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European Commission Press Releases

‘No-deal’ Brexit: European Commission takes stock of preparations ahead of the June European Council (Article 50)

Vlad Poptamas

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Photo source: ec.europa.eu
Reading Time: 4 minutes

 

Ahead of the June European Council (Article 50), the European Commission has today taken stock – in its fifth Brexit Preparedness Communication – of the European Union’s Brexit preparedness and contingency measures, particularly in light of the decision taken on 11 April by the European Council (Article 50), at the request of and in agreement with the United Kingdom, to extend the Article 50 period to 31 October 2019.

In light of the continued uncertainty in the United Kingdom regarding the ratification of the Withdrawal Agreement – as agreed with the UK government in November 2018 – and the overall domestic political situation, a ‘no-deal’ scenario on 1 November 2019 very much remains a possible, although undesirable, outcome.

Since December 2017, the European Commission has been preparing for a ‘no-deal’ scenario. To date, the Commission has tabled 19 legislative proposals, 18 of which have been adopted by the European Parliament and Council. Political agreement has been reached on the remaining proposal – the contingency Regulation on the EU budget for 2019 –, which is expected to be formally adopted later this month. The Commission has also adopted 63 non-legislative acts and published 93 preparedness notices. In light of the extension of the Article 50 period, the Commission has screened all these measures to ensure that they continue to meet their intended objectives. The Commission has concluded that there is no need to amend any measures on substance and that they remain fit for purpose. The Commission does not plan any new measures ahead of the new withdrawal date.

The Commission recalls that it is the responsibility of all stakeholders to prepare for all scenarios. Given that a ‘no-deal’ scenario remains a possible outcome, the Commission strongly encourages all stakeholders to take advantage of the extra time provided by the extension to ensure that they have taken all necessary measures to prepare for the UK’s withdrawal from the EU. Today’s Communication provides details on the extensive preparations in the EU27 in areas such as citizens’ residence and social security entitlements, customs and taxation, transport, fishing, financial services as well as medicinal products, medical devices and chemical substances.

A ‘no-deal’ scenario

In a ‘no-deal’ scenario, the UK will become a third country without any transitional arrangements. All EU primary and secondary law will cease to apply to the UK from that moment onwards. There will be no transition period, as provided for in the Withdrawal Agreement. This will obviously cause significant disruption for citizens and businesses and would have a serious negative economic impact, which would be proportionally much greater in the United Kingdom than in the EU27 Member States.

As outlined by President Juncker in the European Parliament on 3 April 2019, should a ‘no-deal’ scenario occur, the UK would be expected to address three main separation issues as a precondition before the EU would consider embarking on discussions about the future relationship. These are: (1) protecting and upholding the rights of citizens who have used their right to free movement before Brexit, (2) honouring the financial obligations the UK has made as a Member State and (3) preserving the letter and spirit of the Good Friday Agreement and peace on the island of Ireland, as well as the integrity of the internal market.

The EU’s ‘no-deal’ preparedness and contingency work: continued vigilance in selected areas

Preparing for the UK’s withdrawal is a joint effort by public administrations and economic operators. The Commission has held extensive technical discussions with the EU27 Member States both on general issues of preparedness and contingency work and on specific sectorial, legal and administrative preparedness issues. The Commission has also completed a tour of the capitals of the 27 EU Member States. The visits showed a high degree of preparation by Member States for all scenarios.

Today’s Communication focuses on areas in which continued and particular vigilance is needed in the coming months:

Citizens’ residence and social security entitlements

  • Member States had prepared or adopted national contingency measures before 12 April 2019 to ensure that UK nationals and their non-EU family members could remain legally resident in the immediate period after a ‘no-deal’ withdrawal.
  • To provide further clarity, the Commission has provided an overview of residency rights in the EU27 Member States (see here, including direct links to national preparedness websites). This will continue to be updated.

Medicinal products, medical devices and chemical substances

  • Only a small number of centrally authorised medical products (around 1%) had not been brought into regulatory conformity by 12 April 2019 The European Medicines Agency (EMA) is now close to completing the regulatory compliance process for products that are authorised centrally.
  • For products that are authorised at national level, more work remains to be done to bring remaining medicinal products into regulatory compliance by 31 October 2019.
  • The transfer of certificates for medical devices from UK notified bodies to EU27 notified bodies is ongoing.
  • As regards chemical substances, by the end of April 2019, REACH registrations of 463 substances had been transferred to the EU27 Member States, while 718 still remained registered only by registrants established in the United Kingdom. The European Chemicals Agency (ECHA) opened a ‘Brexit window’ in REACH-IT to take the necessary steps to transfer their REACH registrations ahead of the withdrawal date.

Customs, indirect taxation and border inspection posts

  • In the field of customs and indirect taxation, the Commission organised numerous technical meetings, and published guidance notes on customs, value-added tax (VAT) and excise ahead of the previous withdrawal date.
  • National administrations have made significant investments in infrastructure and human resources, primarily in Member States that are the main entry and exit points for the EU’s trade with the United Kingdom. Member States are also working with the Commission in its training and communication efforts to reach out to economic operators and stakeholders in general.
  • In the field of sanitary and phytosanitary controls (SPS), EU27 Member States have set up new Border Inspection Posts (BIPs) or extending existing ones at entry points of imports from the United Kingdom into the EU.

Transport

  • The contingency Regulation on air transport includes a specific mechanism for EU airlines to comply with the EU majority ownership and control requirements. This process is underway and the Commission is in regular contact with national authorities.
  • In the rail transport sector, operators that have not taken the necessary steps to obtain the relevant EU27 documents should do the necessary to obtain them.

 

Financial services

  • While in the run-up to 12 April 2019, firms had made significant progress with their contingency planning, some residual issues remain. Insurance firms, payment services providers and other financial service operators which remain unprepared regarding certain aspects of their business (for example contract management and access to infrastructures) are strongly encouraged to finalise their preparatory measures by 31 October 2019. The Commission is working with EU level and national supervisors to ensure that firms’ contingency plans are fully implemented, and it expects that UK supervisors will not prevent firms from implementing such plans.

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B2B Press Releases

EU trade agreements: delivering new opportunities in time of global economic uncertainties

Vlad Poptamas

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Photo source: inc.com
Reading Time: 3 minutes

Despite the difficult global economic climate, European companies have continued to make good use of the opportunities created by the European Union’s trade network – the largest in the world. In 2018 this network covered 31% of Europe’s trade exchanges, a figure that is set to rise significantly (to almost 40%) as more trade agreements enter into force, according to the European Commission’s annual report on the implementation of trade agreements released today. Overall, trade accounts for 35% of the EU’s gross domestic product (GDP).

In 2018 EU exports to and imports from trade agreement partners showed positive developments, with a continued growth of 2% and 4.6% respectively, with a strong performance of EU agri-food exports. The EU’s growing network of trade agreements is creating economic opportunities for workers across Europe, with over 36 million jobs being supported by exports to outside of the EU. The EU recorded a surplus of €84.6 billion in trade in goods with its trade agreement partners, compared to its overall trade deficit with the rest of the world of about €24.6 billion.

Commenting on the report, Commissioner for Trade Cecilia Malmström said “Trade agreements create opportunities for European businesses to grow and hire more people. Today’s report shows that overall trade is up, and more of our global trade is covered by preferential deals than ever before. Our food and drink exports in particular are flourishing thanks to lower tariffs and legal protection abroad for artisanal EU products like Champagne and Feta. The report also provides evidence of how our focus on trade and sustainable development is bearing fruit. Furthermore, we have taken a number of unprecedented steps to enforce the commitments made by our trade partners in the last year, including notably on workers’ rights. There is still work to be done, of course. But by opening up this data to the wider public we hope to launch a wider discussion about how to make sure trade agreements benefit as many citizens as possible.”

Looking at specific sectors across agreements, the 2018 report shows:

  • EU agri-food exports to trade partners continued to grow with an overall increase of 2.2% compared to the previous year. Exports of agri-food products to South Korea also gained 4.8 %. Also noteworthy are agri-food exports to Georgia, Moldova and Ukraine, which grew by 11% compared to 2017;
  • EU industrial goods exports also increased overall by 2%, with stronger growth among others for chemicals (2.5 %), mineral products (6 %) and base metals (4.4 %).

Looking for instance at one of the recent trade agreements, the report shows that in the first full calendar year (2018) of the EU-Canada trade agreement implementation:

  • bilateral trade in goods grew by 10.3% and the EU’s trade surplus with Canada increased by 60%;
  • EU goods exports to Canada rose by 15% (or €36 billion in extra export revenue), especially for sectors where import duties were previously high such as pharmaceuticals (up 29%), machinery (up 16%) or organic chemicals (up 77 %);
  • EU Agri-food exports to Canada (accounting for 9% of total EU exports) rose by 7%.

Moreover, following intensive discussions in the joint committees created under the different trade agreements, several partner countries lifted barriers to trade, thus allowing more EU companies to benefit fully from the opportunities these agreements offer. Danish and Dutch farmers, for example, will be able to export beef to South Korea, while Poland and Spain will be able to export poultry meat to South Africa.

The report investigates also the impact of the provisions included in the dedicated ‘Trade and Sustainable Development’ (TSD) chapters, which are part of all modern EU trade agreements. These chapters aim at engaging with trade partners to implement international rules on labour and the environment, as incorporated in multilateral environmental agreements or International Labour Organisation (ILO) conventions. Recent achievements ahead of the entry into force of the respective agreements include the ratification by Mexico and Vietnam of ILO Convention 98 on the rights to organise and collective bargaining. Additionally, the agreements with Vietnam, Japan, Singapore, Mercosur and Mexico include reinforced commitments to effectively implement the Paris Agreement on Climate Change.

In 2018 and 2019, the EU also took several enforcement actions under its trade agreements, including in relation to labour standards. Among other examples, the EU requested a panel following South Korea’s failure to ratify ILO Conventions on workers’ rights, notably freedom of association and collective bargaining.

However, the report also highlights the need to increase efforts – together with Member States and stakeholders – to raise awareness of the opportunities trade agreements offer, as well as stepping up enforcement action so the agreements deliver the intended results.

The report will now be subject to discussion with the European Parliament and Member States’ representatives in the Council.

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B2B Press Releases

State aid: Commission opens investigation into proposed public support for Samsung plant in Hungary

Vlad Poptamas

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Photo source: dailynewshungary.com
Reading Time: 2 minutes

 

The European Commission has opened an in-depth investigation to assess whether Hungary’s plans to grant €108 million of public support to Samsung SDI for investing in the expansion of its battery cell production facility in Göd (Hungary) is in line with EU rules on regional State aid.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Public investment is important to foster economic growth in disadvantaged regions in Europe. But public support should only be given if it’s necessary to trigger private investment in the disadvantaged region concerned. Otherwise, it only gives the beneficiary an unfair advantage over its competitors, at the expense of taxpayers. The Commission will carefully investigate whether Hungary’s planned support is really necessary for Samsung SDI to invest in Göd, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU.”

Samsung SDI is one of the main players in the fast growing market of lithium-ion battery market. Samsung SDI is investing around €1.2 billion to expand the production capacity of lithium-ion cells and battery packs for electric vehicles in its existing plant located in Göd (Hungary). The work on the capacity expansion started in December 2017, and the implementation of the project is now well advanced. In 2018, Hungary notified the Commission of its plans to grant €108 million of public support for the project.

EU State aid rules, in particular the Commission’s 2014 Regional State Aid Guidelines, enable Member States to support economic development and employment in the EU’s disadvantaged regions and to foster regional cohesion in the Single Market. In order to be approved, the measures need to fulfil certain conditions to make sure that they have the intended positive effect. This includes that the support must incentivise private investment, be kept to the minimum necessary, must not lure away investment from a region in another Member State which is as or more disadvantaged (“anti-cohesion effect”) and must not be directly causing the relocation of activities (such as jobs) to the Member State granting the support from elsewhere in the EU.

The Commission has doubts at this stage that the planned aid support of €108 million to Samsung SDI in Göd complies with all relevant criteria of the Regional Aid Guidelines:

  •  the Commission has doubts whether the measure has an “incentive effect”. In this respect, the Commission will investigate whether the decision by Samsung SDI to invest in Hungary was directly triggered by the Hungarian public support, in line with the conditions set out in the Guidelines or whether the investment would have been carried out in Göd, even absent the public support;
  •  the Commission also has doubts in relation to the public support’s contribution to regional development and on its appropriateness and proportionality; and
  • the Commission cannot exclude at this stage that the public support may lead to the relocation of jobs from other EU Member States to Hungary.

The Commission will now investigate further to determine whether or not the initial concerns are confirmed. The opening of an in-depth investigation provides Hungary and interested third parties with an opportunity to comment on the measure. It does not prejudge in any way the outcome of the investigation.

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B2B Press Releases

State aid: Commission approves €380 million German rescue aid to Condor

Vlad Poptamas

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Photo source: ft.com
Reading Time: 2 minutes

 

The European Commission has approved, under EU State aid rules, Germany’s plans to grant a temporary €380 million loan to charter airline Condor. The measure will contribute to ensuring the orderly continuation of air transport services and avoid disruptions for passengers, without unduly distorting competition in the Single Market.

On 25 September 2019, Germany notified the Commission of its intention to grant, via the German public development bank KfW, a €380 million rescue loan to Condor. The airline faces an acute liquidity shortage following the entry into liquidation of its parent company, the Thomas Cook Group. Furthermore, Condor had to write off significant claims against other Thomas Cook Group companies, which Condor will no longer be able to collect.

The Commission’s Guidelines on rescue and restructuring aid allow Member States to support companies in difficulties, provided, in particular, that the public support measures are limited in time and scope and contribute to an objective of common interest. Rescue aid can be granted for maximum six months to give a company time to work out solutions in an emergency situation.

In the present case, the Commission has taken the following elements into account:

  •  the loan will be paid out in instalments under stringent conditions. In particular, Condor has to demonstrate its liquidity needs on a weekly basis and new instalments will only be paid when all existing liquidity has been used; and
  •  Germany committed to ensure that, after six months, the loan will either be fully repaid, or Condor will carry out a comprehensive restructuring in order to return to viability in the long-term. Such possible restructuring would be subject to the Commission’s assessment and approval.

The Commission found that the measure will help ensure the orderly continuation of flight services, in the interest of air passengers. At the same time, the strict conditions attached to the loan and its duration limited to six months will reduce the distortion of competition potentially triggered by the State support to a minimum.

The Commission therefore concluded that the measure is compatible with EU State aid rules.

The non-confidential version of the decision will be made available under the case number SA.55394 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

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