Portugal's Council Presidency: Mapping the Priorities and Some Thoughts on the Outlook

Portugal has taken over the Council’s rotating presidency since January 1, 2021, a role it will assume until June 30, 2021, with the flagship motto of "Time to deliver: for a fair, green and digital recovery." The presidency was handed over by Germany and will be held by Slovenia in the second half of 2021 in the context of the trio presidency. The priorities Lisbon laid out in its program align with the trio presidency's program approved in June 2020.

Portugal will seek first and foremost to overcome the COVID-19 pandemic and the ensuing economic crisis, ensure a social digital and green transition, and strengthen the EU’s presence in the world. It will aim to close important files to complete the (digital) single market, such as with the Digital Services Act and the Capital Markets Union initiatives, whilst affirming the EU’s social identity internally and assertiveness with international partners.

Below, we shed light on these priorities in more detail and share our analysis of what this means for the EU and its partners.

The Presidency's Political Trajectory for the Next Six Months

Trade, Economy, and Finance

• Trade policy features as the main priority, the presidency will aim to create the conditions to diversify global value chains, ensure greater strategic autonomy, develop the Enforcement Regulation and closely monitor the implementation of trade defense instruments to counter unfair trade practices.
• It will also seek to conclude negotiations on the Chinese investment agreement, sign the Mercosur association agreement and the Mexican modernized global agreement.
• A top priority is to implement the €1.074 trillion Multiannual Financial Framework and the €750 billion NextGenerationEU to help Europe recover from the crisis.
• The presidency will equally work towards completing the economic and monetary union, in particular the establishment of the capital markets union to help unblock funds for businesses across the EU.
• The presidency will advocate for an approach that favors the financial sectors' stability by linking financial regulation and supervision, competition and data protection. It will also prioritize initiatives on crypto-assets, the operational resilience of financial intermediaries, and payments.
• On taxation, the presidency will contribute to negotiations on how to fairly and effectively tax the digital economy led at OECD level. In October, the OECD announced that an agreement is hoped to be reached by mid-2021. Should these negotiations fail, the European Commission says it is ready to propose a temporary digital services tax.
• Implementing action plans on the customs union, on preventing money laundering and terrorist financing is also considered as key.

Digital, Telecommunications, and Competitiveness

• The presidency will steer negotiations on the Digital Services Act and Digital Markets Act which are key for the digital transformation.
• A European data entry platform based on submarine cables linking Europe, Africa and South America will be created to affirm Europe’s digital autonomy while promoting data protection and privacy.
• Cybersecurity is a key area. The presidency will develop the main pillars of the new EU’s Cybersecurity Strategy, implement the new NIS Directive, revise the Critical Infrastructure Directive and create the new Joint Cyber Unit.
• The presidency also aims to strengthen the single market by removing unjustified barriers to the free movement of goods and services and promote digital services.
• The regulatory framework will be better tailored to SMEs to help them thrive, as opposed to mostly focusing on creating European champions from the biggest economies.

Energy and Environment

• The presidency will strive to mobilize Member States to meet the objectives of the European Green Deal. It will support the review of a range of policies by June 2021 to reduce carbon emission by 55% in 2030 and carbon neutrality by 2050. Key will be to decarbonize the economy, promote the circular economy and restore biodiversity.
• The presidency will see the negotiations kick-off on the Carbon Border Adjustment Mechanism which is expected in the second half of this year.
• Green hydrogen is viewed as key in the energy transition and as an opportunity to foster growth which the Hydrogen Strategy is geared towards. The presidency also seeks to develop smart grids, green taxation and address the role of alternative fuels.

Employment, Social Policy, and Health

• The presidency will aim to mainstream social considerations in formulating policy.
• The presidency will insist on binding measures on pay transparency and the proposal on improving the gender balance in company boardrooms.
• A European Health Union will be developed as a matter of priority, it will help to be better prepared to face public health threats and emergencies.

External Relations

• The presidency seeks to revitalize relations with the United States towards developing a new alliance of shared interest and values in areas of trade, security and climate.
• The presidency will also actively work to establish good relations with the United Kingdom, as well as deepen and diversify relations with India and Africa.

Assessing what this Means for the EU and its International Partners

The Portuguese presidency's work will be crucial, not only to relaunch the European economy hit by the pandemic and affirm the EU's role in a complex geopolitical context, but also to deliver on key files the Commission has committed to. These include regulating BigTech, making the EU-UK agreement a success, reviewing the numerous green initiatives to achieve carbon neutrality by 2050, and advancing the trade policy review. Other initiatives include venturing into relatively new fields, such as with establishing mandatory human rights and environmental due diligence obligations for companies and the launch of the European space program.

As the EU's policies are having increasingly external impacts and as the EU's role is growing in international relations, the EU has made clear its will to be more assertive and independent. Exactly what this means will be defined in debates on the EU's strategic autonomy expected to kick-off early on this year. On the other hand, the election of the Biden Administration is an opportunity to reset the transatlantic relations and gear it towards greater cooperation on key files, in particular, trade, data, climate and human rights.

Portugal's socialist government will work towards reinforcing the EU’s social and democratic dimension, better connect the EU with citizens and prove that the EU is not only about having a market economy. Santos Silva, Portuguese Foreign Affairs Minister, said they viewed this as the best antidote to fight populism which is spreading in Europe.

In light of the magnitude of the challenges laying ahead, Portugal will benefit from its experience of managing four presidencies and of its reputation of an honest broker. However, transforming the political priorities into concrete achievements and delivering on the legislative agenda will require subtle, although decisive, diplomatic steering during the negotiations to get EU Member States on board. While the issues are pressing and decisions need to be taken rapidly, the circumstances are made difficult by the working conditions imposed by the pandemic which are, for now, here to stay.