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EU approves €30 million disbursement in Macro-Financial Assistance to the Republic of Moldova

Vlad Poptamas

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Photo source: euneighbours.eu
Reading Time: 2 minutes

The European Commission, on behalf of the EU, has today approved the disbursement of €30 million in Macro-Financial Assistance to the Republic of Moldova.

This is the first of three planned disbursements under the Macro-Financial Assistance (MFA) programme to Moldova that was adopted in September 2017. The programme, worth up to €100 million, is designed to assist Moldova in covering its external financing needs while implementing a wide-ranging and ambitious structural reform agenda.

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “This disbursement is an expression of support for the implementation of key reforms to improve democratic standards and protect the rule of law in Moldova. The European Commission stands ready to continue working closely with the Moldovan authorities to help deliver on a wide-ranging and ambitious set of economic and structural reforms necessary to secure jobs, growth and investment for the benefit of the people of Moldova.”

For disbursements under the MFA programmes to take place, several conditions need to be met: political preconditions related to respect of democratic mechanisms, the rule of law and human rights need to be fulfilled, and specific policy measures need to have been successfully implemented. Disbursements are also conditional on good progress with the IMF programme.

In June 2018, following an assessment that the political preconditions had not been fulfilled, the release of the first instalment of the programme was put on hold. This assessment was based, in particular, on the decision of the Supreme Court of Justice on the non-transparent invalidation of election results in Chisinau. Following the change of government in June 2019, the Moldovan authorities have engaged in a significant and substantial structural reform process to strengthen the independence of the judiciary and the fight against corruption. The Commission and the European External Action Service now consider that the political preconditions for proceeding with the disbursement of the first instalment of the MFA programme have been fulfilled.

Moldova has now also fulfilled the policy commitments agreed with the EU, as laid down in the Memorandum of Understanding, for the release of the first disbursement. This includes measures taken to fight corruption and money laundering, to foster greater transparency in public finance management, to modernise the country’s public administration, to advance the ongoing reforms of the energy and financial sectors and to improve the business environment. The IMF also recently completed the fourth and fifth reviews of its programme with Moldova. These decisions have paved the way to a resumption of the disbursement of the assistance.

The Commission services and the European External Action Service will continue to monitor closely and assess the fulfilment of the specific policy commitments and the political preconditions ahead of the second and third instalments of this MFA programme.

The disbursement of €30 million will be composed of €10 million in grants and €20 million in loans.

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B2B Press Releases

Antitrust: Commission imposes interim measures on Broadcom in TV and modem chipset markets

Vlad Poptamas

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Photo source: reuters.com
Reading Time: 1 minute

 

The European Commission has ordered Broadcom to stop applying certain provisions contained in agreements with six of its main customers. This will prevent serious and irreparable harm to competition likely to be caused by Broadcom’s conduct, which prima facie (at first sight) infringes EU competition rules.

Margrethe Vestager, Commissioner in charge of competition policy, said: “We have strong indications that Broadcom, the world’s leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anticompetitive practices. Broadcom’s behaviour is likely, in the absence of intervention, to create serious and irreversible harm to competition. We cannot let this happen, or else European customers and consumers would face higher prices and less choice and innovation. We therefore ordered Broadcom to immediately stop its conduct.”

Broadcom is the world leader in the supply of chipsets for TV set-top boxes and modems, including so-called systems-on-a-chip. Systems-on-a-chip combine electronic circuits of various components in a single unit, which constitute the “brain” of a set-top box or modem. They are essential to bring the television signals and connectivity to consumers’ premises.

In June 2019, the Commission opened an antitrust investigation to assess whether Broadcom restricted competition in various markets for these chipsets and components for so-called central office/head end equipment by means of certain practices, including exclusivity, tying, bundling, interoperability degradation and abusive use of intellectual property rights.

At the same time, the Commission issued a Statement of Objections where it preliminarily concluded that interim measures with respect to certain aspects of Broadcom’s conduct may be required to ensure the effectiveness of any final decision taken by the Commission in the future.

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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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