Today, EU member states’ representatives reached an agreement on the final component of a common European asylum and migration policy. At a meeting of the Council’s permanent representatives committee, member states sealed their negotiating mandate on a regulation on crisis situations, including sentimentalization of migration, and force majeure in the field of migration and asylum. This position will form the basis of negotiations between the Council presidency and the European Parliament.
The new law establishes the framework that would allow member states to address situations of crisis in the field of asylum and migration by adjusting certain rules, for instance concerning the registration of asylum applications or the asylum border procedure. These countries would also be able to request solidarity and support measures from the EU and its member states.
Exceptional measures in crisis situations
In a situation of crisis or force majeure, member states may be authorised to apply specific rules concerning the asylum and the return procedure. In this sense, among other measures, registration of applications for international protection may be completed no later than four weeks after they are made, easing the burden on overstrained national administrations.
Solidarity with countries facing a crisis situation
A member state that is facing a crisis situation may request solidarity contributions from other EU countries. These contributions can take the form of:

the relocation of asylum seekers or beneficiaries of international protection from the member state in a crisis situation to contributing member states
responsibility offsets, i.e. the supporting member state would take over the responsibility to examine asylum claims with a view to relief the member state that finds itself in a crisis situation
financial contributions or alternative solidarity measures

These exceptional measures and this solidarity support require the authorisation from the Council in accordance with the principles of necessity and proportionality and in full compliance with fundamental rights of third-country nationals and stateless persons.
Background and next steps
The regulation addressing crisis situation and force majeure in the field of migration and asylum is part of the New Pact on Migration and Asylum proposed by the Commission on 23 September 2020. The pact consists of a set of proposals to reform EU migration and asylum rules. Other landmark proposals in addition to the crisis regulation include the asylum and migration management regulation and the asylum procedure regulation.

EU migration and asylum policy (background information)
EU asylum rules (background information)

 
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The main goal is to deter foreign powers from bullying the EU or its member states. Restrictions to trade, direct investment and access to the EU procurement market are among possible countermeasures. This new tool should serve as a shield protecting EU’s sovereignty.

The new trade instrument is primarily meant as a deterrent, but it will allow the EU to fight economic coercion and respond with its own countermeasures.

With 578 votes to 24 and 19 abstentions. Parliament approved on Tuesday a new trade instrument to enable the EU to respond, in line with international law and as a last resort, should the EU or member states face economic blackmail from a foreign country seeking to influence a specific policy or stance.
The Anti-Coercion Instrument (ACI) seeks to protect EU and member state sovereignty in a geopolitical context where trade and investment are increasingly weaponised by foreign powers.
What is coercion?
According to the regulation, economic coercion occurs when a non-EU country attempts to pressure the EU or a member state into making a specific choice by applying, or threatening to apply, trade or investment measures. Although this kind of coercion undermines the EU’s strategic autonomy, it is not covered by the World Trade Organisation (WTO) agreement. The WTO dispute settlement mechanism is unavailable for cases of economic coercion specifically, unless they also involve aspects that violate WTO rules.
Under the new rules, the Commission will have four months to investigate potential coercion. Based on its findings, the Council will have eight to ten weeks to decide -by a qualified majority- whether coercion exists. Although the primary objective will be to engage in dialogue to persuade the authorities of the non-EU country to cease their coercion, if those efforts fail, the EU will have a wide range of countermeasures at its disposal. If coercion is found, and member states agree, the Commission will have six months to outline the appropriate response, keeping the Parliament and the Council informed at all stages.
Potential countermeasures
MEPs enhanced the deterrent aspect of the instrument by including a comprehensive list of potential responses available to the EU, including restrictions in trade of goods and services, intellectual property rights and foreign direct investment. Imposing constraints on access to the EU public procurement market, capital market, and authorisation of products under chemical and sanitary rules will also be possible.
Repairing the injury
Under the new rules, the EU could seek “reparation” from the coercive non-EU country. The Commission may also apply measures to enforce these reparations.
Quote
Bernd LANGE (S&D, DE), rapporteur and Chair of the Committee on International Trade, said: “This instrument enables rapid reaction against coercive measures, against pressure from other countries. We have introduced clear timelines and clear definitions to say what a coercive measure is and how to react to it. We now have a broad range of countermeasures at our disposal and have filled our toolbox with defensive instruments. While this anti-coercion tool should act as a deterrent, we will also be able to take action if necessary to defend the European Union’s sovereignty.”
Next steps
Once formally adopted by the Council – expected in October -, the regulation will take effect 20 days after publication in the Official Journal.
Background
The Commission proposed the mechanism in December 2021, driven by a demand from the European Parliament and in response to economic pressure exerted by the US during the Trump administration, along with numerous confrontations between the EU and China. This new instrument complements a series of trade defence tools adopted in recent years. In May, G7 leaders announced the launch of a coordination platform against economic coercion, echoing the EU’s initiative.
 

Compliments of the European Parliament.

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Blog post by Myriam Moufakkir, Chief Services Officer |  The recent rise of artificial intelligence (AI) has led to a number of quite useful applications, such as helping doctors diagnose diseases and scientists crunch large sets of numbers. So, how does the ECB use this rapidly developing technology? As part of our core work we analyse vast amounts of data. This is the basis for good decisions that contribute to keeping prices stable in the euro area and ensure the safety and soundness of the European banking system. AI offers new ways for us to collect, clean, analyze and interpret this wealth of available data, so that the insights can feed into the work of areas like statistics, risk management, banking supervision and monetary policy analysis.
We are exploring the opportunities and challenges of AI together with other central banks in the European System of Central Banks (ESCB) and the national competent authorities in the Single Supervisory Mechanism, as well as through initiatives such as the Bank for International Settlements’ Innovation Hub. Here are a few examples of what we are doing.
What kinds of AI does the ECB use?
The first initiative concerns the data we use. Our statisticians collect, prepare and disseminate data from over ten million legal entities in Europe, which are classified by institutional sector (e.g. financial institutions, non-financial corporations or the public sector). We need these classifications to have the right data to support our decision-making. Doing this manually, however, is very time-consuming. Machine learning techniques allow us to automate the classification process, meaning that our staff can focus on assessing and interpreting these data.
The second initiative aims to deepen our understanding of price-setting behaviour and inflation dynamics in the EU. Today, by applying web scraping and machine learning, we are able to assemble a huge amount of real-time data on individual product prices. One of the challenges, however, is that the data collected are largely unstructured and not directly suitable for calculating inflation. Together with economists and researchers at the other euro area central banks – via the Price-setting Microdata Analysis network ­– we are therefore exploring how AI can help us structure these data to improve the accuracy of our analyses.
The third initiative is in the area of banking supervision. To do their job, our supervisors analyze a broad range of relevant text documents (e.g. news articles, supervisory assessments and banks’ own documents). To consolidate all of this information in one place, our colleagues have created the Athena platform which helps supervisors find, extract and compare this information. Using natural language processing models trained with supervisory feedback, the platform supports supervisors with topic classification, sentiment analysis, dynamic topic modelling and entity recognition. Supervisors can now collate these kinds of enriched texts within seconds, so they can more quickly understand the relevant information – instead of spending time searching for it.
What else do we have to keep in mind?
Large-language models (of which ChatGPT is the best known) are another area which we are exploring. And we have identified a few possible uses for them. They could be used to write initial drafts of code for experts for use in analysis, or to test software more quickly and thoroughly. These models can also analyze, summarize and compare the documents prepared by the banks we supervise. This supports the work of our supervisory teams. The technology is also capable of helping to more quickly prepare summaries and draft briefings, which can assist colleagues across the bank in policy and decision-making activities. A large language model can also help improve texts being written by staff members, making the ECB’s communication easier to understand for the public. Relatedly, we have used neural network machine translations for a while now to help us communicate with European citizens in their mother tongues.
Naturally, we are cautious about the use of AI and conscious of the risks it entails. We have to ask ourselves questions like “how can we harness the potential that large language models offer in a safe and responsible manner?”, and “how can we ensure proper data management?”. Working in close cooperation with other ESCB institutions, we are looking at key questions in the fields of data privacy, legal constraints and ethical considerations (such as fairness, transparency and accountability).
With those considerations in mind, we will continue to investigate the possibilities and challenges of using AI. The examples above are only the tip of the iceberg. By putting in place the appropriate governance, coordination, infrastructure and investment, we will pull together the various strands of our work on AI and accelerate its adoption across our organization. This will allow us to harness the technology’s full potential and allow us to remain a modern and innovative central bank: an ECB that embraces – and continues to embrace – the future.
 
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Narrowing the gap between the share of men and women who work is one of the very important reforms policymakers can make to revive economies amid the weakest medium-term growth outlook in more than three decades.
With global growth predicted to languish at just 3 percent over the next five years and with traditional growth engines sputtering, many economies are missing out by not tapping women’s potential. Only 47 percent of women are active in today’s labor markets, compared with 72 percent of men. The average global gap has fallen by only 1 percentage point annually over the past three decades and remains unacceptably wide.
To blame are unfair laws, unequal access to services, discriminatory attitudes and other barriers that prevent women from realizing their full economic potential. The result is a shocking waste of talent, leading to losses in potential growth.
We estimate that emerging and developing economies could boost gross domestic product by about 8 percent over the next few years by raising the rate of female labor force participation by 5.9 percentage points—the average amount by which the top 5 percent of countries reduced the participation gap during 2014-19. As the Chart of the Week shows, that’s more than the economic “scarring,” or output losses, inflicted on countries by the pandemic.

Policymakers can of course lift growth in many ways, from governance reforms to strengthen institutions, to financial reforms to unlock capital for investment, as discussed in a recent IMF blog. Complementing these reforms with measures to narrow gender gaps would greatly amplify these returns.
Unfortunately, present policies do not come close to closing gender gaps. Many researchers say it’s inevitable that women’s labor force participation will eventually reach that of men, even if it takes centuries. But gender gaps are unlikely to ever close if present policy trends persist, as we show in a new research paper.
Our analysis of three decades of data shows that countries have made progress increasing women’s participation, but economies of all income levels experienced several setbacks—a result of shocks, crises and policy reversals. The pandemic, for example, eroded progress closing gender gaps, especially for women with young children. Setbacks like this cause scarring that slows and often reverses progress toward gender equality.
As a result, gender gaps in labor force participation will narrow but never close if countries continue on their present policy path. Gaps would remain large for most countries, exceeding 16 percentage points in one out of ten countries.
Countries must step up efforts to break down barriers to women’s participation in the labor market—such as limited access to education, health, assets, finance, land, legal rights, and care services. They should systematically take account of how macroeconomic, structural, and financial policy packages impact women. The IMF’s gender strategy aims to assist member countries in these efforts.
 
For more information, please contact:
Antoinette M. Sayeh, Deputy Managing Director, IMF
Alejandro Badel, Senior Economist – Strategy Policy and Review Department’s Inclusion and Gender, IMF
Rishi Goyal, Deputy Director – Strategy, Policy, and Review Department, IMF
 
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Today, the Commission takes another major step to protect the environment by adopting measures that restrict microplastics intentionally added to products under the EU chemical legislation REACH. The new rules will prevent the release to the environment of about half a million tonnes of microplastics. They will prohibit the sale of microplastics as such, and of products to which microplastics have been added on purpose and that release those microplastics when used. When duly justified, derogations and transition periods for the affected parties to adjust to the new rules apply.
The adopted restriction uses a broad definition of microplastics – it covers all synthetic polymer particles below five millimetres that are organic, insoluble and resist degradation. The purpose is to reduce emissions of intentional microplastics from as many products as possible. Some examples of common products in the scope of the restriction are:

The granular infill material used on artificial sport surfaces – the largest source of intentional microplastics in the environment;
Cosmetics, where microplastics is used for multiple purposes, such as exfoliation (microbeads) or obtaining a specific texture, fragrance or colour;
Detergents, fabric softeners, glitter, fertilisers, plant protection products, toys, medicines and medical devices, just to name a few.

Products used at industrial sites or not releasing microplastics during use are derogated from the sale ban, but their manufacturers will have to provide instructions on how to use and dispose of the product to prevent microplastics emissions.
Next Steps
The first measures, for example the ban on loose glitter and microbeads, will start applying when the restriction enters into force in 20 days. In other cases, the sales ban will apply after a longer period to give affected stakeholders the time to develop and switch to alternatives.
Background
The Commission is committed to fighting microplastics pollution, as stated in the European Green Deal and the new Circular Economy Action Plan. In the Zero Pollution Action Plan, the Commission set the target to reduce microplastics pollution by 30% by 2030.
As part of these efforts, the Commission is working to reduce microplastics pollution from different sources: plastic waste and litter, accidental and unintentional releases (e.g. plastic pellet loss, tyres degradation or release from clothing), as well as intentional uses in products.
To tackle microplastics pollution while preventing the risk of fragmentation in the single market, the Commission requested the European Chemicals Agency (ECHA) to assess the risk posed by microplastics intentionally added to products and whether further regulatory action at EU level was needed. ECHA concluded that microplastics intentionally added to certain products are released into the environment in an uncontrolled manner, and recommended to restrict them.
Based on the scientific evidence provided by ECHA, the Commission drafted a restriction proposal under REACH that was positively voted by the EU countries and successfully passed the scrutiny of the European Parliament and the Council before being adopted.
 
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On September 21, the European Chips Act entered into force. It puts in place a comprehensive set of measures to ensure the EU’s security of supply, resilience and technological leadership in semiconductor technologies and applications.
Semiconductors are the essential building blocks of digital and digitised products. From smartphones and cars, through critical applications and infrastructures for healthcare, energy, defence, communications and industrial automation, semiconductors are central to the modern digital economy. They are also at the centre of strong geostrategic interests and the global technological race.
Concretely the European Chips Act will strengthen manufacturing activities in the Union, stimulate the European design ecosystem, and support scale-up and innovation across the whole value chain. Through the European Chips Act, the European Union aims to reach its target to double its current global market share to 20% in 2030.
Three Pillars of the European Chips Act
The European Chips Act consists of three main pillars.
The first pillar – the Chips for Europe Initiative – reinforces Europe’s technological leadership, by facilitating the transfer of knowledge from the lab to the fab, bridging the gap between research and innovation and industrial activities and by promoting the industrialisation of innovative technologies by European businesses. The Chips for Europe Initiative will be primarily implemented by the Chips Joint Undertaking.
The Initiative will be supported by €3.3 billion of EU funds, which is expected to be matched by funds from Member States. Concretely, this investment will support activities such as the setting up of advanced pilot production lines to accelerate innovation and technology development, the development of a cloud-based design platform, the establishment of competence centres, the development of quantum chips, as well as the creation of a Chips Fund to facilitate access to debt financing and equity.
The second pillar of the European Chips Act incentivises public and private investments in manufacturing facilities for chipmakers and their suppliers.
The second pillar creates a framework to ensure security of supply by attracting investments and enhancing production capacities in semiconductor manufacturing. To this end, it sets out a framework for Integrated Production Facilities and Open EU Foundries that are “first-of-a-kind” in the Union and contribute to the security of supply and to a resilient ecosystem in the Union interest. The Commission has already indicated at the time of the Chips Act proposal that State aid may be granted to first-of-a-kind facilities, in accordance with the Treaty on the functioning of the European Union.
In its third pillar, the European Chips Act has established a coordination mechanism between the Member States and the Commission for strengthening collaboration with and across Member States, monitoring the supply of semiconductors, estimating demand, anticipating shortages, and, if necessary, triggering the activation of a crisis stage. As a first step, a semiconductor alert system has been set up on 18 April 2023. It allows any stakeholder to report semiconductor supply chain disruptions.
Next Steps
Also today, the Regulation on the Chips Joint Undertaking (JU) enters into force, allowing the start of the implementation of the main part of the Chips for Europe Initiative. Furthermore, the Chips Fund will start its activities as well. With the entry into force of the Chips Act, the work of the newly established European Semiconductor Board will also formally start, which will be the key platform for coordination between the Commission, Member States, and stakeholders.
Under the second pillar, industry will be able to apply for planned “first-of-a-kind” facilities to obtain the status of “integrated production facility” (IPF) or “open EU foundry” (OEF). This status will allow these facilities to be established and operable within the Union, thus allowing for a streamlined approach to administrative applications and permit grants. This status will also require that these facilities comply with criteria to ensure their contribution to the EU’s objectives and their reliability as suppliers of chips in times of crisis.
Background
A common European strategy for the semiconductor sector was first announced by Commission President Ursula von der Leyen in her 2021 State of the Union speech. In February 2022, together with the European Chips Act, the Commission published a targeted stakeholder survey in order to gather detailed information on chip and wafer demand, to better understand how the shortage of chips was affecting European industry. In February 2022 the Commission proposed the European Chips Act. In April 2023 a political agreement was reached between the European Parliament and the EU Member States on the Chips Act. The measures adopted will help Europe to reach its 2030 Digital Decade targets, fostering a greener, more inclusive and digital Europe.
For more background information, please click here.
 
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The near-term global outlook is shaped by the increasingly visible impact of monetary policy tightening by most major central banks and stresses in the Chinese economy. Global growth is projected to slow, remaining below trend in 2023-24, while inflation moderates but remains above target. Key downside risks include the possibility of a sharper-than-expected slowdown in China and a continued rise in oil prices.
Summary:

After a stronger-than-expected start to 2023, helped by lower energy prices and the reopening of China, global growth is expected to moderate. The impact of tighter monetary policy is becoming increasingly visible, business and consumer confidence have turned down, and the rebound in China has faded.

Global GDP growth is projected to remain sub-par in 2023 and 2024, at 3% and 2.7% respectively, held back by the macroeconomic policy tightening needed to rein in inflation.

Annual GDP growth in the United States is expected to slow from 2.2% this year to 1.3% in 2024, as tighter financial conditions moderate demand pressures. In the euro area, where demand is already subdued, GDP growth is projected to ease to 0.6% in 2023, and edge up to 1.1% in 2024 as the adverse impact of high inflation on real incomes fades. Growth in China is expected to be held back by subdued domestic demand and structural stresses in property markets, easing to 5.1% in 2023 and 4.6% in 2024.

Headline inflation is declining, but core inflation remains persistent in many economies, held up by cost pressures and high margins in some sectors.

Inflation is projected to moderate gradually over 2023 and 2024, but to remain above central bank objectives in most economies. Headline inflation in the G20 economies is projected to ease to 6% in 2023 and 4.8% in 2024, with core inflation in the G20 advanced economies declining from 4.3% this year to 2.8% in 2024.

Risks remain tilted to the downside. Uncertainty about the strength and speed of monetary policy transmission and the persistence of inflation are key concerns. The adverse effects of higher interest rates could prove stronger than expected, and greater inflation persistence would require additional policy tightening that might expose financial vulnerabilities.

A sharper-than-expected slowdown in China is an additional key risk that would hit output growth around the world.

Monetary policy needs to remain restrictive until there are clear signs that underlying inflation pressures have durably abated. Policy interest rates appear to be at or close to a peak in most economies, including the United States and the euro area, with policy judgements more finely balanced as the effects of higher interest rates become visible.

Governments are faced with mounting fiscal pressures from rising debt burdens and additional spending on ageing populations, the climate transition and defence. Enhanced near-term efforts to rebuild fiscal space and credible medium-term fiscal plans are needed to better align near-term macroeconomic policies and help ensure debt sustainability.

Structural policy efforts need to be reinvigorated to strengthen growth prospects. Reducing barriers in labour and product markets and enhancing skills development would help to boost investment, productivity and labour force participation, and make growth more inclusive.

A key priority is to revive global trade, which is an important source of long-term prosperity for both advanced and emerging-market economies. Concerns about economic security should not prevent advantage being taken of opportunities to lower trade barriers, especially in service sectors.

Enhanced international co-operation is needed to ensure better coordination and faster progress in carbon mitigation efforts.

To read the full report, please click here.

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