by Ross Elwood
BRUXELLES (Public Policy Europe) – It has been a diverse week that saw the EU-US trade deal back in the spotlight, a cosy and increasingly important European Political Community meeting, and major discussions at ECOFIN and Eurogroup on Anthropic’s AI model and on progressing the capital markets integration package.
The Facts
The following facts are compiled from hundreds of updates on the Public Policy Europe Newswires this week. Find out more about the newswire here.
AI Omnibus: EU Council and Parliament negotiators reached a provisional agreement this week on an AI omnibus, though it still requires formal approval. Key changes include delayed application dates for high-risk AI obligations, a ban on AI-generated child sexual abuse material and non-consensual intimate imagery by December 2026, and watermarking requirements for AI-generated content from the same date. Tech industry association CCIA criticised the deal as insufficient and legally uncertain, while Parliament described it as a step toward more workable AI rules. Subscribers can read the full breakdown from Public Policy here.
Jet Fuel: The European Commission will include US-produced Type A aviation fuel in guidelines for airlines to be published tomorrow. A spokesperson said the guidelines will clarify existing rules in the context of the Middle East energy situation.
Steel Overcapacity: The European Parliament’s International Trade Committee (INTA) has confirmed the trilogue agreement on new rules to address the negative effects of global industrial overcapacity particularly from China on the EU steel market. The text was adopted with 32 votes in favour, none against and one abstention, and will go to a plenary vote later this month.
Sustainability Reporting: The European Commission has launched a consultation on a draft revision of the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD), alongside a new voluntary standard for smaller companies, open until 3 June 2026. Building on the Omnibus I simplification package, the revised standards aim to cut reporting costs by over 30%, mandatory data points by over 60%, and total data requirements by over 70%. The Commission will then adopt the two delegated acts and submit them to the Parliament and Council for review.
Industrial Accelerator Act: The European Parliament has completed its rapporteur team for the Industrial Accelerator Act across the three joint committees handling the file. Christophe Grudler (Renew, France) leads for ITRE, Pierre Jouvet (S&D, France) for IMCO, and Anna Cavazzini (Greens, Germany), who also chairs IMCO, for INTA .
Capital Market Supervision Package: Concerns over ESMA’s expanded powers dominated today’s Ecofin in Brussels, with Luxembourg, Belgium, Sweden, Czech Republic, Slovakia, Hungary, Italy, Portugal, Denmark, Latvia, Austria and Malta opposing key elements of the financial supervision reform package and complicating the Cyprus summit commitment to complete it by year-end. Sticking points include ESMA’s supervisory scope, oversight of small domestic crypto operators, Executive Committee composition and cooperation with national authorities. The scale of disagreement means most of the work will fall to the Irish presidency starting 1 July.
Single European Sky: On Tuesday Transport Commissioner Apostolos Tzitzikostas chaired a high-level dialogue on the future of air traffic management (ATM) in Europe under the Single European Sky (SES2+) initiative. The meeting brought together aviation stakeholders to review the first year of SES2+ implementation and address growing pressure on the sector — driven by rising demand, outdated infrastructure, staff shortages and fragmented airspace. Discussions covered capacity, delays, safety and environmental performance, as well as accelerating airspace modernisation through financial support and stricter enforcement of EU rules.
Digital Euro: On Tuesday, Eurogroup President Kyriakos Pierrakakis told the European Parliament’s Economic Affairs Committee that a European solution on the digital euro is essential to avoid dependence on non-European systems. He expressed hope that a trilogue agreement could be reached in the second half of this year.
Online Age-verification: On Wednesday, Yvo Volman of the European Commission’s DG Connect told the European Parliament’s Civil Liberties Committee that the planned EU age-verification app cannot be made fully tamper-proof and could be bypassed by parents using their own ID. He noted that France and Denmark may release national versions before summer, with all member states expected to follow by year-end under the Commission’s recommendation, and that the Digital Services Act sets out when platforms must implement age-verification and the minimum criteria for those tools.
The Analysis – Anthropic Model Confirms All Of Europe’s Worst Fears About Competitiveness
The EU bubble has woken up to the Anthropic AI threat this week, with a number of reports and discussions in the wake of the Eurogroup meeting on the topic. Last week Public Policy noted that the threat posed by Anthropic’s new model (which has the ability to hack at a new and dangerous scale) shows that if you are not at the forefront of AI, you face not just a competitiveness risk but a security one too.
The model was launched last month and created a tidal wave of shock inside the cybersecurity industry, with one insider describing it as “world changing” with the ability to cause “societal collapse”. As is always the case with these things, the ramifications slowly trickle down into the political and regulatory sphere. First to jump on the issue were the banks prompting a series of warnings from regulators and policymakers gathered at the IMF spring meetings in Washington, where IMF Managing Director Kristalina Georgieva warned that the world does not have the ability to protect the international monetary system against massive cyber risks, saying “the risks have been growing exponentially.” This week the issue reached the Eurogroup, with Eurogroup President Pierrakakis warning that “Frontier AI models are evolving rapidly and may soon present challenges of a potentially systemic nature” The seriousness of the situation is underlined by the fact it reached the Eurogroup for formal discussion. It was also discussed in the European Parliament’s IMCO committee on Wednesday. The Parliament’s approach is to use cybersecurity and AI laws to compel Anthropic and companies like it to share access with EU institutions but this misses the bigger issue.
The ramifications of AI are not simply about competitiveness (the risk that Europe misses the AI boat without its own frontier models) but about something far wider: security. From banking to energy to communications, everything is underpinned by cybersecurity, and Anthropic’s model, by its own account, has the potential to take these systems down. The core problem is not that such a model has been developed, but that it has been developed by an American company that has decided, for the good of the world, to share it exclusively with the world’s largest digital, cybersecurity and cloud companies — all of which happen to be American. No EU company has access to the model, and it is entirely within Anthropic’s right to decide who does and does not get access. In other words a world changing AI model is owned by an American company and regulated by a fairly hostile and highly transactional American government.
As the Eurogroup President said this week: “we overdramatize the present and underestimate the future.” The real crisis is not the one Europe is currently managing in the Strait of Hormuz — it is the future crisis caused by a lack of innovation in a world built on digital infrastructure.
The Analysis – The Art Of The EU-US Trade Deal
The week opened with two new threats to the EU-US relationship in the form of Trump’s announced withdrawal of 5,000 troops stationed in Germany and the imposition of 25% tariffs on EU cars. Both put the spotlight firmly back on the Turnberry deal struck in July 2025, a deal announced with so little detail that the joint statement, usually a formality, was delayed for weeks because both sides could not agree on what had actually been agreed.
Any deal of this kind must go through the EU legislative process and since then the file has been moving at its usual pace, buffeted by the familiar rhythm of Trump rhetoric on tariffs, from threats over Greenland to steel and aluminium measures and broader tariff escalation, each of which threatened progress and at the very least made the European Parliament increasingly cautious. Public Policy flagged after the Parliament’s vote on the deal at the end of March the dangers of a slow legislative process and the tweaks being made along the way, and that it risked a presidential-sized spanner being thrown into the works.
Commission President von der Leyen responded to the 25% tariff threat by reminding Washington that a deal is a deal. On Tuesday, Trade Commissioner Šefčovič met Trade Representative Greer to discuss EU legislative timelines, with the Commission noting afterwards that it would be desirable for the main features of the agreement to be operational before its first anniversary (July 27). Šefčovič has urged Parliament and Council to reach a trilogue agreement as quickly as possible and on Wednesday a major trilogue session took place. While no deal was expected, Parliament rapporteur Bernd Lange said that positive progress had been made but that there is still a long way to go, adding that Parliament remains more committed than ever to carrying forward and defending its negotiating mandate.
The next meeting is scheduled for 19 May, however the Parliament had originally projected to conclude negotiations by mid-June. Whether that timeline risks the ire of the American side, with an increasingly erratic Trump looking for distractions from the Iranian war, remains to be seen. (Public Policy Europe)
