What’s App in Europe – July 2017
EU trade relations
Canada and the EU agreed on Saturday 8 July during the G20 summit that the Comprehensive Economic and Trade Agreement (CETA) will come into force on 21 September this year. The first negotiations on such an agreement started in 2004 and were ramped up in 2006 to make it more comprehensive. The first text of an agreement was reached in 2014 and implementation 3 years later. However the time taken is measured it must be considered lengthy and can only be a bad precedent for the post Brexit arrangements between the EU and the UK.
On a more positive note the EU Court of Justice (the EU’s Supreme Court) in Luxembourg ruled that the EU has competence to make agreements on many issues which were heretofore considered the competence of the Member States or of mixed competence between the EU and the Member States. This will make it easier for the EU as a whole to ratify agreements once they are concluded by the Commission which is the EU institution which negotiates trade agreements on behalf of the EU and the EU’s Member States.
Mention should also be made of the conclusion of the outlines of a free trade area deal between Japan and the EU. The deal is not yet final and there are some thorny issues like investment protection. However the EU appears to have got important access to Japan’s agricultural markets including access on soft cheeses, something which Japan had held out against in the TPP negotiations. The talks have been going on for 4 years now and are expected to conclude by the end of 2017.
Finally, some Commissioners consider that dropping investment provisions from trade agreements might make them easier to ratify. This is probably correct. But is it good for the EU. Investment protection in third countries is essential for EU business. Investment agreements should not therefore be seen as second class agreements just because they are difficult to get ratified. The real difficulty in investment agreements is getting the agreement with the third country in the first place. The EU is struggling to get agreement with China which continues to discriminate against foreign enterprise and capital. Maybe Vice President Katainen needs to think again.
Compliance with EU law
The EU Commission is considered the ‘guardian’ of the Treaties. This means that it must police how Member States implement EU law. And if the Member States are not implementing EU correctly the Commission has the power to bring them to Court to be condemned and in subsequent actions to be fined. This is happening more and more. On 6 July the Commission published the report for 2016. Belgium and Cyprus are the two countries which delay the most in transposing EU law into national law. The countries with the fewest cases opened against them are Denmark, Italy and Slovakia.
Late or deficient transposition of EU law can be remedied by other means. Individual citizens who consider that their rights are affected by the absence of the EU law can bring actions before the national courts to have the matter corrected and to get monetary damages from the Member State if the delays have caused loss.
The State Aid to Apple
State aids are most often provided by governments to either help ailing industries or to boost new technologies or start up industries. Apple is neither a start up or ailing. It is probably one of the most cash rich companies on the Earth. However, the EU Commission, the Union’s state aid watchdog, has found that Apple received a state aid from the Irish government in the form of revenue foregone. State aids can be either disbursements from the state or be some sort of ‘failure’ by the state to collect monies. The Commission considers that Ireland gave Apple favourable tax breaks and thus failed to collect taxes. This was the state aid.
Ireland and Apple have challenged the findings of the Commission before the General Court of the EU in Luxembourg. Now the United States has applied to intervene in the case in support of Ireland and Apple. It is likely that Ireland and Apple would support this application but that the Commission would object. On balance, the Court is likely to allow the intervention which will see the US appearing before the EU’s junior court.
Brexit and the EU Medicines Agency
The UK hosts two EU agencies, the European Medicines Agency and the European Banking Authority. Both will have to be re-located to an EU Member State. The question is where? All 27 Member States are looking to get them.
This is a time for the EU institutions to come together in a strong fashion and use this opportunity to solve one of the most egregious problems facing the legitimacy of the EU. Each month, the European Parliament moves from Brussels where most of the offices are, to Strasbourg where the Parliament’s plenary sessions are held. The Parliament has been demanding that it be given one seat and the preference is for Brussels where is can have better access to the Commission and the Council. France has resisted this demand insisting that the Parliament should have at least 10 plenary sessions in Strasbourg every year.
The compromise seems very straight forward. Give France the two agencies in return for giving up the Parliament’s sessions in Strasbourg. Can the EU agree this? It would be a significant proof of a new rapport and dynamism between Macron and Merkel if it was to come about. The decisions will be taken in November/December this year.
Estonia is the new President of the Council
The Council presidency rotates every six months. In the first six months of 2017 it was Malta. As the President Malta drove the agenda and signed all documents on behalf of the Council. For the second half of 2017 it will Estonia. The UK had been scheduled to be the President in this period and had been prepared to push a liberal agenda but Brexit intervened. The UK, still a full member of the EU and entitled if it had wanted to keep the Presidency for the six months, decided to withdraw so as to allow the other 27 Member States organise themselves for the tough negotiations under a different President. Estonia took up the challenge and will be President from July to December 2017.
Estonia feels it has a lot to offer. It is only 25 years since the collapse of the Soviet Union and only 13 years since Estonia joined the EU. The key theme that Estonia wants to promote during its tenure is the digitalisation of the public administration so that it would be possible to get married, get divorced and buy a house all on-line. It’s a great ambition. Let’s see how far it gets.
The law just got harder for us lawyers. As from the end of June 2017 lawyers, banks and accountants have to have in place checks and balances to assess the risks that money is being laundered. This applies to the payments that lawyers receive for their work and for the monies that lawyers see flowing into companies and banks for their clients.
The new rules will also enhance the cooperation between fiscal authorities in the different Member States and coordinate the EU approach to third countries which might have deficient systems for the control of the flows of money. Tax avoidance just got harder.