Warsaw, 21^st October 2021

Opinion of the Chief Expert of the Union of Entrepreneurs and Employers on digital economy
regarding the Personal Information Protection Law

The Personal Information Protection Law (PIPL), the Chinese equivalent of the European General Data Protection Regulation (GDPR), will enter into force at the beginning of November this year. While it resembles the GDPR in many ways, there are also a number of significant differences proving the goals of the Chinese law are broader than mere protection of personal data.

PIPL regulates how personal data is collected and processed by companies. Both GDPR and PIPL similarly define such basic notions as “personal data” or “personal data processing”. Following its enforcement, data processing will only be allowed if it has a clear and legitimate purpose and is limited to the “minimum extent necessary to achieve the purposes of data processing”, and the user will have to consent to their processing. This consent may be withdrawn at any time, and companies will not be entitled to refuse to render services solely on this basis. Contrary to the GDPR, PIPL does not mention any legitimate interests of the administrator, yet it states that data may be collected without consent in certain cases, such as compliance with an obligation imposed by law or to the extent necessary to perform the contract concluded with the user etc.

Both GDPR and PIPL are applied in an extraterritorial fashion, which means both acts apply to the processing of personal data that takes place outside the borders of the EU and China, respectively. However, the scope of the extraterritorial application of PIPL is wider than in the case of GDPR. When determining the territorial scope of the GDPR, it is necessary to take into account the geographic location of the administrator or the processing party, and more specifically, whether it is based in the EU or conducts business activities in the EU. Running a business in the EU can be determined by offering services in one any of the member states. The availability of a website or the use of a language that is also a widely spoken language in a third-party country are not sufficient indicators. On the other hand, enabling an order in the currency of one of the member states may be enough.

Meanwhile, PIPL will apply to the processing of personal data outside of China, provided that the purpose of the processing is to provide products or services to individuals in China or to “analyse” the behaviour of individuals in China. Other objectives can be added by regulation. This shows that PIPL is “casting a much bigger net” than the GDPR.

Due to PIPL, foreign entities will be required to establish a branch or representative office in China for purposes related to data protection and control together with the Chinese authorities. This requirement largely reflects a non-EU entity representative known from GDPR.

The new provisions will also introduce restrictions on the cross-border transfer of personal data. Some provisions resemble those of the GDPR, but PIPL also includes a number of additional requirements, especially if the data exporter is an operator of a critical IT infrastructure or is processing a volume of personal data that requires permission from the Cyberspace Administration of China (CAC).

Firstly, a data controller planning to transfer personal data to entities outside of China is required to:

• obtain separate consent from users;
• take the necessary measures to guarantee that foreign recipients of data can ensure the level of protection required by PIPL;
• carry out an impact assessment on the protection of personal data.

Second, critical infrastructure operators or large data processors will need to store personal data locally. Should a transfer of data abroad become a necessity, the controller will have to undergo a security audit conducted by the CAC. These provisions will give the Chinese regulator wide opportunities to interfere in the business practices of companies and defend Chinese public interests.

Ultimately, the PIPL gives China the opportunity to take countermeasures against countries that have:

• acted in a way that discriminates against China in the protection of personal information;
• violated the interests of Chinese citizens whose data were processed;
• violated China’s national security and public interest.

To sum up, PIPL, following the example of GDPR, sets high standards of personal data protection. On the one hand, one could say that it is testament to the normative power of the EU in international relations and achieves one of the strategic goals of the European Commission to export EU standards. However, if we take consider the fact that PIPL, unlike the GDPR, will increase the control of the central state apparatus over the economy and strengthen China’s international position against foreign entities, we will see that these high standards are used against the EU itself. This is primarily due to the fact that PIPL will cover foreign companies to a much greater extent than GDPR, and will limit cross-border data transfer. Ultimately, PIPL shows how, in an increasingly data-driven economy, the regulation of cyberspace is becoming a new arena for geopolitics.

 

Kamila Sotomska
Chief Expert of the Union of Entrepreneurs and Employers on digital economy

 

See more: 21.10.2021 Opinion of the Chief Expert of the Union of Entrepreneurs and Employers on digital economy regarding the Personal Information Protection Law

Warsaw, 26^th October 2021

 

Position of the Union of Entrepreneurs and Employers on the ‘Fit for 55’ package

 

While the Union of Entrepreneurs and Employers does not question the necessity to care of the climate and the natural environment, the measures to be taken to that end should be of a sustainable nature and should therefore also take its socio-economic aspects into account.

In our view, the draft documents and legal acts constituting the ‘Fit for 55’ package presented for consultation are an expression of a purely ideological approach to combating climate change. The instruments and solutions provided for in them fail to guarantee the achievement of set goals. However, a tangible effect of their enforcement may be the impoverishment of European society and a reduction in competitiveness of the EU economy.

In the context of works undertaken to develop a European climate policy, the current state of the European energy system should also be taken into account, which is characterised by high instability and excessive dependence on third-party countries. Unfortunately, in the presented documents, we cannot find the balance between striving for a zero-emission economy and ensuring energy security for the entire EU.

The ‘Fit for 55’ package[1] is a set of interconnected proposals which together aim to ensure the implementation of the ambitious EU climate policy. The amendments proposed in the package cover not only the areas of climate and energy, but also such sectors as fuel, electricity, heavy industry, road transport, real estate, land use and forestry. Their main goal is to reduce greenhouse gas emissions by 55% by 2030, in comparison to levels from 1990, and climate neutrality by 2050.

It is the belief of the Union of Entrepreneurs and Employers that the prepared strategy is excessively optimistic concerning the opportunities that the planned energy transformation may bring, and it disregards the considerable risks that arise due to the implementation of such radical reforms.

One should consider that the implementation of the instruments included in ‘Fit for 55’ (a significant part of which are of a fiscal or para-tax nature) will result in the loss of competitiveness of the European economy and thus a widespread impoverishment of EU citizens.

The introduction of such significant reforms without prior appropriate macroeconomic analyses that would take into account the impact of the ‘Fit for 55’ package on the economy of the entire EU as well as individual member states in the period up to 2030 and beyond can be viewed as slightly lacking vision. The presented documents also overlook the estimated social and economic impact, although it is obvious that the strategy being implemented will bring about significant economic changes for the EU population and enterprises.

The European Emissions Trading System (EU ETS)[2] – a speculative instrument to negatively impact other sectors of the economy

The EU ETS obliges issuers to obtain and redeem allowances to emit carbon dioxide (EU allowances, or EUA). Therefore, emission allowances are necessary for EUA installations to be able to conduct economic activity in their industry. These are, for example, combined heat and power plants that burn emission fuels.

The free pool of allowances that can be used by selected enterprises operating under the EUA system does not cover the entire market demand. For this reason, the system allows for secondary transactions whereby installations with a surplus of allowances can sell them to the party with a shortage, which is unable for various reasons to reduce emissions to the necessary minimum.

The nature of the CO₂ emission trading system allows investors to join the transactions. They form the secondary group of EUA buyers. One should keep in mind that investors do not require an operating licence and thus allowances become one of the many products available on European financial markets. Investors are interested in purchase of instruments solely in order to gain profit (from arbitration, derived from price differences, or speculative on exchange rate differences) or, alternatively, to hedge themselves against unfavourable price changes. Such an emissions trading system leads to the formation of bubbles, increasing EUA prices. This, in turn, leads to the fact that companies emitting greenhouse gases incur increasingly higher costs for obtaining allowances, instead of allocating these funds to activities and investments reducing CO₂ emissions.

Following the above-mentioned reasons, the Union of Entrepreneurs and Employers negatively evaluates the functioning of the ETS system whose actual impact on reducing CO₂ emissions remains limited. Therefore, we are equally critical of the proposed amendments to include maritime economy, road transport and real estate in this system.

CBAM[3] – protectionism may backfire on the EU

The introduction of the Carbon Border Adjustment Mechanism (CBAM) at EU borders will in fact establish an additional customs duty on the import of certain goods. Such a solution will certainly be negatively perceived by the Union’s trading partners, who, in order to “maintain a sense of symmetry”, may decide to introduce retaliatory tariffs. Therefore, in our view, the introduction of a carbon tax would result, among other things, in an increase in domestic production costs due to the increase in the prices of imported semi-finished goods. On the other hand, retaliatory duties imposed by other countries would significantly weaken the position of EU exporters.

Moreover, apart from negative economic effects, CBAM may be of little benefit to the climate. While the European Commission claims CBAM will cut greenhouse gas emissions by 1%, the Cambridge Institute for Sustainability in its recent analysis estimated its impact at merely 0.023%[4].

Conclusions

The Union of Entrepreneurs and Employers in indeed aware of the necessity to act for the climate and the environment. We believe, however, that the European climate policy is ill-designed, as it only sets ambitious goals, and does not provide for effective ways to achieve them. Instruments that are intended to help take care of the environment are as a matter of fact short-sighted in their nature. In short term, they are likely to have a quick albeit non-lasting effect, yet in the long run they will prove devastating for the European economy and therefore for the entire Community.

For this reason, we are in favour prudent and reliable measures to achieve low-carbon emissions in the European Union. We oppose any and all actions that may cause harm to the competitiveness of European enterprises, as well as the widespread impoverishment. Consequently, we ought to ensure that reforms do not generate the risk of increasing poverty in terms of energy and mobility. In our view, the EU should, on the one hand, guarantee appropriate support mechanisms and a fair transformation of the fossil-fuel mining and energy sectors, and, on the other hand, should not limit investment opportunities, for example with the use of transition fuels, which significantly help to maintain the energy security of individual member states.

The current climate policy is to a large extent a set of penalties, restrictions and taxes. More emphasis ought to be placed on positive measures that will encourage CO₂ emitters to invest and modernise. Deregulatory and entrepreneurial initiatives are what is needed to help Europe return to the global economic elite.

There can be no doubt that the EU could take more effective pro-ecological actions, while at the same time having a greater impact on shaping climate policies in third-party countries.

Find out more: 26.10.2021 Position of the Union of Entrepreneurs and Employers on the ‘Fit for 55’ package

***

[1] Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality (COM (2021) 550 final).

[2] Directive of the European Parliament and of the Council amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757.

[3] Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism.

[4] https://www.cisl.cam.ac.uk/files/cbam_report.pdf

Warsaw, 28^th October 2021

 

Union of Entrepreneurs and Employers with the largest social media reach
among Polish business organisations

 

We are pleased to inform you that, in the period from January to September 2021, the Union of Entrepreneurs and Employers was the most visible entrepreneurs’ organisation in social media according to an independent media monitoring centre. Over these 9 months, the Union managed to generate almost twice the range of publications than its largest competitor. At the same time, Cezary Kaźmierczak, President of the Union, achieved by far the largest reach in social media among Polish business organisation leaders, achieving results almost seven times better than the runner up in the ranking.

Source: Newspoint Monitoring Mediów (combined total reach for Facebook, Twitter and LinkedIn – January-September 2021)

The Union vs the Competition – January-September 2021 (estimated reach):

C. Kaźmierczak (President of the Union vs other Business Leaders – January-September 2021 (estimated reach):

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Positions, memoranda, reports and opinions of our experts on the most important economic issues, as well as up-to-date information on initiatives undertaken by Union are published online on an ongoing basis.

 

About the Union

Established in 2010, the Union of Entrepreneurs and Employers is the fastest growing and most active organisation of entrepreneurs in Poland. Its members include over 52,000 companies, 16 regional and 21 industry organisations. Every year, the Union publishes more than 30 reports, studies, vidos and over 100 legislative commentaries, positions, and opinions. It organises numerous debates and meetings. The goal of the Union of Entrepreneurs and Employers is to change Poland into a country with optimal business conditions and the best tax system in Europe. The Union is an apolitical organisation supporting the free market and common sense, regardless of political divides. The Union is a founding member of the Social Dialogue Council and has an EU representative office in Brussels.

Warsaw, 20^th October 2021

 

While we must defend our borders, we need immigration for settlement, not Gastarbeiter

 

The key conclusion from a new report published by the Union of Entrepreneurs and Employers today: the Polish policy on immigration ought to be based on a quota system and should provide for an easy path to obtain permanent residence and legal employment.

Experts of the Union of Entrepreneurs and Employers have long drawn attention to the fact that Poland is in need of a reasonable immigration policy, that is it not just a temporary necessity.

“As a result of a low total fertility rate, we are now facing a rather serious demographic problem, which affects the situation on the labour market, whereas in the long run, it will impact almost every aspect of the functioning of the state,” comments Cezary Kaźmierczak, President of the Union of Entrepreneurs and Employers. “To maintain our current economic growth, we simply have to accept the fact that we need immigrants.”

As the Union’s experts indicate in their report, problems related to demographics are the root of numerous short- and long-term challenges. The former are mainly related to workforce shortages in several sectors of the economy, while the latter are much more complex and are related, amongst others, to increasing burdens on the Social Insurance Fund or the healthcare system.

Unfortunately, the Polish immigration policy currently solely responds, and not in a fully effective manner, to the former. Its structural weakness is the consistent adherence to a model based on fast-rotating and short-term immigration.

“One could say that the model of immigration policy adopted in Poland is of a Gastarbeiter character,” continues Cezary Kaźmierczak. “Immigrants come for a short time, work hard and are then forced to go back to their country of origin. They have no serious connection to Poland. A couple of Western European countries had made that mistake, and we are, unfortunately, not learning from it.”

The system described above fails to meet the needs of employers and employees alike. The former group is looking for employees for a longer period, as they want to ensure the stability and continuity of their business operations. The other, in turn, often declares the willingness to leave their country for good, ergo they need a state with predictable and foreigner-friendly settlement procedures.

“Despite the fact that professional activity of immigrants in Poland remains one of the highest in the European Union, our adopted model of immigration is not up to date with society’s needs,” claims Jakub Bińkowski, Member of the Board of the Union and Head of the Law and Legislation Department. “Immigration is a value the state should not underestimate. Meanwhile, existing regulations are definitely in favour of fast-rotating immigration, which – while it does temporarily fill the gaps in labour supply – is not the answer to our development challenges in the long run.”

In their report, the Union’s experts indicated desired changes for the better in public policy. Above all else, the system should give preference to settlement and family immigration, enabling the acquisition of citizenship in the long term. A white and red card, highlighting Poland’s national colour, should serve as a physical confirmation of obtaining a long-term residence permit as well as legal employment. It should be issued for a period of 3 years at first and later, under certain conditions, should be extended indefinitely. To maintain control over the immigration process, the government should make a political decision regarding the number of immigrants from each country that the state will be able to accept over a given period.

“It goes without saying that we need immigrants,” concludes Cezary Kaźmierczak. “However, we must draw a line between legal and illegal immigration. We have a firm position on the latter – we have to make use of the experience of others and put to use a wide range of instruments: from physical barriers in the form of walls, through deportations of illegal immigrants to their country of origin, to a lifetime ban on re-entry to the Republic of Poland.”

 

Find out more: 20.10.2021 Report by the Union of Entrepreneurs and Employers: Poland’s migration policy – necessary directions of changes

Warsaw, 13^th October 2021

 

Opinion of the Chief Economist of the Union of Entrepreneurs and Employers:
What’s coming up next with inflation?

 

The stress related to waiting for the next inflation readings has slightly eased. The Monetary Policy Council contributed to this state of affairs with their rather decisive, albeit delayed, decision to raise interest rates. This move resulted to some extent in restored credibility of the National Bank of Poland. Inflation readings in several countries of our region played an important role here: over the last month, they quite clearly exceeded inflation in Poland, thus signalling that it was not only a local problem. However, the risk of inflation remaining at least at the present level, or an even higher one, has not yet disappeared.

At the moment, a number of regulatory factors in Poland have a significant impact on the level of inflation. These include the so-called sectoral taxes (such as the sugar tax, the planned increase of excise duties etc.), rapid wage growth, post-COVID fiscal expansion, and persistently low real interest rates encouraging ill-considered and rash investments (for instance, on the housing market). However, it seems that what impacts the level of inflation to an even higher degree (and its ubiquity in Europe too) are factors of a supra-national nature, both those of a regulatory character and those resulting from the imbalance between supply and demand.

Inflation in Europe is driven in particular by rapidly rising prices of energy and energy resources. The prices of electricity, thermal coal and natural gas in Western European markets have reached very high levels. The reasons for such a state of affairs are twofold: the unrelenting imbalance on global markets (influenced by demand in Asia, increased for various reasons) and the European climate policy (both already in force and planned). Due to the market imbalance on a global scale, it is difficult to expect a lasting decline in gas and coal prices in the coming months (although some count on the Russian Federation to enforce a favourable policy on its natural gas which will flood Europe after Nord Stream 2 is put into use).

Quite surprisingly, Poland found itself in a fairly good situation. Both the size of conventional coal-based energy and long-term contracts for coal supplies from Polish mines that were concluded some time ago helped in this context. Since the share of energy in the Consumer Price Index (used to calculate consumer inflation) in CEE countries is relatively high compared to Western Europe, changes in energy prices are more noticeable here. Now, by complete coincidence, they have become an anchor that somewhat slows down the dynamics of inflation.

Nevertheless, it does not change the fact that with the persistence of both external and internal inflationary pressures, soon, or even now, inflation expectations may become a factor that maintains the unfavourable situation if not worsens it. We may still console ourselves, and some actually do so, that everything is fine, because wages are rising faster than inflation. But it would be best if we didn’t forget that we are close to finding ourselves in an entirely different situation: in which the rate of inflation may exceed wage growth. Then there will be even less justification for the current monetary policy, and it will become even more difficult to control the situation.

Moreover, stagflation, a concept that was invented during the oil crisis of the 1970s, is returning to use, though perhaps it is a bit of an exaggeration for the time being. It describes a situation where high levels of exogenous inflation persist despite recession, depriving governments and banks of some anti-crisis policy tools. Concern about stagflation as well as rising prices of energy and energy resources can be seen all over Europe.

Currently, skyrocketing energy prices in Europe, at least during the upcoming winter, seem inevitable. And irrespective of rising wage expectations and the risk of pro-inflationary impact of the next wave of expansionary fiscal policy, they will have a significant and difficult-to-control impact on the rise in prices. Particularly in this context, rushed proposals of regulations, such as the aforementioned sectoral taxes, are cause for concern, as they might increase the risk of further price increases. In winter, prices will almost certainly be high for reasons beyond our control. Therefore, the government should refrain from actions that are burdened with the risk of triggering an inflationary spiral.

 

Piotr Koryś, Ph.D.
Chief Economist of the Union of Entrepreneurs and Employers

 

See more: 13.10.2021 Opinion of the Chief Economist of the Union of Entrepreneurs and Employers: What’s coming up next with inflation?

Warsaw, 14^th October 2021

 

Opinion of the Chief Expert on Energy of the Union of Entrepreneurs and Employers
on the amendment to the Distance Act

 

With growing concern, we have realised that the legislative proceedings with regard to the amendment to the so-called the “anti-windmill act” have significantly slowed down. The proposed changes to the regulations primarily aimed at liberalising the “10H rule”, according to which it is forbidden to locate wind farms next to buildings in a radius of less than 10 times the height of a wind turbine. This rule in its current wording is widely recognised as harmful to the investment potential of renewable energy sources. At the same time, it remains one of the most restrictive rules for locating wind farms in the entire European Union. In fact, this rule makes it impossible to invest on 99.7% of Polish land.

The prepared draft act amending the act on investments in wind farms and certain other acts was subject to extensive public consultations, during which stakeholders from all backgrounds and organisations involved in the development of green energy participated. This way, a consensus was reached aimed at bringing a significant investment impulse for the Polish RES market. It is therefore rather incomprehensible why the process of adoption of this amendment faces new obstacles and is so slow.

Awaiting the novelised provisions of the “10H act” are also state-owned energy companies, which have both the appropriate funds and RES investment opportunities. The planned separation of conventional energy sources and their transfer to the National Energy Security Agency (NABE – Narodowa Agencja Bezpieczeństwa Energetycznego) will result in a complete organisational and business shift of these entities towards green energy.

Further regulatory uncertainty is sparked by recent statements of Ministry of Development and Technology representatives, according to whom the draft amendment is not a priority for the central government. This may to a greater extent delay the implementation of the new regulations. Such an approach may indicate a failure to recognise the scale of problems taking place in connection with the application of the restrictive “10H rule”.

In our view, the amendment to the Distance Act is one of the most pressing issues the Polish authorities have to address in the context of the energy sector’s development. The aforementioned modification of the strict provisions will make it possible to execute RES projects– currently the cheapest source of electricity production – quickly and efficiently.

Furthermore, one should also pay attention to the growing energy deficit, an increasingly significant threat to domestic energy industry. Therefore, we feel compelled to stress that onshore wind energy together with large-scale photovoltaic sources can significantly reduce the growing deficit and simultaneously have a positive impact on energy prices on the Polish national market. In our opinion, the development of renewable energy sources is also important for the implementation of the Polish Hydrogen Strategy, as these sources will be of key importance for the development of modern technologies in the field of energy.

Companies owned in part by the Polish National Treasury and private investors alike had commenced investment projects in onshore wind farms that were later forced to stop in 2016 due to unfavourable provisions of the Distance Act. Liberalisation of the “10H rule” would allow for the completion of these projects, and thus would enable a rapid execution of modern, efficient and cheap energy sources with a capacity amounting to approximately 5 GW, which in our climate could provide up to 15 TWh (terawatt hours) of green energy per year after 2025.

Only then could our economy safely await green energy supplies coming from offshore wind farms, and there would be no need to make emergency or unprofitable purchases of green energy for industries exporting to European markets.

With all of the above in mind, we wish to appeal to the Ministry of Development and Technology to resume works leading to the adoption of the amendment as soon as possible, as it will enable quick investments in renewable energy sources.

 

Włodzimierz Ehrenhalt
Chief Expert on Energy of the Union of Entrepreneurs and Employers

 

See more: 14.10.2021 Opinion of the Chief Expert on Energy of the Union of Entrepreneurs and Employers on the amendment to the Distance Act

Warsaw, 19 October 2021

 

New EU Emissions Trading Scheme – how to mitigate the risks for European consumers and SMEs?

 

The emissions trading scheme (EU ETS) cannot be regarded as functioning in accordance with the idea of a free market since the underlying mechanisms artificially limit the supply of allowances. In the ETS there are two groups of buyers. First, installations, that need allowances to conduct their business activities. Second, investors, that can substitute allowances for pretty much any other financial instrument. Investors face little to no risk, while installations have to buy EU allowances (EUA) at any price. Moreover, the econometric analysis leads to a conclusion that there is a bubble forming on the EUA prices. These are the key conclusions from the report “EUA price bubbles and competitiveness” published by ZPP.

Today (19/10) ZPP together with SME Connect and European Enterprise Alliance has hosted an online discussion ‘New EU Emissions Trading Scheme – how to mitigate the risks for European consumers and SMEs.’ The keynote speech was delivered by MEP Marian-Jean Marinescu who’s stated that ‘Fit for 55 is one of the most critical legislation packages ever introduced by the European Commission regarding the impact on the people and industry.’

According to Dr Horst Heitz Chair of the European Steering Board of SME Connect, Executive Director SME Europe of the EPP, Fit for 55 ‘is now a one-sided discussion.’ Discussion about growth and jobs should not be separated from the debate about environmental targets. Otherwise, it will be impossible to avoid social consequences.

The reality is that we have two speed Europe. Imbalances can quickly rise if we don’t mitigate these differences. Reducing CO2 emissions is essential yet the current proposal most likely will have negative consequences on citizens and companies in many countries, leading to impoverishment in Southern and Eastern Europe – added Damir Filipovic, Sec-Gen of the European Enterprise Alliance.

Marek Lachowicz, the author of the report on the ETS, stressed that the ETS market structure facilitates the creation of bubbles  and the monetary price drop will not affect it. What’s more concerning is that forcing installation to keep cash in reserves in case of ETS price increase restricts real ways to reduce emission – Lachowicz notes.

The ETS system can be improved, the biggest problem is, however, that the European Commission doesn’t see the problems – concluded Marcin Nowacki, ZPP’s VP.

 

See more: 19.10.2021 Report by the Union of Entrepreneurs and Employers: Forming of bubbles and the competitiveness of the European Union