How do they shape the Regulatory Framework?
Competitiveness and security
The European Union is undertaking significant efforts to enhance its global competitiveness.
Every new law is assessed against this goal, and even recently enacted rules are being reviewed to ensure better regulation. Better regulation means coherent, comprehensive, and business-friendly frameworks. The Digital and Circular Economy Omnibus packages, are examples of this program. They aim to cut administrative burdens and simplify compliance.
At the same time, the EU is enhancing security. Faced with war on its borders and reliance on foreign technology, it is creating incentives to secure independence and sovereignty.
Foreign Investment and Foreign Subsidies screenings, for instance, aim to prevent undue influence from non-EU actors and protect strategic sectors. Similarly in the digital space, measures like Digital Decade – Policy Programme encourage local cloud and AI solutions to replace dependence on non-EU hyperscalers.
Security also means securing access to critical materials, improving cyber resilience, and reinforcing policing through Europol’s expanded mandate.
The ultimate goal is clear. The EU means to strengthen its economic stance and safeguard strategic autonomy.
Is Completing the Single Market Europe’s Key to Global Competitiveness?
Where does the EU stand on standards and climate neutrality?
The EU continues to advance legislation aimed at climate neutrality and maintaining high standards.
The EC’s work programme for 2026 includes initiatives such as the Green Claims Directive. It also emphasizes renewable energy, indicating that environmental regulation will still progress. For example, the EU’s adoption of the Ocean Pact, aimed at protecting oceans and growing a sustainable blue economy, reinforces their commitment to sustainability-driven regulations.
Similarly, in the context of standard-setting, implementation of the AI Act proceeded in 2025 despite calls for a pause from the tech industry.
The EC president’s State of the Union address further linked competitiveness to increased investment and growth in clean tech and energy. This signals that regulatory drive in AI and clean tech will continue, requiring proactive compliance and strategic investment to stay competitive.
What are the priorities?
Measures aimed at stimulating economic growth or capable of enhancing security, will be prioritized in the near future. Such prioritization will necessitate adjustments to social and environmental requirements.
The most prominent laws marking a pivot towards competitiveness and security are the Omnibus packages and the EU-US trade deal.
Omnibus I aimed to simplify sustainability measures for affected businesses, by postponing application dates and raising scope thresholds. The EU-US trade deal aimed at reaffirming a long standing alliance in defense and trade with the US. It suggested that the green regulatory approach was being weighed against the avoidance of tariffs, industrial alignment and supply-chain security.
The legislative process of both files involved complex negotiations among lawmakers, with significant uncertainty as to their outcome. Nevertheless, together these measures indeed signal the EU’s current direction of travel. Economic and security priorities dominate, even if this requires adjustments or delays to standard-setting and environmental regulation.
The EU will be less willing to leverage market access to enforce standards and climate targets on global businesses in the short-term. But, these remain long-term EU goals. Therefore, EU lawmakers will likely keep embedding green measures provided they align with competitiveness and security goals.
Are political dynamics impacting the final outcome?
Following the 2024 European Parliament elections, forming stable legislative coalitions has become increasingly difficult. This election marked a turning point as gains by fringe parties disrupted traditional alliances and weakened consensus-building. This matters because political fragmentation directly affects the speed and consistency of regulatory reform. Businesses can no longer assume that simplification measures will progress smoothly or on predictable timelines.
For example, the traditional center-right, historically supportive of pro-business policies, now face the challenge of balancing democratic consensus with calls for faster regulatory change. At the same time, far-right parties are pushing to influence competitiveness-related legislation while opposing deeper EU integration. These competing priorities create uncertainty for global businesses operating in Europe.
Businesses should expect delays and uneven progress on initiatives aimed at reducing regulatory complexity. While the push for simplification is welcome, the political reality suggests progress will be incremental and contested. This division signals a turning point for EU governance. The biggest risk is that slower reforms will increase compliance burdens. However, there is opportunity in shaping the debate. For global businesses, the winners will be those that combine strong compliance with active policy engagement.
Key contacts
Dr. Alexander Niethammer, LL.M. Managing Partner Rechtsanwalt, Attorney-at-Law (New York), Managing Partner Germany T: +49 89 54565 318 E: alexanderniethammer@ eversheds-sutherland.com
Pia Krökel Caruana Knowledge Lawyer Member of the EU Knowledge Hub T: +32 472 88 87 37 E: PiaKroekelCaruana@ eversheds-sutherland.com
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