State of the Union 2023 - Headlining the Speech of President Ursula von der Leyen

On 13 September 2023, the President of the European Commission gave her State of the Union address in the European Parliament (Strasbourg). This has become an annually revolving tradition of presenting the state of play, the important issues facing Europeans during the year ahead and how the European Commission proposes to solve them. In this context, also new legislation or policies on the EU level are suggested.

With the European flag (blue with 12 golden stars) on her right side, President Ursula von der Leyen conveyed her key message of “Answering the call of history”, traditionally mostly in English, but not missing out on German and French.

The President encourages the European institutions and Member States to answer the call of history in regard to geopolitics, the climate change, digital transition, investments in and reform of labour markets, building a Health Union, work on gender equality, combat violence against women, the migration crisis and an enlargement of the European Union.

In the following, I have summarized what I believe are some of the key messages of quite a remarkable speech for European businesses:

European Green Deal

The EU has set a long-term perspective to protect our planet and preserve our future prosperity. This has given a clear sense of direction for investment and innovation.

And the European industry is ready to power this transition and proves that modernisation and decarbonisation can go hand in hand: 38 clean steel factories in the EU in the last five years. The EU attracts more investment in clean hydrogen than the US and China combined.

The EU will keep supporting the European industry throughout the transition. There will be a series of Clean Transition Dialogues with industry with the core aim to support every sector in building its business model for the decarbonisation of industry. The transition is essential for our future competitiveness, for the people and their jobs.

The EU will put forward a European Wind Power package together with industry and member states (fast-track permitting, improve the auction system across the EU, focus on skills, access to finance and stable supply chains.

More broadly, the ambition is that our clean tech industry is in Europe (from wind to steel, from batteries to electric vehicles). In this context, the President stresses the importance of fairness in the global economy and the fight against China’s unfair trade practices. While Europe is open for competition, it is not for a race to the bottom. In this context, the Commission will today launch an anti-subsidy investigation into electric vehicles coming from China. That is indeed some news.

The President reiterates that nature, biodiversity and ecosystems must be protected. In this context, the Commission will kick off a strategic dialogue for the future of agriculture in the EU stressing that agriculture and protection of nature can go together – "we need both" is the message. At the same time the President thanks the European farmers for securing the supply of foodstuff and suggests a strong support for this sector that is confronted with climate change and the impact of the war in Ukraine.

Economy, Social and Competitiveness

The President sees three major economic challenges for the European industry in the year ahead:

• the labour market: Labour shortages directly affect our competitiveness and hamper the capacity for innovation, growth and prosperity. So there is a need to improve access to the labour market for young people, women, and qualified migrants. The President wants to rely on the expertise of the collective bargaining partners (businesses and trade unions) to respond to the deep-rooted shifts in technology, society and demography. For this purpose, the European Commission will together with the Belgian Presidency convene a new Social Partner Summit next year at a historical place (at Val Duchesse, the place where the European social dialogue was born almost 40 years ago). The idea is to build the future of Europe with and by our social partners.
• the persistent high inflation: The President wants to replicate the successful model of pooling our demand and buying energy together (as EU 27) in other fields like critical raw materials or clean hydrogen.
• making it easier for European companies to do business: An EU SME envoy will be appointed who will be in direct contact with SMEs about their everyday challenges and report to the President. An independent board will conduct a competitiveness check for every new piece of EU legislation. And there will be legislative proposals towards reducing reporting obligations at the EU level by 25%. Member states should be motivated to match this target at national level as well. It is time to make business easier in Europe – a message that entrepreneurs in Europe wanted to hear for a long time.

Securing access to key technologies is key for European companies and a question of European sovereignty. To this end, new budgetary means for the European Commission should finance the STEP platform to boost, leverage and steer EU funds to invest in key technologies (microelectronics, quantum computing and AI, biotech and clean tech).

Europe also needs to step up on economic security (take the example of China’s export restrictions on gallium and germanium, two essential input materials for semiconductors and solar panels). The aim to pursue de-risking (but not decoupling) while at the same time maintain the dialogue with China. There will be a first meeting of the new Critical Raw Materials Club bringing Latin America and Africa on board. Various free trade agreements should still be concluded this year (Australia, Mexico and Mercosur).

Mario Draghi will prepare a report on the future of European competitiveness. Europe will do “whatever it takes” to keep its competitive edge. Wow.

Digital and AI

Europe has become the global pioneer of citizen’s right in the digital world (the Digital Services Act and the Digital Markets Act creating a safer digital space and clear responsibilities for big tech). And Europe should lead the way on a new global framework for AI building three pillars:

• Guardrails: The AI Act should be adopted quickly to ensure that AI develops in a human-centric, transparent and responsible way.
• Governance: The President proposes a global panel (similar to the IPCC for climate) consisting of scientists, tech companies and independent experts that provides the latest science to policy makers.
• Guiding innovation in a responsible way: AI-startups will gain access to Europe’s 3 high-performance computers to train their AI models. But there needs to be an open dialogue on a global scale with those that develop and deploy AI to set minimum global standards for safe and ethical use of AI.

Global, Migration and Security

Europe wants to collaborate with emerging economies and give them a more transparent, more sustainable, and more economically attractive model of collaboration (Global Gateway).

One pillar is the India-Middle East-Europe Economic Corridor with the prospect of much faster trade between India and Europe, an electricity cable and a clean hydrogen pipeline and a high-speed data cable.

The President also presses towards having Bulgaria and Rumania in the Schengen area and towards finalizing the pact on migration.

Ukraine and other neighbouring countries

Europe will be at Ukraine’s side every step of the way. For as long as it takes. EUR 12 billions have already been provided to keep social and other public services running and to pay wages and pensions. The ammunition production for the Ukraine is ramped up. The European Commission also proposes an additional EUR 50 billions over four years for investment and reforms.

In a broader context, the President urges us to work on completing our European Union by enlarging it to Ukraine, the Western Balkans, Moldova and Georgia. This is also in Europe’s strategic and security interests. It will not be an easy road and accession will need to be merit-based. To make the Union fit for enlargement (apart from changes to the EU Treaty), the Commission will start working on pre-enlargement policy reviews, will think about the future work within the European Parliament and the Commission as well as the future of the EU budget and credible security commitments in a world where deterrence matters more than ever. So it is time for Europe to once again think big and write our own destiny.

Conclusions

The future of our continent depends on the choices we make today. It is the moment to build a continent for the young generation, reconciled with nature and leading the way on new technologies, a continent that is united in freedom and peace.

Interested readers are invited to read von der Leyen’s script (for download here).

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“Long live Europe.” This was (once again) the end of her speech and should also be good for my task here.

Please note: This blog is for general information purposes only and in no way constitutes legal advice from Binder Grösswang Rechtsanwälte GmbH. The blog cannot replace individual legal advice. Binder Grösswang Rechtsanwälte GmbH accepts no liability of any kind for the content and accuracy of the blog.