COUNCIL OF THE EU,update

Press material Friday 14 July 2023

● Council of the EU   14/07/2023 18:14 | Statements and remarks | North Korea/DPRK: Statement by the High Representative on behalf of the European Union on the launch of an inter-continental ballistic missile   The EU strongly condemns the Democratic People’s Republic of Korea’s (DPRK) launch of another intercontinental ballistic missile on 12 July for the fourth time this year. The DPRK continues to show its intention to develop the means to deliver weapons of mass destruction. These actions threaten international peace and security. The DPRK must cease all illegal and dangerous actions that violate UN Security Council resolutions and recklessly escalate military tensions in the region. The DPRK must comply immediately with its obligations under UN Security Council resolutions by abandoning all its nuclear weapons, other weapons of mass destruction, ballistic missile programmes and existing nuclear programmes, in a complete, verifiable and irreversible manner and cease all related activities. This is the only viable route to sustainable peace and security on the Korean peninsula. The DPRK cannot and will never have the status of a nuclear weapon state under the Nuclear Non-Proliferation Treaty (NPT) or any other special status in that regard. The EU urges the DPRK to return immediately to full compliance with the NPT as a non-nuclear weapon state and the International Atomic Energy Agency (IAEA) Comprehensive Safeguards Agreement, bring into force the Additional Protocol and sign and ratify the Comprehensive Nuclear Test Ban Treaty. The DPRK’s use of resources to support its unlawful weapons programmes exacerbates the difficult living conditions endured by much of its population. The EU again calls upon the international community to respond in a united and firm manner to uphold the international non-proliferation architecture and to prevent the DPRK from further escalating military tensions in the region. It is critical that all UN Member States, especially Members of the UN Security Council, ensure the full implementation of UN sanctions and urge the DPRK to resume meaningful dialogue with all parties. The EU expresses its full solidarity with the Republic of Korea and Japan. The EU is ready to work with all relevant partners in promoting a meaningful diplomatic process aimed at building sustainable peace and security through the complete, verifiable and irreversible denuclearisation of the Korean peninsula. 14/07/2023 | Article Madrid EPSCO calls for a return to binding agreements with social dialogue in Europe During the informal meeting of EU employment and social policy ministers (EPSCO), held in Madrid on 13 and 14 July, the ministers called for a binding agreement with social dialogue relating to remote working and the right to disconnect to be approved during this six-month period. Meetings Friday 14 July 2023   ● Council of the EU   14/07/2023 17:16 | MEETING | Main results - Economic and Financial Affairs Council, 14 July 2023   The Council exchanged views on own resources, financial support to Ukraine in the context of the Multiannual Financial Framework mid-term revision and the customs reform. The Council approved conclusions on the 2023 in-depth reviews under the macroeconomic imbalance procedure and endorsed amended Recovery and Resilience Plans for France, Malta, Slovakia and Ireland.

Press material Friday 14 July 2023

● Council of the EU   14/07/2023 17:13 | Press release | Council adopts decisions in support of modernised export credits   Today the Council adopted two decisions setting the EU’s position on proposed changes to the Arrangement on officially supported export credits. The EU’s position is to support both amendments. The Arrangement on officially supported export credits provides a framework for the orderly use of officially supported export credits by fostering a level playing field among exporters. The Arrangement is a gentlemen's agreement negotiated within the framework of the OECD in 1978, and updated and transposed into EU law since then. A modernised arrangement The first decision adopted today concerns the proposed modernisation of the Arrangement. The modernisation aims to allow longer repayment terms and more flexibility in the financial structuring of export credits, such as the frequency, size and pattern of repayment of principal and payment of interest. The purpose of the modernisation is to ensure that the rules are sufficiently flexible in order to secure a level playing field between the countries participating to the Arrangement and to avoid crowding out the private sector. Supporting the green transition The second decision concerns the proposed amendment of the Sector Understanding on export credits for renewable energy, climate change mitigation and adaptation, and water projects, contained in an Annex to the Arrangement. The purpose of the change is to expand the scope of the Sector Understanding to allow exports from a broader range of industry sectors to benefit from its terms. Currently, the Sector Understanding focuses only on some sectors of energy generation and transmission. Expanding the scope will enable export credit agencies to play a greater role in supporting the green transition and to contribute to the achievement of the objectives of the Paris Agreement. The amendment also aligns the criteria for identifying adaptation projects more closely with the standards used by development banks. Next steps The decisions enter into force immediately after their adoption. The Council will inform the European Parliament of the decisions. They will be published in the EU’s Official Journal. The reform of the Arrangement will come into effect once all participants have completed their formal internal decision-making processes and agreed to the new Arrangement text, in principle on 15 July 2023. Background Governments support national exporters by providing officially supported export credits through Export Credit Agencies (ECAs). Such support takes the form of either 'official financing support' or 'pure cover support', such as export credit insurance or guarantee cover. The Arrangement on officially supported export credits provides a regulatory framework for this. In June 2019, the EU initiated a modernisation of the Arrangement and put a first broad proposal on the table at the OECD, following which, in 2020, the participants agreed in principle to modernise the Arrangement. The participants to the Arrangement are the EU, Australia, Canada, Japan, Korea, New Zealand, Norway, Switzerland, Türkiye, the United Kingdom, and the United States. On 31 March 2023, the OECD submitted proposals to the participants to the Arrangement to modernise the Arrangement on the one hand and to amend the Sector Understanding on Export Credits for Renewable Energy, Climate Change Mitigation and Adaptation, and Water Projects contained in Annex IV (the ‘CCSU’) to the Arrangement, on the other hand. On 23 May 2023 the Participants reached an agreement in principle on the proposals. Council Decision establishing the position to be taken on behalf of the European Union regarding the decision of the Participants to the Arrangement on Officially Supported Export Credits on amendments to that Arrangement I/A item note Statements Council Decisions establishing the position to be taken on behalf of the European Union on amendments to the Sector Understanding on Export Credits for Renewable Energy, Climate Change Mitigation and Adaptation, and Water Projects I/A item note Statements

Press material Friday 14 July 2023

● Council of the EU   14/07/2023 17:00 | Press release | Macroeconomic imbalance procedure: Council adopts conclusions   Today, the Council adopted conclusions on the 2023 in-depth reviews under the macroeconomic imbalance procedure. THE COUNCIL OF THE EUROPEAN UNION: 1. RECALLS that the EU economy continues to show resilience despite a challenging environment marked by Russia’s unprovoked invasion of Ukraine, with high energy prices and inflation affecting purchasing power of households and competitiveness by rising protectionism and geopolitical competition. ACKNOWLEDGES the robust post-pandemic recovery, benefitting from swift policy actions at EU and national level and the key role of EU polices in supporting solid investment performance and progress in structural reforms across a wide range of policy areas. 2. STRESSES that the full, timely and effective implementation of the Recovery and Resilience Facility via the reforms and investments scheduled in the national recovery and resilience plans, enabling the deployment of available funding is crucial. This would support the economic expansion, increase the resilience, inclusiveness and sustainability of the EU economies, and reduce macroeconomic vulnerabilities. 3. UNDERLINES the importance of the continued close EU economic policy coordination, and of detecting, preventing and correcting macroeconomic imbalances that hinder the proper functioning of Member State economies, the Economic and Monetary Union or the European Union economy as a whole. WELCOMES the publication of the 2023 in-depth reviews in the context of the Macroeconomic Imbalance Procedure. 4. ACKNOWLEDGES that economic developments are generally favourable in most Member States under in-depth review, but that significant challenges remain for several Member States. RECOGNISES that cost competitiveness could be undermined in Member States with high inflation if divergent inflationary dynamics were to become persistent. NOTES that long-standing imbalances related to high public, private and external debts have resumed their downward trends, in a context of high nominal growth. NOTES that tightening of financing conditions increases risks and that continued efforts are needed to ensure a sustainable downward trend of debt levels. TAKES NOTE that external positions have typically been weakened by a shock in energy import prices, with domestic demand buoyancy contributing further in some cases. NOTES that the current account balances are expected to strengthen in 2023, due to reductions in energy costs. 5. RECOGNISES that house prices grew strongly in several Member States in 2022; tighter financing conditions together with falls in real household incomes have dampened housing demand and started a correction in house prices. AGREES that the banking sector weathered the pandemic well and that non-performing loans have kept on falling, but NOTES that sustained vigilance is needed to ensure continued macro-financial stability. 6. CALLS for vigilance and timely policy action, as necessary, to prevent the deterioration and emergence of macroeconomic imbalances related to high inflation differentials. UNDERLINES the urgency to address the structural challenges related to the ageing population and climate change, to reinforce the energy security of the EU, to strengthen the resilience of supply chains, to address low productivity growth, to promote labour market participation, to reduce existing macroeconomic imbalances and to prevent the emergence of new imbalances. 7. AGREES with the Commission analysis in the 2023 in-depth reviews that imbalances in Cyprus are no longer excessive. ACKNOWLEDGES that public, private and external debts have declined over time and over the last two years in Cyprus and are on a downward path. AGREES that Hungary is now experiencing imbalances related to very strong price pressures, and external and government financing needs, requiring urgent policy action. A timely disbursement of the RRF and other EU funds, following the completion of the agreed milestones and targets linked to investments and reforms, would help to reduce the risks of a deterioration of imbalances. TAKES NOTE that the Commission kept most classifications unchanged. AGREES that Greece and Italy continue to experience excessive imbalances, albeit their vulnerabilities appear to be receding, including due to policy progress. AGREES that Germany, Spain, France, the Netherlands, Portugal, Romania, and Sweden continue to experience imbalances, although for some Member States, these imbalances are receding. ACKNOWLEDGES that Germany, Spain, France and Portugal could be de-escalated next year if the current positive trends continue. AGREES that in Romania risks are tilted on the downside, requiring urgent policy action. ACKNOWLEDGES that the 2023 in-depth reviews concluded that Czechia, Estonia, Latvia, Lithuania, Luxembourg and Slovakia are not experiencing imbalances as vulnerabilities appear to be contained. 8. CONSIDERS that the 2023 in-depth reviews present a high quality and comprehensive analysis of the situation in each Member State under review. WELCOMES the early multilateral thematic notes on inflation differentials, house prices and external sustainability ahead of the country-specific assessment. NOTES that the Commission has applied relevant analytical tools, complemented by substantive qualitative analysis, in view of the specific challenges of each economy. WELCOMES the increased importance of forward-looking analysis and the assessment of relevant policies. UNDERLINES the continued high relevance of the assessment of cross-country spillover effects. 9. UNDERLINES that the Macroeconomic Imbalance Procedure is a central procedure within the European Semester. STRESSES the importance of the Macroeconomic Imbalance Procedure in the ongoing Economic Governance Review. CALLS for continued implementation of the Macroeconomic Imbalance Procedure, including the close monitoring of existing and possible emerging new imbalances, using a forward-looking approach, and of policy progress and needs. ACKNOWLEDGES that the analysis in the Macroeconomic Imbalance Procedure should be developed to enhance the euro area dimension of the procedure. STRESSES the importance of timely regular comprehensive multilateral reviews of macroeconomic imbalances and the need to further incorporate sensitivity analyses to consider the ever fast-changing, unpredictable and challenging global environment. 10. UNDERLINES the urgent need to resume the traditional European Semester calendar, in particular the publication of in-depth reviews in the first quarter of the year. This is indispensable to ensure a substantial policy dialogue and multilateral discussions on the identified policy challenges. STRESSES that enhancing visibility of the Procedure and clear communication of the outcome are key. 11. REITERATES that the Macroeconomic Imbalance Procedure should be used to its full potential, including the activation of the Excessive Imbalance Procedure, where appropriate, and that ownership, predictability, transparency, equal treatment and enforcement should be enhanced. NOTES that under the present circumstances, the Commission has not deemed appropriate to launch the Excessive Imbalance Procedure. MAINTAINS that whenever the Commission concludes that a Member State is experiencing excessive imbalances, but does not propose to the Council the opening of the Excessive Imbalance Procedure, it should explain clearly and publicly its reasons. In the context of ensuring national ownership and proper levels of multilateral surveillance, STRESSES the need for allocating the necessary amount of time for the early preparation of relevant documents and for the required policy dialogue in the frame of the European Semester. CALLS for continued policy action for reducing imbalances and for addressing vulnerabilities. STRESSES the importance of a strong and clear link between the identified macroeconomic imbalances and the country-specific recommendations. Background Introduced in 2011, the European Semester enables EU member states to coordinate their economic, fiscal and employment policies throughout the year and address the economic challenges facing the EU. Macroeconomic imbalances in one EU country, such as a large current account deficit or a real estate bubble, can have detrimental effects on other EU countries. For this reason, the Macroeconomic Imbalance Procedure was introduced in 2011. The Macroeconomic Imbalance Procedure aims to identify, prevent and address the emergence of potentially harmful macroeconomic imbalances that could adversely affect economic stability in a particular member state, the euro area, or the EU as a whole. Every year, the Commission publishes in-depth reviews of countries with potential macro-economic imbalances. In-depth reviews are analytical documents aimed at identifying and assessing the severity of macroeconomic imbalances. Since 2015 in-depth reviews have been incorporated in the European semester’s country reports. The Commission Communication accompanying the Country Reports includes the in-depth reviews results, which may be as follows: no imbalances; imbalances; excessive imbalances; excessive imbalances with corrective action. A process of “specific monitoring” is applied to member states with imbalances or excessive imbalances, which is adapted to the degree and nature of their imbalances and involves an intensified dialogue with national authorities, as well as progress reports and policy recommendations in their annual Country-Specific Recommendations. Countries found to be experiencing ‘excessive imbalances with corrective action’ are liable to face the Excessive Imbalance Procedure. Council conclusions on the 2023 in-depth reviews under the macroeconomic imbalance procedure European Semester explained (background information) European Semester in 2023 - timeline (background information) In-depth reviews 2023 Press material Friday 14 July 2023   ● Council of the EU   14/07/2023 16:59 | Press release | Recovery fund: Council greenlights updated national plans for France, Malta, Slovakia and Ireland   The Council today adopted implementing decisions approving the amended recovery and resilience plans of France, Malta, Slovakia and Ireland. The amended plans of France, Malta and Slovakia now include a new REPowerEU chapter. This will contribute to accelerating their transition towards clean energy, diversifying their energy supplies and improving their energy efficiency. Ireland’s plan was updated to request the adaption of timelines for certain measures. According to the Commission, the modifications put forward by those member states do not affect the relevance, effectiveness, efficiency and coherence of their recovery and resilience plans. France On 20 April 2023, France submitted its amended recovery and resilience plan, which includes a new REPowerEU chapter. On 26 June, the Commission adopted its positive assessment and corresponding CID proposal. The amended plan places much greater emphasis on the green transition, devoting 49.5% (compared with 42.4% in the initial plan) of the available funds to measures that support climate objectives. The digital ambition of the French plan remains high, devoting 21.6% of its total envelope to supporting the digital transition. France has requested the transfer to its recovery and resilience plan of its share of the Brexit Adjustment Reserve, €504 million that, added to France’s REPowerEU grant allocation of €2.3 billion, bring the amended envelope to €40.3 billion in grants. Malta On 26 April 2023, Malta submitted a request to amend its recovery and resilience plan, to which it also added a new REPowerEU chapter. On 26 June 2023, the Commission adopted its positive assessment. The amended plan has a stronger focus on the green transition, devoting 68.8% (up from 53.8% in the original plan) of the available funds to measures that support climate objectives. Malta has requested to transfer a portion of its share of the Brexit Adjustment Reserve to its plan, amounting to €40 million. These funds, added to Malta’s REPowerEU grants allocation of €30 million make the overall amended plan worth €328 million in grants. Slovakia On 26 April 2023, Slovakia submitted its request to amend its recovery and resilience plan, including a new REPowerEU chapter. On 26 June 2023, the Commission adopted its positive assessment. The amended plan has a significantly stronger focus on the green transition, dedicating 46% (up from 42% in the initial plan) of the available funds to measures that support climate objectives. Slovakia has requested to transfer its share of the Brexit Adjustment Reserve, amounting to €36.3 million to its plan. These funds, added to Slovakia’s REPowerEU grants allocation, amounting to €367 million, make the overall submitted amended plan worth €6.4 billion in grants. Ireland On 22 May 2023, Ireland submitted a request to amend its recovery and resilience plan and on 26 June the Commission adopted its positive assessment. The amended plan includes targeted amendments to two measures. Ireland has not requested the addition of a REPowerEU chapter so its allocation of €914.6 million in grants remains unchanged. Background The recovery and resilience facility (RRF) is the EU’s programme of large-scale financial support in response to the challenges the pandemic has posed to the European economy. It is the centrepiece of NextGenerationEU, a temporary recovery instrument that allows the Commission to raise funds to help repair the immediate economic and social damage caused by the COVID-19 pandemic. To benefit from the facility’s €724 billion (in current prices), member states submit recovery and resilience plans (RRPs) to the Commission, setting out the reforms and investments they intend to implement by the end of 2026. To date, all RRPs have been approved, 27 payment requests have been received from 18 member states, and €153 billion have been disbursed. Regulation 2023/241 as regards REPowerEU chapters, in force since 1 March 2023, increases the RRF financial envelope by €20 billion in new grants. In addition, member states are able to voluntarily transfer up to €5.4 billion from the Brexit Adjustment Reserve to the RRF to finance REPowerEU measures. This comes on top of the existing transfer possibilities of 5% from the cohesion policy funds (up to €17.9 billion). During 2023, it is expected that gradually each of the 27 member states will submit implementing decisions concerning amendments to their national recovery and resilience plans at least once, to access the new REPowerEU grants, to request available loans, or to take into account the updated RRF allocation. Council implementing decision amending the recovery and resilience plan for France Council implementing decision amending the recovery and resilience plan for Malta Council implementing decision amending the recovery and resilience plan for Slovakia Council implementing decision amending the recovery and resilience plan for Ireland A recovery plan for Europe (background information) REPowerEU: energy policy in EU countries’ recovery and resilience plans (background information)