European Parliament issued the following announcement.

• Legislative initiative to protect democracy, the rule of law and fundamental rights through preventive and corrective measures
• The EU is “structurally ill-equipped” to tackle backsliding in its member states, while facing an “unprecedented and escalating crisis of its founding values”
• Parliament, Council and Commission to monitor developments in all EU countries with help from independent experts

The EU needs a “robust, comprehensive and positive agenda” to effectively protect and reinforce EU values, according to the Civil Liberties Committee.

With 51 votes to 14 and one abstention, the Civil Liberties Committee adopted on Tuesday a legislative initiative report that envisions an EU mechanism being established to protect and strengthen democracy, the rule of law and fundamental rights. The text reiterates MEPs’ concerns regarding “the rise and entrenchment of autocratic and illiberal tendencies”, further compounded by COVID-19, as well as “corruption, disinformation and state capture”, in several EU countries.
An “Annual Monitoring Cycle” with preventive and corrective measures
Aiming to protect the European Union’s legal order, the fundamental rights of its citizens, and its international credibility from the deterioration of Article 2 TEU values, MEPs propose an objective and evidence-based tool that would apply equally, objectively and fairly to all member states, while respecting the principles of subsidiarity and proportionality.
This new “Annual Monitoring Cycle” must include preventive and corrective measures, ranging from country-specific recommendations to budgetary conditionality. To this end, the three EU institutions should establish a permanent “Interinstitutional Working Group on Union Values”, which will hear from a panel of independent experts in cooperation with the EU Agency for Fundamental Rights.
The Committee’s proposal aspires to integrate and complement existing mechanisms, such as those provided in Article 7 TEU. MEPs regret the Council’s inability to make meaningful progress in ongoing Article 7 procedures and note that this failure “is in fact enabling continued divergence”. They welcome the Commission’s work on the Annual Rule of Law Report, among other instruments, whilst pointing out that the areas of democracy and fundamental rights should not have been omitted from it.
Quote
“To prevent further democratic backsliding, the EU needs a change of pace to place the protection of its values at the heart of European politics. We propose a legally binding interinstitutional agreement that will consolidate and enhance existing initiatives, which will in turn increase the EU's ability to protect itself”, said rapporteur Michal Šimečka (Renew, SK).
Next steps
The report is set to be voted on by the full house at the 5-8 October plenary session.
Background
Parliament has asked since 2016 for a permanent mechanism to be established and insisted since 2018 that the new tool should be linked to protecting the European Union’s budget when there are generalised deficiencies as regards the rule of law. MEPs and stakeholders alike have referenced the European Semester as a useful existing resource to draw upon.
In her inaugural address in July 2019 and in her Political Guidelines, Commission President Ursula von der Leyen pledged to respond with a proposal for a legislative act whenever Parliament, acting by a majority of its members, adopts a resolution requesting a legislative proposal. Find out more about Parliament’s right of legislative initiative.

Original source can be found here.