THE NEED TO ADOPT EU-WIDE STANDARDS ON LOBBYING

Adopting EU-wide standards on lobbying would, at minima, guarantee a baseline level of transparency and integrity across all EU Member States, enabling citizens across the continent to hold their public officials to account. It would also protect public institutions from undue influence from domestic or foreign malign actors in a time of considerable geopolitical strife.

An EU -wide adoption of a legislative instrument on interest representation would cover:

1. An EU-wide definition on interest representation which includes all organizations seeking to influence public decision making, independent of their financial and legal status. This would include at minima companies, business associations, civil society organizations, consultants, law firms, think tanks, academic institutions and wherever possible, organized labour and religious groups. 

2. Setting up of national registers publishing key harmonized data for all interest representatives in open and accessible formats. This would include unique identifying numbers for organizations active in different Member States and/or at EU level and provide key information pertaining to them, such as basic identification, interests represented, financial and human resources involved, sources of funding, clients and associated organisations wherever applicable.

3. Enforceable Codes of Conduct for interest representatives based on common ethics and integrity standards, as well as strong and independent monitoring and compliance mechanisms. The Code of Conduct would ban certain behaviors, such as providing misleading information, paying for access, achieving legislative outcomes through financial or lavish “quid pro quo” gifts, or lying about the actual interests that a given organization is representing (i.e.: ‘astroturfing’)

4 A lobbying footprint in the form of open and accessible pro-active publication of meetings or lobbying activities between decision-makers and interest representatives.

Note

On 12 December 2023, the European Commission adopted its “Defense of Democracy Package”, particularly in view of the upcoming elections for the European Parliament in 2024. This package includes a proposal for a new EU directive, introducing for the first time EU-wide harmonized transparency and accountability standards for lobbying activities carried out on behalf of third countries.

EU Member States with already established lobbying registers will likely be required to amend their rules, other EU Member States will have to set-up lobbying registers for the first time. Stakeholders in the political sphere will have to consider the rules closely to ensure compliance and their ability to continue interacting with political and governmental actors.

The current state of play

The current legal framework governing lobbying activities and related transparency requirements in the EU is highly fragmented.

At the EU level, an initially voluntary registration system for lobbyists seeking to influence the decision- making processes of the European Parliament and the EU Commission was replaced by a mandatory transparency register covering interest representation vis-à-vis all EU institutions that entered into force in 2021. The publicly available EU Transparency Register contains detailed information, among others, on the lobbyist, its areas of interest and its financial resources related to the lobbying activities.

In addition, several EU Member States, including Belgium, France and Germany, have already enacted national regulations on lobbying that require interest representatives carrying out lobbying activities vis-à-vis national officials to comply with certain ethical and transparency standards and to disclose various information in the respective national lobbying registers. However, the national rules differ considerably both in terms of the activities and the officials covered and the extent and granularity of information to be disclosed in the register. In particular, none of the national lobbying acts specifically addresses the risks associated with covert interest representation activities carried out on behalf of third countries.

The context of the proposal

The proposed directive may be seen as part of a broader and multilayered EU strategy to defend and foster democracy within the EU.

The EU Commission’s proposal is a puzzle piece of its “Defense of Democracy Package”. This was initially announced in the 2022 State of the Union Address by EU Commission’s President von der Leyen and based on the European Democracy Action Plan. It is primarily designed to protect the EU democratic sphere from covert foreign influence and to strengthen trust by defending the European democratic system from outside interests. The proposed directive on lobbying registration requirements is accompanied, inter alia, by recommendations aiming at the strengthening of electoral processes in the EU by proposing measures to minimize risks of interference from third countries through funding of political parties and candidates.

As such, the proposal also complements several recent proposals, including the proposed Regulation on the transparency and targeting of political advertising.

Scope of the proposal

The requirements in the proposed directive cover economic activities of interest representation carried out on behalf of third country entities, which means

(i) the central government and public authorities at all levels of a country outside the EU and the EEA (Foreign Public Authority) and

(ii) public or private entities whose actions can be attributed to any Foreign Public Authority (Foreign Entities, together with Foreign Public Authorities Third Country Entities).

More specifically, the directive applies to all entities – irrespective of their place of establishment (i.e. inside or outside the EU) – that provide interest representation services to a Third Country Entity. In particular, lobbying firms acting on behalf of Third Country Entities will therefore typically fall within the scope of the directive. Likewise, interest representation activities carried out by a Third Country Entity are covered, provided that they are linked to, or substitute, activities of an economic nature and are thus comparable to an interest representation service (together “Covered Entities”).

The proposal explicitly exempts activities carried out directly by a Foreign Public Authority that relate to the exercise of official authority, including activities related to the exercise of diplomatic or consular relations between States or international organizations. Comparable exemptions can also be found in national lobbying regulations. Further, certain legal and other professional services as well as ancillary activities may be exempted from the scope.

Activities qualify as “interest representation activity” if they are conducted with the objective of influencing the development, formulation or implementation of policy or legislation, or public decision-making processes, in the EU (Interest Representation). The proposal provides a couple of examples and indicates that such activities caught under the directive could, inter alia, be performed through organizing or participating in meetings, organizing communication or advertising campaigns and preparation of policy and position papers. At first glance, the scope of relevant activities falling under the proposed directive seems to be rather congruent with those activities that are subjected to registration requirements at the level of the Member States that have in place lobbying laws and registers. It is noteworthy that, unlike national rules, the proposal does not contain specific thresholds that trigger a registration requirement (e.g. a certain number of contacts to officials).

Key content of the proposal

Covered Entities are required to keep, for each Interest Representation, records of a large set of information for a period of four (4) years after the Interest Representation has ceased. Such information includes, among others, (i) the identity and name of the Third Country Entity on whose behalf the activity is carried out, and the name of the third country whose interests are represented, (ii) a description of the purpose of the Interest Representation, as well as (iii) exchanges with the Third Country Entity essential to understand the nature and purpose of the Interest Representation including, where applicable, the records of the means and extent of any remuneration. Further, Covered Entities must draw up, on an annual basis, and keep for a period of four (4) years, (i) a list of all Third Country Entities on whose behalf they have carried out Interest Representation in the preceding financial year and (ii) a list of the aggregated annual amount received in respect of Interest Representation for Third Country Entities.

As soon as the Interest Representation is commenced, Covered Entities have to register in a national register set up by the Member State where they are established or, in case the Covered Entity is not established in the EU, where their legal representative – who is to be designated in one of the Member States where the non-EU based Covered Entity carries out Interest Representation – is established or has his permanent address. For the registration, the Covered Entities must disclose information specified in Annex I to the proposed directive. Most information disclosed in the register entry will principally be made publicly available by the competent national authority, but Covered Entities may request to partially or fully limit the publication on the basis of certain legitimate interests to be assessed in the individual case.

Non-compliance with the requirements of the proposed directive will be subject to administrative fines to be imposed by the competent national authorities and may amount up to 1 % of an undertaking’s annual worldwide turnover.

The proposal is similar, although narrower, than the Foreign Agents Registration Act in the United States, which requires registration for a broad swath of political and lobbying activities in the United States on behalf of a foreign interest (governments and corporations alike). The U.S. has also long prohibited foreign funding in elections in the U.S. Both laws have seen a significant uptick in criminal enforcement in recent years.