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Document 52022PC0111

Proposal for a COUNCIL DECISION on the position to be taken on behalf of the European Union within the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems, as regards amending Annexes III and IV to the Agreement

COM/2022/111 final

Brussels, 18.3.2022

COM(2022) 111 final

2022/0076(NLE)

Proposal for a

COUNCIL DECISION

on the position to be taken on behalf of the European Union within the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems, as regards amending Annexes III and IV to the Agreement

(Text with EEA relevance)


EXPLANATORY MEMORANDUM

1.Subject matter of the proposal

This proposal concerns the decision establishing the position to be taken on the Union's behalf in the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems with a view to amending Annex III and IV to the Agreement

2.Context of the proposal

2.1.The Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems

The Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems (‘the Agreement’) aims to connect the EU Emissions Trading System (EU ETS) with the Swiss one, by allowing that allowances issued in one system can be traded and used for compliance in the other one, expanding the opportunities for climate change mitigation. The Agreement entered into force on 1 January 2020.

2.2.Joint Committee

The Joint Committee, established by Article 12 of the Agreement, is responsible for administering the Agreement and ensuring its implementation. It can decide to adopt new annexes to the Agreement or amend existing ones. It can also discuss amendments to the Articles of the Agreement, facilitate the exchange of views on the Parties' legislation and conduct reviews of the Agreement.

The Joint Committee is a bilateral body composed by representatives of the Parties (the EU and Switzerland). Decisions taken by the Joint Committee shall be agreed by both Parties.

Article 13(2) of the Agreement provides that the Joint Committee may decide to adopt a new Annex or to amend an existing Annex to this Agreement. Article 8(2) of the Agreement lays down the rules how to handle sensitive information the unauthorised disclosure of which could cause varying degrees of damage or harm to the interests of the Parties to the Agreement including the Member States of the European Union. Such information requires protection against unauthorised disclosure in the security interests of one of the Parties. It bears a sensitive marking assigned by the Parties to protect sensitive information in accordance with the security requirements, the sensitivity levels and the instructions set out in Annexes III and IV respectively.

By means of Security Notice C(2019) 1904 “Marking and handling of sensitive non-classified information”, the European Commission introduced new security markings to be used by its services. As a marking is only legally enforceable within the Commission, it recommended setting up appropriate arrangements with third parties outside the Commission in the event that sensitive non-classified information has to be exchanged with them. The Agreement, constituting the Joint Committee and laying down its tasks, provides the necessary and effective framework to this end.

2.3.The envisaged act of the Joint Committee

During its fifth meeting, which will be held in 2022, or earlier by means of the written procedure pursuant to Article 8(4) of the Rules of Procedure of the Joint Committee 1 , the Joint Committee is to adopt a decision regarding amending Annexes III and IV to the Agreement (‘the envisaged act’).

The purpose of the envisaged act is to restore compatibility and consistency between legal rules and their practical application with a view to protecting sensitive information, in particular against unauthorised disclosure or integrity loss. By adopting Security Notice C(2019) 1904, the European Commission changed the security markings of sensitive non-classified information for internal European Commission use.

To this end, Annexes III and IV to the Agreement should be amended to restore compatibility and consistency between legal rules and their practical application and to safeguard and further ensure efficient and effective working arrangements on both sides without entailing the risk of compromised security levels.

The envisaged act will become binding on the parties in accordance with Article 13(2) of the Agreement, which provides: ‘The Joint Committee may decide to adopt a new Annex of to amend an existing Annex to this Agreement’. Furthermore and in accordance with Article 12(3) of the Agreement, decisions taken by the Joint Committee in the cases provided for in this Agreement will, upon their entry into force, be binding on the Parties.

3.Position to be taken on the Union's behalf

The Council Decision based on this proposal from the Commission determines the position of the European Union on the Decision of the Joint Committee to be taken on amending Annexes III and IV to the Agreement.

Article 9(2) of the Agreement lays down the sensitivity levels for sensitive information, which, in accordance with Annex III to the Agreement, the Parties shall make use to identify sensitive information that is handled and exchanged within the Agreement. Annex IV to the Agreement provides the definition of ETS sensitivity levels in terms of confidentiality and integrity rating.

The need to exchange sensitive non-classified information in the framework of the Agreement by means of the direct registry link established by the Agreement requires safeguarding the necessary level of security to minimise the risk of fraud, misuse or criminal activity involving the registries, but also to respond to such incidents and protect the integrity of the registry link as well as the linked markets. To this end, the Agreement lays down the sensitivity levels and provides the relevant rules how to deal with sensitive information under the Agreement. It explicitly defines the security markings to be used under the Agreement, which are identical to those used before adoption of Security Notice C(2019) 1904. Following adoption of Security Notice C(2019) 1904, security markings currently applicable in the European Commission do not correspond anymore to those laid down in the Agreement and should be made compatible again. Security Notice C(2019) 1904 recommended to agree with external partners correspondingly.

The development of a well-functioning international carbon market through bottom-up linking of emissions trading systems is a long-term policy goal of the EU and the international community, notably as a means to achieve the climate objectives of the Paris Agreement. In this respect, Article 25 of the Directive establishing the EU's Emissions Trading System (EU ETS) allows for the EU ETS to be linked with other emissions trading systems provided they are mandatory, have an absolute cap on emissions and are compatible, as it is the case with the Swiss system. Following the entry into force of the Agreement on 1 January 2020, the restoring compatibility and consistency bet represents an important step towards the implementation of the Agreement.

4.Legal basis

4.1.Procedural legal basis

4.1.1.Principles

Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides for decisions establishing ‘the positions to be adopted on the Union’s behalf in a body set up by an agreement, when that body is called upon to adopt acts having legal effects, with the exception of acts supplementing or amending the institutional framework of the agreement.’

The concept of ‘acts having legal effects’ includes acts that have legal effects by virtue of the rules of international law governing the body in question. It also includes instruments that do not have a binding effect under international law, but that are ‘capable of decisively influencing the content of the legislation adopted by the EU legislature 2 .

4.1.2.Application to the present case

The Joint Committee is a body set up by pursuant to Article 12 of the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems.

The act which the Joint Committee is called upon to adopt constitutes an act having legal effects. The envisaged act will be binding under international law in accordance with Article 12(3) of the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems.

The envisaged act does not supplement or amend the institutional framework of the Agreement.

Therefore, the procedural legal basis for the proposed decision is Article 218(9) TFEU.

4.2.Substantive legal basis

4.2.1.Principles

The substantive legal basis for a decision under Article 218(9) TFEU depends primarily on the objective and content of the envisaged act in respect of which a position is taken on the Union's behalf. If the envisaged act pursues two aims or has two components and if one of those aims or components is identifiable as the main one, whereas the other is merely incidental, the decision under Article 218(9) TFEU must be founded on a single substantive legal basis, namely that required by the main or predominant aim or component.

4.2.2.Application to the present case

The main objective and content of the envisaged act relate to environment.

Therefore, the substantive legal basis of the proposed decision is Article 192(1) TFEU.

4.3.Conclusion

The legal basis of the proposed decision should be Article 192(1) TFEU, in conjunction with Article 218(9) TFEU.

5.Publication of the envisaged act

As the act of the Joint Committee will amend Annexes III and IV to the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems, it is appropriate to publish it in the Official Journal of the European Union after its adoption.

2022/0076 (NLE)

Proposal for a

COUNCIL DECISION

on the position to be taken on behalf of the European Union within the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems, as regards amending Annexes III and IV to the Agreement

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 192(1), in conjunction with Article 218(9) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)The Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems (‘the Agreement’) was concluded by the Union by Council Decision (EU) 2018/219 3 and entered into force on 1 January 2020.

(2)Pursuant to Article 12(3) of the Agreement, the Joint Committee may adopt decisions that shall, upon their entry into force, be binding on the Parties.

(3)In 2022, during its fifth meeting or earlier by means of the written procedure pursuant to Article 8(4) of the Rules of Procedure of the Joint Committee 4 , the Joint Committee is to adopt the Decision on amending Annexes III and IV to the Agreement.

(4)It is appropriate to establish the position to be taken on the Union's behalf in the Joint Committee, as the Decision on amending Annexes III and IV to the Agreement will be binding on the Union.

(5)It is appropriate to restore compatibility and consistency between legal rules and their practical application with a view to protecting sensitive information, in particular against unauthorised disclosure or integrity loss.

HAS ADOPTED THIS DECISION:

Article 1

The position to be taken on the Union's behalf in the fifth meeting of the Joint Committee or earlier by means of the written procedure pursuant to Article 8(4) of the Rules of Procedure of the Joint Committee 5 , shall be based on the draft act of the Joint Committee attached to this Decision.

Article 2

This Decision is addressed to the Commission.

Done at Brussels,

   For the Council

   The President

(1)    Decision No 1/2019 of the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the Linking of their Greenhouse Gas Emissions Trading Systems of 25 January 2019 regarding the adoption of its Rules of Procedure, available from
https://ec.europa.eu/clima/system/files/2021-07/20191201_jc_dec_rop_en.pdf  and Council Decision (EU) 2018/1279 of 18 September 2018, OJ L 239 of 24.9.2018, p.8.
(2)    Judgment of the Court of Justice of 7 October 2014, Germany v Council, C-399/12, ECLI:EU:C:2014:2258, paragraphs 61 to 64.
(3)    OJ L 322, 7.12.2017, p. 3.
(4)    Decision No 1/2019 of the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the Linking of their Greenhouse Gas Emissions Trading Systems of 25 January 2019 regarding the adoption of its Rules of Procedure, available from
https://ec.europa.eu/clima/system/files/2021-07/20191201_jc_dec_rop_en.pdf  and Council Decision (EU) 2018/1279 of 18 September 2018, OJ L 239 of 24.9.2018, p.8.
(5)    Decision No 1/2019 of the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the Linking of their Greenhouse Gas Emissions Trading Systems of 25 January 2019 regarding the adoption of its Rules of Procedure, available from
https://ec.europa.eu/clima/system/files/2021-07/20191201_jc_dec_rop_en.pdf  and Council Decision (EU) 2018/1279 of 18 September 2018, OJ L 239 of 24.9.2018, p.8.
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Brussels, 18.3.2022

COM(2022) 111 final

ANNEX

to the Proposal for a COUNCIL DECISION

on the position to be taken on behalf of the European Union within the Joint Committee established by the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems,

as regards amending Annexes III and IV to the Agreement


DECISION No 1/2022 OF THE JOINT COMMITTEE ESTABLISHED BY THE AGREEMENT BETWEEN THE EUROPEAN UNION AND THE SWISS CONFEDERATION ON THE LINKING OF THEIR GREENHOUSE GAS EMISSIONS TRADING SYSTEMS
of …

on
amending Annexes III and IV to the Agreement

THE JOINT COMMITTEE,

Having regard to the Agreement between the European Union and the Swiss Confederation on the linking of their greenhouse gas emissions trading systems 1 (hereinafter ‘the Agreement’) and in particular Article 9 and Article 13(2) thereof,

Whereas:

(1)Pursuant to Article 9(2) of the Agreement, sensitive information shall be marked in accordance with its level of sensitivity.

(2)Annex III to the Agreement sets out how sensitive information that is handled and exchanged within the Agreement is marked. It requires the Parties to make use of the sensitivity levels to identify such sensitive information.

(3)Annex IV to the Agreement defines the ETS sensitivity levels and establishes the global information sensitivity level.

(4)Marking and corresponding handling of information is important to ensure the necessary level of confidentiality of information to avoid damage accruing from unauthorised disclosure of information.

(5)By means of Security Notice C(2019) 1904, the European Commission changed the security markings of sensitive non-classified information for internal European Commission use. The European Commission recommended drawing up an agreement with external partners setting out the handling instructions for all information exchanged between them.

(6)To ensure consistency of the application of security markings as set out in Annex III and IV to the Agreement, the Joint Committee may amend these Annexes in accordance with Article 13(2) of the Agreement.

(7)In its 3rd meeting held on 26 November 2020, the Joint Committee approved the handling instructions in accordance with Annex III to the Agreement and as referred to in Article 8(2) of the Agreement.

(8)The Working Group established by Decision 1/2020 and 2/2020 of the Joint Committee recommended, in accordance with the mandate provided by those Decisions, to amend the handling instructions to ensure consistent application of security markings.

HAS ADOPTED THIS DECISION:

Article 1

Annex III and IV to the Agreement are replaced by the Annex to this Decision.

Article 2

This Decision shall enter into force on the day of its adoption.

Done in English at [Brussels][Bern], on [xx 2022].

For the Joint Committee

Secretary for the European Union

The Chair

Secretary for Switzerland

ANNEX

ANNEX III

SENSITIVITY LEVELS AND HANDLING INSTRUCTIONS

The Parties shall make use of the following sensitivity levels to identify sensitive information that is handled and exchanged within this Agreement:

To this end, the markings laid down in Article 9(2) of this Agreement shall be applied as follows:

—  ETS Limited shall be applied in the EU as “SENSITIVE: ETS Joint Procurement”; in Switzerland as “LIMITED: ETS

— ETS Sensitive shall be applied in the EU and in Switzerland as “SENSITIVE: ETS

— ETS Critical shall be applied in the EU and in Switzerland as “SPECIAL HANDLING: ETS Critical

Information that is marked as ‘SPECIAL HANDLING: ETS Critical’ is more sensitive than information that is marked as ‘SENSITIVE: ETS’, which in turn is more sensitive than information that is marked as ‘SENSITIVE: ETS Joint Procurement’ in the European Union or ‘LIMITED: ETS’ in Switzerland.

The Parties agree to develop handling instructions on the basis of the existing ETS information classification policy of the Union and on the basis of the Information Protection Ordinance (IPO) and the Federal Act on Data Protection (FADP) of Switzerland. The handling instructions shall be submitted to the Joint Committee for approval. Following approval, all information shall have to be handled according to its sensitivity level in compliance with the handling instructions.

In case of different level assessments by the Parties, the higher level shall be applied.

The legislation of each Party shall include equivalent essential security requirements for the following handling steps, taking into account the ETS sensitivity levels:

—  Generation of document

—  Resources

—  Sensitivity Level

—  Storage

—  Electronic document on network

—  Electronic document in a local environment

—  Physical document

—  Electronic transmission

—  Phone and mobile

—  Fax

—  E-mail

—  Data transmission

—  Physical Transmission

—  Oral

—  Personal handover

—  Postal system

—  Use

—  Processing with IT applications

—  Printing

—  Copying

—  Removal from permanent location

—  Information management

—  Regular evaluation of classification and recipients

—  Archiving

—  Deletion and destruction



ANNEX IV

DEFINITION OF ETS SENSITIVITY LEVELS

A.1 – Confidentiality and Integrity rating

‘Confidentiality’ means the reserved nature of information or of all or part of an information system (such as algorithms, programmes and documentation) to which access is limited to authorised persons, bodies and procedures.

‘Integrity’ means the guarantee that the information system and the processed information can be altered only by deliberate and legitimate action and that the system will produce the expected result accurately and in full.

For each piece of ETS information that is considered to be sensitive, the confidentiality aspect has to be considered from the potential impact at business level where this information is disclosed and the integrity aspect has to be considered from the potential impact at business level where this information is unwillingly modified, partially or totally destroyed.

The level of confidentiality of information and the level of integrity of an information system shall be rated following an assessment based on the criteria contained in section A.2. Those ratings allow the global sensitivity level of the information to be evaluated by means of the mapping table provided in section A.3.

A.2 – Confidentiality and Integrity rating

A.2.1 – ‘Low rating’

A low rating shall be given to any information relating to the ETS the disclosure to unauthorised persons, and/or loss of integrity of which would cause moderate damage to the Parties or other institutions which, in turn, would be likely to:

—  moderately affect political or diplomatic relations;

—  cause local negative publicity to the image or reputation of the Parties or other institutions;

—  cause embarrassment to individuals;

—  affect staff morale/productivity;

—  cause limited financial loss or, moderately facilitate improper gain or advantage for individuals or companies;

—  moderately affect the effective development or operation of the Parties' policies;

—  moderately affect the proper management of the Parties and their operations.

A.2.2 – ‘Medium rating’

A medium rating shall be given to any information relating to the ETS the disclosure to unauthorised persons, and/or loss of integrity of which would cause damage to the Parties or other institutions which, in turn, would be likely to:

—  cause embarrassment to political or diplomatic relations;

—  cause damage to the image or reputation of the Parties or other institutions;

—  cause distress to individuals;

—  cause consequential reduction in staff morale/productivity;

—  embarrass the Parties or other institutions in commercial or policy negotiations with others;

—  cause financial loss or facilitate improper gain or advantage for individuals or companies;

—  affect the investigation of crime;

—  breach legal or contractual obligations on confidentiality of information;

—  affect the development or operation of the Parties' policies;

—  affect the proper management of the Parties and their operations.

A.2.3 – ‘High rating’

A high rating shall be given to any information relating to the ETS the disclosure to unauthorised persons, and/or loss of integrity of which would cause catastrophic and/or unacceptable damage to the Parties or other institutions which, in turn, would be likely to:

—  adversely affect diplomatic relations;

—  cause substantial distress to individuals;

—  make it more difficult to maintain the operational effectiveness or security of Parties or other contributors' forces;

—  cause financial loss or facilitate improper gain or advantage for individuals or companies;

—  breach proper undertakings to maintain the confidence of information provided by third parties;

—  breach statutory restrictions on disclosure of information;

—  prejudice the investigation or facilitate the commission of crime;

—  disadvantage the Parties in commercial or policy negotiations with others;

—  impede the effective development or operation of the Parties' policies;

—  undermine the proper management of the Parties and their operations.

A.3 – ETS Sensitive information level assessment

Based on the ratings for Confidentiality and for Integrity pursuant to section A.2 and in accordance with the sensitivity levels pursuant to Annex III to this Agreement, the global information sensitivity level is established using the following mapping table:

Confidentiality rating

Integrity rating

Low

Medium

High

Low

Marking EU:
SENSITIVE: ETS Joint Procurement

Marking CH :

LIMITED : ETS

SENSITIVE: ETS 

(or (*)

Marking EU:
SENSITIVE: ETS Joint Procurement

Marking CH:

LIMITED: ETS

)

SPECIAL HANDLING: ETS Critical

Medium

SENSITIVE: ETS 

(or (*)  

Marking EU:
SENSITIVE: ETS Joint Procurement

Marking CH:
LIMITED: ETS

)

SENSITIVE: ETS 

(or (*)  
SPECIAL HANDLING: ETS Critical

)

SPECIAL HANDLING: ETS Critical

High

SPECIAL HANDLING:
ETS Critical

SPECIAL HANDLING: ETS Critical

SPECIAL HANDLING: ETS Critical

(*)   

Possible variation to be assessed on a case-by-case basis.

(1)    OJ L 322, 7.12.2017, p. 3.
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