After four days of summit talks, the EU finally reached a deal on the coronavirus recovery package designed to help hard-hit member states deal with the pandemic's economic impact.
The package includes the €750-billion Next Generation EU Coronavirus recovery fund that will be financed by borrowing on the financial markets.
The fund has a grants component amounting to €390bn, with the rest to be made available as necessary in the form of low-interest loans.
Grants and loans will be paid in instalments, following the fulfilment of milestones and targets. The summit also agreed on the EU’s next seven-year budget, which will be worth €1.074 trillion and run through 2027.
"It is an ambitious and comprehensive package combining the classical [budget] with an extraordinary recovery effort destined to tackle the effects of an unprecedented crisis in the best interest of the EU," the EU leaders said in a joint declaration.
Another component of the recovery package is a new EU tax on plastic packaging waste. The tax, an idea floated back in 2018 by former EU-Commissioner for budget, Günther Oettinger, who saw this as a means to plug the Brexit-gap in the budget, was revived in February in the new budget proposal submitted by EU Council President Charles Michel.
The tax is to be introduced as of 1 January 2021, will take the form of "a national contribution calculated on the weight of non-recycled plastic packaging waste with a call rate of EUR 0.80 per kilogram with a mechanism to avoid excessively regressive impact on national contributions."
Proceeds from the tax will flow directly into the EU budget, forming a new ‘own resource’ as part of the commitment over the coming years to work towards reforming the own resources system and introduce new own resources. In this context, the Commission will also put forward in the first semester of 2021 proposals on a carbon border adjustment mechanism and on a digital levy, with a view to their introduction at the latest by 1 January 2023. The proceeds of the new own resources introduced after 2021 will be used for early repayment of Next Generation EU borrowing.
However, the use of the revenue from the plastics tax has drawn criticism, as it will not be earmarked for measures relating to plastics waste, and will, say opponents, essentially have ‘close to zero direct effect on the circular economy goals’, as Martin Engelmann pointed out in a LinkedIn post with the title EU-Plastics Tax - The Dark Side earlier this year.
Jürgen Resch, of the German environmental group Deutsche Umwelthilfe (DUH) hailed the decision, saying that “The EU is doing what the federal government should have done for years: it is finally taxing environmentally harmful plastic packaging.”
In his view, however, the tax should be even higher. “We need a price that really causes a change in direction. And we need regulations that primarily end the littering of nature and cities with unnecessary disposable products, be it disposable plastic bottles, plastic bags or disposable coffee-to-go cups,” he said, in a statement issued 21 July. The organisation would prefer to tax virgin plastic used to produce packaging, so, when the plastic enters circulation, seeing this as a far more effective approach. In addition, DUH says a tax of at least 20 cents should be levied on “particularly problematic disposable items such as plastic bottles, plastic bags or coffee-to-cups”.
Nonetheless, at first glance, the summit yielded much to be satisfied with. After all, as EC president Ursula von der Leyden pointed out: “And Europe's recovery will be green! The new budget will power the European Green Deal. It will accelerate the digitalisation of Europe's economy. Thanks to Next Generation EU, national reforms will be boosted. We invest in Europe's future.”
However, ‘the final word will be for the European Parliament’, noted Belgian Greens MEP Petra De Sutter.
Indeed: in a plenary sitting earlier today, the EP’s main groups backed a motion for a resolution that stated, among others:
“Welcomes the Heads of State or Government's acceptance of a Recovery Fund to kick start the economy as proposed by the European Parliament in May; deplores however, the reduction of the grant component in the final agreement; Recalls that legal basis chosen to set up the Recovery Instrument does not give a formal role to elected members of the European Parliament;
2. Does not accept, however, the political agreement on the Multiannual Financial Framework 2021-2027 as it stands; is ready to engage immediately in constructive negotiations with the Council to improve the proposal; recalls the Parliament’s mandate from November 2018; stresses that the European Parliament must consent to the MFF regulation agreement under article 312 of the Treaty”
7. Recalls that the European Council’s conclusions on the MFF represent no more than a political agreement between Heads of State and Government; stresses that Parliament will not rubber-stamp a fait accompli and is prepared to withhold its consent on the MFF until a satisfactory agreement is reached in the upcoming negotiations between Parliament and Council;"
This deal is not done - yet.