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EU Commission to hold a meeting with stakeholders on the establishment of the Multilateral Investment Court on 22 March 2019

03/03/2019

On 22 March 2019, the EU Commission will hold a meeting with stakeholders on the reform of investor-State dispute settlement (ISDS).

The meeting will focus on the establishment of a fully-fledged two-tiers’ multilateral investment court, the Commission’s proposal for ISDS reform arised out of the TTIP negotiations in 2015.

After the impact assessment process on options for a multilateral reform of the investment dispute settlement system, on 20 March 2018 the Council adopted and published the negotiating directives for the multilateral investment court.

The EU is also negotiating the establishment of the court at the multilateral level in UNCITRAL Working Group III. The submissions presented by the EU in UNCITRAL are available here and here.

 Registration for th event is available here. The event will be livestreamed.

The European Parliament adopts a resolution on the recommendations for opening of trade negotiations between the EU and the US

26/02/2019

After that on 19 January 2019 the international trade committee voted in favour of a resolution calling for new talks between the EU and the US to start, the EU Parliament is engaged in an effort to make sure that such relations develop in the framework of the EU values.

Notably, with the input of Mr. Bernd Lange, chair of the international trade committee,the European Parliament has adopted a resolution pointing out that the mentioned negotiations shall not start before the US complies with some of the conditions indicated in the resolution of the the international trade committee of 19 January 2019.

These are specifically that the negotiations exclude agriculture and that the US lifts its tariffs on aluminium and steel.

The Commission will have to take into account the position of the EU Parliament: any deal resulting from these talks has to be approved by the European Parliament before it can enter into force.

The European Commission submitted its draft negotiating mandates to the Council for approval on 18 January. The mandates will authorise the Commission to negotiate with the US on eliminating tariffs on industrial goods and on harmonising conformity assessment.

Parliament will vote on its stance on the mandates in March. EU Council of Ministers is expected to adopt the draft negotiating mandates in the same month. The Commission will start negotiations on the basis of the final mandate.

EU Parliament approves the new European framework for screening of foreign direct investments

18/02/2019

On 14 February 2014, the European Parliament has approved the new European framework for screening of foreign direct investments.

The approval follows the political agreement reached on 20 November 2018 by the European Parliament and the Council on the proposal of the Commission for the first comprehensive European Union (EU) framework for the screening of Foreign Direct Investments.

The framework responds to growing concerns in many EU countries that state-owned or state-controlled foreign investors are increasingly acquiring control over high-tech companies and critical infrastructure in Europe.

The framework does not establish EU-level screening nor it harmonizes existing screening mechanisms of the Member States.Rather, it sets up a common legal framework in which such mechanisms can develop. Specifically, among other things, the framework:

1.Lays down minimum requirements for Member States’ FDI screening schemes (judicial protection, non-discrimination, transparency);

2. Will allow the Commission to provide advice to Member States if it considers that a planned or executed investment could have an impact on safety or public order in one or more Member States.

3. Provides for a cooperation mechanism between the Member States and the Commission. Under the framework, Member States should keep each other and the Commission informed of any foreign direct investment that is screened by their national authority. They must also share certain information on request, such as the ownership structure of the foreign investor and the financing method.

The Regulation needs now to be approved by the Council to enter into force.

EU-Japan EPA Enters Into Force

01/02/2019

Today the Economic Partnership Agreement (EPA) between the EU and Japan entered into force. As of today, also a large part of another agreement between the two parties – the Strategic Partnership Agreement – becomes provisionally applicable.

The EPA, which represents the outcome of longstanding negotiations started in 2013, addresses several aspects of the commercial relations between Japan and the EU, by for instance:

  • Removing customs duties – tariffs on more than 90% of the EU's exports to Japan;
  • Safeguarding the geographical indications of  numerous EU exports;
  • Reducing many non-tariff measures, is so facilitating the access of EU companies to the highly regulated Japanese markets, such as the automotive sector;
  • Opening the services sectors;
  • Removing a number of access barriers to the market of public procurements in Japan.

The deal also includes a comprehensive chapter on trade and sustainable development and sets the highest standards of labour, safety, environmental and consumer protection.

AG Bot finds that the ICS – the mechanism for the settlement of disputes between investors and States provided in CETA – is compatible with EU law

29/01/2019

In his much anticipated opinion rendered today, Advocate General Bot found that the mechanism for the settlement of disputes between investors and States provided for by the free trade agreement between the EU and Canada is compatible with EU law.

The AG’s opinion sparks from the request for an opinion (C-1/17) of the European Court of Justice (“ECJ”) pursuant to Article 218(11) TFEU filed by Belgium on 7 September 2017 regarding the compatibility with EU law of the Investment Court System (“ICS”) provided for by the Comprehensive Economic and Trade Agreement between the EU and Canada (“CETA”). Specifically, Belgium expressed reservations as regards to the effects of that mechanism on the autonomy of EU law, the general principle of equal treatment, the requirement that EU law is effective, and the right of access to an independent and impartial tribunal.

In the opinion of AG Bot, “autonomy” of the EU legal order cannot be understood as autarchy. Indeed, the creation of a common set of rules and standards to regulate the EU relations with third countries calls for the creation of an independent system of protection for investors, both in the EU and on the territory of the Union’s trade partners. This conclusion is also supported by the absence of direct effect of CETA, which excludes that national courts may enforce the safeguards included therein. The AG also draws a comparison – and underlines the differences – between the ICS and the system of investment arbitration, found incompatible by the ECJ in the Achmea judgement (C-284/16): whilst the Court in Achmea was safeguarding the essential principles of mutual trust and loyal cooperation which govern the relationship between the Member States, the ICS does not impinge in such principles.

AG Bot further observes that the ICS would not be able to interpret and apply EU law, it would be unable to order the annulment of EU law measures considered in violation of CETA, and it would be prohibited from ruling on the division of powers between the EU and its Member States. Thus, its structure and functioning safeguard the “autonomy” of EU law. Of particular relevance is the observation that the law applicable by the ICS consists of the provisions of CETA, applied in the light of international law. On those instances where the ICS would be requested to apply EU law, it would be bound by the decisions of the ECJ (CETA, para. 8.31.2).

The AG also concludes that the ICS does not undermine either the application of EU law or the role of national courts to start preliminary references procedures: on the one hand, its jurisdiction does not limit the substantive rights enjoyed by investors in the EU; on the other, the role of national courts “to hear and determine actions brought with a view to ensuring the observance of such rights as are afforded by internal EU law” remains untouched.

Finally, for AG Bot, the ICS affords investors with the right of access to an independent and impartial tribunal as provided under Article 47 of the European Charter of Fundamental Rights. Not only the ICS is only an alternative method of dispute resolution relating to the application of the free trade agreement – which complements the remedies offered by the contracting parties – but also it includes procedural safeguards essential to ensuring the right of access to an independent and impartial tribunal, such as the remuneration of the judges, the rules for their appointment and possible removal, and the specific rules on ethics applicable to them.

EU steps up engagement with Republic of Korea over labour commitments under the trade agreement

23/01/2019

On 21 January 2019, the EU has begun government consultations with the Republic of Korea regarding the implementation of the sustainable development commitments under the EU-Korea trade agreement following the formal request issued on 17 December 2018. The EU-Republic of Korea trade agreement, in place since 2011, was the first of the “new generation” comprehensive trade agreements that include a trade and sustainable development chapter, with a number of labour and environmental commitments based on multilateral standards and agreements. The EU-Republic of Korea trade agreement is now in its eighth year of implementation and the EU considers it is time that progress is made and therefore supports the efforts of President Moon to move forward to ratification and legislative changes in this field. The EU has two key longstanding concerns with regard to Korea’s implementation of the commitments on trade and sustainable development: on the one hand, the respect for the International Labour Organisation (ILO) fundamental principles of freedom of association and the right to collective bargaining and, on the other one, the outstanding ratification by Korea of four fundamental ILO Conventions: two concerning freedom of association and the right to collective bargaining and two concerning forced labour.​

 

The EU moves forward efforts at UN on multilateral reform of ISDS

21/01/2019

On 18 January 2019, the EU and its Member States submitted two papers to the UN Working Group under the United Nations Commission on International Trade Law (UNCITRAL) on the multilateral reform of ISDS. The first EU paper sets out the EU’s proposal of establishing a permanent multilateral investment court with an appeal mechanism and full-time adjudicators. The EU views this as the only reform option that can effectively respond to all the concerns identified in this UN process as it would:

• enhance the predictability and consistency of decisions and ensure their correctness,

• eliminate the ethical concerns of the current system, and

• effectively address the problems of excessive costs and duration.

The second paper makes proposals for an effective work plan so that the Working Group develops concrete solutions and text proposals to be adopted by the UNCITRAL Commission and ultimately the UN General Assembly. The EU papers are a contribution to a multilateral discussion on ISDS reform with broad and inclusive participation of all countries and stakeholders. The proposals by the EU and its Member States and by other countries will be discussed at the next meeting of the Working Group from 1 to 5 April 2019.

The EU Commission submits two proposals to Uncitral Working Group III regarding the reform of investor-state dispute settlement

18/01/2019

Following up on the invitation by the President of the UNCITRAL Working Group III to participating parties of 22 November 2018 to present concrete written proposals regarding the future of investor state dispute settlement, on 18 January 2019 the EU Commission submitted two documents for discussion to the Working Group.

A first document, “Establishing a standing mechanism for the settlement of international investment disputes” sets out the coordinates of a standing mechanism to resolve disputes between investors and states. It also reiterates that a permanent mechanism is the only type of reform which can effectively respond to all the concerns identified in the works of UNCITRAL Working Group III since its first meeting on 27 November-1 December 2017 in New York.

The second document, “Possible work plan for Working Group III” identifies the four practical steps that, in the opinion of the EU, the Working Group should undertake in its future work. These are: 1) Identification and proposal by governments of their preferred reform options; 2) Identification of which of the reform options put forward should be the subject of further work on the part of the Working Group; 3) Discussion and decisions in respect of the priority to be given, the sequencing of the deliberations, the possibility of multiple tracks, coordination with other international organisations and inter-sessional work of the options identified; 4) Development of concrete solutions and text proposals, which could be adopted or endorsed by the UNCITRAL Commission and, ultimately, the General Assembly of the United Nations.

The EU to impose definitive safeguard measures on the import of certain steel products

09/01/2019

In response to the US’ adoption of protectionist measures for its steel industry, the EU intends to impose definitive safeguard measures on the import of certain steel products.

 

In a report notified to the WTO on 2 January 2019, the Commission explains that it intends to apply tariff-rate quota on 26 steel product categories (listed in Annex II of the report) to prevent “serious injury” to the EU steel market.

 

The adoption of the measures is based on an impact assessment carried out by the Commission, which highlighted the negative consequences that the imposition of the US Section 232 measures is having on the vulnerable EU steel market.

 

The measures will consist of tariff-rate quota by which a duty of 25% will apply when the level of the traditional trade flows is reached

 

The notification to the WTO explains that the measures will be introduced before 4th February 2019, date when the application of provisional measures already in place for those products from 18 July 2018 (G/SG/N/7/EU/1 and G/SG/N/11/EU/1) will expire. The safeguard measures will last for a period of three years (including the period of imposition of the provisional measures), until 16 July 2021.

 

Not all steel importers will be however affected. The provisional measures should exclude products originating in certain developing countries, which meet the requirements of Article 9 of the WTO Agreement on Safeguards, and, by reason of the high level of market integration, also steel products originating from EEA countries.