title: Council Recommendation of 15 June 2020 assessing the progress made by the participating Member States to fulfil commitments undertaken in the framework of permanent structured cooperation (PESCO) 2020/C /

text:
               18.6.2020

               EN

               Official Journal of the European Union

               C 204/1

      COUNCIL RECOMMENDATION
      of 15 June 2020
      assessing the progress made by the participating Member States to fulfil commitments undertaken in the framework of permanent structured cooperation (PESCO)
      (2020/C /)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on European Union, and in particular Article 46(6) thereof,
      Having regard to Protocol No 10 on permanent structured cooperation established by Article 42 of the Treaty on European Union, attached to the Treaty on European Union and to the Treaty on the Functioning of the European Union,
      Having regard to Council Decision (CFSP) 2017/2315 of 11 December 2017 establishing permanent structured cooperation (PESCO) and determining the list of participating Member States (1),
      Having regard to the proposal from the High Representative of the Union for Foreign Affairs and Security Policy,
      Whereas:

                  (1)

                  Point (d) of Article 4(2) of Decision (CFSP) 2017/2315 provides that the Council is to adopt decisions and recommendations assessing the contributions of participating Member States (pMS) to fulfil the agreed commitments, according to the mechanism described in Article 6 of that Decision.

                  (2)

                  Article 6(3) of Decision (CFSP) 2017/2315 provides that, on the basis of the annual report on PESCO presented by the High Representative of the Union for Foreign Affairs and Security Policy (High Representative), the Council is to review once a year whether the pMS continue to fulfil the more binding commitments referred to in Article 3 of that Decision.

                  (3)

                  Paragraph 15 of the Council Recommendation of 6 March 2018 concerning a roadmap for the implementation of PESCO (2) provides that, as of 2020, the High Representative should present his annual report in March or April of each year, taking into account the revised and updated national implementation plans (NIPs) presented by pMS in January of the same year. Paragraph 16 of that Recommendation provides that the Military Committee of the European Union should provide the Political and Security Committee with military advice and recommendations to enable it to prepare the Council's review on whether the pMS continue to fulfil the more binding commitments, by May of each year.

                  (4)

                  Paragraph 26 of the Council Recommendation of 15 October 2018 concerning the sequencing of the fulfilment of the more binding commitments undertaken in the framework of permanent structured cooperation (PESCO) and specifying more precise objectives (3) provides that the High Representative should take that Recommendation into account in the annual report on PESCO, which will support the assessment of the fulfilment of the more binding commitments by each pMS.

                  (5)

                  Point (c) of Article 4(2) of Decision (CFSP) 2017/2315 provides that the Council is to adopt decisions and recommendations updating, and enhancing if necessary, the more binding commitments set out in the Annex to that Decision in light of the achievements made through PESCO, in order to reflect the Union's evolving security environment. Such decisions are to be taken in particular at the end of the phases referred to in point (b) of Article 4(2) of Decision (CFSP) 2017/2315, based on a strategic review process assessing the fulfilment of the PESCO commitments.

                  (6)

                  Paragraph 14 of the Council Recommendation of 14 May 2019 assessing the progress made by the participating Member States to fulfil commitments undertaken in the framework of permanent structured cooperation (PESCO) (4) provides that in addition to describing the status of PESCO implementation, including the fulfilment by each pMS of its commitments in accordance with its NIP, the High Representative is invited to also provide in the 2020 annual report first proposals with a view to the strategic review process at the end of the first PESCO phase (2018-2020), taking into consideration other relevant EU initiatives contributing to the fulfilment of the Union's Level of Ambition in the area of security and defence.

                  (7)

                  On 15 April 2020, the High Representative provided the Council with his annual report on the status of PESCO implementation, including on the fulfilment, by each pMS, of its commitments, in accordance with its revised and updated NIP.

                  (8)

                  On that basis, the Council should therefore adopt a Recommendation assessing the progress made by the pMS to fulfil commitments undertaken in the framework of PESCO,

            HAS ADOPTED THIS RECOMMENDATION:
      I.   Objective and scope

                  1.

                  The objective of this Recommendation is to assess the contributions made by the pMS to fulfil the more binding commitments undertaken in the framework of PESCO, based on the Annual Report on the Status of PESCO Implementation provided by the High Representative on 15 April 2020 (Annual Report) and in accordance with the NIPs presented by the pMS.

                  2.

                  Following the Recommendation adopted by the Council on 14 May 2019, the Annual Report also includes a dedicated chapter on the PESCO strategic review at the end of the first PESCO phase (2018-2020) and provides recommendations and proposals on the commitments, projects and processes as well as working methods that are addressed in this Recommendation.

            II.   Findings and assessment

                  3.

                  The Annual Report provides a solid basis to assess the status of PESCO implementation, including the fulfilment, by each pMS, of its commitments, in accordance with its NIP.

                  4.

                  By addressing Europe's current and future security and defence needs, notably with their current and future efforts to fulfil their more binding commitments, the pMS contribute to enhancing the Union's capacity to act as a security provider and its strategic autonomy, and strengthen its ability to cooperate with partners and to protect its citizens.

                  5.

                  Overall, the Council underlines that the pMS:

                              (a)

                              confirmed the positive trajectory in terms of the commitments related to defence budgets and defence investment expenditure. However, overall progress remains modest at this stage and, although the pMS face financial challenges as a consequence of the COVID-19 crisis, they are encouraged to allocate the necessary resources to further contribute to this positive trend in the coming years. The pMS are also encouraged to further contribute to a European collaborative approach (for example through equipment procurement and defence research and technology);

                              (b)

                              are strongly encouraged to take more into account and make better use in their national defence planning processes, as an element of orientation and decision making, of the EU defence planning tools such as the Capability Development Plan (CDP), which also includes the results of the Headline Goal Process (HLGP), the Strategic Context Cases (SCC), the Coordinated Annual Review on Defence (CARD) as well as other initiatives such as the European Defence Industrial Development Programme or other relevant EU instruments. In that regard, the Council underlines the importance that EU institutions, agencies and bodies and Member States further enhance the coherence between these tools and initiatives, while recognising that they are distinct and have different legal bases;

                              (c)

                              are encouraged to make further progress in fulfilling the commitments related to bringing their defence apparatus in line with each other and to regularly review plans and objectives to be taken forward, notably with a view to playing a substantial role in capability development within the Union, including within the framework of CARD, while recognising that this requires a sustained longer-term effort. The Council recalls that in its Recommendation of 14 May 2019, it indicated that the coherence of output between CARD and the CDP, on the one hand, and respective NATO processes such as the NATO Defence Planning Process, on the other hand, has been and will continue to be ensured where requirements overlap, while recognising the different nature of the two organisations and their respective responsibilities and memberships. The Council encourages further discussions amongst Member States on such a coherence between those processes, as appropriate;

                              (d)

                              should, in order to increase the operational output as a matter of urgency, enhance their efforts as regards the commitments related to strengthening the availability, deployability and interoperability of forces including by completely filling the EU Battlegroup roster, the Rapid Response Data Base and the Statements of Requirements for common security and defence policy (CSDP) missions and operations. In particular, it is important that their contribution to support CSDP missions and operations should improve qualitatively and quantitatively, also with a view to the most demanding missions. With regard to the more binding commitment on the ambitious approach by the pMS on the common funding of military CSDP missions and operations, the implementation is linked to the Athena Mechanism review and to the establishment by the Council of the proposed European Peace Facility, which are currently being discussed by Member States;

                              (e)

                              have shown limited progress, compared to the updated NIPs provided in 2019, in taking measures to address capability shortcomings identified under the CDP and CARD, including an assessment of the implementation of High Impact Capability Goals (HICGs), and should therefore consider undertaking more efforts to increase the use of a European collaborative approach as a priority in national planning. The pMS should also indicate how their capability development projects strengthen the European Defence Technological and Industrial Base;

                              (f)

                              still have to enhance their efforts with a view to fulfilling the commitments related to taking part, where appropriate, in major joint or European equipment programmes in the framework of the European Defence Agency.

                  6.

                  In light of the findings and recommendations of the Annual Report as regards the individual NIPs, each pMS is encouraged to continue efforts and review its contribution to the fulfilment of the more binding commitments accordingly.

                  7.

                  Taking into account the fact that PESCO aims at contributing to the fulfilment of the Union's Level of Ambition in the area of security and defence, including with a view to the most demanding missions, further work needs to be done to define the 'coherent full spectrum force package' in line with the parameters mentioned in the PESCO common notification.

                  8.

                  As Member States only have a 'single set of forces' which they can use within different frameworks, the development of Member States' capabilities within the EU frameworks will also help to strengthen defence capabilities potentially available to other frameworks, including the United Nations and NATO.

            III.   National Implementation Plans

                  9.

                  While the quality of the information provided in the NIPs has overall improved, the pMS are invited to further improve the quality and ensure the appropriate level of granularity of the information provided, with particular emphasis on developing dedicated forward-looking plans on how they envisage contributing to the fulfilment of more binding commitments and more precise objectives of PESCO. As the NIPs should provide an important basis for political oversight, maintaining momentum, and ensuring transparency among pMS, the Council emphasises the need to improve their political dimension, in order to facilitate discussions at political level on the progress made on the more binding commitments.

                  10.

                  The pMS are encouraged to continue to engage in bilateral dialogues with the PESCO secretariat on the review and update of their future NIPs and with a view to ensuring transparency among themselves and further developing coherence and consistency in relation to the information required and provided in the context of PESCO.

            IV.   PESCO projects

                  11.

                  The majority of the 47 projects being developed under PESCO are considered to contribute to the implementation of the EU Capability Development Priorities, with 24 of them directly addressing the HICGs and 12 indirectly. Three projects have already reached Initial Operational Capability (IOC) and 23 are planned to reach IOC in the timeframe 2020-2023. However, more than two-thirds (30) of the projects remain at their ideation phase, including some which were already established in March and November 2018.

                  12.

                  In light of the PESCO projects' progress reports to the Council of 28 February 2020, pMS are encouraged to focus on swift and effective implementation of their projects in order to deliver the expected outputs and products, with a view to fulfilling the more binding commitments. The pMS are also encouraged to enhance and accelerate the processes leading to the adoption of Project Arrangements in an effort to achieve more clarity and certainty regarding emerging projects at a faster pace. The Council also recalls that there is a need to reinforce the reviewing process of the progress of PESCO projects, using clear, targeted and transparent criteria developed in close coordination with pMS. It further stresses that, when project members identify that projects are encountering difficulties in delivering results, those projects should either be revived or closed, in order to ensure the relevance and credibility of all PESCO projects.

                  13.

                  The Council considers that in order to be able to better assess the progress of the projects and identify synergies, dedicated workshops on PESCO projects management and events on the projects' progress should be organised to facilitate further discussion between pMS. The Council also recognises the need for a better common understanding of terms and definitions related to the project development and management. In addition, the PESCO secretariat should continue to provide expertise upon request and to facilitate liaison with other EU actors as regards possible synergies with other EU instruments and initiatives developed in other relevant EU institutional frameworks to ensure transparency and inclusiveness and avoid unnecessary duplications.

                  14.

                  The Council highlights that clustering, merging or grouping of projects in order to increase synergies, their impact and efficiency, save resources and prevent duplications should be considered where appropriate and when project members, considering a supporting role for the PESCO secretariat, agree.

                  15.

                  With a view to identifying future PESCO project proposals, the Council recommends continuing to use as a baseline the agreed EU Capability Development Priorities which are derived from the CDP, and which include the HICGs, and to take the related SCC as implementing guidance. In addition, the findings of the CARD Aggregated Analysis and the CARD Report should be taken as a pathfinder to help pMS identify opportunities for collaborative projects, including in the operational domain. The Council stresses that suitable PESCO projects could benefit from future funding under the European Defence Fund (EDF), if eligible.

                  16.

                  While pMS are encouraged to continue submitting project proposals covering a broad range of topics, the Council also invites the submission of project proposals with a more operational focus and short-term impact based on already existing capabilities. To that end, more refined or additional criteria for the selection of more mature proposals for projects which directly contribute to mitigating shortfalls as identified in the CDP, including the HICGs, can be developed together with pMS.

                  17.

                  In line with its Conclusions on Security and Defence in the context of the EU Global Strategy of June 2019, the Council looks forward to the adoption, as soon as possible, of a Council Decision on the general conditions under which third States could exceptionally be invited to participate in individual PESCO projects, in accordance with point (g) of Article 4(2) and Article 9 of Decision (CFSP) 2017/2315, the guidance provided in the PESCO notification as well as Council Decision (CFSP) 2018/909 (5), establishing a common set of governance rules for PESCO projects.

            V.   PESCO Strategic Review

                  18.

                  A pMS-driven PESCO strategic review process was launched in December 2019 assessing the fulfilment of the PESCO more binding commitments, as laid down in Decision (CSFP) 2017/2315. The proposals and recommendations set out in Part V draw on the various discussions and inputs provided by pMS, including the recommendations provided in the Annual Report.
                  Commitments

                  19.

                  The Council underlines that the current set of more binding commitments has proven to be solid guidelines in ensuring consistent implementation of PESCO and should therefore not be changed at this stage. However, the Council also highlights that there is a need to step up the efforts to fulfil those more binding commitments.

                  20.

                  In addition, the Council stresses that it is necessary that pMS agree on the objectives and concrete deliverables for the next PESCO phase (2021-2025) as part of the PESCO Strategic Review process this year, also considering new areas of cooperation in light of the evolving security context, in particular, but not limited to, climate change, countering hybrid threats, cyber, artificial intelligence, space-related aspects, energy security and maritime security, as well as on tangible results to be achieved both from a capability perspective and from an operational angle. Furthermore, identified mid- and long-term consequences and challenges of the response to complex emergencies, such as pandemics that could be addressed within the PESCO framework, should be taken into account. A revision and update of the Council Recommendation of 15 October 2018 on the more precise objectives should take all of the above into account. As part of this process, the Council stresses the need to use the PESCO Strategic Review to identify those projects which will start delivering concrete results by 2025.

                  21.

                  The Council highlights that options to improve the follow-up to the fulfilment of all more binding commitments, including at political level and via the Political and Security Committee (PSC), should be further explored, in particular where progress was assessed by the High Representative and highlighted by the Council as not sufficient, namely on operational commitments, as well as on the commitments related to the European collaborative approach. Further discussions on progress indicators, which could assist pMS in planning to fulfil the more binding commitments and to facilitate the assessment of progress as outlined in paragraph 2 of the Council Recommendation of 15 October 2018, are also encouraged.

                  22.

                  The Council underlines that options for innovative incentives to promote the fulfilment of PESCO's operational commitments may be considered and further explored, with a particular focus on improving the availability, deployability and interoperability of forces to CSDP missions and operations. It stresses that this should also take into account ongoing work and inform future efforts on the common funding of military CSDP missions and operations.

                  23.

                  The Council underlines that discussions on the Strategic Compass and its EU-level threat analysis, to be delivered by the end of 2020, should lead to a clearer direction for EU initiatives, such as PESCO. This necessary process could further contribute to develop the common European security and defence culture, informed by our shared values and objectives and which respects the specific character of the security and defence policies of the Member States.

                  24.

                  The Council recognises the need to continue efforts, also through the PESCO Strategic Review, in ensuring the coherence and coordination between different EU defence initiatives (CARD, PESCO, and the future EDF) under closer political monitoring and guidance by Member States, including at ministerial level, while recognising that those initiatives are distinct and have different legal bases.
                  Projects

                  25.

                  The Council emphasises that the PESCO project cycle should be aligned with the CARD cycle in order to use its findings and recommendations as a pathfinder for opportunities for collaborative projects and provide an improved framework for pMS to submit more ambitious project proposals, including in the operational domain. In addition, the results of the HLGP have a specific importance for CSDP missions and operations, which should be taken into account when proposing new PESCO projects with a view to strengthening the fulfilment of the operational commitments. Those considerations should guide the definition of the project submission cycle, while taking into account the balance between administrative burden and the outcome and quality of PESCO projects.
                  Processes

                  26.

                  As regards the NIPs' cycle, the Council invites the PESCO secretariat to provide detailed options on how to improve the coherence between the cycles of PESCO NIPs and CARD as well as the HLGP. This should also aim at reducing the administrative burden and improving the quality of the NIPs, also ensuring the appropriate level of detail. It stresses that at the same time the necessary political momentum needs to be ensured, as well as the Council's role in providing strategic direction and guidance for PESCO on an annual basis. The Council should also consider the possibility of adjusting the deadlines for pMS to hand in PESCO documents, also with regard to the submission of NIPs and project proposals.

            VI.   Way forward

                  27.

                  The Council invites:

                              —

                              the PESCO secretariat to prepare and organise dedicated workshops with pMS in 2020 in order to further improve the related PESCO processes (inter alia the future PESCO NIPs, the project cycles and processes and coherence between the NIPs and CARD, as well as HLGP) and identify the key policy goals and objectives for PESCO from 2021-2025 in preparation for the adaptation of the sequencing/more precise objectives;

                              —

                              the PESCO secretariat to present options to improve the follow-up to and explore the possibility of incentives for the fulfilment of some commitments which have not been sufficiently fulfilled by the pMS;

                              —

                              the PESCO secretariat to present before the end of 2020 a document for validation to finalise the PESCO Strategic Review; and

                              —

                              pMS to review their NIPs with a view to updating them as appropriate.

         Done at Brussels, 15 June 2020.

               For the Council

               The President

            A. METELKO-ZGOMBIĆ

         (1)  OJ L 331, 14.12.2017, p. 57.

         (2)  OJ C 88, 8.3.2018, p. 1.

         (3)  OJ C 374, 16.10.2018, p. 1.

         (4)  OJ C 166, 15.5.2019, p. 1.

         (5)  Council Decision (CFSP) 2018/909 of 25 June 2018 establishing a common set of governance rules for PESCO projects (OJ L 161, 26.6.2018, p. 37).


title: Council Recommendation (EU) 2020/1052 of 16 July 2020 amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction

text:
                  17.7.2020

                  EN

                  Official Journal of the European Union

                  L 230/26

         COUNCIL RECOMMENDATION (EU) 2020/1052
         of 16 July 2020
         amending Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction
         THE COUNCIL OF THE EUROPEAN UNION,
         Having regard to the Treaty on the Functioning of the European Union, and in particular Article Article 77(2)(b) and (e) and Article 292, first and second sentence thereof,
         Whereas:

                     (1)

                     On 30 June 2020, the Council adopted a Recommendation on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction (1) (‘Council Recommendation’).

                     (2)

                     The Council Recommendation provides that Member States should gradually lift the temporary restriction on non-essential travel to the EU as from 1 July 2020 in a coordinated manner with regard to the residents of the third countries listed in Annex I to the Council Recommendation. Every two weeks, the list of third countries referred to in Annex I should be reviewed, and as the case may be updated, by the Council, after close consultation with the Commission and the relevant EU agencies and services following an overall assessment based on the methodology, criteria and information referred to in the Council Recommendation.

                     (3)

                     Discussions have since then taken place within the Council, in close consultation with the Commission and the relevant EU agencies and services, on the review of the list of third countries set out in Annex I to the Council Recommendation and in application of the criteria and methodology laid down in the Council Recommendation. As a result of these discussions, the list of third countries set out in Annex I should be amended. In particular, Serbia and Montenegro should be deleted from the list.

                     (4)

                     Border control is in the interest not only of the Member State at whose external borders it is carried out but of all Member States which have abolished internal border control. Member States should therefore ensure that measures taken at the external borders are coordinated in order to ensure a well functioning Schengen area. To that end, as of 16 July 2020, Member States should continue lifting the temporary restriction on non-essential travel into the EU in a coordinated manner with regard to the residents of the third countries listed in Annex I of the Council Recommendation as amended by this Recommendation.

                     (5)

                     In accordance with Articles 1 and 2 of Protocol No 22 on the Position of Denmark annexed to the Treaty on European Union and to the TFEU, Denmark is not taking part in the adoption of this Recommendation and is not bound by it or subject to its application. Given that this Recommendation builds upon the Schengen acquis, Denmark shall, in accordance with Article 4 of the said Protocol, decide within a period of six months after the Council has decided on this Recommendation whether it will implement it.

                     (6)

                     This Recommendation constitutes a development of the provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC (2); Ireland is therefore not taking part in its adoption and is not bound by it or subject to its application.

                     (7)

                     As regards Iceland and Norway, this Recommendation constitutes a development of the provisions of the Schengen acquis within the meaning of the Agreement concluded by the Council of the European Union and the Republic of Iceland and the Kingdom of Norway concerning the latter’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1, point A, of Council Decision 1999/437/EC (3).

                     (8)

                     As regards Switzerland, this Recommendation constitutes a development of the provisions of the Schengen acquis within the meaning of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1, point A, of Decision 1999/437/EC (4) read in conjunction with Article 3 of Council Decision 2008/146/EC (5).

                     (9)

                     As regards Liechtenstein, this Recommendation constitutes a development of provisions of the Schengen acquis within the meaning of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis which fall within the area referred to in Article 1 point A, of Decision 1999/437/EC (6) read in conjunction with Article 3 of Decision 2011/350/EU (7),

               HAS ADOPTED THIS RECOMMENDATION:
         Council Recommendation (EU) 2020/912 on the temporary restriction on non-essential travel into the EU and the possible lifting of such restriction is amended as follows:

                     (1)

                     the first paragraph of point 1 of the Council Recommendation is replaced by the following:

                                 ‘1.

                                 As from 16 July 2020, Member States should gradually lift the temporary restriction on non-essential travel to the EU in a coordinated manner with regard to the residents of the third countries listed in Annex I.’;

                     (2)

                     Annex I to the Recommendation is replaced by the following:

                           ‘ANNEX I
                           Third countries whose residents should not be affected by temporary external borders restriction on non-essential travel into the EU

                                       1.

                                       ALGERIA

                                       2.

                                       AUSTRALIA

                                       3.

                                       CANADA

                                       4.

                                       GEORGIA

                                       5.

                                       JAPAN

                                       6.

                                       MOROCCO

                                       7.

                                       NEW ZEALAND

                                       8.

                                       RWANDA

                                       9.

                                       SOUTH KOREA

                                       10.

                                       THAILAND

                                       11.

                                       TUNISIA

                                       12.

                                       URUGUAY

                                       13.

                                       CHINA (*1)

                        (*1)  subject to confirmation of reciprocity"

            Done at Brussels, 16 July 2020.

                  For the Council

                  The President

               M. ROTH

            (1)  OJ L 208 I, 1.7.2020, p. 1.

            (2)  Council Decision 2002/192/EC of 28 February 2002 concerning Ireland’s request to take part in some of the provisions of the Schengen acquis (OJ L 64, 7.3.2002, p. 20).

            (3)  OJ L 176, 10.7.1999, p. 36.

            (4)  OJ L 53, 27.2.2008, p. 52.

            (5)  Council Decision 2008/146/EC of 28 January 2008 on the conclusion, on behalf of the European Community, of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis (OJ L 53, 27.2.2008, p. 1).

            (6)  OJ L 160, 18.6.2011, p. 21.

            (7)  Council Decision 2011/350/EU of 7 March 2011 on the conclusion, on behalf of the European Union, of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederation’s association with the implementation, application and development of the Schengen acquis, relating to the abolition of checks at internal borders and movement of persons (OJ L 160, 18.6.2011, p. 19).


title: Commission Recommendation (EU) 2020/1743 of 18 November 2020 on the use of rapid antigen tests for the diagnosis of SARS-CoV-2 infection

text:
               23.11.2020

               EN

               Official Journal of the European Union

               L 392/63

      COMMISSION RECOMMENDATION (EU) 2020/1743
      of 18 November 2020
      on the use of rapid antigen tests for the diagnosis of SARS-CoV-2 infection
      THE EUROPEAN COMMISSION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
      Whereas:

                  (1)

                  In line with Article 168(7) of the Treaty on the Functioning of the European Union (1), the definition of health policy as well as the organisation and delivery of health measures remain a national competence. EU Member States are thus responsible for deciding on the development and implementation of COVID-19 testing strategies, including the use of rapid antigen tests, taking into consideration countries’ epidemiological and social situations as well as the target population for testing.

                  (2)

                  The number of SARS-CoV-2 infection continues to rise and is putting pressure on healthcare workers involved in sampling as well as laboratories performing the COVID-19 tests, resulting in increasing turn-around times between the test request and result. Moreover, improved access to COVID-19 test sites and services compared to earlier in 2020 when Europe experienced its first pandemic wave, has resulted in high peaks in testing demands, often exceeding available testing capacities.

                  (3)

                  Scientific and technical developments continue to evolve, offering new insights on the characteristics of the virus and the possibilities for using different methodologies and approaches for COVID-19 diagnosis. Currently, the ‘gold standard’ for COVID-19 diagnostics is the RT-PCR test, which is considered the most reliable methodology for testing of cases and contacts by both the World Health Organisation (WHO) and the European Centre for Disease Prevention and Control (ECDC) (2).

                  (4)

                  A new generation of faster and cheaper tests is increasingly available on the European market: the so-called rapid antigen tests, which detect the presence of viral proteins (antigens), can be used to detect an ongoing infection. In the COVID-19 ‘In Vitro Diagnostic Devices and Test Methods Database’ of the European Commission, 72 CE-marked rapid antigen tests are included (3).

                  (5)

                  The currently applicable regulatory framework for placing rapid antigen tests on the market is Directive 98/79/EC of the European Parliament and of the Council (4). According to the Directive, for SARS-CoV-2 rapid antigen tests, the manufacturer must draw up a technical file which explicitly shows that the test is safe and performs as intended by the manufacturer, by demonstrating compliance with the requirements laid down in Annex I to the Directive. Following this, the manufacturer may issue an EU declaration of conformity and affix CE-marking to their device. From 26 May 2022, the Directive will be replaced by Regulation (EU) 2017/746 of the European Parliament and of the Council (5) on in vitro diagnostic medical devices. Under the Regulation, rapid antigen tests will be subject to reinforced requirements on device performance and a thorough assessment by a notified body.

                  (6)

                  In line with the Commission Guidelines on COVID-19 in vitro diagnostic tests (6), work is ongoing in the Medical Device Coordination Group (MDCG) of Member States’ competent authorities to facilitate coherent application of the legal framework for placing the tests on the market, including guidance to manufacturers under Directive 98/79/EC. In addition, the Commission, with contribution from the MDCG, intends to develop and adopt common specifications according to Regulation (EU) 2017/746 for COVID-19 tests including rapid antigen tests (7).

                  (7)

                  On 15 April 2020, the Commission adopted Guidelines on COVID-19 in vitro diagnostic tests and their performance (8), providing an overview of COVID-19 testing and considerations regarding test performance. It underlines that, in line with Directive 98/79/EC, the manufacturer must state the intended purpose of the device, and that the device must be designed and manufactured so that it is suitable for that intended purpose, including the intended user and clinical aspects such as the target population. The manufacturer must also state the levels of analytical performance of the device, which must correspond to the intended purpose. The information accompanying the device must take account of the training and knowledge of the potential users.

                  (8)

                  The WHO published on 11 September 2020 interim guidance on the use of rapid antigen tests for COVID-19 detection (9), offering countries with advice on the potential role played by these tests and the need for careful test selection. As stressed by WHO, while the rapid antigen tests may offer helpful solutions for the diagnosis of SARS-CoV-2 infection in a range of settings and scenarios, their clinical performance is not yet optimal and caution should be exercised.

                  (9)

                  Among existing models, WHO recommends the use of rapid antigen tests that meet the minimum performance requirements of ≥ 80 % sensitivity and ≥ 97 % specificity, and that these tests should in particular be used when the availability of RT-PCR tests is temporarily limited or where prolonged turn-around-times preclude clinical utility. The use of rapid antigen tests offers the potential for rapid identification of those individuals at greatest risk of spreading the infection, particularly in circumstances of high community transmission.

                  (10)

                  ECDC has provided guidance on suitable SARS-CoV-2 testing strategies to achieve specific public health objectives in various epidemiological situations (10). This guidance provides the framework within which testing for SARS-CoV-2 critically contributes to generating reliable surveillance data, achieving control of transmission in the community, preventing transmission in high-risk settings, and limiting virus reintroduction in communities that have achieved sustained transmission control.

                  (11)

                  Most of the currently available rapid antigen tests show a lower sensitivity compared to RT-PCR tests. The ECDC guidance (11) on the use of rapid antigen tests defines the suitability of various testing strategies in different epidemiological contexts, settings, and expected clinical performance, based on currently available evidence. Until now, clinical evaluation studies of rapid antigen tests show a 29 % to 93,9 % sensitivity and a 80,2 % to 100 % test specificity, compared to the gold standard RT-PCR test. Sensitivity of rapid antigen tests increases if they are applied to populations up to 5 days of symptom onset and tested in specimens with high viral load.

                  (12)

                  However, rapid antigen tests can offer a significant advantage over RT-PCR tests in terms of simplicity of equipment needed, lower demands of highly skilled operators, price and timeliness of results, by providing health services with easy to use and rapid results which will also help to relieve the pressure on healthcare systems. For instance, when used in targeted population-wide testing approaches, the risk of not detecting all cases or risk of false negative results is counter-balanced by the timeliness of results and the possibility of recurred testing of initially negative individuals. The predictive value of a positive or negative test result depends on the test performance and infection prevalence in the population tested. Interpretation of the results of rapid antigen tests should therefore duly consider these elements.

                  (13)

                  Regarding the possibility to use of antigen tests in asymptomatic persons, it should be noted that, until now, very limited data is available regarding the performance of rapid antigen tests in this context. Moreover, for the currently available rapid antigen tests, manufacturers’ instructions do not mention asymptomatic persons as a target population.

                  (14)

                  The possibility to use rapid antigen tests for travellers might be further considered, taking into account the latest scientific and technological developments in light of the epidemiological situation. For example, as announced in the Commission Recommendation on COVID-19 testing strategies of 28 October 2020, ECDC and the European Union Aviation Safety Agency (EASA) are jointly developing a protocol for safer air travel, including for a common testing approach at airports.

                  (15)

                  A key body in the coordination of public health crises of Union relevance is the Health Security Committee (HSC). Its role is to reinforce the coordination and sharing of best practice and information on national preparedness and response planning. The use of rapid antigen tests has been discussed since early September 2020. Several Member States have started to use rapid antigen tests in practice and have included their use in their national COVID-19 testing strategies. Additionally, the majority of Member States are currently carrying out validation studies or pilots to assess the clinical performance of rapid antigen tests in specific settings and for the diagnosis of SARS-CoV-2 infection among certain target populations.

                  (16)

                  The Commission Recommendation on COVID-19 testing, including the use of rapid antigen tests (12) of 28 October 2020 sets out guidance for countries regarding key elements to be considered for national, regional or local testing strategies. It provides recommendations focused on the scope of COVID-19 testing strategies, groups to be prioritised, and specific situations to be considered, and addresses key points linked to testing capacities and resources.

                  (17)

                  It also recommends that Member States should agree on criteria to be used for the selection of rapid antigen tests, particularly those related to their clinical performance such as sensitivity and specificity, as well as to reach agreement on the scenarios and settings during which rapid antigen tests are appropriate to be used, such as for example in circumstances of high community transmission.

                  (18)

                  The Recommendation also included a commitment by the Commission to work with Member States towards creating a framework for evaluation, approval and mutual recognition of rapid tests, as well as for mutual recognition of test results, which this Recommendation contributes towards.

                  (19)

                  Economic operators must comply with the requirements set out in the applicable EU law. By fulfilling these requirements and affixing the CE marking to a product, a manufacturer declares that the product meets all the legal requirements for CE marking and that its product can be sold throughout the EEA. Member States have the possibility to restrict the availability of certain devices if they believe this is in the interest of protection of health and safety or in the interest of public health (13). The choice of tests at national level depends on the availability of the tests as well as national testing strategies in place, including, for example, the purposes for which the tests are intended to be used, in what combinations, and the accepted levels of performance, taking into consideration the epidemiological and clinical situation of the concerned Member State, region, particular health institution or patient group. Cooperation at EU level in assessing the evidence gathered from the use of these tests in clinical practice, including through the Joint Action EUnetHTA, can provide important benefit to inform national strategies.

                  (20)

                  Effective testing plays a key role in the smooth functioning of the Internal Market as it allows for targeted isolation or quarantine measures. Mutual recognition of rapid antigen tests would allow limiting restrictions of free movement in line with Council Recommendation (EU) 2020/1475 (14) on a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic.

                  (21)

                  Member States health services should mutually recognise results of rapid antigen tests following the guidance set out in this Recommendation. To support mutual recognition, joint discussions of national testing strategies among Member States should continue, notably in the Health Security Committee and taking into account input received from ECDC and other relevant cooperation efforts, such as the EUnetHTA Joint Action.

                  (22)

                  EU cooperation in the area of Health Technology Assessment (HTA) has proven useful to HTA national authorities by providing guidance related to SARS-CoV-2, including on the use of antigen tests. The Commission has proposed to further strengthen cooperation at EU level on HTA (15). The implementation of an EU HTA framework would provide an important instrument to work jointly, pool resources, share expertise and provide evidence necessary to inform decisions including on the use of antigen tests.

                  (23)

                  Furthermore, in order to provide additional support to Member States for introducing the use of rapid antigen tests, the Commission has identified EUR 100 million from the European Support Instrument (ESI) for the purchase and distribution of rapid antigen tests to Member States. In addition, the Commission has launched a joint procurement with Member States to facilitate the fair and equitable access to rapid antigen tests.

                  (24)

                  This Recommendation is based on the latest guidance from ECDC and WHO. It may be updated in the light of new scientific evidence, the latest technological developments and evolving epidemiological situation,

            HAS ADOPTED THIS RECOMMENDATION:
      1.   PURPOSE OF THE RECOMMENDATION

                  (1)

                  This Recommendation sets out guidance for Member States regarding the use of rapid antigen tests to detect SARS-CoV-2 infection, drawing on the Recommendation of 28 October on COVID-19 testing strategies.

                  (2)

                  It recommends Member States to conduct rapid antigen tests in addition to RT-PCR tests in clearly defined settings where the deployment of antigen tests is appropriate, and with the aim to contain the spread of the coronavirus, to detect SARS-CoV-2 infections and to limit isolation and quarantine measures.

                  (3)

                  This Recommendation also contributes to ensuring the free movement of persons and the smooth functioning of the internal market, in times of limited testing capacities.

                  (4)

                  In particular, the present Recommendation focuses on criteria to be used for the selection of rapid antigen tests, the settings during which rapid antigen tests are appropriate to be used, test operators, and validation and mutual recognition of rapid antigen tests and their results.

            2.   SELECTION CRITERIA OF RAPID ANTIGEN TESTS

                  (5)

                  Member States should aim to use rapid antigen tests with acceptable test performance, i.e. ≥ 80 % sensitivity and ≥ 97 % specificity, to avoid as many false negative and false positive test results as possible.

                  (6)

                  Rapid antigen testing should be conducted by trained healthcare personnel or trained operators where appropriate, and in accordance with manufacturer’s instructions. A critical point, often neglected, is the collection of the sample. Protocols for an efficient sample acquisition and handing should also be available.

                  (7)

                  Rapid antigen tests should be used within five days after the onset of symptoms or within seven days after exposure to a confirmed COVID-19 case.

                  (8)

                  Before rapid antigen tests are adopted for use, Member States should ensure that such tests carry a CE-marking (16) and, before they are introduced into clinical practice, that those tests have been validated, as described in this Recommendation, against the standard RT-PCR tests and within the target population and setting intended for use.

            3.   RECOMMENDED SETTINGS FOR THE USE OF ANTIGEN TESTS

                  (9)

                  When the availability of RT-PCR tests is temporarily limited, the use of rapid antigen tests can be considered for individuals with COVID-19 compatible symptoms in areas where the proportion of test positivity is high or very high, e.g. ≥ 10 %.

                  (10)

                  The use of rapid antigen tests can be recommended to test individuals, regardless of symptoms, in settings where the proportion of test positivity is expected to be ≥ 10 %, e.g. in the context of contact tracing and outbreak investigations.

                  (11)

                  In order to mitigate the impact of COVID-19 in healthcare and social-care settings, rapid antigen tests use should be considered at admission to healthcare facilities, as well as for triage of symptomatic patients or residents (up to 5 days since symptom onset), including for assigning patients to isolation facilities.

                  (12)

                  Rapid antigen tests use should also be considered for a targeted population-wide testing approach, e.g. in a local community as well as in other high prevalence situations, and in the context of restrictive measures, in order to detect individuals with high transmission potential in the community and to lower the pressure on health-care settings. In such situations, the risk of not detecting all cases or the risk of false negative results is counter-balanced by the timeliness of results and the possibility of recurred testing of initially negative individuals. A confirmatory test will allow further informing the diagnosis, as stated in this Recommendation.

                  (13)

                  In high prevalence situations and/or with limited RT-PCR testing capacity to detect the individuals with high transmission potential, rapid antigen tests use should be considered for recurring testing (e.g. every 2-3 days) of staff of health-care, home and social care, other long-term care facilities, closed settings (e.g. prisons or administrative detention centres, other reception infrastructures for asylum seekers and migrants), other relevant frontline workers in relevant sectors (meat processing plants, slaughterhouses, etc.) and other similar settings.

                  (14)

                  In low prevalence situations, the use of rapid antigen tests should be focused on settings and situations where a fast identification of infected individuals is supporting the management of outbreaks and the regular monitoring of (high) risk groups, such as medical personnel or other long-term care facilities. The risk related to missing positive cases and the risk related to implementing isolation and quarantine measures due to falsely identified positive cases need to be assessed in such situations. This could be addressed by a confirmatory test.

                  (15)

                  If a rapid antigen test is used in a population with high infection prevalence, negative results should be confirmed either by RT-PCR or by a repeated rapid antigen test. If a rapid antigen test is used in a population with low infection prevalence, positive results should be confirmed either by RT-PCR or by a repeated rapid antigen test. In both situations, the use and choice of the confirmatory test depends on the tolerability of the risk associated with missing positive cases or with detecting falsely positive cases.

            4.   TESTING CAPACITIES AND RESOURCES

                  (16)

                  In addition to the considerations above, the choice of a given diagnostic test depends on existing testing capacities. If there are shortages of RT-PCR assays or if the result turn-around-time of these is beyond 24 hours, the choice of a rapid antigen tests can be justified, depending on the intended use and the tolerability of the risk associated with its performance limitations.

                  (17)

                  Trained healthcare and laboratory staff are needed to carry out sampling, testing, test analysis and reporting of test results to clinical staff and public health authorities at local, regional, national and international level. Manufacturer instructions for sample collection, safe handling, use and disposal need to be strictly followed, including specimen type and intended use. Appropriate biosafety measures must be in place when sampling, handling and processing specimens. Member States need to ensure sufficient capacities and resources for sampling, testing and reporting. To ensure these capacities, it might be necessary to train additional test operators other than healthcare personnel.

                  (18)

                  Medical laboratories, notably the laboratories being part of the EU network accredited by national bodies of the Member States on the basis of harmonised standard EN ISO 15189 ‘Medical laboratories – Requirements for quality and competence’ and possibly additional standards and requirements, fulfil high quality requirements and could play an active role in rapid antigen testing. Accreditation also ensures that these laboratories are controlled on a regular basis and comply with the necessary quality and competence requirements.

                  (19)

                  Capacity for confirmatory RT-PCR testing needs to be in place when applying rapid antigen tests as appropriate.

            5.   VALIDATION AND MUTUAL RECOGNITION

                  (20)

                  Member States should use technical guidance developed by ECDC (17) on the use of rapid antigen tests for COVID-19, particularly as regards the clinical validation of these tests, to ensure reliability and comparability of results, when performing independent validations of rapid antigen tests.

                  (21)

                  Considerations for rapid antigen test validations, as described in the technical guidance by ECDC, will include elements on validation of tests under similar settings as its intended use, respect of the manufacturer’s instructions, comparison to the current RT-PCR gold standard, elements on retrospective approaches and categorisation of samples.

                  (22)

                  Member States should share with ECDC and the Commission, as soon as they become available, their validation results and corresponding testing strategies by intended use, with the aim of aligning them as much as possible with other Member States, and share any other information on results of validation studies carried out on rapid antigen tests independently of studies conducted by test developers and manufacturers. Testing strategies should consider continuously the new information coming from these validation studies and be adapted accordingly, if necessary.

                  (23)

                  The Commission will extend the existing COVID-19 diagnostic test database (‘COVID-19 In Vitro Diagnostic Devices and Test Methods Database’) with information on rapid antigen tests and validation studies results and keep the database updated with the latest information.

                  (24)

                  ECDC, in cooperation with Commission services and Member States, will prioritise and coordinate the validation of existing and upcoming types of rapid tests (e.g. with different measurement techniques or sample specimen such as saliva) to facilitate an efficient entry of new tests, which meet the required performance criteria, into practice and alleviate pressures on testing and healthcare systems.

                  (25)

                  The Commission will facilitate joint work and exchange of information on nationally conducted health technology assessments on rapid antigen tests between Member States.

                  (26)

                  Mutual recognition of test results, as provided for in point 18 of Recommendation (EU) 2020/1475, is essential in order to facilitate cross-border movement, cross-border contact tracing and treatment. Results performed with tests that have been validated at national level by one Member State and that meet the criteria of sensitivity and specificity of this Recommendation, should be recognised by other Member States.

         Done at Brussels, 18 November 2020.

               For the Commission

            Stella KYRIAKIDES

               Member of the Commission

         (1)  https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&from=EN

         (2)  https://www.ecdc.europa.eu/sites/default/files/documents/TestingStrategy_Objective-Sept-2020.pdf

         (3)  Value as of 12.11.2020, https://covid-19-diagnostics.jrc.ec.europa.eu/devices?marking=Yes&principle=ImmunoAssay-Antigen&format=Rapid+diagnostic+test&manufacturer=&text_name=#form_content

         (4)  Directive 98/79/EC of the European Parliament and of the Council of 27 October 1998 on in vitro diagnostic medical devices (OJ L 331, 7.12.1998, p. 1).

         (5)  Regulation (EU) 2017/746 of the European Parliament and of the Council of 5 April 2017 on in vitro diagnostic medical devices and repealing Directive 98/79/EC and Commission Decision 2010/227/EU (OJ L 117, 5.5.2017, p. 176). The Regulation provides for a transition period starting on the date of its entry into force (May 2017) during which the conformity of in vitro diagnostic medical devices can be assessed either under the Regulation or under Directive 98/79/EC.

         (6)  Communication from the Commission – Guidelines on COVID-19 in vitro diagnostic tests and their performance (2020/C 122 I/01) (OJ C 122 I, 15.4.2020, p. 1).

         (7)  These common specifications may be applied on a voluntary basis before the date of application of Regulation (EU) 2017/746 which is 26 May 2022.

         (8)  Communication from the Commission – Guidelines on COVID-19 in vitro diagnostic tests and their performance (2020/C 122 I/01) (OJ C 122 I, 15.4.2020, p. 1).

         (9)  https://apps.who.int/iris/bitstream/handle/10665/334253/WHO-2019-nCoV-Antigen_Detection-2020.1-eng.pdf?sequence=1&isAllowed=y

         (10)  ECDC. COVID-19 testing strategies and objectives. Published on 17.9.2020. Available at: https://www.ecdc.europa.eu/en/publications-data/covid-19-testing-strategies-and-objectives

         (11)  Guidance on a common validation protocol for rapid antigen tests, from ECDC, to be published on 18.11.2020.

         (12)  C(2020) 7502.

         (13)  Articles 8 and 13 of Directive 98/79/EC.

         (14)  Council Recommendation (EU) 2020/1475 of 13 October 2020 on a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic (OJ L 337, 14.10.2020, p. 3).

         (15)  Proposal for a Regulation of the European Parliament and of the Council on health technology assessment and amending Directive 2011/24/EU (COM(2018) 51 final).

         (16)  All rapid antigen tests used by Member States should carry a CE-marking with the exception of devices referred to in Article 1(5) of Directive 98/79/EC.

         (17)  ECDC technical guidance, Options for the use of rapid antigen tests for COVID-19, published on 18.11.2020.


title: Recommendation of the European Systemic Risk Board of 24 September 2020 on identifying legal entities (ESRB/2020/12) 2020/C 403/01

text:
               26.11.2020

               EN

               Official Journal of the European Union

               C 403/1

      RECOMMENDATION OF THE EUROPEAN SYSTEMIC RISK BOARD
      of 24 September 2020
      on identifying legal entities
      (ESRB/2020/12)
      (2020/C 403/01)
      THE GENERAL BOARD OF THE EUROPEAN SYSTEMIC RISK BOARD,
      Having regard to the Treaty on the Functioning of the European Union,
      Having regard to Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macroprudential oversight of the financial system and establishing a European Systemic Risk Board (1), and in particular Article 3(2)(a), (b), (d) and (f) and Articles 16 to 18 thereof,
      Having regard to Decision ESRB/2011/1 of the European Systemic Risk Board of 20 January 2011 adopting the Rules of Procedure of the European Systemic Risk Board (2), and in particular Article 15(3)(e) and Articles 18 to 20 thereof,
      Whereas:

                  (1)

                  The global economy is based on an intricate, tightly knit and extremely complex network of financial transactions that are created by a vast number of cross-border contracts with effects reaching across the world. This network comprises not only financial institutions, but any entities that have relationships with each other and with the financial markets. Breakage of any single crucial node in this network has the potential to cause large parts of the whole to unravel, with significant global implications. Clear identification of the individual entities and the connections between them is a key requirement for drawing a reliable map of the global economic and financial landscape, which is necessary in order to reduce contagion.

                  (2)

                  Financial contagion occurs because financial and non-financial entities are linked through financial transactions, and by financial assets and liabilities. Channels for contagion are created by direct exposure through links between the financial and the non-financial sectors as well as by indirect exposure where entities form part of the same group. Contagion between financial and non-financial entities can spread in both directions and is more dramatically demonstrated during crises. Thus, a financial crisis can spread from the financial to the non-financial sector, as demonstrated by the failure of the investment bank Lehman Brothers in 2008; an economic crisis can spread from the non-financial to the financial sector, originating, for example, in the over-indebtedness of non-financial entities or in any severe crisis of supply or demand. The economic and financial effects of the crisis caused by the coronavirus (COVID-19) pandemic offer an example of the close interlinkages between the non-financial and financial sectors. Enabling the correct identification of non-financial entities is therefore equally as important as the correct identification of financial entities, to ensure financial stability.

                  (3)

                  Large financial groups, such as those of global systemically important institutions (G-SIIs), have highly complex legal structures that concentrate numerous obligations, including many which are large. G-SIIs often have a significant number of subsidiaries and/or international branches and interact with numerous major counterparties. The failure of one or more such G-SIIs would have a negative impact on the financial system in many countries and, more widely, on the global economy. Policies have been put in place to reduce both the probability of G-SIIs failing and the impacts of such failure. The latter objective could be achieved by improving global recovery and resolution measures. The more complex the group structure, the greater the cost and time needed to recover and resolve it. Identifying such groups, as well as their legal entities and overall structure, is therefore crucial to ensuring financial stability.

                  (4)

                  In 2012, the G20 endorsed the recommendations of the Financial Stability Board (FSB) regarding the framework for development of a global legal entity identifier (LEI) system for parties to financial transactions, and encouraged global adoption of the LEI to support authorities and market participants in identifying and managing financial risk (3). Since its introduction, the LEI has been adopted by more than one million entities across more than 200 countries. The use of a unique, exclusive and universal legal entity identifier has increased authorities’ abilities to evaluate systemic and developing risks and adopt remedial measures. In particular, the clear identification of contractual parties in a network of global financial contracts processed electronically at a very high speed permits authorities to make use of existing technologies to analyse interconnectedness, identify potential chains of contagion, and track market abuse for financial stability purposes. The LEI has also become critical for connecting existing datasets of granular information on entities from multiple sources.

                  (5)

                  In 2017, G20 leaders welcomed recommendations for promoting the use of common identifiers, in particular the LEI for entities (4). However, in 2019, in a thematic review on the implementation of the LEI, the FSB listed a set of challenges still faced by the LEI system (5). These include the low rate of adoption of the LEI by entities outside the securities and over-the-counter (OTC) derivatives markets; the one-off bursts of issuance following the adoption of Union regulations such as Regulation (EU) No 648/2012 of the European Parliament and of the Council (6) (commonly referred to as ‘EMIR’) and Regulation (EU) No 600/2014 of the European Parliament and of the Council (7) (commonly referred to as ‘MiFIR’) without sustained growth over time; the insufficient level of voluntary adoption of the LEI; and the limited adoption of the LEI by non-financial entities. Moreover, whereas most parent entities of G-SII groups have LEIs, coverage does not generally extend to all international subsidiaries and branches, or all counterparties.

                  (6)

                  The European Systemic Risk Board (ESRB) is responsible for the macroprudential oversight of the financial system within the Union. In carrying out its tasks, the ESRB should contribute to ensuring financial stability and mitigating the negative impacts on the internal market and the real economy. For these purposes, the availability and wide adoption of a worldwide unique identifier to unequivocally identify entities engaged in financial transactions is of key importance. The low rate of adoption of the LEI referred to above constitutes a factor that may hamper the reliability of financial stability analysis, making it difficult to accurately assess and compare risks across national markets. Existing gaps in the adoption of the LEI should therefore be addressed.

                  (7)

                  The purpose of this Recommendation is to contribute, in line with the ESRB’s mandate, to the prevention and mitigation of systemic risks to financial stability in the Union through the establishment of systematic use of the LEI by entities engaged in financial transactions. To achieve this objective, this Recommendation seeks the introduction of a Union legal framework to uniquely identify legal entities engaged in financial transactions by LEIs and to make the use of the LEI more systematic in respect of supervisory reporting and public disclosure. Taking into account the time frame for the adoption of such a Union framework, the ESRB recommends that relevant authorities pursue and systematise their efforts to promote the adoption and use of the LEI, making use for this purpose of the various regulatory or supervisory powers which they have been granted by national or Union law.

                  (8)

                  As a first objective, the Recommendation is aimed at ensuring that all legal entities established in the Union that are involved in financial transactions obtain and maintain an LEI. Adoption of the LEI in the Union has mainly been driven by regulatory requirements laid down in legislation such as Regulation (EU) No 648/2012, Regulation (EU) No 600/2014, Regulation (EU) 2015/2365 of the European Parliament and of the Council (8) and Regulation (EU) No 909/2014 of the European Parliament and of the Council (9). Those requirements apply to entities involved in OTC derivatives transactions, in transactions in derivatives and other financial instruments traded on trading venues and in securities financing transactions, as well as to securities issuers. Other legislative and non-legislative acts, such as Regulation (EU) No 575/2013 of the European Parliament and of the Council (10) – applicable to credit and financial institutions – and the European Banking Authority (EBA) Recommendation on the use of the Legal Entity Identifier (LEI) (11), as well as the European Insurance and Occupational Pensions Authority (EIOPA) Guidelines on the use of the Legal Entity Identifier (LEI) (12), also require or recommend the use of the LEI. However, there is no uniform approach across markets and use of the LEI currently does not extend to non-financial sectors, leaving LEI coverage fragmented and important sectors excluded. A Union legal framework regulating LEI use in the Union would achieve coherent implementation across all sectors of the economy, thereby maximising the benefits arising from the use of the LEI. Meanwhile, and until such a framework is adopted, entities supervised in the Union should be encouraged to obtain an LEI and authorities supervising them should, to the extent permitted by law, require them to have an LEI.

                  (9)

                  The principle of proportionality should be applied so as to avoid an extra cost burden. For example, Union legislation could exempt smaller entities that do not form part of a wider group from the requirement to obtain an LEI, or require that they be provided with an LEI at no cost. Addressing the cost aspects of the LEI by means of a proportionate approach is of very considerable importance given that methods of identifying legal entities differ between jurisdictions. Within the Union, national and other identifiers exist and are in use to cover specific needs. For example, the European Unique Identifier (EUID) is used in the Business Registers Interconnection System to ensure interoperability among Member States’ business registers. Nonetheless, the LEI, as a global identifier that aims at universal coverage and addresses a large variety of applications, is better suited for the purpose of monitoring financial stability, given the important interconnections that exist between entities in the Union and in third countries. The ESRB is of the view that business registries across the Union could have a role to play in the allocation of LEIs, alongside national identifiers and EUIDs.

                  (10)

                  Since the LEI became available, national supervisory authorities and European Supervisory Authorities (ESAs) have been strongly promoting the LEI and its use in connection with reporting requirements. However, gaps in this area remain. Therefore, a second objective of the Recommendation is to ensure the systematic and comprehensive use of the LEI for identification of entities in the reporting of financial information. First, if the entity subject to the reporting obligation were required to hold an LEI to identify itself, this would allow authorities to uniquely identify entities across different reporting frameworks. Second, the LEI should be used in a more systematic and comprehensive way to identify other entities for which the reporting entity is also required to report information, Such entities include – but are not limited to – issuers of financial instruments, counterparties to financial transactions, and related entities.

                  (11)

                  An entity for which financial information must be reported may not have an LEI. This will be the case, for example, where an entity established in the Union is exempted under the principle of proportionality or where an entity established in a third country has not acquired an LEI. Various legislation has already been implemented to limit the access of entities without an LEI to financial markets in the Union. The rule under Regulation (EU) No 600/2014 that is known as the ‘no LEI, no trade’ rule has been of crucial importance for the adoption of the LEI in the Union by requiring an LEI as a pre-condition for access to Union markets (13). In cases where the lack of an LEI is not justified, the ESRB encourages addressees of this Recommendation to adopt a similar approach to the ‘no LEI, no trade’ rule, where appropriate.

                  (12)

                  Since the LEI became available, national statistical authorities, national supervisory authorities and ESAs have also been promoting the LEI and its use in the context of public disclosures. The LEI has been voluntarily used or required to be used in certain public registers, publication of stress tests results and other mandatory or voluntary disclosures of data. Nonetheless, the LEI is not yet used in a systematic way as this has not been made obligatory in all cases, whether under Union or national law. To contribute to the third objective of this Recommendation – that is, to promote the awareness and use of the LEI by the general public and facilitate the general public’s access to company information through the use of the LEI – relevant authorities should further enhance and systematise references to the LEI in their disclosure of information about entities.

                  (13)

                  This Recommendation has been prepared taking into account ongoing international and European initiatives in the area, including, for example, the FSB’s proposals in its thematic review in 2019 on the implementation of the LEI referred to above.

                  (14)

                  This Recommendation is without prejudice to the monetary policy mandates of the central banks in the Union.

                  (15)

                  Recommendations of the ESRB are published after the addressees have been informed, and after the General Board has informed the Council of the European Union of its intention to do so and provided the Council with an opportunity to react,

            HAS ADOPTED THIS RECOMMENDATION:
      SECTION 1

         RECOMMENDATIONS

         Recommendation A – Introduction of a Union framework on the use of the legal entity identifier

                  1.

                  The Commission is recommended to propose that Union legislation incorporates a common Union legal framework governing the identification of legal entities established in the Union that are involved in financial transactions by way of a legal entity identifier (LEI), paying due regard to the principle of proportionality, taking into account the need to prevent or mitigate systemic risk to financial stability in the Union and thereby achieving the objectives of the internal market.

                  2.

                  The Commission is recommended to propose that Union legislation that imposes an obligation on legal entities to report financial information, while paying due regard to the principle of proportionality, as expressed in Recommendation A(1), include the obligation to identify by way of an LEI:

                              (a)

                              the legal entity subject to the reporting obligation; and

                              (b)

                              any other legal entity about which information must be reported and which has an LEI.

                  3.

                  The Commission is recommended to propose that Union legislation incorporates an obligation on authorities to identify by way of its LEI any legal entity about which they publicly disclose information and which has an LEI, paying due regard to the principle of proportionality, as expressed in Recommendation A(1).

         Recommendation B – Use of the legal entity identifier until the possible introduction of Union legislation

      Pending any action taken by the Commission to comply with Recommendation A and the possible introduction of corresponding Union legislation, it is recommended that to the extent permitted by law and subject to the principle of proportionality:

                  1.

                  the relevant authorities require or, where applicable, continue to require, all legal entities involved in financial transactions under their supervisory remit to have an LEI;

                  2.

                  the authorities, when drafting, imposing, or amending financial reporting obligations include or, where applicable, continue to include, in such obligations an obligation to identify by way of an LEI:

                              (a)

                              the legal entity subject to the reporting obligation; and

                              (b)

                              any other legal entity about which information must be reported and which has an LEI;

                  3.

                  the authorities identify or, where applicable, continue to identify, by way of its LEI, any legal entity about which they publicly disclose information and which has an LEI.

            SECTION 2

         IMPLEMENTATION

      1.   Definitions

      For the purposes of this Recommendation the following definitions apply:

                  (a)

                  ‘relevant authorities’ means:

                              (i)

                              the national competent or supervisory authorities as specified in the Union acts referred to in Article 1(2) of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (14), Regulation (EU) No 1094/2010 of the European Parliament and of the Council (15) and Regulation (EU) No 1095/2010 of the European Parliament and of the Council (16);

                              (ii)

                              the ECB under Article 9(1) of Council Regulation (EU) No 1024/2013 (17);

                              (iii)

                              designated authorities pursuant to Chapter 4 of Title VII of Directive 2013/36/EU of the European Parliament and of the Council (18) or Article 458(1) of Regulation (EU) No 575/2013;

                              (iv)

                              macroprudential authorities with the objectives, arrangements, tasks, powers, instruments, accountability requirements and other characteristics set out in Recommendation ESRB/2011/3 (19);

                              (v)

                              resolution authorities designated by Member States pursuant to Directive 2014/59/EU of the European Parliament and of the Council (20);

                  (b)

                  ‘authorities’ means:

                              (i)

                              relevant authorities;

                              (ii)

                              the EBA;

                              (iii)

                              EIOPA;

                              (iv)

                              the European Securities and Markets Authority;

                              (v)

                              the Single Resolution Board;

                  (c)

                  ‘legal entity identifier’ (LEI) means a 20-character reference code to uniquely identify legally distinct entities that engage in financial transactions and associated reference data and which is based on the ISO standard 17442 developed by the International Organization for Standardization;

                  (d)

                  ‘legal entity’ means an entity that is eligible for an LEI according to the ISO17442 standard and guidance on the eligibility for LEI published by the Regulatory Oversight Committee for the Global Legal Entity Identifier System;

                  (e)

                  ‘financial transaction’ means, in accordance with paragraph 1.66(c) of Annex A to Regulation (EU) No 549/2013 of the European Parliament and the Council (21), the net acquisition of financial assets or the net incurrence of liabilities for each type of financial instrument.

            2.   Criterion for implementation

      When implementing the Recommendation due regard should be paid to the principle of proportionality, taking into account the objective and the content of each recommendation.
      3.   Timeline for the follow-up

      In accordance with Article 17(1) of Regulation (EU) No 1092/2010, addressees are requested to report on the actions taken in response to this Recommendation, or adequately justify any inaction, in compliance with the following timelines:

                  1.

                  Recommendation A
                  By 30 June 2023, the Commission is requested to deliver to the European Parliament, to the Council and to the ESRB a report on the implementation of Recommendation A.

                  2.

                  Recommendation B
                  By 31 December 2021, the addressees of Recommendation B are requested to deliver to the European Parliament, to the Council, to the Commission and to the ESRB a report on the implementation of Recommendation B.

            4.   Monitoring and assessment

                  1.

                  The ESRB Secretariat will:

                              (a)

                              assist the addressees, ensuring the coordination of reporting and the provision of relevant templates, and detailing where necessary the procedure and the timeline for the follow-up, with a view to limiting the reporting burden on the addressees;

                              (b)

                              verify the follow-up by the addressees, provide assistance at their request, and submit follow-up reports to the General Board via the Steering Committee.

                  2.

                  The General Board will assess the actions and justifications reported by the addressees and, where appropriate, may decide that this Recommendation has not been followed and that an addressee has failed to provide adequate justification for its inaction.

         Done at Frankfurt am Main, 24 September 2020.

               Head of the ESRB Secretariat,

               on behalf of the General Board of the ESRB

            Francesco MAZZAFERRO

         (1)  OJ L 331, 15.12.2010, p. 1.

         (2)  OJ C 58, 24.2.2011, p. 4.

         (3)  See ‘G20 Leaders’ Declaration’, available on the G20 website at https://g20.org/en/g20/Documents/2012-Mexico-Leaders-Declaration0619-loscabos.pdf

         (4)  See ‘Annex to G20 Leaders’ Declaration: G20 Hamburg Action Plan’, available on the G20 website at https://www.g20germany.de/Content/DE/_Anlagen/G7_G20/2017-g20-hamburg-action-plan-en___blob=publicationFile&v=4.pdf

         (5)  See ‘Thematic Review on Implementation of the Legal Entity Identifier’, available on the FSB’s website at https://www.fsb.org/wp-content/uploads/P280519-2.pdf

         (6)  Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).

         (7)  Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84).

         (8)  Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (OJ L 337, 23.12.2015, p. 1).

         (9)  Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, p. 1).

         (10)  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).

         (11)  Recommendation on the use of the Legal Entity Identifier (LEI) (EBA/REC/2014/01), available on the EBA’s website at https://eba.europa.eu/regulation-and-policy/supervisory-reporting/consultation-paper-draft-recommendation-on-the-use-of-legal-entity-identifier-lei-

         (12)  Guidelines on the use of the Legal Entity Identifier (LEI) (EIOPA-BoS-14-026), available on EIOPA’s website at https://www.eiopa.europa.eu/sites/default/files/publications/eiopa_guidelines/lei_gls_en_ori.pdf

         (13)  See Article 13(2) of Commission Delegated Regulation (EU) 2017/590 of 28 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the reporting of transactions to competent authorities (OJ L 87, 31.3.2017, p. 449) which provides that ‘An investment firm shall not provide a service triggering the obligation to submit a transaction report for a transaction entered into on behalf of a client who is eligible for the legal entity identifier code, prior to obtaining the legal entity identifier code from that client’.

         (14)  Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12).

         (15)  Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48).

         (16)  Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

         (17)  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).

         (18)  Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

         (19)  Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 2011 on the macro-prudential mandate of national authorities (OJ C 41, 14.2.2012, p. 1).

         (20)  Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).

         (21)  Regulation (EU) No 549/2013 of the European Parliament and the Council of 21 May 2013 on the European system of national and regional accounts in the European Union (OJ L 174, 26.6.2013, p. 1).