Mr. Didier Reynders:

I will first make some comments on the rule of law. We are attentive to the rule of law in the EU due to the fact that if we want to be credible outside the European Union it is important to deliver inside. I understand the possible comparison, but if I remember well the UK is no longer a member and the United States is not yet a candidate to join the EU - perhaps in the future.

We need to be active to protect the values at the foundation of the European Union and that is what we try to. I emphasise that we also do that in our discussions with partners that want to become members. For the enlargement, I assure the committee that it is clear in our strategy that we start with the rule of law and we will conclude negotiations with the rule of law. It is sometimes difficult due to the emotional situation we sadly see in Ukraine and Moldova. It is difficult to manage a normal enlargement process and discussion at the same time as a war. We said we will publish a report about the situation in the autumn of next year. We will follow the normal process and perhaps provide some information before that during the spring. There will be no real change in the process to ensure it is possible to implement the rule of law.

I will give one example before I speak about member states. When we discuss the possible additional special tribunal for the crime of aggression with Ukraine, to be concrete, I have said from the beginning that Ukraine first needs to ratify the Rome Statute to participate in the International Criminal Court, ICC, before thinking about anything else. There is support to do that in Ukraine but it has not been done so far. The Rada, the Ukrainian Parliament. must do that.

To respond to the questions on member states, we have concerns and have made observations in all member states. We made some recommendations in the Rule of Law Report and we engage in dialogue to try to improve the situation. In some member states we have a systemic issue. That is something else and we must use other instruments. I will elaborate on Article 7, the infringement proceedings and so on, but the situations in Hungary and Poland are totally different and the Deputies are right to compare the situations in the different countries. What is the situation now? We must take decisions in the near future, but if we consider the possibility of using financial pressure, it can be done in two ways. The first is via the recovery and resilience plan. We have approved the Polish plan on recovery and resilience and there are some milestones in it dedicated to the independence of the judiciary. We will not pay anything before a full implementation of those milestones. We have a set of rulings from the European Court of Human Rights and the European Court of Justice and, to be honest, I am in negotiations with the Polish minister for European affairs because it is difficult to make progress with their minister for justice in the coalition. We will continue and when all requests for the independence of the judiciary are fully implemented, it will be possible to pay. In addition, we have had a decision of the Court of Justice on a fine on Poland because I asked the European Court of Justice to rule on interim measures on the disciplinary regime of the judges due to a lack of implementation by the Polish authorities. In response to our request, the court decided to condemn Poland with a fine of €1 million per day. That was one year ago. It happened in October last year so we have asked Poland to pay not less than €400 million. We organised an offsetting of the payment due by the Commission to Poland so we are at approximately €260 million. Not only have we not paid anything but we have offset the payment for full enforcement of the decision of the Court of Justice. It is clear we want to use financial instruments.

It is the same with Hungary. It has been impossible so far to approve a recovery and resilience plan. We are close to doing so as we have had negotiations with Hungary and they have put forward many proposals for reforms. In the same way as for Poland, if it is possible - perhaps next week - to approve the Hungarian plan; that will be the beginning of the process. We will not pay anything. We will follow the situation to see whether there is a real implementation of all the reforms. If the reforms are implemented, it might be possible to start the disbursement but nothing has been disbursed to date. On top of this, the committee will be aware that we have the so-called conditionality mechanism, the new regulation. Under this, we have proposed to the Council to suspend some funding to Hungary. There are two approaches, namely the plan - we will pay if reforms can be implemented - and on the other side, the possible suspension by the Council of some funding. It has been said clearly in recent days and we will have a final decision next week but we are quite sure we need to come with a negative assessment of the conditionality which means it will be up to the Council. We thank Ireland for its support as the Irish authorities have always supported the rule of law. It will be needed in the Council to reach a qualified majority to decide on the suspension of funds to put pressure on the situation.

I am sure it is logical because it is the only chance we have to move forward. Perhaps this will be my last comment on the rule of law. Deputy Ó Murchú mentioned lobbying by some industries, which is quite positive lobbying. We have received many remarks from companies from different countries that are afraid about the situation, at first some time ago about the non-independence of the judiciary in Poland but now more and more often about Hungary. How can a company invest in a country when it is not sure it will be treated fairly before the judiciary? We have asked for that to be changed, but in Hungarian legislation, it is possible for authorities to challenge all final decisions of tribunal courts before the highest court and to direct the court for the national interest to change the final decision. There is no legal certainty, but we have asked for that to be changed in our proposal. It will be an obligation. The committee can see what we are doing.

I am sure it will be a difficult debate at Council level perhaps in the coming weeks. On the situation in other dossiers, I will return briefly to what I said about Ukraine and reconstruction and compensation. If we have convictions due to attempts to circumvent the sanctions, it is possible that a part of the €17 million indicated will be confiscated. It is not so much, because reconstruction will cost hundreds of billions of euro but the reserve from the Russian central bank is a possible guarantee. It will be a negotiation some day, as happens at the end of all wars.

In many wars in the past, it was possible to engage in a discussion about the participation of the aggressor in reconstruction and compensation. It will be a long process for reparations. If there is the guarantee of the reserve of the central bank, there will be huge pressure. I do not want to make the comparison with Hungary and Poland. If you retain a lot of money, there comes to be real pressure.

On the ICC, it is true that we have a long way in front of us, but we have changed the regulation on Eurojust to give it a new competence to store all the evidence collected in Ukraine and to exchange with all the prosecutors in the ICC and the member states such as Ireland, because there are national investigations. It will be followed by a lot of time. I am sure there will be some trials in the coming months or years, or even in the next decade. We are now again starting investigations about Rwanda or the genocide or the former Yugoslavia. It is not so long ago. It was less than 30 years ago, in 1994 or 1995. It must be clear to all perpetrators that for the rest of their lives, there is a risk that they may go to justice. We will see. It is a long way.

On defamation, we need to find a way to a balanced approach. It is logical that there is a possible right to go to justice about defamation but we need also to have real protection of journalists and an independent press because that is an important pillar of the democratic system. On social media, we will try to work at EU level. We have to work with the code of conduct on hate speech, but now there is the Digital Services Act, DSA, with some capacity to impose fines - part of the turnover, which can be a huge amount of money - so it will be impressive. We need to engage with big tech because if they do not have enough people to implement all of those regulations, it becomes a problem, given that we also have the GDPR in front of us. I have discussed that a lot with the Data Protection Commission, DPC, and the Irish Government to be sure there are enough human, financial and technical resources in the DPC to deliver. If you want to attract big tech to the country, you need also to be able control big tech. We may help from the EU level.

The due diligence initiative is a process that we organised over two years before a decision was made by the Commission in February this year. Now, it is in the hands of the Parliament to come up with an opinion, perhaps in May next year. The Czech Presidency is trying to come up with a general approach in the Council before the end of the year, in December. The main element is that we want to be sure we are covering the most important companies. It is true that it is 1% of European companies, but in assets it is 50% of turnover in the EU. It is quite huge. We do not want to create a new burden for SMEs or other small companies. We want to start with large companies with more than 500 employees and a substantial turnover, not only from the EU, where we want a level playing field, but also from outside the EU in the Single Market.

The second main issue is organising a process for the entire value chain. Perhaps the committee has had discussions about forced labour or child labour or environmental issues in the world, but one needs to organise a due diligence process across the entire value chain if one wants to give an answer to that. We pay specific attention to the financial sector. We want to take the financial sector on board but just in the relationships with their clients, not to control the supply chain or value chain of their clients. That is not the call we have. There are some specific measures to do that.

On the occupied territories and those kinds of situations, it is not the situation in general in one country or one territory that is of concern. The problem is to see if there are violations of human rights or environmental issues in producing goods or services. That is the real issue. If there is forced labour or child labour or other kinds of issues in relation to international conventions, it will be a concern, but not the fact that there are difficulties with human rights in one country. If we were to say it is impossible to work with companies located in a country where we have human rights concerns, it would be very restrictive. We would stop working with many countries. It is not the goal; the goal is to improve the situation regarding human rights and environmental issues in those countries. That is the state of play. If it is possible to start the discussion with the Council or the Parliament in the middle of next year, we may have the opportunity to conclude doing the mandate of this Commission before the next European elections.

For the benefit of the committee, if it has a further debate with stakeholders, I must point out that if there is a decision before the elections of 2024, the entry into force and real application will perhaps be in 2028 or 2029. We have time to prepare our companies to do that. I am sure it is needed to be more resilient. As an example, I have been asked many times whether there is a need to be more resilient in order to protect the environment and fight against climate change, or in order to protect human rights. I always say that now that there is an energy crisis, the companies that took the opportunity to use renewables some years ago are more resilient than others. At that time, the remark was that it was costly and not evident, but those who took the opportunity to invest in renewables across their own suppliers of energy now have real resilience. The same point applies to the reputation of the company - if you have problems with child labour or forced labour in your work, when the consumers discover that it will have a negative effect on the reputation of the company. I am sure that one is more resilient if one takes care of this and if one organises due diligence. Many companies are doing that. What we are asking now is to report on this and be sure it is a reality.