Special highlights from EU decision making: Carbon Border Adjustment Mechanism (CBAM) and corporate due diligence

This briefing includes our latest observations regarding the politics behind EU policies on the following subjects:

- Corporate due diligence

- Tax coordination

- Carbon Border Adjustment Mechanism (premium subscribers only)

- Fisheries policy (premium subscribers only)

- Sustainable Growth Strategy  (premium subscribers only)


Corporate due diligence

Latest EP voting sessions indicate that the pro-regulation camp is gaining ground in the European Parliament when it comes to implementing a mandatory and binding human rights due diligence framework across the whole value chain. Recent intense campaigning by several stakeholders calling for human rights due diligence to be enshrined into EU law seems to have expanded the basis for political support among MEPs. To see how each MEP voted, click here.

This trend mirrors the increased support within the European Parliament for more strategic autonomy, the main purpose being to promote ambitious climate and human rights due diligence. These initiatives are supposed to decrease the EU's reliance on imports, while deterring companies from producing outside of the EU through higher requirements and taxes.

The opponents fear, however, that if overplayed, such initiative would result in a loss of competitiveness for European companies and higher prices for European consumers. For this reason, the scope of such a directive ignited certain divisions amongst MEPs. A key matter is whether SMEs should also be asked to comply with the new regulations. Centre-right MEPs would have wanted to introduce the possibility for Member States to exempt SMEs, but they could not get enough support. Only a minority of EPP (including Merkel’s CDU/CSU) and Renew members, as well as ECR and ID groups, support the proposed exemptions for SMEs. To see the position of each MEP click here.

Additionally, the ECR and ID groups, as well as several members of EPP and Renew Europe, seem to be rather concerned about the actual impact of the corporate due diligence framework on the EU supply chains. These conservative forces are suggesting that the new mechanism is unlikely to work as expected and want the Commission to further examine the impact and the third-country enforceability of the new framework. The observed left/right divide on this specific proposal is in line with the general trends identified by VoteWatch in several policy areas, as shown in our different influence matrices. Find how each MEP voted on this proposal here.


Taxation

This month’s plenary continues to point towards a relatively large cross-party and cross-national support of the European Parliament for increased harmonisation on taxation. As MEPs are renewing their call to effectively counter harmful tax practices adopted by some countries, it can be expected that this debate adds pressure on Member States who are blocking these initiatives in the Council, including Malta, Cyprus or Luxembourg for instance. While political groups generally seem to support this initiative (except for ECR), geographical divisions amongst MEPs are still visible, in particular within the EPP and Renew groups. This is reflected in the voting behaviour of certain delegations, for example of Maltese members from the EPP and Luxembourgish MEPs from Renew. Dutch MEPs, be it from CDA and VVD, are also more reserved than their respective counterparts when it comes to pointing out harmful tax practices adopted by some Member States. The current positions of MEPs are here.

 

Are you interested in EU fiscal policy? Find our policy matrix here and uncover which MEPs can help you advance your agenda.


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Carbon Border Adjustment Mechanism

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