EuroCommerce InBrief | Issue 193 | 23 June 2020

Ohessa ajankohtaista tietoa EuroCommercen 23.6. uutiskirjeestä lainattuna:

Commissioner Kyriakides invites EuroCommerce to discuss Farm-to-Fork strategy

In a recent video call with EuroCommerce members to ask our views on the Farm-to-Fork (F2F) strategy, Health and Food Safety Commissioner Stella Kyriakides praised our sector for its work during the Covid-19 crisis. Senior retail executives from across Europe, including several Board members (Sonae, AholdDelhaize, REWE, Esselunga, ICA, ASEDAS) expressed support for the strategy and highlighted some of their key initiatives, including working with local suppliers and stimulating supply of high-quality products with special characteristics. EuroCommerce delegates underlined the need to respect the single market, to avoid damage to our sector’s competitiveness, and to be part of the F2F core stakeholder group. EuroCommerce will be working to further define our priorities under F2F, particularly the strategy’s focus on mandatory front-of-pack (FOP) nutrition labelling, country-of-origin labelling and a possible single EU sustainability logo, which Commission officials see as important in removing a proliferation of national/private schemes. On FOP schemes, the Commission last month issued a Joint Research Centre (JRC) and separate Commission report, and Evaluation of the nutrition and health claims regulation. The comprehensive JRC report reviews the scientific literature on FOP, maps the various nutrition labelling schemes across Europe and their impact on consumers, food business operators, and the single market. Some key findings worth noting: labels could guide consumers towards healthy diets and incentivise food product reformulation; they influenced consumers’ perception of retailers adopting them (more transparent and caring). They also found that different FOP labels confuse consumers. In its report, the Commission concludes that a harmonised mandatory FOP nutrition labelling was needed across the EU; the F2F Strategyforesees a proposal by Q4 2022. The Commission also mentioned to EuroCommerce that it might seek to address mandatory FOP labelling together with the rules on nutrition claims and nutrient profiles. EuroCommerce will organise a dedicated workstream to determine our detailed position on FOP.

Payments: UK’s top court rules against Visa and Mastercard on interchange fees; Commission rules out SCA extension

MasterCard and Visa suffered heavy defeats in the UK Supreme Court last week, which ruled in favour of merchants. The Court has unanimously upheld a Court of Appeals finding that interchange fees set by Visa and Mastercard before entry into force of the Interchange Fee Regulation to be anti-competitive and accepting merchants’ arguments on all major issues. The case background can be found here. A copy of the press summary issued by the Supreme Court can be found here, and the full judgment here. Payments analysts CMSPi estimate that the maximum pay-out for UK merchants could be as high as €17bn. If European merchants followed suit, Visa and Mastercard faced paying out as much as €68bn – the total interchange paid since 2013. This judgment is helpful, although not directly related to our campaign for wider regulation of card fees, which the Commission is unwilling to pursue. In another area where the Commission has also been reluctant to act, Executive Vice-President Dombrovskis responded to a joint industry letter also signed by EuroCommerce. This sought a delay of at least 6 months in the implementation and enforcement of Strong Customer Authentication (SCA) due to the disruption in planning and testing systems for SCA caused by COVID-19. The Commission reply made it clear that the EBA and Commission had no intention to extend the implementation of SCA. See our recent press release. CMSPi estimates that refused card transactions due to systems not being ready could cost merchants €90 billion in lost sales next year.

McKinsey study: COVID-19 and automation means many jobs at risk in retail and wholesale

McKinsey Global Institute’s analysis of Europe’s labour market shows that increased automation adoption triggered by the covid-19 pandemic may accelerate long-term trends in the labour market. This will lead to job growth focused on the highly-skilled, and decrease in middle management. Employment growth has been concentrated in a handful of regions, and labour mobility has risen as workers from lower-income regions migrate to big cities. The report suggests 5.4 million retail and wholesale jobs are at risk due to COVID-19 and automation. Earlier McKinsey analysis saw warehouses being most affected by automation, but this latest study suggests that 20-25% of jobs in shops could be automated by 2030. Relevant to our discussions with the Commission on recovery support, the study points to challenges around retraining, given high staff turnover and the study’s belief in many retail jobs being easily automated. This will need companies to understand changing consumer demand at local level and look at store resizing as well as retraining and deploying staff to focus on the customer experience.

SME Envoy Network discusses and key priorities and SME strategy post-crisis

Kerstin Jorna, the newly-appointed Director General of DG Grow held a meeting with SME Envoys to brief them on the new priorities of her DG relevant to SMEs, focusing on issues the EU recovery plan, the increased budget for Invest EU and effective spending of those resources to meet liquidity needs. She explained how the new ecosystems methodology will be used to assess investment needs for the twin digital and sustainability transition in key value chains. Envoys also heard more on how the Commission would pursue the SME Strategy presented in March, with a strong focus on accelerating the digital transition and ensuring access to finance. They will create a rapid alert function to identify supply and value chain disruptions and an internal taskforce to coordinate the work. The Danish Envoy Torsten Andersen will coordinate answers and reactions to the issues raised. EuroCommerce raised the fact that retail and wholesale was an ecosystems hit hard by the crisis; the crisis highlighted the enormous opportunities of digital: there was an urgent need to support investment in the digital transition (infrastructure, technologies and skills) for particularly SMEs. Liquidity was urgently needed for the wider economy and simple access to this funding for SMEs. A smooth recovery of the whole economy needed legal certainty and increased consumption to kickstart value chains including wholesale, by boosting consumer confidence, encouraging them to go back to shops.

US to withdraw from OECD digital tax negotiations

US Treasury Secretary Steven Mnuchin last week told EU finance ministers that the US was taking a step back from the OECD negotiations on the tax challenges of the digitalisation of the economy. The US had concluded that the talks “were not making headway”. In slight contrast, US Trade Representative Robert Lighthizer did not rule out a multilateral deal entirely: the US agreed on the need of an international regime, but this should not only focus on certain (i.e digital) industries, but seek a consensus on how taxation can work more broadly. EU Commissioner Paolo Gentiloni confirmed that the EU was ready to come up with its own proposal if the OECD did not succeed by the end of the year. French Finance Minister Bruno Le Maire described the US announcement “a provocation” and France would go ahead with its digital tax. OECD Secretary-General Angel Gurria argued for a multilateral solution as the best way forward and the OECD will maintain its schedule of meetings. EuroCommerce has been supportive on the OECD negotiations and a global agreement to avoid a multitude of uncoordinated national taxes.

DG COMP and members discuss New Competition Tool

In a call last week, the Commission’s DG COMP presented their inception impact assessment and consultation on a New Competition Tool, suggesting new powers of enquiry for restrictions to competition not captured under current rules on antitrust (Art. 101 TFEU) or abuse of dominance (Art. 102 TFEU) in both the digital and non-digital economy. Members sought to clarify with the Commission the background to this proposal and its interaction with the ongoing review of existing competition law. The Commission saw the tool as part of a three-leg approach, including proposed ex ante regulation of so-called “gatekeeper online platforms”, and existing competition rules, even if these are being updated including to adapt them to a digital environment. They seemed under pressure from their hierarchy to push these ideas through quickly. The Supply Chain Committee is currently drafting EuroCommerce responses to the consultations. The consultation on the Inception Impact Assessments is open until 30 June and on the ex ante instrument (as part of the Digital Services Act consultation) and the New Competition Tool respectively on 7 and 8 September

New figures show further global decline in trade

The German Federal Statistical Office has published new figures showing that German exports plummeted by 24% in April. Foreign sales of goods fell to €75.7 billion, the worst monthly drop since 1950. Germany’s trade surplus fell to the lowest in almost 20 years, at €3.5 billion. Exports to France plunged by more than 48% compared to a year ago, while sales to Italy fell more than 40% and to the U.S. by almost 36%. The figures from Europe’s largest economy and exporter adds to the picture of the impact on Europe of the COVID-19 pandemic. Eurostat reports that the eurozone economy shrank by 3.6% in the first three months of the year, and the EU27 by 3.2% compared with the previous quarter. GDP figures saw a slight improvement over initial estimates but for Eurostat still represented “the sharpest declines observed since time series started in 1995”. Similarly, US figures show exports and imports plunged by record amounts in April, falling 20.5% to $151.3 billion, while imports fell 13.7% to $200.7 billion. The US goods and services trade deficit increased to $49.4 billion with a larger drop in exports than imports.

MEPs seek extended legal guarantees and right to repair for consumers

David Cormand (Greens, FR), published a draft EP report on a more sustainable single market for businesses and consumers. The report proposes to extend legal product guarantees to their full lifetime, mandatory labelling to show the estimated lifetime of a product and options for repair. It would also require information at time of purchase on whether spare parts were available, their period of availability and price of delivery and repair times. It would introduce an advertising tax, and prohibit the destruction of goods still in working order. These wide-ranging ideas, which have major implications for business, and could undermine innovation and slow the development of sustainable consumption, are accompanied by no impact assessment and would require amendment of EU law which had just been reviewed and is not yet applicable. It looks like the report may attract a GREEN, S&D, GUE and RENEW majority in the European Parliament’s IMCO committee. EuroCommerce has coordinated with members in a working group to work towards a more balanced report, the deadline for amendments to which is 25 June.

Commission seeks views on revision of sustainability requirements for packaging

In line with the new Circular Economy Action Plan, the Commission is working on revising the ‘essential requirements’ under the Packaging and Packaging Waste Directive, starting with an Inception Impact Assessment, which was published earlier this month. All packaging in the EU market must comply with the existing minimum requirements. The Commission aims now to raise the bar to ensure that by 2030 all packaging is either recyclable or reusable. The Commission wants to assess how to improve packaging design to promote reuse and recycling; increase recycled content in packaging; address excessive packaging; and reduce packaging waste. It plans to revise the essential requirements to achieve this with proposals in Q2 2021. Ahead of this, the Commission will engage stakeholders with a 12-week consultation, stakeholder workshops, and targeted interviews. EuroCommerce has over the last year take a full part in a preparatory study and will continue to follow developments. We will comment on the Inception Impact Assessment.

Vietnam ratifies EU trade agreement

The Vietnamese National Assembly has now ratified the free trade agreement with the European Union, the last step in paving the way for the agreement’s likely entry into force in August The investment agreement with Vietnam still needs to be ratified separately by all EU governments and national parliaments. EuroCommerce has advocated an FTA with Vietnam from the outset, and argued for removing obstacles to its ratification after signature in 2015. EuroCommerce together with other European business associations organised a high-level event with Trade Commissioner Hogan ahead of a decisive EP vote in February to promote the benefits of the FTA. The agreement will eliminate virtually all customs duties on exports to and from Vietnam over the next decade, with 65 percent of exported EU products and 71 percent of exports from Vietnam enjoying duty-free access from day one.

EU adopts new steel safeguards

After weeks of discussion, member states last week voted in a closed-door committee session by a majority to adopt the European Commission’s proposal on new steel safeguards, with seven, mainly Nordic countries and Cyprus and Malta abstaining. Ahead of the meeting the EU steel industry and a group of member countries including France, Germany, Italy and Spain asked the Commission to further tighten quotas on tariff-free steel imports. The Commission partially amended its initial proposal to come closer to these requests. The final decision includes a mechanism to prevent big exporters such as China and Turkey from transferring unused quotas. EuroCommerce had pushed for keeping the liberal approach on the quotas in a letter to trade DG Sabine Weyand. The outcome is a compromise and we will continue to lobby for further liberalisation.

Wholesale interest Group looks at new tools under EuroCommerce wholesale strategy

EuroCommerce organised a brainstorming session with members review the main achievements and their expectations for the future and how to take the wholesale strategy forward. EuroCommerce announced the creation of a set of new tools specifically for wholesalers: a monthly newsletter, a dashboard tailored to provide an overview of issues of relevance to wholesale members, and the organisation of digital policy briefings on key issues for wholesale, promoting dialogue with the Commission and raising the profile of the sector with as wide a group of them as possible. EuroCommerce also informed members that DG Grow was looking for our feedback on specific measures that retail and wholesale would need as part of the EU recovery plan.

After a pause during COVID crisis, Commission unleashes tsunami of consultations – on Rule of Law, Data Strategy, AI, and intra-EU investments

EuroCommerce submitted its final contributions to a number of consultations in recent weeks. This included :

• A contribution to the consultation on Rule of Law in which we stressed its importance for retailers and wholesalers, the obstacles they face (e.g. disproportionate or illegal legislation, lack of legal certainty), the often challenging political environment and lack of legal remedies. This contribution will not be made public by the Commission ;

• A contribution (and remarks) to the consultation on the European Strategy for Data. Data sharing should remain voluntary, common European data spaces should be self-regulatory, and cross-sectoral data sharing encouraged; and

• A contribution (and annex) to the consultation on the White Paper on Artificial Intelligence, emphasising the need for a positive narrative on AI technologies to unlock Europe’s technology potential, a clearly-defined and harmonised definition of Artificial Intelligence. We saw better enforcement of existing regulation as providing many safeguards. An EU AI framework should be technology-neutral, sector-specific and focus on achieving desirable outcomes rather than regulating tools. High-risk AI applications should be defined and overseen to provide legal certainty and regulation future-proof. Investing in skills, digital education and research should be a priority.

The Commission has also launched a roadmap on strengthening intra-EU investment protection, and an accompanying consultation looking at new or streamlined existing instruments to help cross-border investors resolve potential disputes with public authorities in other EU countries. This may help address some of the problems retailers and wholesalers face in Central and Eastern Europe.