Brussels update: December

Building on COP26: international collaboration will be key to driving ambition

As the dust settles on a critical two weeks in Glasgow, the CBI's focus turns to the next 12 months and the key challenges to overcome ahead of COP27, due to take place at the end of 2022 in Egypt. The past few weeks have seen the EU reflect on the outcomes of COP26, largely seeing it as a success that brought the targets of the Paris Agreement within reach. Nevertheless, there is broad agreement that we need to build on the momentum and increase ambition.

The CBI organised a member roundtable with the European Commission’s Directorate for Climate Action to explore how the EU and the UK can work together to build on momentum created in Glasgow and drive a more resilient, competitive, net-zero future. We saw strong alignment between the European Union and UK business in driving the transition to net zero, as well as ambition to work together.

With another twelve months remaining under the UK’s Presidency, and more to be achieved, EU-UK collaboration will be key. France, taking over the Presidency of the Council of the EU in January, will be a critical partner for driving real change on stubborn remaining issues such as reducing coal use. Businesses and governments must come together to keep the 1.5 degree target alive.

Fit for 55

In Brussels, all eyes are on the European Commission’s recently proposed ‘Fit for 55’ package, and how this will support international climate ambition. The CBI has played an active role in defining BusinessEurope’s recently published position paper, which sets out recommendations on the legislative proposals. Businesses across Europe are committed to the transition to a climate neutral economy and welcome the Commission’s plans to make its policies fit for reducing net greenhouse gas emissions by at least 55% by 2030. However, climate ambition must go hand in hand with industrial competitiveness. The CBI believes that partnership between business and government is the only way to achieve net zero.

The CBI supports making meaningful progress on the detail of the proposals for a revised EU Emissions Trading System (ETS) and the linkage between the UK and EU ETS, which would reaffirm the UK and EU as climate leaders. Linkage would also further demonstrate commitment to Article 6 of the Paris Agreement and align carbonisation pathways on a Carbon Border Adjustment Mechanism (CBAM). The EU must engage early on with trade partners and ensure a WTO compatible mechanism.

Overall, the long-term aim should be a global price on carbon, which would reduce the need for measures such as a unilateral CBAM by the EU alone.

The CBI in Brussels is relaunching it’s EU Climate & Energy network – get in touch if you want to get involved in the EU climate agenda and help shape our position.

What’s next for the World Trade Organisation?

This week was meant to see the long-awaited WTO Twelfth Ministerial Conference (MC12) take place in Geneva. However, due to new coronavirus travel restrictions, it was postponed at the last minute (for the second time). MC12 had been pitched as a defining moment for the multilateral trading system – a make or break opportunity. Trust in the WTO has been fading, with the pandemic seeing a rise in protectionist measures. A successful Ministerial this week, with new agreements and progress on big questions around WTO reform, would have shown that the organisation can still deliver, and would have potentially renewed confidence in the multilateral agenda.

So, what does another postponement mean?

In the run up to the Ministerial, there was a feeling that we were headed for disappointment, with limited hope of any real progress, despite renewed political will. Perhaps a postponed MC12 will buy time for further negotiations at the technical level, paving the way for a successful Ministerial further down the line – it is now due to be held in the first week of March 2022.

Recently appointed WTO Director General Ngozi Okonjo-Iweala was hoping to see a ministerial declaration on the response to the pandemic, which looked at access to vaccines. There were many options on the table from vaccine patent wavers to technology transfers and voluntary licensing, however finding an agreement is proving difficult. The CBI and BusinessEurope have been calling for a holistic and pragmatic approach that does not put into question the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The outbreak of the Omicron coronavirus variant, however, has only increased the pressure to reach an agreement on vaccines. While MC12 has been postponed, a number of previously scheduled meetings with ambassadors to the WTO and some visiting negotiators are still going ahead as they seek to make progress where possible.

The CBI is following developments closely and working with our partners including BusinessEurope to ensure a strong business voice behind a reformed WTO, and to ensure the current momentum in the negotiations and discussions are maintained. Business must show that it stands ready to support and provide concrete solutions, despite setbacks.

The CBI continues engagement on EU digital policy

Work on new EU digital regulation continues at full speed on key proposals including the Digital Services Act (DSA), the Digital Markets Act (DMA), and the Artificial Intelligence Act.

The Council of the European Union has adopted its general approach on the DSA and the DMA, while the European Parliament’s Internal Market and Consumer Protection (IMCO) Committee has also finalised its position on the DMA. The Parliament is expected to vote on its position in the December Plenary. Some member states reportedly expressed concerns over the Council’s general approach on the DSA, reflecting significant divisions within the European Parliament over the proposal. This is also an example of how complicated it can be to reach agreements between institutions.

The Artificial Intelligence Act

Discussions on the Artificial Intelligence Act continue and the CBI – following feedback from our members – fed into BusinessEurope’s recent position paper on the proposal. The upcoming French Presidency of the Council of the European Union (January-July 2022) has yet to publish its full programme and priorities. But digital policy will be a critical area and the French Presidency has already indicated its interest in pushing forward inter-institutional negotiations on the DSA and DMA.

The CBI welcomes member feedback through our EU Digital Policy Working Group - an informal network made up of our Brussels-based members interested in EU digital policy developments. This group discusses the latest policy updates and member priorities, shaping the CBI's digital policy priorities as we look to continue sharing the voice of UK business on these issues.

For the CBI, the Digital Services Act, the Digital Markets Act, the Artificial Intelligence Act, as well as the Data Act and Data Governance Act continue to be key priorities.

Join the CBI's working group on EU digital policy

If you work on EU digital policy issues and are interested in joining the Working Group to help shape our positions on upcoming regulation, please get in touch with Owain Richards. The next meeting will take place in January 2022.