July 2015 – What’s app in Europe?
What’s going on in Brussels? This section aims at providing the reader with an overview of some of the most significant issues currently being addressed by the EU institutions.
Greek ‘War’ or ‘Crisis’ still on-going
On 20 February 2015 there was the agreement of the Eurogroup and the other international institutions on the extension of the current financial assistance arrangement with Greece. Since then intensive negotiations have taken place between the EU institutions and the Greek authorities to achieve a successful conclusion of the review and in particular the terms on which the extension could be continued.
Given the prolonged deadlock in negotiations and the urgency of the situation, EU leaders put forward a comprehensive proposal conditions on certain reforms in Greece, making use of the flexibility within the current arrangement. Despite efforts, this proposal has been rejected by Greece which unilaterally broke off negotiations late on 26 June.
In a letter sent to the leaders of the Eurozone on 28 June, Greek Prime Minister asked for an extension of the 2012 bailout programme, which expired on 30 June. Greece has scheduled to hold a referendum on 5 July on the bailout agreement proposed by the lenders and wanted a carry over of its loans until then. The problem is that the deal offered by the Eurozone is no longer valid. This means that the Referendum can only be about accepting austerity or not. Greece recommends rejection of the (out-of-date) proposal. And the outcome of the referendum is very uncertain.
In the meanwhile, banks across Greece remain close between 29 June and 6 July, holders of Greek banks credit cards are allowed to withdraw up to 60 euro per day, customers are queuing up outside pharmacies and supermarkets… this is reminiscent of a “war economy” scenario. At the time of writing, the discussions are still on-going and very last moment changes cannot be excluded.
EU-China Summit
The 17th bilateral Summit between the EU and China took place in Brussels on 29 June 2015, celebrating the 40th anniversary of EU-China diplomatic relations. EU and Chinese leaders agreed to reinforce the EU-China 2020 strategic agenda, adopted at the 2013 summit in Beijing focusing on: peace and security, prosperity, sustainable development, people-to-people exchanges.
Other topics on the agenda were migration and mobility; further development of cooperation on defence and security; protection and promotion of human rights dialogue, as well as regional and foreign policy issues including the situation in Ukraine and in South East Asia.
As to global challenges, leaders also discussed multilateral cooperation on trade, climate and development issues. An EU-China business summit, took place in the margins of the summit. As for climate change negotiations, EU and China discussed the promotion of low carbon and climate-friendly investments bilaterally and internationally. They agreed to aim for a fair and ambitious deal at the international climate conference in Paris in December 2015.
One of the elephants in the room not formally discussed by the leaders (and in particular for which there was no element in summit conclusions) was in relation to whether China can, or should, be considered as a market economy by the EU. This has a big impact on anti-dumping investigations. The EU considers that China does not meet the five EU criteria for consideration as a market economy. China considers that it has the right under WTO law to be considered a market economy. So there is a standoff.
Funding of 13.1 bn euro for transport projects
On 29 June 2015, the Commission approved a record €13.1 billion investment plan in 276 transport projects, selected under the Connecting Europe Facility (CEF). This investment will unlock additional public and private co-financing for a combined amount of €28.8 billion. Along with the future European Fund for Strategic Investments (EFSI), the CEF will play a major role in bridging the investment gap in Europe, which is one of the Commission’s top priorities. Beyond transport, it will benefit the EU economy as a whole by creating more favourable conditions for growth and jobs.
Plan for strengthening Europe’s Economic and Monetary Union as of 1 July 2015
On 22 June 2015, the five Presidents – European Commission (‘Commission’) President Jean-Claude Juncker, together with the President of the European Council, Donald Tusk, the President of the Eurogroup, Jeroen Dijsselbloem, the President of the European Central Bank, Mario Draghi, and the President of the European Parliament, Martin Schulz – have revealed ambitious plans on how to deepen the Economic and Monetary Union (EMU) as of 1 July 2015 and how to complete it by latest 2025.
The key proposals set out in the Report issued on 22 June include a system of competitiveness authorities in the Eurozone, a European deposit insurance scheme (EDIS), the first steps toward a fiscal union, and (maybe) a permanent President of the Eurogroup.
EU Member States have not reacted warmly to the proposals despite, or maybe because of, the Greek crisis. All Member States agree that something needs to be done. All sensible observers say something must be done. Now we have a plan. So maybe, despite opposition, something will begin to emerge.
Restrictive measures against Russia extended
As expected, on 22 June 2015 the Member States’ Foreign Affairs Ministers decided formally to extend until 31 January 2016 the economic sanctions, which were introduced in response to Russia’s destabilising role in Eastern Ukraine. This initiative follows the political guidelines adopted by the European Council in March 2015, when EU leaders linked the duration of these sanctions to the complete implementation of the Minsk agreements, which is foreseen by 31 December 2015. These restrictive measures target certain exchanges with Russia in the financial, energy and defence sectors and dual-use goods.
Green light for EUNAVFOR Med
On 22 June 2015, the Council of the EU launched the EU naval operation against human smugglers and traffickers in the Mediterranean called ‘EUNAVFOR Med’. Its mission is to identify, capture and dispose of vessels and enabling assets used or suspected of being used by migrant smugglers or traffickers.
In total, ten or so Member States are taking part, in particular France, the UK, Italy, Luxembourg and Belgium. EUNAVFOR Med will be conducted in sequential phases, which aim to seize and destroy the resources of the traffickers. The first phase focuses on surveillance and assessment of human smuggling and trafficking networks in the Southern Central Mediterranean. The second stage of the operation provides for the search and, if necessary, seizure of suspicious vessels. A third phase would allow the disposal of vessels and related assets, preferably before use, and to apprehend traffickers and smugglers.
CETA to be done by the end of July
On 23 June 2015, EU Trade Commissioner Cecilia Malmström predicts that the bloc’s pending trade with Canada (Comprehensive Economic and Trade Agreement, CETA) between the EU and Canada could be done by the end of July. Malmström also said that legal experts from Brussels and Ottawa have basically concluded the so-called ‘legal scrubbing’, the final stage for CETA.
Although the negotiations were concluded last September, the ratification process in the EU Parliament, the Canadian Parliament and potentially the 28 Parliaments of the EU Member States has not started yet. This phase will only start once the scrubbing process – which is intended to remove language ambiguity, typos or other inconsistencies in the more than 1,600 pages of the text – is concluded.
However, potential shadows over CETA have not been removed yet. Malmström in fact recognised that the most delicate part of the legal scrubbing, namely provisions on ISDS, has not been started yet.
Commission asks Member States to terminate their intra-EU bilateral investment treaties
In its June Infringements Package issued on 18 June 2015, the Commission initiated infringement proceedings against five Member States[1] requesting them to terminate intra-EU bilateral investment treaties between them (‘intra-EU BITs’). BITs are agreements establishing the terms and conditions for private investment by nationals and companies of one state in another one.
Intra-EU BITs confer rights on a bilateral basis to investors from some Member States only: according to consistent case-law of the European Court of Justice (‘ECJ’), such discrimination based on nationality is incompatible with EU law. The problem with BITs is not theoretical and has very practical consequences. For instance, one recent arbitration proceeding based on an intra-EU BIT has produced an outcome that the Commission considers incompatible with EU law, as the arbitral award constitutes illegal state aid.[2]
The Commission has therefore called on Member States to terminate their intra-EU BITs by sending letters of formal notice to the five Member States from whom clarification had already been sought in the past through administrative dialogues.
Two Member States – Ireland and Italy –already ended all their intra-EU BITs in 2012 and 2013 respectively.
New infringement procedure against Italy
In its June Infringements Package, the Commission requested Italy to ensure that waste disposal and management at old landfills is operating in line with EU legislation. Directive 1999/31/EC[3] on the landfill of waste sets out standards for landfills to prevent adverse effects on human health, water, soil and air.
Almost six years after the final deadline for closure, at least 50 landfill sites in Italy are still not compliant, and should have been either closed or brought up to the standards required. Italy now has two months to notify the Commission of measures taken to remedy this situation. Otherwise, the Commission may decide to refer Italy to the ECJ.
Infringement procedures for lack of compliance with the Services Directive for liberal professions
On 18 June 2015, the Commission launched infringement procedures against Austria, Cyprus, Germany, Malta, Poland and Spain on the grounds that their national rules include excessive and unjustified obstacles in the area of professional services. The Commission considers that requirements imposed on certain service providers in these Member States run counter to Directive 2006/123/EC on services in the internal market.[4]
The national measures under the Commission’s scrutiny include some shareholding requirements and prohibitions of multidisciplinary practices (for architects and engineers in Austria, Cyprus and Malta for patent agents in Austria), compulsory minimum tariffs (for procuradores in Spain, architects, engineers and tax advisors in Germany, patent agents in Poland and veterinarians in Austria), as well as Spanish provisions regulating certain activities of procuradores deemed to be incompatible with those of lawyers.
A Letter of Formal Notice is a first step in an infringement procedure and constitutes an official request for information. The Member States concerned now have two months to respond to the arguments put forward by the Commission
Public consultation on corporate tax transparency
On 17 June 2015, the Commission launched a public consultation on corporate tax transparency in the EU.[5] This consultation aims to find out whether requiring companies to disclose more information about the taxes they pay could help tackle tax avoidance and aggressive tax practices in the EU. For instance, companies could be required to disclose the taxes they pay, in every country where they operate. The consultation will close on 9 September 2015.
Commission v Amazon
On 11 June 2015, the Commission opened a formal investigation into certain business practices of Amazon in the distribution of electronic books (‘e-books’). The Commission suspects the online sales giant of using anti-competitive distribution agreements. The Commission will in particular investigate certain clauses included in Amazon’s contracts with publishers. These clauses oblige publishers to notify Amazon if they offer more favourable or alternative terms to its competitors and/or offer Amazon terms at least as good as those for its competitors. If confirmed, such behaviour could be an infringement of EU competition rules which prohibit abuse of a dominant position and restrictive business practices. The investigations will initially focus on the largest markets in Europe, namely Germany and UK.
First package of third country equivalence decisions in the insurance sector
On 5 June 2015, the Commission adopted its first third country equivalence decisions under Solvency II,[6] the EU’s new prudential regulatory regime which sets out rules to develop a single market for the insurance sector.
After receiving equivalence, EU insurers can use local rules to report on their operations in third countries, while third country insurers are able to operate in the EU without complying with all EU rules. These equivalence decisions take the form of delegated acts and they concern Switzerland, Australia, Bermuda, Brazil, Canada, Mexico and the USA. They will provide more legal certainty for EU insurers operating in a third country as well as for third country insurance companies operating in the EU.
Red light to UK traffic lights labelling scheme
On 16 June 2015, the EP JURI Committee adopted an Opinion on a project of simplification of the EU regulatory framework (Refit) of the Commission on nutritional claims. This vote approved the amendment proposed by the EP ENVI Committee that appeals to the Commission to review the scientific basis of Regulation No 1924/2006 on nutritional claims[7] and remove the concept of ‘nutrient profiles’. The dossier is now expected to pass the scrutiny of the EP Plenary Session on 7 July 2015.
This Opinion can be considered as a signal against the UK labelling scheme that uses the red light to classify as ‘unhealthy’ many excellences of ‘Made in Italy’ because of their content of salt, sugar and fat.
Labelling of foodstuffs must not mislead consumers
By judgment delivered on 4 June 2015 in Case C-195/14 Bundesverband der Verbraucherzentralen und Verbraucherverbände – Verbraucherzentral Bundesverband e.V. v Teekanne GmbH & Co. KG, the ECJ found that the labelling of a foodstuff must not mislead the consumer by giving the impression that a particular ingredient is present, even though it is not in fact present.
In the case at issue,[8] a German company markets a fruit tea called ‘Felix raspberry and vanilla adventure’. The packaging includes depictions of raspberries and vanilla flowers and the indications ‘fruit tea with vanilla natural flavourings’ and ‘fruit tea with natural flavourings – raspberry-vanilla taste’). However, the fruit tea does not contain natural ingredients from vanilla or raspberry or flavouring obtained from them. The list of ingredients, which is on one side of the packaging, reads: ‘Hibiscus, apple, sweet blackberry leaves, orange peel, rosehip, natural flavouring with a taste of vanilla, lemon peel, natural flavouring with a taste of raspberry, blackberries, strawberry, blueberry, elderberry’. A German consumer-protection association complains that through the packaging the company misleads the consumers with regard to the tea’s contents.
By its judgment, the ECJ first upheld that EU law[9] requires that the consumer have correct, neutral and objective information that does not mislead him and that the labelling of food products cannot mislead.
The ECJ also made clear that the list of ingredients, even though correct and comprehensive, may not be capable of correcting the erroneous or misleading impression which the consumer has from the labelling of the foodstuff. Therefore, where the labelling of a food product gives the impression that a particular ingredient is present in that foodstuff, even though it is not in fact present (this being apparent from the list of ingredients), such labelling is such as could mislead the purchaser as to the characteristics of the foodstuff in question.
[1] The Member States concerned are Austria, the Netherlands, Romania, Slovakia and Sweden.
[2] The arbitral tribunal in the Micula case ordered Romania to pay damages to a Swedish investor, ignoring the Commission’s position that such an award would infringe EU state aid rules.
[3] Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste, oj l 182, 16.7.1999, p.1.
[4] Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, OJ L 376, 27.12.2006, p.36.
[5] The text of the public consultation can be found at the following webpage: http://ec.europa.eu/finance/consultations/2015/further-corporate-tax-transparency/index_en.htm
[6] Directive 2009/138/EU of 25 November 2009 on the taking-up and pursuit of the business if Insurance and Reinsurance (Solvency II), OJ L 335, 17.12.2009, p.1, as amended by Directive 2013/58/EU, and complemented by Commission Delegated Regulation 2015/35. Solvency II is a Directive which will be applied from 1 January 2016. Solvency II introduces the first harmonised, risk-based regulatory regime in the EU, including quantitative, governance and reporting rules, to facilitate the development of a single market in insurance services.
[7] Regulation (EC) No 1926/2006 of 20 December 2006 on nutrition and health claims made on foods, OJ L 404, 30.12.2006, p.9.
[8] The present case is a reference for a preliminary ruling from the Bundesgerichtshof (the German Federal Court of Justice).
[9] Directive 2000/13/EC of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs (OJ 2000 L 109, p. 29), as amended by Regulation (EC) No 596/2009 of 18 June 2009 (OJ 2009 L 188, p.14).
