are the
rules for seeds and reproductive materials.
Sectorial associations claimed that the new

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regulation would give excessive powers to the
Commission on the controls over seeds and
reproductive materials without leaving a sufficient
margin of manoeuver to Member States.
Following criticisms from farmers associations
and seeds producers, MEPs rejected the
Commission proposal. Moreover, MEPs formally
called the Commission to withdraw its proposal
and submit an updated draft to the new
Parliament.
The Commissioner for health, Tonio Borg,
strongly defended the proposal and did not
accept to take a step back. The ball is now in
Council’s court: on 16-17 June, Member States
can either back Parliament’s vote and reject the
proposal (and so conclude the legislative
process) or amend it. In case the Council chose
this second option, the new MEPs will be in
charge to carry on a second reading on this highly
sensitive dossier.
The Commission expects that this package will
enter into force in 2016.
Organic farming and labelling
Last March, the European Commission unveiled
a legislative package on new rules for bio-
production. The Commission’s proposal contains
a new regulation on the farming and labelling of
organic products and an action plan that sets
goals such as strengthening links between EU
research and organic farming or encouraging the
use of organic food in schools. The Commission
also put for approval a mandate for international
negotiations in order to reinforce the external
dimension of EU organic production. The aim of
this package is to update the legal framework in
a sector that has quadrupled in size in the past
ten years.
Regarding this dossier new MEPs will have to
start from zero as their predecessors did not have
enough time to take any decision. The package
has been generally welcomed by the organic
industry, however, some green MEPs and
farmers associations expressed concerns about
financial burden sharing in case of pesticide
contamination. This legal proposal is criticized
because organic producers would be obliged to
pay for contamination done by farmers using
pesticides even if the contamination was
accidental. This question is expected to be a
major issue for the next AGRI Committee and it
remains highly sensitive for both consumers and
producers representatives: 45,000 respondents
submitted their comments to a public consultation
on the issue last year.

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Healthcare and Pharmaceutical
Medical devices
In September 2012, following the breast implant
scandal, the European Commission unveiled two
draft regulations: one on medical devices and
another on in vitro medical devices (such as
those used for HIV blood tests). The aim of the
proposed reform was mainly to restore patient’s
confidence by introducing new rules to assess
safety and performance of medical devices
before accessing the European market.
Last April, before leaving office, MEPs reached a
common position, but were unable to start the
talks with Members States as negotiations have
been delayed in the Council. Within the
Parliament, political positions have been
contrasting especially on the system for market
authorization: the Commission’s proposal was in
favour of a decentralized approach while many
MEPs advocated for a centralized system. The
final decision can be considered half-way from
those positions. Newly elected MEPs will have to
reach a compromise with Member States once
the Council has reached a common position.
According to insiders, Member States are
clashing around the question of reprocessing,
traceability and assessment of compliance of
medical devices. Ministers nevertheless expect
to reach a deal by June.

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Information and Communication Technology
Connected Continent Package
Just before leaving office, former Members of the
European Parliament adopted their position on a
single telecoms market (the so-called “connected
continent package”). Newly elected Members will
now have to go ahead with the opening of
negotiations with the Council of Ministers. The
Council is expected to adopt its position by
October prior to a final agreement.
On the flagship measure of roaming fees,
Members of the European Parliament voted in
favour of scrapping roaming charges for mobile
phones from 15 December 2015. This obligation
would apply for voice, text and data services.
MEPs included nevertheless an exemption: if
consumers use roaming services to excess,
capped charges could exceptionally be imposed.
On the sensitive issue of net neutrality, the
European Parliament supported amendments to
the initial proposal from the European
Commission to include this principle in the new
rules and to shorten the list of exemptions for
slowing down internet access and services
(limited to the cases of court order enforcement,
network security or prevention of temporary
network congestion). Under the new provisions,
internet service providers would be banned from
slowing down or blocking particular services.
Data protection package
In February, the European Parliament adopted its
position on personal data protection. The new
Parliament has now to find an agreement with the
Council and negotiations are likely to be very
intense especially because the proposal is
extremely dense and technical. The text will
probably be discussed in June during an informal
meeting among EU justice ministers. A definitive
agreement is unlikely to be reached before the
end of 2014.
In comparison to the original Commission
proposal, the Parliament’s amended text
introduced stricter rules for data gathering and
processing. Former MEPs also introduced
tougher sanctions in case of violation of the
European rules (up to 5% of the global turnover
while the Commission proposed 2%). They also
included the “right to be forgotten” which means
that users would have the right to have their own
data removed. The concept of ‘consent to the use
of data’ has also been clarified to make it more
explicit especially when data are transferred to
third countries.

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Political positions on Digital issues at a glance

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Transport
The Fourth Railway Package
In the area of transport, the first important policy
issue on the plate of the newly elected Parliament
will be the Fourth Railway Package. The previous
European Parliament already adopted a common
position on the dossier, but new MEPs will have
to start negotiations with the Council of Ministers.
The Fourth Railway Package aims to create, from
2019 onward, a railway landscape in which
domestic railway lines are also subject to public
tendering. Yet, the nitty-gritty aspects of the
legislative outcome might lead to less changes to
the European railway landscape than originally
envisaged.
First, in their positions, MEPs substantially
disagreed with the required institutional “Chinese
Wall” between infrastructure manager and train
operator. The Parliament amended the original
text in order to allow for cooperation agreements
between both. This line of reasoning promises a
similar, conservative position of the Council of
Ministers, downplaying the ramifications of the
liberalisation.
Second, social aspects might become an issue.
The Parliament required that train operators
tendering for public service contracts would be
obliged to respect the existing labour agreements
of the country they operate in. Given the influence
of the well-organized railway unions on some of
the higher-wage countries’ representatives, the
Council might be inclined to follow the Parliament.
Further, MEPs discussed the role of the
European Railway Agency (ERA). Where
Commission and Parliament want ERA to
become a “one-stop-shop” for the authorization of
vehicles and to give it a supervising authority over
the existing national regulatory agencies, the
Council prefers a dual-system in which ERA and
its national counterparts would act on an equal
footing for domestic connections.
A last contentious matter concerns the principle
of reciprocity. Namely, can countries deny access
to public tendering to companies originating from
countries that have not yet opened their markets?
As only two Member States have fully liberalised
their rail transport and some (former) national
railway companies have an interest in getting a
foot in the door in foreign markets, it remains
unsure if the Council will back the Parliament on
this stance.
Single European Sky II+
The new parliament will also inherit the Single
European Sky 2+ initiative released by the
Commission as a follow-up to the Single
European Sky legislation. This initiative from
2004 sought to tackle the organizational
fragmentation of national traffic control providers
by creating so called “functional air blocks”,
grouping together the air control agencies of
neighbouring European countries. The follow-up
package, however, released by the Commission
in June 2013; contained new, contentious matter.
With the purpose of enhancing the efficiency in

INSIGHTS BRUSSELS
21
the aviation back-up services sector, it proposed
to uncouple air support services from the air
control authority and to make the former subject
to public tendering.
Not surprisingly, plans for liberalisation in a sector
historically organised as a non-competitive public
service, evoke resistance from the employees
and their labour unions. And thus, at the end of
January 2014, the staff of air control authorities in
many Member States went on strike. The
Parliament amended the text to turn the
compulsory liberalisation into a voluntary one. A
formal liberalisation requirement was deemed
premature and only negotiable after an impact
assessment, carried out by the Commission by
2016.
A similar, perhaps even more critical position, can
be expected from the Council of Ministers.
Member States find themselves not only
pressured by the labour unions but they also
worry about the financial health of their national
air control authorities, on whose balance sheets –
for some countries at least – the first Single Sky
package has had a detrimental impact.
ETS for intercontinental flights
The exemption for intercontinental flights from the
European Emissions Trading Scheme (ETS) for
aviation will be extended until 2016. This decision
was taken during the plenary session of 3 April
after the Environment Committee of the European
Parliament had first rejected the proposal.
With a trade war lurking behind the bend, the
Council had given in to pressure from the US,
China and Russia which had threatened to
retaliate against the European aircraft
manufacturers. At the same time, it was believed
that this decision might give Europe a stronger
position in the International Civil Aviation
Organisation when negotiating a global emission
reduction scheme.
The adopted texts stipulate that the ETS will cover
transnational flights from 2017 onwards. Still, it is
very likely that the cap on aviation emissions will
be on the agenda of the following legislature,
since the texts themselves ask the Commission
to come up with proposals that “take into account
international developments”.
Truck Measures Regulation
Another unfinished policy project concerns a
regulation changing the allowed weight and
dimensions of trucks. Originally, the Commission
hoped to blaze a trial for extra-large lorries - the
so called mega trucks - on the European roads,
but that attempt bit the dust after a first reading in
the Parliament. What did pass the scrutiny of
MEPs were measures to make trucks more
aerodynamic and thus less energy consuming. At
the same time the text was amended to make
these vehicles safer for other road users.
In case the proposal would be approved by the
Council, the era of the typical brick-shaped trucks
on the European roads would soon come to an
end as they would be replaced by more rounded,
aerodynamic successors by the year 2022. Yet, it

INSIGHTS BRUSSELS
22
is far from sure that the Member States will
straightforwardly approve this position.
The umbrella organization of national
environmental NGOs advocating a more
sustainable transport system, Transport and
Environment, said it suspected several national
delegations to have become prone to lobbying by
truck manufacturers demanding a postponement
of the new standards until after 2025.
Whether T&E’s allegations are correct, can be
assessed in June, when the Member States are
expected to take an official stance in the Council
of Ministers.
eCall
With the eCall initiative presented in June 2013,
the European Commission aimed at introducing a
European-wide road alert system that
automatically informs the relevant emergency
authorities in case of a traffic accident. For this
purpose, by 2015, all cars would have to be
equipped with an electronic chipset to transfer
location and other relevant data.
Whereas in the Parliament the discussion on the
privacy aspects of this technology didn’t prevent
a majority to support the Commission’s initiative,
the proposal got stuck in the Council, as some
Member States stumbled upon the costs needed
to set up the necessary call infrastructure that is
indispensable for the system to work.
Newly elected MEPs will now have to reach a final
agreement with the Council which is expected to
take a consenting decision in May. Delays are
however postponing the implementation by two
years.

INSIGHTS BRUSSELS
23
Political positions on Transport at a glance

INSIGHTS BRUSSELS
24
International Trade
Transatlantic Trade and Investment Partnership (TTIP)
If the current Transatlantic Trade and Investment
Partnership (TTIP) negotiations between the
European Commission and the US Trade
Representative ever lead to an agreement, the
text will be presented to the next European
Parliament for ratification.
The widespread criticism from civil society has
already had its influence on the Parliament. The
left-wing groups, namely GUE-NGL and the
Greens, already dismissed any new trade
agreement. S&D still sits on the fence and
explicitly refers to the rejected ACTA treaty as a
sketch of what to expect when the outcome of the
negotiations compromises European social and
environmental standards. Not only in the
Parliament scepticism surrounds the TTIP
debate, also – mostly in Europe – civil society has
started to mobilise against it and dispraises the
fact that important political decisions are being
taken behind closed doors. This controversy has
even lead fierce supporters of international trade
to become sceptical about TTIP.
Societal pressures – and criticisms – from
constituencies are making talks harder between
the Commission and the US Trade
Representative.
With the quantitative tariff barriers in the EU-US
trade being already very low, TTIP primarily
focusses on the reduction of non-tariff barriers.
Especially on the eastern side of the Atlantic this
attempt is regarded with a very watchful eye, as
European social, environmental and safety
standards are in most sectors stricter than their
American counterparts. Under unremitting public
scrutiny are, for instance, the sanitary and
phytosanitary measures, a torn in the side of the
US negotiators, who seek to overcome the (de
facto) ban on most genetically modified food
imports and hormone treated beef. Also under
negotiation is the fuel quantity directive, of which
the provisions rule out oil imports originating from
Canadian oil sands.
At the same time, the removal of the American
moratorium on shale gas exportation which is on
the wish list of European Commission, is fiercely
contested by European environmental
organizations that see the availability of a cheap
fossil energy supply as an important threat to the
transition towards a renewable European energy
market.
Even more controversial has been the inclusion
of a so called Investor-State Dispute Settlement
Mechanism (ISDS). Such a provision would allow
foreign investors to litigate against Member
States in case legislation has been adopted that
violates a treaty provision. Confronted with an
allergic reaction from civil society against what it
calls a form of “corporate sovereignty” that
undermines national democratic decision making
abilities, Trade commissioner Karel De Gucht,
saw himself forced to temporarily exclude ISDS
from the talks.

INSIGHTS BRUSSELS
25
Free Trade Agreement EU-Japan
Somewhat in the shadow of the TTIP, a free trade
agreement between the European Union and
Japan is also in the making. In contrast to the
talks with the United States, one year since the
start, substantial progress has been made and -
in a not so distant future - a final agreement is
expected to be presented to the new Parliament
which will ratify or not the agreement. Though
talks are held under a similar degree of secrecy,
they have drawn less attention from civil society.
A plausible explanation is the less ambitious
agenda regarding non-tariff barriers; one that
does not touch upon the more high-profile,
politically sensitive debates.
For Japan, the removal of European tariff barriers
is key, especially for imported cars. This is
greeted with aversion by Europe’s car export
champion Germany, that doesn’t want to see a
further growth of Japan’s share in the European
car market. Europe, on the other hand, wants
Japanese non-tariff barriers to be hauled down.
For example, a major stumbling block for
European train manufacturers is the operational
safety clause for public procurement in free trade
agreements. This exemption – according to the
European railway manufacturers – is
systematically being used to make the rolling
stock market an intra-Japanese business. Tokyo,
on the other hand, claims the provision is
necessary to ensure that trains resist
earthquakes. A similar complaint concerns the
requirements for small cars to be eligible for the
Japanese tax reduction for small cars that are
believed to be tailored to the Japanese car
industry, as they are not met by most European
small cars.

INSIGHTS BRUSSELS
26
For further information please contact:
Leonardo Sforza
Leonardo.Sforza@mslgroup.com
Romain Seignovert
Romain.Seignovert@mslgroup.com
Jacopo Grassi
Jacopo.Grassi@mslgroup.com
Ruben Brugnera
Ruben.Brugnera@mslgroup.com
Square de Meeûs 23 – B 1000 Bruxelles
Our website: www.mslgroup.com
Follow us on twitter for breaking news updates: @MSL_Brussels

Call for Change: Key EU Policy Decisions After EP Elections

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