Every five years, before the European Commission’s appointment, EU Heads of State convene to discuss and set the EU’s political priorities for the future. The EU strategic agenda for 2024-2029, expected to be adopted by the European Council during their meeting on June 27-28, is a significant milestone shaping the upcoming legislative cycle. It will provide a framework for EU action in crucial areas such as resilience and competitiveness, security and defence, climate change, the EU’s global role, and enlargement. Understanding this agenda and its implications from a policy, regulatory, and economic perspective is crucial for organisations operating in the EU.

Driving competitiveness through the green transition

The draft of the EU’s five-year strategic agenda, seen by B&K Agency, is set for adoption at the June 27-28 meeting. Leaders are expected to prioritise the need for a “prosperous and competitive Europe.”

To achieve this, the document emphasises harnessing the potential of green and digital transitions, aiming for a “just and fair climate transition” while reducing energy imports.

According to the draft, a “genuine energy union,” the long-standing goal of more deeply integrated European energy markets, will ensure the supply of “abundant, affordable, and clean energy.” Leaders are expected to agree that “building adequate smart network infrastructure and interconnections” is essential, as the EU is currently not on track to meet the 2025 interconnection targets for most countries.

On environmental protection, the draft states that national governments will “continue to protect nature and reverse the degradation of ecosystems” while promoting an agricultural sector that “continues to ensure food security.”

Food: from sustainability to security

The draft document marks a shift from the 2019 priorities, which included “promoting sustainable agriculture” and “calling on all EU countries to move forward and step up their climate action.”

In response to widespread farmer protests across the EU, the European Commission has recently shelved or backtracked some of its plans to enhance the sustainability of the farming sector.

A study commissioned by the European Parliament’s Agricultural Committee found that while food availability in the EU “is not generally considered to be at risk,” the bloc relies heavily on imports from a limited group of suppliers for animal feed and fertilisers.

According to the report, these dependencies, exacerbated by an uncertain geopolitical situation and climate change, could threaten the long-term resilience of the EU food system.

The shift is also highlighted in the Hungarian Presidency of the Council of the EU working programme, which starts on 1 July.

In a document released on 18th June, Budapest declared that agriculture “has never faced so many challenges as it does today,” citing climate change, soaring production costs, plant diseases, conflicts, and a surge in imports from non-EU countries.

Highlighting the critical role of farmers in Europe, Hungary emphasises that food sovereignty and security should be integral to the EU’s “strategic autonomy.”

“The European agricultural and associated industrial processing sectors play a pivotal role in restoring disrupted global supply chains and achieving the goals of a sovereign European food system and European Strategic Autonomy,” the text states.

A step back on health?

In the draft document, the European Council does not seem to prioritise health for the next five years.

Health is mentioned only twice in the document and is grouped with broader topics like defence and artificial intelligence (AI).

The first mention of health states that the EU “will strengthen its resilience, preparedness, and crisis response capacities.” This is included in the same paragraph discussing the “collective response to cyber and hybrid warfare” and fighting “terrorism and violent extremism.”

Health is also identified as one of the “sensitive sectors and key technologies of the future,” along with defence, space, and AI, where the EU aims to build capacity to “reduce harmful dependencies” and “protect our open markets.”

The draft starkly contrasts the European Council’s 2019-2024 agenda, which promised “adequate social protection, a high level of consumer protection and food standards, and good access to healthcare.”

It also diverges significantly from the Council’s conclusions on the future of the European Health Union, published on 29th January, which encouraged the next Commission to prioritise health.

These conclusions will be approved at the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) meeting on 21st June. The agenda also includes discussions on the pharmaceutical package incentives cluster and the adoption of a recommendation on vaccine-preventable cancers.

This contrast between the draft strategic agenda and recent health-focused recommendations has raised concerns among lawmakers and analysts about the EU’s commitment to health as a fundamental aspect of its future strategic priorities.

Enlargement is for real

EU enlargement has become crucial to the EU’s future and security. In Brussels, Russia’s large-scale invasion of Ukraine was rightly perceived as Vladimir Putin’s attempt to reassert dominance over Eastern Europe, not just Kyiv. Consequently, as noted by Balkan candidates, the Council tasked the Commission with revitalising an enlargement policy that had been largely dormant for nearly a decade. Another critical priority is to support Ukraine’s survival, future reconstruction, and transformation into a European state, with the same considerations applying to Moldova.

The group of EU aspirants has expanded to nine countries and has become more diverse. Leading the accession negotiations are four Balkan states – Montenegro, Serbia, Albania, and North Macedonia. Following them are Ukraine, Moldova, and Bosnia and Herzegovina, which were recently upgraded to this stage. Kosovo is also progressing from earlier stages of the accession process. In contrast, Turkey’s accession process remains effectively frozen, while Georgia is experiencing a considerable step back due to recent political events. This strategic shift in EU policy has led to significant adjustments, with a new emphasis not only on the rule of law and democratic principles but also on foreign policy alignment. This change has increased scrutiny of Serbia, the largest Balkan candidate, due to its autocratic tendencies and close relations with Russia and China.

Accelerating enlargement also presents the EU with internal challenges related to budget, governance, and critical policy areas such as cohesion and agriculture.

Given this broader scenario, the draft of the Strategic Agenda significantly changes the enlargement policy to involve the “gradual integration” of aspiring countries into selected EU policies. Instead of linking all rewards to full membership at the end of the process, the mid-term objective is to promote the integration of enlargement countries before accession. This will focus on critical areas of the Single Market and strategic sectors such as energy and climate, transport, technologies, critical raw materials, food security, migration, and border management.

Security and Defence are the top priorities

Expectations were high when newly elected Commission President Ursula von der Leyen declared her administration a “geopolitical commission” in 2019. Three years later, following Russia’s large-scale invasion of Ukraine, High Representative Josep Borrell spoke of Europe’s “geopolitical awakening.” While the EU’s reactions have been mixed, notable developments have occurred. For the first time, joint orders for weapons and war material are being financed via the European Peace Facility to support Ukraine, and training courses for Ukrainian soldiers are underway through the EU training mission EUMAM UA. However, Europe faces significant military capacity and production deficits, and gaps exist in the joint procurement and supply of ammunition.

The draft of the next EU Strategic Agenda priorities security and defence through three main directions:

1. A Coherent and Influential External Action:

Europe is committed to asserting its sovereignty and global influence. By engaging proactively with international partners, the EU aims to uphold a multilateral framework that promotes inclusivity and fairness. This approach defends European interests and promotes peace, stability, and prosperity in neighbouring regions. Moreover, Europe is committed to maintaining a balanced trade policy while reducing dependencies that could compromise its strategic autonomy.

2. Strategic Action on Security and Defence:

Ensuring security and defence readiness remains a cornerstone of Europe’s strategy. The EU is mobilising all necessary resources to strengthen its defence capabilities, enhance cooperation, and increase defence spending. Efforts are underway to bolster the European defence industry, improve access to financing through entities like the European Investment Bank (EIB), and fortify crisis response capacities. Addressing cyber threats, hybrid warfare tactics, and combatting terrorism and extremism are also pivotal in safeguarding internal security and resilience.

3. A Comprehensive Approach to Migration:

Migration continues to be a pressing issue for Europe. Efforts focus on safeguarding external borders, combating irregular migration, and preventing exploitation. Collaborative frameworks with origin and transit countries are being strengthened to manage migration flows effectively, emphasising legal pathways and returns while tackling criminal networks involved in smuggling and organised crime. Maintaining the integrity and functionality of the Schengen area remains paramount to facilitating seamless travel within Europe.

The Revival of the Nature Restoration Law

The EU has enacted a significant environmental law aimed at nature conservation following a contentious vote that broke a deadlock among member states. The deadlock had been prolonged due to strong farmer protests.

However, Austria’s Green climate minister, whose eleventh-hour support was pivotal in securing the proposal’s passage, faced backlash in Vienna. The chancellor’s party, led by Karl Nehammer, announced its intention to pursue criminal charges against her, accusing her of alleged abuse of power.

The Nature Restoration Law, a highly contentious component of the European Green Deal that faced near failure in its final stages, aims to restore a minimum of 20% of the EU’s land and sea by 2030. By 2050, that should rise to cover all ecosystems needing restoration. Additionally, the law includes a provision to restore peatlands, with up to 40% of restoration coming from “drained peatlands under land uses other than agricultural use and peat extraction”. It also requires that areas subject to restoration that have reached good condition and certain listed areas of terrestrial and marine habitats be prevented from significant deterioration, and demands countries to monitor and report on their progress towards achieving the restoration targets.

The contentious proposal faced significant challenges in the European Parliament last year and teetered on the brink of collapse in March when Hungary unexpectedly withdrew its support.

Until the eleventh hour, it remained uncertain whether the law’s proponents had garnered sufficient votes to secure a qualified majority of 55% of member states representing at least 65% of the EU population.

Ultimately, the final vote revealed that 20 countries supported the nature restoration law. Finland, Hungary, Italy, the Netherlands, Poland, and Sweden voted against it, while Belgium abstained. Critics raised concerns about the proposal’s cost and the perceived administrative burdens it would impose.

The regulation will now be published in the EU’s Official Journal and enter into force. It will become directly applicable in all member states.

The Commission will review the regulation’s application, impacts on the agricultural, fisheries, and forestry sectors, and wider socio-economic effects by 2033.

AI (final) Act

This week, the Al Act reached a significant milestone with its official adoption by Parliament and Council. With just one more step left—publication in the EU Official Journal scheduled for late July—the countdown begins anew as we prepare for its implementation across the Member States. The big question now: What’s next?

The imminent scramble begins as Member States grapple with questions of implementation and leadership. Who’s in charge? How can we better ensure compliance? And where can professionals certify their readiness? These pressing issues underscore the complexity ahead.

In parallel, the new Parliament is already strategising its role in shaping AI policy and fostering innovation. Amidst these discussions, key players are focusing on compliance market dynamics and deciphering regulatory nuances. The Commission’s forthcoming explanations will clarify criticalities.

Corporate strategists are discussing how best to capitalise on AI’s potential. Questions abound on investing in infrastructure, ensuring data legitimacy, and optimising performance gains while complying with the regulation. The journey from excitement to adoption and profitability is paved with challenges, yet promising opportunities await those who navigate it wisely.

In the meantime, here’s a quick recap of the AI Act’s main provisions.

1. Broad Definition of AI Systems: The AI Act defines AI systems as machine-based systems designed with varying levels of autonomy, capable of adaptive behaviour post-deployment. This definition, aligned with OECD standards, emphasises inference and autonomy, distinguishing AI from traditional algorithmic systems.

2. Prohibited AI Practices: The Act lists prohibited AI practices, including using deceptive techniques, exploiting vulnerabilities based on personal characteristics, and deploying real-time remote biometric identification systems for law enforcement, except under specific circumstances like countering human trafficking or terrorism.

3. Regulation of High-Risk AI Systems: The AI Act rigorously regulates high-risk AI systems, including AI used in critical infrastructure, law enforcement, education, and other specified sectors. Compliance entails extensive requirements such as risk assessments, data quality assurances, transparency, and human oversight.

4. Exceptions to High-Risk Classification: Certain AI systems within the high-risk category may be exempt if they perform narrow procedural tasks, enhance human decision-making, or detect deviations without influencing decisions. However, systems conducting profiling are always classified as high-risk.

5. Comprehensive Obligations: Providers, importers, distributors, and deployers of high-risk AI systems must adhere to stringent obligations covering technical documentation, risk assessments, user transparency, cybersecurity measures, and compliance with AI Act regulations.

6. Fundamental Rights Impact Assessment: Entities deploying high-risk AI systems in sensitive sectors like banking, insurance, and public services must conduct a Fundamental Rights Impact Assessment (FRIA) before deployment, detailing risks, mitigation measures, and oversight protocols.

7. Responsibilities Across the Value Chain: Importers, distributors, and deployers of AI systems share responsibilities akin to product liability rules. Each must ensure AI systems comply with regulatory standards before market introduction or deployment.

8. Right to Explanation: Individuals affected by decisions made by high-risk AI systems have the right to receive explanations regarding how these decisions were reached. This balances transparency with protecting trade secrets in specific contexts like credit scoring.

9. Enforcement and Compliance Timelines: The AI Act establishes a complex governance structure involving multiple authorities to enforce compliance. Significant penalties apply for non-compliance, with specific deadlines for different provisions after the Act’s publication in the EU Official Journal.

10. Broader Legal Context: Beyond the AI Act, additional legal frameworks such as intellectual property, data protection, contractual liability, and cybersecurity regulations intersect with AI governance, shaping legal responsibilities and operational frameworks.

This summary encapsulates the multifaceted regulatory landscape defined by the AI Act, highlighting its impact on AI systems, compliance requirements, and broader legal considerations for stakeholders across various sectors.

Conclusion

In conclusion, today’s edition underscores the dynamic and multifaceted nature of the EU’s policy landscape, as reflected in the draft of the Council’s Strategic Agenda 2024-2029.

We have explored pivotal topics such as the revitalised Nature Restoration Law, the pivotal AI Act, and the crucial debates surrounding the EU’s priorities for the next five years. These elements highlight the EU’s commitment to addressing contemporary challenges through comprehensive legislative frameworks.

The forthcoming implementation of these policies will undoubtedly shape the EU’s future, offering opportunities and challenges for all stakeholders involved.

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