Dear reader,
Welcome to Publyon’s Digital Policy Update. Every month, we are happy to provide you with insights on the latest EU policy trends and developments. It’s September and Publyon did its summer homework, so prepare your pen and notebook, we’ve got some important updates to share as we hit the books again on the EU digital and tech policy files.
We all know the year doesn’t really start until the President of the Commission gives their speech of the Union. Spotlight this month on headmaster Ursula von der Leyen (and her two graduating Commissioners, read more for details), who gave us some insights on what to expect for the upcoming year. We’ll then dive into our two favourite subjects, the AI Act and the Cybersecurity Act.
This month’s special guest is Olivier Joris, Executive Manager Europe and International for the Federation of Enterprises in Belgium (VBO FEB), who will address the importance of the elections and the Belgian Presidency for your business. Lastly, don’t miss our special insights for those who are too cool for school, but not for EU events on digital and tech.
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If you have an appetite for interesting content read our blog for more insightful reading and helpful tips.
The spotlight
All ears for the State of the Union
While everyone was off enjoying the sea and sun, Brussels prepared an eventful rentrée for all of us. By the time everyone came back from holidays, not one but two Commissioners had resigned. Commissioners Frans Timmermans and Margrethe Vestager (temporarily) left their position respectively towards the Green Deal and ‘Europe fit for the Digital Age’.
We read on our cheat sheet that one will attempt to become the next Dutch PM, while the other aims for the Presidency of the European Investment Bank. While Timmermans’ Dutch successor Wopke Hoekstra still needs to be confirmed by the European institutions. Vestager’s responsibilities have already been redistributed, with Vice-President Jourová taking over ‘A Europe Fit for the digital age’ and the portfolio responsibility for Competition to Commissioner Reynders.
Even without these two Commissioners, it was an exciting start of the year. President von der Leyen gave her State of the Union address on 13 September, during which she reflected on the Commission’s achievements of the last year and the key priorities going forward.
Artificial intelligence was the centre of attention. Von der Leyen urged for the adoption of the AI Act, a “blueprint for the world”. Not only does the EU ambition to be the first to regulate AI worldwide, but von der Leyen envisions establishing a new international body of AI, with tech companies, scientists, and experts to advise on global rules. She also announced a new initiative for AI startups in which they can use high-performance computers for training purposes. Seen the challenges stemming from AI, skills and labour shortages will overall be a priority for the Commission and for the upcoming Belgian Presidency. More on the AI Act below.
What to expect next?
Time is pressing to close files before the election campaigning begins in Brussels. We can already tell you that besides the AI Act, you should be paying attention to a few more important files, namely the European Cloud Services, the upcoming Telecoms Act (and what will happen without Vestager), and the data-related files, including Cloud Rulebook, the EU Cloud Marketplace, the Mobility Data Space and the European Health Data Space.
Talking about elections, are you curious about this thrilling period of pre-elections? Then Publyon would like to present to you its brand-new and tailored EU elections services.
Policy update
Back to the drawing board: What’s next for the AI Act negotiations?
Quick recap: Before the summer break, the European Parliament adopted its position version of the Artificial Intelligence Act. This kicked off the three-way negotiations (trilogues) among the European Commission, Parliament and the Council of the EU. During the second trilogue of 18 July, EU policymakers discussed topics such as innovation, sandboxes, real-world testing, fundamental rights impact assessment and classification of high-risk AI systems.
From a leaked document circulated by the Spanish Presidency of the Council on principal elements of the AI Act, the central question now is how to proceed with foundation models such as ChatGPT by OpenAI or Bard by Google. These had not been taken into consideration in the Council’s initial position, but now seem impossible to forget. While the Parliament wants to impose additional obligations, the Council is afraid that obligations for foundation models are excessive and abstract.
The Council document also inquired about copyright rules for AI. The Parliament’s proposal insists that foundation models document how they utilise copyrighted material for teaching purposes. This would, however, be a significant challenge due to the enormous amount of data used and various copyright systems.
What lies ahead?
The negotiations for the AI Act are proceeding full steam ahead. The next trilogue is scheduled on 3 October. Many specifics about the AI Act remain to be decided. We expect that more controversial aspects such as copyright issues for teaching purposes will be a tough nut to crack in the next trilogue. The AI Act is foreseen to be completed by the end of the year, but is expected to run into the Belgian presidency of the Council of the EU – we will keep you in the loop.
Cyber Resilience Act: the hard work paid off
Before the summer recess, we looked forward to developments regarding the Cyber Resilience Act (CRA). And after burning the midnight oil, the Council and Parliament adopted their position in July. Each institution internally agreed on covering a wide range of everyday products, implementing more robust cybersecurity requirements and enabling automatically applied security updates.
Back in July, the Council removed explicit references to ‘highly critical products’ which could mandate EU cybersecurity certification schemes. Additionally, they insisted that an impact assessment should be conducted before requesting such mandatory certification. Lastly, they decreased the criteria for determining a product’s lifetime and changed the wording on substantial modification.
On the other end, the responsible Parliamentary Committee on Industry, Research and Energy (ITRE) voted its position on 19 July, deciding to shift compliance responsibility to product manufacturers. It further specified the proposal’s scope, notably on remote data processing solutions and the exclusion of non-commercial open source software, and altered application timelines and definitions. A plenary vote in the Parliament still has to be scheduled.
Which aspects of the CRA should your business look out for?
One of the biggest challenges remains the reporting obligations. The Commission’s proposal says that manufacturers must report unpatched vulnerabilities within 24 hours of discovery, which irked businesses. They argue that reporting without fixing the issue first make their products more prone to hacking, but EU lawmakers say that it could potentially save many other businesses from hacks. The European Commission and Parliament want the responsibility to go to the EU’s Cybersecurity Agency (ENISA). However, the Council proposed assigning national competent authorities (CSIRTs) in lieu of ENISA. Some say this might pose a significant cybersecurity risk by giving national authorities data on private enterprises’ weaknesses.
What is next on the cyber menu?
The first trilogue round is set to start in September still, with a precise date yet to be announced. During trilogues, we can expect the issue of reporting obligations to be resolved fast, as the Spanish presidency is prioritising this file and hoping to come to an agreement by the end of the year.
Expert interview
Olivier Joris
To fully fill you in on the importance of all this Belgian-ness on your business, we sat down with Olivier Joris, Executive Manager Europe and International for the Federation of Enterprises in Belgium (VBO FEB) who presented some key reasons for the importance of the elections and the Presidency.
The Belgian Presidency and its Impact
Those who were convinced that we had covered the busiest month of the year 2023, can look ahead to 2024. In a few months, Belgium will take over the presidency of the Council of the EU, and in June the Belgians will combine European elections with federal and regional elections – an important semester ahead, as the priorities for the next European legislature will be set then, too.
On 1 January 2024, Belgium will take over the Council of the EU. Belgium will have the opportunity to work on a list of priorities and ensure the smooth continuation of the EU policy agenda. In your view, why must companies and organisations be aware of the next EU agenda?
The upcoming Belgian Presidency of the Council of the EU will not be a usual one. Indeed, this Presidency comes at the end of the current EU legislative period (2019-2024). There will be two phases: the first one will mainly focus on the legislative agenda (concluding as many negotiations with the EP and the EC as possible, in the first months of 2024, whereas the second one will mostly focus on the prospective agenda (launching the reflection on the key priorities for the period 2024-2029).
Both exercises can have a major impact on the businesses, in Belgium and in the rest of the EU. For example, as regards the legislative agenda, the current “trilogue” negotiations on the EC’s proposal “Corporate Sustainability Due Diligence Directive” (CSDDD) might not be concluded under the current Spanish Presidency of the Council; if this is the case, this file might be a key topic under the Belgian Presidency.
As regards the prospective dimension, a key challenge for the period 2024-2029 will be to better reconcile the green deal agenda and an effective industrial policy; indeed, it is crucial to reinforce the competitiveness of the EU companies towards their international competitors. We hope the priorities of the businesses will be taken into account in the legislative and other prospective activities under the upcoming Belgian Presidency of the Council.
What impact does it have on businesses having national elections at home during the Presidency, as well as having EU elections?
Elections, at national or at EU level, create a momentum to evaluate what has been done over the last years and to think about the key priorities for the coming years. Employers’ organisations like the FEB try to play their role in this context, on behalf of their members.
Due to the major impact of the EU on the daily life of our companies, the priorities for the next EU term must be debated, and the voice of the companies must be heard. We hope that the EU elections will get enough attention, for example in the media, besides the federal and regional ones. The fact that the EU elections will happen during the Belgian Presidency of the Council could contribute to that goal.
The European Commission, MEPs, and EU Member States have already started thinking about legislative priorities for the period 2024-2029. In the past mandate, the focus was on the twin digital and green transition. Due to several crises, we experience a shift to a reinforcement of the EU’s single market. How do you think this will be translated into the priorities for the next 5 years?
The FEB very much welcomes the fact that the single market gets again more attention. It was less the case over the last few years, and we deplored this situation as our companies are still confronted with many obstacles in their activities in Europe.
Even though the EU is celebrating this year the 30th anniversary of the internal market, Member States sometimes maintain or create new obstacles for cross-border activities. For an open economy such as Belgium where more than 80% of the GDP depends on export (mainly in the EU), the well-functioning and further integration of the internal market is a key priority.
We welcomed the conclusions of the European Council at the end of June that called for an “independent High-Level Report on the future of the Single Market” to be presented in March 2024. We hope this Report will pave the way for new initiatives and a strong political commitment to further deepen the internal market and remove barriers, for the benefit of the EU companies and citizens. Besides, an ambitious and well-balanced trade policy must also be a priority for the next 5 years.
Digitalisation is one of the major areas where we are undergoing a (r)evolution. Belgium is a frontrunner in R&D and innovation. Do you feel that entrepreneurs and governments fully exploit new digital and technological opportunities? If not, how can it be improved?
Belgium has indeed a tech-savvy business community investing a lot in R&D (2.33% of GDP, second highest in Europe) and new digital technologies. Being a small country, however, it is not always easy for our entrepreneurs to bring together the amounts of capital required for disruptive innovations.
Our big neighbouring countries often have an advantage on that front because their governments are pursuing a more active industrial policy, pouring lots of money into some specific projects. So, for a country like Belgium, it is crucial that large R&D-support schemes are designed at the European level with equal access for all European businesses.
It is also important that Europe does not overregulate from a risk avoidance perspective (e.g. in AI or biotech), but keeps regulations limited so as to leave a lot of space for innovation and experiments in new digital and technological fields. This is the only way in which European businesses will be able to compete with their US and Chinese counterparts.
Lastly, regarding the Belgian elections, do you know the major themes political parties will prioritise? What would you recommend?
At this point in time, it is clear that the profitability of Belgian businesses has suffered severely from the explosion of energy and wage costs in the past few years.
As a consequence of our unique automatic wage indexation system, wages have risen some 5% faster than in our neighbouring countries, which of course is an important drag on the competitiveness of our businesses and will weigh on exports and FDI in the coming 2-3 years.
On top of that, our businesses are faced with severe and structural labour market shortages, caused by the fact that we have far too many people in structural inactivity mostly in generous sick leave and unemployment systems. It is of utmost importance that a new and stable government would tackle these two problems after June 2024.
If election polls are right, however, we are heading for a rather unstable political environment. So, we will probably be faced with a rather difficult business environment for the next few years.
Blog
Belgian elections 2024: how can businesses prepare?
The rentrée politique is not exclusively a European Union event. Belgian politics is also back at it and kicked off the pre-election campaign with some insights from key French-speaking parties on their priority election files. To discover what each party wishes to bring to the table in the next government coalition at the federal level, read our updated blog post on the Belgian elections.
READ ARTICLE
Too cool for school – but never for networking
Back in the days, the cool kids often stuck around for after-school detention. Little did people know that is how networking was born. At Publyon, we don’t see after-work networking as detention, but as a great opportunity to meet our readers. You can run into our director Cathy Kremers and Junior Consultant Emmanuelle Ledure at the Politico event ‘Halfway through the Digital Decade: how far along is Europe’s digital transformation?’ on 25 September between 1:30 and 6:30pm.
Emmanuelle Ledure
Hi, my name is Emmanuelle and I am curating this monthly update to bring Brussels’ main digitalisation and technology insights to your inbox. I hope you enjoyed this edition of our update. We are always looking to provide our community with the most valuable content possible, and that starts with you. If you have any suggestions for topics you would like to see covered in our next edition, do not hesitate to reach out to me.
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