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OECD sees brighter economic prospects but an uneven recovery

Watch the live webcast of the press conference
Prospects for the world economy have brightened but the recovery is likely to remain uneven and, crucially, dependent on the effectiveness of public health measures and policy support, according to the OECD’s latest Economic Outlook. 
In many advanced economies more and more people are being vaccinated, government stimulus is helping to boost demand and businesses are adapting better to the restrictions to stop the spread of the virus. But elsewhere, including in many emerging-market economies where access to vaccines as well as the scope for government support are limited, the economic recovery will be modest.
The OECD has revised up its growth projections across the world’s major economies since its last full Economic Outlook in December 2020. It now sees global GDP growth at 5.8 % this year (compared with 4.2% projected in December), helped by a government stimulus-led upturn in the United States, and at 4.4% in 2022 (3.7% in December). The world economy has now returned to pre-pandemic activity levels, but real global income will still be some USD 3 trillion less by the end of 2022 than it would have been without a crisis.
As long as a large proportion of the world’s population is not vaccinated and the risk of new outbreaks remains, the recovery will be uneven and remain vulnerable to fresh setbacks, the Outlook says. Some targeted restrictions on mobility and activity may still need to be maintained, particularly on cross border travel. This will affect the prospects for a full recovery in all countries, even for those with a fast vaccine rollout or low infection rates.
Driving the differences between countries are public health strategies, the speed of vaccine rollout, fiscal and monetary support, and the relative importance of hard hit sectors such as tourism. While Korea and the US are already back to their pre-pandemic income levels, much of Europe is expected to take an additional year for them to bounce back. In Mexico and South Africa, it could take another three to five years.
Considerable uncertainty surrounds the projections, although risks have become more balanced between potential positive and negative impacts. In countries where vaccination is not widespread, the risk of further outbreaks remains very high, with the possible emergence of new vaccine-resistant variants of the virus. This could trigger further containment measures and delay the economic rebound.
On the upside, the high levels of household savings that have built up during the crisis could be unleashed as economies reopen, boosting consumption and growth to higher-than-expected levels, especially in advanced economies.

Image courtesy of the OECD.
The release of pent-up demand in the advanced economies, together with disruptions to supply chains caused by COVID-19, could push up inflation and market interest rates, which in turn risks putting vulnerable emerging-market and developing countries under financial pressure. But, according to the Outlook, the jump in inflation will likely be temporary as the disruptions should start to fade by the end of the year, with production capacity normalising and consumption rebalancing from goods towards services. The OECD adds that with many people still out of work, a cycle of sharp wage rises and price increases is unlikely.
Presenting the Economic Outlook, OECD Secretary-General Angel Gurría said: “Effective vaccination programmes in many countries has meant today’s Economic Outlook is more promising than at any time since the start of this devastating pandemic. But for millions around the world getting a jab still remains a distant prospect. We urgently need to step up the production and equitable distribution of vaccines.”
OECD Chief Economist Laurence Boone said: “Our latest projections provide hope that in many countries, people hit hard by the pandemic may soon be able to return to work and start living a normal life again. But we are at a critical stage of the recovery. Vaccination production and distribution have to accelerate globally and be backed by effective public health strategies.”
“Stronger international cooperation is needed to provide low-income countries with the resources – medical and financial – required to vaccinate their populations. Trade in healthcare products must be allowed to flow free of restrictions.”
Ms Boone said income support for people and businesses should continue but evolve and adapt in line with the strength of the economy and the health situation. As containment measures are lifted, better targeting of support to where it is needed most – including through re-training and job placement – will improve prospects, particularly for the low skilled and for youth. Support also needs to focus on viable businesses, to encourage a move away from debt into equity, and to create jobs and invest in digitalisation.
Although government fiscal support throughout the pandemic has pushed up public debt in most economies, the Outlook says current low interest rates make debt servicing more manageable and should open the way for investments in areas such as healthcare, digitalisation and addressing climate change. Ms Boone insisted “Debt sustainability should be a priority only once the recovery is well advanced, but governments should start planning for an overhaul of public finance management. This is no ordinary crisis and no ordinary recovery. Post crisis policies should be reformed in depth to address more effectively today’s challenges and those ahead.”

Image courtesy of the OECD.
For the full report and more information, visit the Economic Outlook online.
Contact:

OECD Media Office | news.contact@oecd.org | +33 1 4524 9700).

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OECD Ministers launch new initiative for safe international travel

OECD Ministers have endorsed a new initiative to promote safe international travel during the COVID-19 pandemic at the OECD’s annual Ministerial meeting in Paris.
The Initiative involves a safe travel blueprint and a temporary international cross-sectoral forum for knowledge sharing. The forum will allow governments and stakeholders to share information in real time on plans and approaches facilitating travel. The blueprint promotes greater certainty, safety and security in travel as reopening takes place. It builds on existing initiatives and aims to increase interoperability amongst travel regimes. It will be used by countries on a voluntary basis.
International air passenger transport dropped around 75% in 2020 and international tourism fell by around 80%. For the average OECD country, pre-pandemic, international tourism contributed 4.4% of GDP, 6.9% of employment, and 21.5% of service exports, but with much higher shares for some countries, including Greece, Iceland, Mexico, Portugal and Spain. The halt in international travel and tourism is having a dramatic knock-on impact on the entire, interlinked global economy.
“The OECD is in a unique position to help countries coordinate international action in the context of reopening global travel,” said OECD Secretary-General Angel Gurría at the Ministerial meeting in Paris. “This initiative will help reduce uncertainty and complexity and enable countries to prepare more effectively for a return to safe international travel and tourism.”
Without an international framework for travel policies, a patchwork of national and regional rules, inconsistent with each other, will continue to be confusing and costly for travellers and transport and tourism companies, discouraging travel due to the uncertainty and complexity. It could also increase the incidence of use of fraudulent certificates and so undermine the ability of authorities to mitigate public health risks.
The OECD Blueprint, initiated by Spain, supports and complements existing international initiatives, such as the European Union’s proposed ‘Digital COVID-19 Certificate’, by taking a principles-based approach to ensuring that they are compatible with each other, and adopted in a consistent way across a range of countries.
The Blueprint is a flexible and voluntary set of guidelines not a legal text. It consists of a traffic-light system to classify risks; guidance on how vaccination should be certified for travel to those countries that decide to take vaccination status into account; protocols for testing travellers in different circumstances; and principles to be followed in generating electronic certificates for travel that ensure privacy protection and security and promote interoperability among systems.
Countries that use the OECD Blueprint may do so unilaterally or in bilateral or multilateral agreements, or through mechanisms provided in other bodies, such as, in particular the ICAO Public Health Corridor arrangement.
Read the document and the Q&A for more information.
Contact:

OECD Media Office | news.contact@oecd.org | + 33 1 45 24 97 00

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Green light from all member states for EU recovery spending

The Council has received formal notifications about the approval of the own resources decision from all 27 member states. National ratifications being completed, the EU can now start making available funds under the Recovery and Resilience Facility. With a financial envelope of €672.5 billion, the facility is the central part of Next Generation EU, the EU instrument for economic recovery from the COVID-19 pandemic.
After adopting the own resources decision on 14 December 2020, the EU Council completed the list of received formal notifications on 31 May 2021. For the decision to enter into force, member states had to approve it in line with their constitutional requirements.

Today is a big day for the European Union. All 27 member states have notified the ratification of the own resources decision to the Council. Consequently, this decision enters into force tomorrow, June 1st. The Next Generation EU starts tomorrow! The European Union is now able to obtain the necessary funding for the European social and economic recovery. The governments and national parliaments of the EU 27 have shown a strong sense of solidarity and responsibility. We cannot afford to waste more time. We must ensure the swift approval of the first recovery and resilience plans by the end of June.
António Costa – Prime Minister of Portugal

Own resources decision
The own resources decision empowers the European Commission to borrow up to €750 000 million in 2018 prices on capital markets on behalf of the EU. It also provides for an increase of the maximum amount the Union can ask from member states to cover its financial obligations by 0.6 percentage points.
The increase is temporary and only used to support the recovery from the economic fallout caused by the COVID-19 pandemic. It will serve as a guarantee and enable better borrowing conditions on the market.

Own resources decision – formal notifications
Council decision on the system of own resources of the European Union

Recovery and Resilience Facility
Ratification of the own resources decision was a precondition for the use of the Recovery and Resilience Facility. The facility will support the member states in their process of recovering from the economic and social impacts of the COVID-19 pandemic.
€312.5 billion of grants and €360 billion of loans will be available for public investment and reforms presented in the national recovery and resilience plans drafted by each member state. The plans will foster green and digital transitions, sustainable growth and resilience, and include targets, milestones and estimated costs.

A recovery plan for Europe (background information)

Next steps
The completion of the ratification process allows the EU to start borrowing funds on the capital markets already in June 2021. Pre-financing of 13% of the total amount allocated to each member state will be made available to national governments after the approval of their recovery and resilience plans.
Once the national governments submit their plans, it is for the European Commission to assess them within two months. The Council has then four weeks to approve each plan by means of an implementing decision. The rest of the funds will be disbursed taking into account the achievement of the milestones and targets set in the national recovery and resilience plans.
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Mathias Cormann takes office as OECD Secretary-General

Mathias Cormann took office today as the sixth Secretary-General of the OECD.
Ministers and senior officials of the Organisation’s 38 Member countries and outgoing Secretary-General Angel Gurría welcomed Mr Cormann in a handover ceremony at the OECD Headquarters in Paris during Part I of the two-part 2021 Meeting of the OECD Council at Ministerial Level (MCM).
“I am deeply honoured and humbled by the trust and confidence you have shown in appointing me as your OECD Secretary-General. I am ambitious for the OECD and what it can achieve with Members, for Members, and most importantly, for the people in Member countries. You can count on me to give it my absolute best as we work towards a better future, together.” Mr Cormann said.
Mr Cormann, who has been appointed by member governments to serve a five-year term, was Australia’s Finance Minister from 2013-2020 and was Leader of the Government in the Senate from 2017-2020. He also served as Minister for the Public Service in 2018-2019.
Watch a replay of the handover ceremony

The 2021 MCM, chaired by the United States with Korea and Luxembourg as Vice-Chairs, will be held in two editions.  Edition 1, from 31 May – 1 June, has gathered Leaders and Ministers from the OECD’s 38 countries virtually under the theme of “Shared Values: Building a Green and Inclusive Future”. Key areas of discussion on Day 1 included the global economic situation, lessons to date from the COVID-19 pandemic and priorities for the recovery.
The second edition of the MCM will take place in the autumn and will focus on longer-term issues including the OECD’s future priorities and transforming policy ambitions into deliverable actions that reinforce a shared goal to build a green and inclusive future.
A Ministerial statement summarizing outcomes of this week’s meeting will be issued at the close of the Ministerial, alongside a press conference at 15:30 CEST. (See more information at this link.)
Links to further information:

Mr Cormann’s Biography and Vision Statement

The OECD’s 60-year History and a list of former OECD Secretaries-General

General information About the OECD and the Secretary-General Selection Process

Contact:

OECD Media Office | news.contact@OECD.org | +33 1 45 24 97 00

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Coronavirus: EU Commission proposes update to coordinated travel measures ahead of the summer

Today, the European Commission has proposed an update to the Council Recommendation on the coordination of free movement restrictions in the EU, which were put in place in response to the COVID-19 pandemic. As the epidemiological situation is improving and vaccination campaigns are speeding up all over the EU, the Commission is proposing that Member States gradually ease travel measures, including most importantly for the holders of the EU Digital COVID Certificate. The Commission has also proposed to update the common criteria for risk areas and to introduce an ‘emergency brake’ mechanism, to address the prevalence of new variants of concern or interest. The proposal also includes specific provisions on children to ensure unity of travelling families and a standard validity period for tests.
Didier Reynders, Commissioner for Justice, said: “The last weeks have brought a continuous downward trend in infection numbers, showing the success of the vaccination campaigns across the EU. In parallel, we are also encouraging affordable and widely available testing possibilities. In this context, Member States are now slowly lifting COVID-19 restrictions both domestically and regarding travel. Today, we are proposing that Member States coordinate this gradual lifting of free movement restrictions, taking into account our new common tool: the EU Digital COVID Certificate. We now expect Member States to make best use of this instrument and the recommendation to allow everyone to move freely and safely again.”
Stella Kyriakides, Commissioner for Health and Food Safety said: “Freedom of movement is one of EU citizens’ most cherished rights: we need coordinated and predictable approaches for our citizens that would offer clarity and avoid inconsistent requirements across Member States. We want to make sure that we can move towards the reopening of our societies in the weeks ahead safely and in a coordinated way. As vaccination is progressing with increasing speed, we can be confident that safe free movement without restrictions can gradually resume again. Whilst we are looking ahead with more optimism, we need to remain cautious and always put the protection of public health first.”
Key updates to the common approach to travel measures inside the EU, building on the colour-coded map published by the European Centre for Disease Prevention and Control (ECDC):

Fully vaccinated persons holding vaccination certificates in line with the EU Digital COVID Certificate should be exempted from travel-related testing or quarantine 14 days after having received the last dose. This should also cover recovered persons having received a single dose of a 2-dose vaccine. Where Member States accept proof of vaccination in order to waive restrictions to free movement also in other situations, for example after the first dose in a 2-dose series, they should also accept, under the same conditions, vaccination certificates for a COVID-19 vaccine.

Recovered persons, holding certificates in line with the EU Digital COVID Certificate should be exempted from travel-related testing or quarantine during the first 180 days after a positive PCR test.
Persons with a valid test certificate in line with the EU Digital COVID Certificate should be exempted from possible quarantine requirements. The Commission proposes a standard validity period for tests: 72 hours for PCR tests and, where accepted by a Member State, 48 hours for rapid antigen tests.

‘Emergency brake’: Member States should re-introduce travel measures for vaccinated and recovered persons if the epidemiological situation deteriorates rapidly or where a high prevalence of variants of concern or interest has been reported.

Clarification and simplification of requirements, where imposed by Member States based on their own decision-making processes:

Travellers from green areas: no restrictions
Travellers from orange areas: Member States could require a pre-departure test (rapid antigen or PCR).
Travellers from red areas: Member States could require travellers to undergo quarantine, unless they have a pre-departure test (rapid antigen or PCR).
Travellers from dark red areas: non-essential travel should be strongly discouraged. Requirement of testing and quarantine remain.

To ensure family unity, minors travelling with parents should be exempted from quarantine when the parents do not need to undergo quarantine, for example due to vaccination. Children under 6 should also be exempted from travel-related testing.
The Commission proposes to adapt the thresholds of the ECDC map in view of the epidemiological situation and progress on vaccination. For the areas marked in orange the proposal is to increase the threshold of 14-day cumulative COVID-19 case notification rate from 50 to 75. Similarly, for the red areas the proposal is to adjust the threshold range from current 50-150 to the new 75-150.

In addition, the Commission calls for further efforts to ensure a smooth rollout of the EU Digital COVID Certificate. For this purpose, Member States should make use, to the maximum extent possible, of existing possibilities under national law to start issuing EU Digital COVID Certificates already before the entry into application of the underlying Regulation on 1 July. Where national law provides for the verification of COVID-19 certificates, holders of an EU Digital COVID Certificate could already make use of it when travelling.
The Commission will support this process by launching the central part of the EU Digital COVID Certificate, the EU gateway storing the public keys needed for the verification of an EU Digital COVID Certificate, on 1 June. Given that no personal data is exchanged via the EU gateway, Member States could already make use of its functionality.
Today’s Commission proposal also ensures consistency with the rules on non-essential travel to the EU, updated by the Council on 20 May 2021.
Background
On 3 September 2020, the Commission made a proposal for a Council Recommendation to ensure that any measures taken by Member States that restrict free movement due to the coronavirus pandemic are coordinated and clearly communicated at the EU level.
On 13 October 2020, EU Member States committed to ensure more coordination and better information sharing by adopting the Council Recommendation.
On 1 February 2021, the Council adopted a first update to the Council Recommendation, which introduced a new colour, ‘dark red’, for the mapping of risk areas and set out stricter measures applied to travellers from high-risk areas.
On 20 May 2021, the Parliament and the Council reached provisional political agreement to establish the EU Digital COVID Certificate to facilitate free movement inside the EU. The EU Digital COVID Certificate will also contribute to facilitating the gradual and coordinated lifting of free movement restrictions currently in place. The political agreement was confirmed by Council’s Permanent Representatives Committee and the Parliament’s Committee on Civil Liberties, Justice and Home Affairs.
On 20 May 2021, the Council amended the recommendation on non-essential travel to the EU, easing restrictions on non-essential travel to the EU, in particular for vaccinated third-country nationals. The Council also increased the threshold for new infections used to determine the list of non-EU countries from where non-essential travel should be permitted.
At their meeting on 24-25 May, the European leaders called for the revision by mid-June of the Council Recommendation on travel within the EU, with the view of facilitating free movement in the EU. Today’s proposal follows-up on this request.
The latest information on coronavirus measures as well as travel restrictions provided to us by Member States are available on the Re-open EU platform.
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EU Digital COVID Certificate: EU Gateway goes live with seven countries one month ahead of deadline

Today, the EU Digital COVID Certificate has reached another important milestone with the go-live of the technical system at EU level, which allows to verify certificates in a secure and privacy-friendly way. The EU certificate was proposed by the Commission to resume safe travelling this summer. It will be free of charge, secure and accessible to all. Available in digital format or on paper, it will be a proof that a person has been vaccinated against COVID-19, tested negative, or recovered from an infection.
Following the political agreement between the European Parliament and Council on the Regulation governing the certificate on 20 May, today, the technical backbone of the EU systems goes live. Set up in only two months, the EU gateway provides for the verification of the security features contained in the QR codes of all certificates. This will allow citizens and authorities to be sure that the certificates are authentic. During this process, no personal data is exchanged or retained. The go-live of the gateway completes the preparatory work at EU level.
Since 10 May, 22 countries have already tested the gateway successfully. While the Regulation will be applied from 1 July, all Member States, which have past the technical tests and are ready to issue and verify certificates, can now start using the system on a voluntary basis. Already today, seven Member States – Bulgaria, Czechia, Denmark, Germany, Greece, Croatia and Poland – have decided to connect to the gateway and started issuing first EU certificates, while certain countries have decided to launch the EU Digital COVID Certificate only when all functions are deployed nationwide. Therefore, more countries will join in the coming days and weeks. An updated overview is available on a dedicated webpage.
Next Steps
The political agreement of 20 May has to be formally adopted by the European Parliament and the Council. The Regulation will enter into application on 1 July, with a phasing-in period of six weeks for the issuance of certificates for those Member States that need additional time. In parallel, the Commission will continue to provide technical and financial support to Member States to on-board the gateway.
Member of the College said:
Commissioner for Internal Market Thierry Breton said: “The Go-Live of the Gateway today is an important step which will allow Member States to start using the Gateway and start issuing EU Digital COVID Certificates. Seven Member States is a good start. I encourage others to follow as soon as possible. The timely preparation will allow the full system to be up and running by 1 July – when the proposal enters into application and the EU will be on time to open up again this summer.”
Stella Kyriakides, Commissioner for Health and Food Safety, added: “The EU Digital COVID Certificate shows the value added of effective e-health solutions for our citizens. It is important that during the coming weeks, all Member States fully finalise their national systems to issue, store and verify certificates, so the system is functioning in time for the holiday season. EU citizens are looking forward to travelling again, and they want to do so safely. Having an EU certificate is a crucial step on the way.”
Didier Reynders, Commissioner for Justice, said: “The EU Digital COVID Certificate provides European citizens with a common tool to allow them to move freely and safely again. It showcases Europe’s technological leadership in full respect of our values and principles: data protection, inclusiveness, and proportionality. It is important that all Member States use the next weeks to get fully ready, so the system will be fully up and running on 1 July.”
Background
On 17 March 2021, the European Commission presented a proposal to create an EU COVID Certificate to facilitate the safe free movement of citizens within the EU during the pandemic. On 20 May, co-legislators reached a provisional agreement.
In parallel to the legislative process, the Commission closely worked with Member States representatives in the eHealth Network, a voluntary network connecting national authorities responsible for eHealth, on the technical implementation. On 21 April, technical specifications were adopted, building on guidelines agreed in January and updated in March, and a trust framework outline agreed in March. In addition, a design template was developed with Member States to facilitate the recognition of EU COVID Certificates issued in paper format.
The EU gateway was set-up by T-Systems and SAP and is hosted at the Commission’s data centre in Luxembourg. It allows to verify the digital signatures contained in the QR codes of all certificates without the processing of personal data. The signature keys needed for this verification are stored on servers at national level; through the gateway, these keys can be accessed by national verification apps or systems all across the EU.
The Commission also developed reference software and apps for the issuance, storage and verification of certificates, to facilitate the roll-out at national level; these are published on GitHub and used by 12 Member States.
The latest information on coronavirus measures as well as travel restrictions provided by Member States are available on the Re-open EU platform.
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Joint Statement of the Members of the EEA Council

The members of the EEA Council held a video conference on 28 May 2021 at the initiative of Mr Augusto Santos Silva, Minister of Foreign Affairs of Portugal.[1] The video conference was attended by Mr Guðlaugur Þór Þórðarson, Minister for Foreign Affairs and International Development Cooperation of Iceland, Ms Ine Eriksen Søreide, Minister of Foreign Affairs of Norway and Ms Dominique Hasler, Minister of Foreign Affairs of Liechtenstein, as well as by representatives of the European Commission and the European External Action Service. The members of the EEA Council discussed the overall functioning of the Agreement on the European Economic Area (EEA Agreement) and held an orientation debate on Strategic Autonomy.
Following the videoconference, the members of the EEA Council adopted the following joint statement:
COVID-19

We acknowledge the far-reaching effects of the COVID-19 crisis and stress the need to meet this unprecedented challenge in a spirit of solidarity. We welcome the particularly close cooperation between the EU and the EEA EFTA States during the pandemic. This continues to prove essential in areas such as research, development, and procurement of vaccines, for the acquisition of medicines, medical and protective equipment, and for the ongoing response to the pandemic with exchange of data, experience and views in relevant fora. Reaffirming the central role of the EEA Agreement in closely linking our societies and economies, we stress the continued need to pursue such close cooperation and the importance of considering how to help alleviate the serious socio-economic impact of the COVID-19 pandemic through all available instruments. Ensuring the integrity of the Internal Market and the smooth functioning of the EEA Agreement remain essential priorities in this context. We welcome the participation of EEA EFTA States in the central distribution of vaccines through the EU procurement scheme and underline the importance of preserving the integrity of the Internal Market in the establishment of mechanisms for the production, supplies and deliveries of vaccines.
We emphasise the critical importance of a coordinated approach for the swift and effective roll-out of COVID-19 vaccines across the EEA. We note the initiative to establish a European Health Union aiming at strengthening the EU’s health security response capacity and better equipping authorities at all levels to prevent and address future pandemics in a coordinated manner. We also note the launch of the EU4Health Programme, which will contribute to the availability and affordability of medicines and healthcare products.

Political dialogue

We recognise that the special partnership between the EU and the EEA EFTA States is the best guarantee of long-term shared prosperity and stability. It has contributed to a Europe based on peace, democracy, the rule of law and human rights. In this context, within the framework of the Political Dialogue, we held informal exchanges of views on current foreign policy matters of mutual interest. We underline the importance of continuing the practice of inviting officials from the EEA EFTA States to political dialogues held in conjunction with the EU Council working parties.

Cooperation in the EEA

We confirm our support for the EEA Agreement as a fundamental basis for future relations between the EU and the EEA EFTA States and stress the importance of the two-pillar structure of the Agreement. We recognise the positive contributions made by the EEA EFTA States to the decision-shaping process of EEA-relevant EU legislation and programmes through their participation in committees, expert groups, studies, and agencies, as well as through the submission of EEA EFTA Comments. Furthermore, we stress the positive contribution of the EFTA Surveillance Authority and of the European Commission in monitoring the compliance with the EEA Agreement in all its Member States. We underline the importance of inviting EEA EFTA Ministers to informal EU Ministerial meetings and Ministerial conferences, organised by the Presidency, relevant to EEA EFTA participation in the Internal Market and express our appreciation to the current Portuguese and incoming Slovenian Presidencies for the continuation of this practice.
We agree on the need to further strengthen communication efforts on the EEA Agreement and on its benefits for citizens and businesses. Emphasising that greater knowledge of the EEA Agreement throughout the EEA at all levels is in the interest of all Contracting Parties and the good functioning of the Internal Market, we urge the EU and the EEA EFTA States to ensure that information on the EEA Agreement is made readily and easily available.
We recognise the ongoing challenges in international trade at a time where global supply chains have been under strain due to the COVID-19 pandemic and reconfirm the commitment to open, fair and sustainable trade and rules-based trade relations.
Recognising the important role of parliamentary cooperation and cooperation between economic and social partners, we note the Resolution of the EEA Joint Parliamentary Committee adopted at its meeting on 28 April on the Annual Report of the EEA Joint Committee on the Functioning of the EEA Agreement in 2020.

Incorporation of EEA-relevant EU acts

Noting the Progress Report of the EEA Joint Committee, we express our appreciation for the work of the Joint Committee in ensuring the continued successful operation and good functioning of the EEA Agreement.
We recognise the ongoing work to reduce the number of EU acts awaiting incorporation into the EEA Agreement and that important progress had been made in 2021. These efforts are the result of the joint efforts of the EU Institutions and the EEA EFTA States.  We however note that the backlog remains high and stress the need to make the necessary resources available to increase the speed and volume of incorporation of EU legal acts and thereby continue to ensure legal certainty and homogeneity in the EEA.

The withdrawal of the United Kingdom from the EU and the EEA Agreement

We welcome the dialogue between the EU and the EEA EFTA States on issues related to the implication of the UK’s withdrawal from the European Union and the new relationship between the EU and the UK that are relevant for the EEA Agreement and encourage the continuation of this dialogue. In this context, we underline the importance of ensuring the continuation of a well-functioning, homogenous EEA and of preserving the integrity of the Internal Market.

The development of the Internal Market and Digital Transformation

We emphasise the importance of a well-functioning Internal Market, including the Digital Single Market, which will be essential to sustain economic recovery across the EEA. While it proves necessary to temporarily adapt certain rules, such as on state aid, due to the COVID-19 crisis, we underline the indivisibility of the four freedoms and the importance of common rules and equal conditions in the Internal Market making significant progress. The high average rate of youth unemployment in Europe and the prospect of its increase due to COVID-19 crisis remain an important challenge for the Internal Market.
We reiterate the importance of the close involvement of the EEA EFTA States in the design and development of Internal Market policies and initiatives. We encourage active cooperation on initiatives for better enforcement and implementation of Internal Market rules and welcome the EEA EFTA States’ participation in the Single Market Enforcement Task Force (SMET).
We welcome the proposals of the European Commission for the Digital Services Act and Digital Markets Act as a means to provide for a safe, fair and rules-based internal market for digital services, addressing safety concerns and illegal content online, whilst preserving the innovative potential of the digital economy. The importance of the EU and the EEA EFTA States working closely together on these issues is underlined.
We furthermore note the proposals for a revised Directive on Security of Network and Information Systems (NIS) and the Data Governance Act. Achieving a high common level of cybersecurity and circulation of data in line with European values across the EEA will be essential priorities for the Digital Single Market.

The European Green Deal

High ambitions, collective effort and urgent action are needed to speed up the transition to a sustainable, climate neutral and environmentally friendly future. We further note the preparatory work on the important ‘Fit-for-55’ package which will amend several key EEA-wide policy instruments. We recognise the importance of sustainable finance including as a means of channelling private investment into green growth.
We express our full commitment to stepping up global efforts to tackle climate change, pursuing sustainable energy transition, and protecting the environment. We emphasise the importance of continued close cooperation between the EU and the EEA EFTA States on these issues, including on renewable energy, hydrogen and carbon capture and storage and mineralisation (CCSM). We furthermore agree that it is essential to put these issues and the loss of biodiversity at the heart of a renewed ambition to achieve sustainability. We note that cooperation towards a cleaner Europe and a toxic-free environment will continue, related to the key actions of the European Commission on the new Circular Economy Action Plan and on the Chemicals Strategy for Sustainability. We further note the European Commission Strategy on offshore renewable energy.
We stress the importance of the EU and the EEA EFTA States working together in decarbonising the transport sector, by speeding up the green transition in all modes of transport and developing a sustainable, intelligent, and more resilient transport industry. We welcome the European Strategy for Sustainable and Smart Mobility and the related EEA EFTA Comment, which stresses the need for innovative solutions while ensuring a level playing field for Europe with the objective to take the global lead to reduce greenhouse gas emissions from transport. In light of current circumstances, we recognise the need for increased cooperation for the recovery of the transport sector in the EEA and welcome the good cooperation on the Green Lanes network.
We note the European Commission Communication on the Farm to Fork Strategy for a fair, healthy, and environmentally-friendly food system. We welcome the EEA EFTA comment which stresses the importance of joining forces in promoting the global transition to sustainable food systems in international standardisation bodies and relevant multilateral fora, inter alia to promote safe food and healthy diets, reduced carbon and environmental footprints, animal welfare and the fight against antimicrobial resistance.
Recognising that climate change is a global problem, we reiterate our full commitment to implement the UN 2030 Agenda and the Paris Agreement as the essential multilateral frameworks governing global action against climate change. We underline the continued importance of increased ambition under the Paris Agreement, and that all Parties should submit enhanced National Determined Contributions as soon as possible.

The Social Dimension

We recognise that the EEA Agreement has an important social dimension, covering issues related to labour law, health and safety at work and gender equality. The social impact of the COVID-19 crisis was partly cushioned by unprecedented support measures, but a robust recovery would be essential to overcome further adverse developments.
In this context, we note the launch of the Action Plan to implement the European Pillar of Social Rights and the outcome of the Porto Social Summit in May. We note the new social rules in the Mobility Package to enhance traffic safety and better social rights for drivers and highlighted the need to focus further efforts on enforcement and exchange of information.

EU programmes

Acknowledging the contribution made by EU programmes to building a greener, more digital, and resilient Europe, we recall the significance of the participation and financial contributions of the EEA EFTA States in EEA-relevant programmes under the recent Multiannual Financial Framework for 2014-2020. We welcome the EEA EFTA States’ intention to participate in several programmes foreseen under the new 2021-2027 period and underline that such participation remained based on the relevant provisions of the EEA Agreement.
We welcome that the foreseen participation will strengthen cooperation in areas like research and innovation, education, civil protection, health and digital matters. It is recognised that this cooperation will represent a substantial financial commitment from the EEA EFTA States towards a green, digital, inclusive, and resilient society.
We look forward to the incorporation of the new generation of EU programmes into the EEA Agreement and invited both sides to speedily process the relevant acts. In the meantime, we stress the importance of ensuring that EEA EFTA entities are eligible and able to participate in the preparatory stages and activities from the very start of programmes with foreseen participation of the EEA EFTA States.

Financial Mechanisms

We commend the positive contribution made by the EEA and Norway Financial Mechanisms in reducing social and economic disparities throughout the EEA and in supporting a free and vibrant civil society, as this contributes to a well-functioning Internal Market. We look forward to the conclusion of the review under Article 11 of Protocol 38C of the EEA Agreement in the EEA Joint Committee in June.
Regarding the agreements on EEA and Norwegian Financial Mechanisms for the 2014-2021 period, we welcome the conclusion of Memoranda of Understanding (MoU) with all 15 beneficiary States and the signing of most of the agreements on programmes. We recall the importance of maintaining a close cooperation between the beneficiary States and the EEA EFTA States, in the spirit of equal partnership between the Contracting Parties to the EEA Agreement.
We note that in the face of the COVID-19 crisis, the EEA EFTA States has, in cooperation with the beneficiary States, put in place a number of flexibilities to mitigate risks for the timely realisation of the programmes and for the achievement of best results in the implementation of the EEA and Norway Financial Mechanisms 2014-2021. Some beneficiary states consider that COVID-19 might have an impact on the achievement of some of the results.

Agricultural trade

We recall the commitment of the Contracting Parties in accordance with Article 19 of the EEA Agreement and call on the parties to pursue the dialogue with a view to reviewing the conditions of trade in agricultural products. We note Contracting Parties’ intention of conducting a new review of the trade regime for processed agricultural products within the framework of Article 2(2) and Article 6 of Protocol 3 to the EEA Agreement, in order to further promote trade in this area.

Compliments of the European Council.
The post Joint Statement of the Members of the EEA Council first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

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EU Commission presents guidance to strengthen the Code of Practice on Disinformation

Today, the Commission publishes its guidance on how the Code of Practice on Disinformation, the first of its kind worldwide, should be strengthened to become a more effective tool for countering disinformation.
It sets out Commission expectations, calls for stronger commitments by the signatories and foresees a broader participation to the Code. Based on a robust monitoring framework and clear performance indicators, signatories should reduce financial incentives to disinformation, empower users to take an active role in preventing its spread, better cooperate with fact-checkers across EU Member States and languages, and provide a framework for access to data for researchers.
Věra Jourová, Vice President for Values and Transparency, said: “Threats posed by disinformation online are fast evolving and we need to step up our collective action to empower citizens and protect the democratic information space. A new stronger Code is necessary as we need online platforms and other players to address the systemic risks of their services and algorithmic amplification, stop policing themselves alone and stop allowing to make money on disinformation, while fully preserving the freedom of speech.”
Thierry Breton, Commissioner for Internal Market, said: “We need to rein in the infodemic and the diffusion of false information putting people’s life in danger. Disinformation cannot remain a source of revenue. We need to see stronger commitments by online platforms, the entire advertising ecosystem and networks of fact-checkers. The Digital Services Act will provide us with additional, powerful tools to tackle disinformation.”
A strong, stable and flexible Code to support the fight against disinformation
The Guidance calls for reinforcing the Code by strengthening it in the following areas:

Larger participation with tailored commitments. The Commission encourages established and emerging platforms active in the EU, relevant stakeholders in the online advertising ecosystem (e.g. ad exchanges, ad-tech providers, brands benefitting from ads), private messaging services, as well as stakeholders that can contribute with resources or expertise to the Code’s effective functioning, to join the Code. The strengthened Code should include new tailored commitments corresponding to the size and nature of services provided by signatories.

Demonetise disinformation. Platforms and players in the online advertising ecosystem must take responsibility and better work together to defund disinformation, notably by exchanging information on disinformation ads refused by one of the signatories, improving transparency and accountability around ad placements and barring participation by actors that systematically post debunked content.

Ensure the integrity of services. The strengthened Code should provide a comprehensive coverage of the current and emerging forms of manipulative behaviour used to spread disinformation (such as bots, fake accounts, organised manipulation campaigns, account takeovers), and include tailored commitments to ensure transparency and accountability of measures taken to reduce its impact.

Empower users to understand and flag disinformation. Users need to have access to tools to better understand and safely navigate the online environment. The signatories must make their recommender systems, i.e. the way users see content, transparent and take measures to mitigate the risks that these fuel such as the viral spread of disinformation. They should also provide their users with accessible, effective tools and procedures to flag disinformation with the potential to cause public or individual harm. Users, whose content or accounts have been subject to measures taken in response to such flagging, should have access to an appropriate and transparent mechanism to appeal and seek redress. The strengthened code should also enhance the visibility of reliable information of public interest, and warn users who interacted with content marked as false by fact-checkers.

Increase the coverage of fact-checking and providing increased access to data to researchers. The new Code should include better cooperation with fact-checkers and increase coverage across EU countries and languages. The strengthened Code should also include a robust framework for access to data for researchers.

A robust monitoring framework. The strengthened Code should include an improved monitoring framework based on clear key performance indicators (KPIs) measuring the results and impact of actions taken by the platforms as well as the overall impact of the Code on disinformation in the EU. Platforms should regularly report on the measures taken and their relevant KPIs to the Commission. Information and data should be provided by the platforms in standardised formats, with Member State breakdowns.

Finally, signatories should develop a Transparency Centre where they indicate which policies they adopted to implement the Code’s commitments, how they have been enforced, and display all the data and metrics relevant to the KPIs. The Guidance also proposes the establishment of a permanent task force chaired by the Commission. It would be composed of signatories, representatives from the European External Action Service, the European Regulators Group for Audiovisual Media Services (ERGA) and from the European Digital Media Observatory (EDMO) that received more than €11 million to create eight regional hubs to help implement and expand its work in the Member States. The task force, which will rely also on the support of experts, will help review and adapt the Code in view of technological, societal, market and legislative developments.
Next Steps
The Commission will call upon the signatories of the Code of Practice to convene and strengthen the Code in line with the Guidance. It also encourages new signatories to join the Code. To this end, the Commission will reach to potential new signatories and interested parties. The signatories should proceed swiftly with revision of the Code and provide a first draft of the revised Code in the autumn. As announced, the Commission will also propose this year a legislation to improve the transparency of political advertising. The Guidance also calls for reinforced commitments in this area, to pave the way towards the upcoming strengthened legislative framework and to devise industry-led solutions in its support.
Background
The Code of Practice has been established in October 2018. As announced in the European Democracy Action Plan (EDAP), the Guidance addresses the shortcomings identified in the Commission’s 2020 Assessment of the Code and draws from the lessons learned in the COVID-19 disinformation monitoring programme. The Commission’s proposal for the Digital Services Act (DSA) establishes a co-regulatory backstop for the measures that will be included in the revised and strengthened Code.
The coronavirus crisis starkly illustrated the threats and challenges disinformation poses to our societies. The ‘infodemic’ has posed substantial risks to personal and public health systems, crisis management, the economy and society. It has shown that, despite important efforts taken to date, there is an urgent need to step-up efforts to fight disinformation.
The EU approach to countering disinformation is deeply rooted in the protection of freedom of expression and safeguarding an open democratic debate. It aims to create more transparency and accountability in the online environment and empower citizens. It goes hand in hand with the other aims of the European Democracy Action Plan, namely promoting free and fair elections and protecting media freedom and pluralism. The EU has mobilised industry, media, academia, public authorities and civil society and encourages a broader participation in the Code.
Compliments of the European Commission.
The post EU Commission presents guidance to strengthen the Code of Practice on Disinformation first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

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IMF | Fit for Purpose—Adapting IMF Advice to a New Economic Landscape

The International Monetary Fund is responding to the policy challenges of a fast-changing global economy still reeling from the COVID-19 crisis: it is modernizing the way it provides its regular policy advice to member countries—a process known as surveillance.
The regular health check of members’ economies, known as the Article IV consultations, will continue to cover fiscal, monetary, exchange rate and financial issues, which are at the heart of the Fund’s work.

‘The Fund’s policy advice is evolving.’

In the future, we will systematically integrate issues that have substantial macroeconomic impact such as inequality, climate change, and digital technology, so as to better deliver on our surveillance mandate.
The tailored and targeted policy advice to countries will also help policymakers better prepare for a transforming economic landscape.
A fast-changing world with challenges, new and old
The COVID-19 pandemic is a watershed moment in the still-young 21st century. The pandemic exposed new risks and spillovers, and significant uncertainties about the recovery.
The prospect of transformational change existed even before the pandemic. The world is becoming more interconnected, trends in digitalization and inequality are accelerating, and addressing climate change is now a key priority.
On top of this, policymakers must now also navigate the COVID-19 crisis. First and foremost, by saving lives and livelihoods, then ensuring a sustainable recovery and avoiding economic scarring.
To do this, they must confront questions for which there are often no easy answers including: how should policies be calibrated to maintain adequate support while ensuring stability and sustained growth? How should policymakers respond when facing scant room for maneuver because macroeconomic tools have already been extensively used in the Global Financial Crisis? How can asynchronous and divergent economic recoveries be managed so that those still grappling with the pandemic avoid falling further behind?
Modernizing the Fund’s surveillance framework
To confront these changes, the Fund’s policy advice is evolving, both on substance and in the way the Fund engages with its members.
This new direction is highlighted in the 2021 Comprehensive Surveillance Review, recently approved by the Fund’s Executive Board. The Review—the first since 2014—reflects extensive discussions with member country authorities, external experts, and other stakeholders. It outlines four priorities that will direct the Fund’s surveillance in the future:

Confronting risks and uncertainties. Policy advice will need to better assess a range of possible outcomes. This will help prepare for worse-than expected scenarios, while also ensuring that policies take advantage of positive surprises and opportunities.

This will require an improved understanding of risk-reward trade-offs, supported by contingency planning and policies geared towards risk management. Such advice can include quantitative considerations–for example, how much insurance to buy against natural disasters–and qualitative aspects, for example, how to take advantage of a growth windfall.

Preempting and mitigating spillovers. The pandemic has underscored the scale of global interconnectedness. Events in one country can have sizable effects across the globe. Divergent recoveries can intensify effects of policy normalization. New sources of such spillovers, including from health policies, climate change, and digitalization will shape the future. It will be critical to identify and assess economic and policy spillovers, and to provide policy advice on how to mitigate and pre-empt them. International economic cooperation can also benefit from better dialogue between spillover producers and spillover receivers.

Fostering economic sustainability. A broader understanding of economic sustainability is needed. Economic stability over time is necessary–but not sufficient–to achieve economic sustainability. Trends in demographics, inequality, socio-political developments, and climate change impact economic stability, and will be discussed more systematically. Not all trends are equally pressing for all countries–country specific circumstances determine if they are macro-critical.

A unified approach to policy advice. Balancing competing priorities with limited room for maneuver is the key challenge. During the pandemic, member countries simultaneously deployed various policy tools (see chart). This required their careful calibration and an understanding of complementarities and conflicting objectives.

The relevant issues differ across countries and over time: coordination of fiscal and structural policies, for example, is important for countries facing low productivity. A deeper integration of macro-financial analysis is particularly important where financial risks are building.
For countries dealing with capital flows and seeking to better counter external shocks, the Integrated Policy Framework (IPF), which outlines the policy options and tradeoffs available to policymakers, provides an analytical approach to selecting an appropriate policy mix.
Unified policy advice helps decision makers discuss these trade-offs and point to synergies.

What it means in practice

Policy dialogue with Fund members will continue to follow requirements endorsed by the IMF’s Executive Board. The Article IV consultations will continue to provide a comprehensive assessment, and will cover fiscal, monetary, external, financial and structural policies.
The reports will be more focused, and better integrate macrofinancial aspects, risk assessment and contingency planning, spillovers, and capacity development. New technologies and enhanced data availability will help to modernize business practices and enhance the relevance of surveillance.
Policy advice will become more granular and country-specific. This is especially so for new and pressing questions, where peer-learning will be needed, such as ways to limit economic scarring or to provide targeted support to firms. Another improvement is ensuring that IMF advice is informed by early identification of cross-cutting policy issues and of lessons from countries’ experiences.
The Comprehensive Surveillance Review is an important milestone, and much work lies ahead to put it into action. Change will be gradual. While the priorities are relevant under a broad range of future outcomes, events are uncertain, and unforeseen shocks will occur. The IMF is a learning institution–being ready to adapt, experiment, and revise is the cornerstone for delivering agile and effective advice to our members.
To learn more visit the CSR website.
Authors:

Fabian Bornhorst
Ceyla Pazarbasioglu

Compliments of the IMF.
The post IMF | Fit for Purpose—Adapting IMF Advice to a New Economic Landscape first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

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EU Commission disburses €14.1 billion under SURE to 12 Member States

The European Commission has today disbursed €14.137 billion to 12 EU Member States in the seventh instalment of financial support under the SURE instrument. As part of today’s operations, Belgium has received €2 billion, Bulgaria €511 million, Cyprus €124 million, Greece €2.54 billion, Spain €3.37 billion, Italy €751 million, Lithuania €355 million, Latvia €113 million, Malta €177 million, Poland €1.56 billion, Portugal €2.41 billion and Estonia €230 million. This is the first time that Bulgaria and Estonia are receiving funding under the instrument. The other ten EU countries have already benefitted from loans under SURE.
These SURE loans will assist Member States in addressing sudden increases in public expenditure to preserve employment following the coronavirus pandemic. Specifically, they will help Member States cover the costs directly related to the financing of national short-time work schemes, and other similar measures that they have put in place as a response to the coronavirus pandemic, including for the self-employed. Today’s disbursements follow the issuance of the seventh social bond under the EU SURE instrument, which attracted a considerable interest by investors amid challenging market conditions in recent days.
With this SURE disbursement, the EU has provided nearly €90 billion in back-to-back loans. All EU Member States which have asked to benefit from the scheme have received part or all of the requested amount. The overview of the amounts disbursed so far is available online, as are the full amounts per Member State.
Overall, 19 EU Member States are due to receive a total of €94.3 billion in financial support under SURE, following approval by the Council of the European Union based on a Commission proposal. Countries can still submit requests to receive financial support under SURE which has an overall firepower of up to €100 billion and is available until end 2022.
Members of the College said:
President Ursula von der Leyen said: “With today‘s disbursement, Bulgaria and Estonia will receive money for the first time and ten other countries will get additional support. SURE is a European success story and has benefitted up to a total of 30 million workers and 2.5 million firms so far. It will also help them recover faster from the pandemic. With the SURE programme, the EU has already provided a total of around €90 billion to 19 Member States.”
Commissioner Johannes Hahn, in charge of Budget and Administration, said: “After seven issuances under SURE, we have already made available almost €90 billion to 19 Member States to support our companies and help keep people employed. This success story paves the way for NextGenerationEU.”
Commissioner Paolo Gentiloni, Commissioner for Economy, said: “One year after the Council adopted the SURE instrument, we have already disbursed 90% of available support: nearly €90 billion. In addition to helping European workers and firms to navigate this unprecedented crisis, SURE has also saved Member States €5.8 billion with respect to market funding rates.”
Background
On 18 May 2021, the European Commission issued the seventh social bond under the EU SURE.
The issuance consisted of a €14.137 billion dual tranche social bond split over two distinct tenors, with €8.137 billion due for repayment in July 2029 and €6 billion due for repayment in January 2047. The seventh EU SURE bond was over 6 times oversubscribed and information about the pricing terms is available online here. All issuances attracted strong investors’ interest and were placed on the market under favourable pricing terms, which ensured good pricing conditions that the Commission is directly passing on to the beneficiary Member States.
The bonds issued by the EU under SURE benefit from a social bond label. This provides investors in these bonds with confidence that the funds mobilised will serve a truly social objective.
Compliments of the European Commission.
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