China: Market Economy Status

The Maltese president of the Council has successfully guided the Member States to an agreed position on the Commission’s proposal not to grant market economy status to China but to change the way in which dumping is calculated. The European Parliament is expected to come to a position in July. In June, the main parliamentary committee the INTA Committee is expected to reach its view and this view will then be presented to the Parliament as a whole for the vote in July.

When both the Parliament and the Council have reached a position and if those positions are different from the Commission’s proposal, which they will be, the Parliament, the Council and the Commission sit down together in ‘Trilogue’ to try and reach a common position. It is not thought that both houses of the legislature, the Parliament and the Council, will be that far apart that it will not be possible to reach a common position.

In the meantime, China has asked the WTO to establish a Panel to rule on the legality of the current dumping methodology. The Panellists are expected to be nominated before the summer and, if that happens, to complete their work before the end of 2017.

Tax breaks in Ireland

If you remember the European Commission ruled in 2016 that Google had to pay up to Euro 13 billion to Ireland in back taxes. Ireland (and Google) have asked the General Court of the EU in Luxembourg to find that the Commission decision is illegal and should be annulled. These cases will take up to two years to reach a conclusion. In the meantime Google is supposed to put the money into an Escrow account. It is not clear that this has happened.

The European Commissioner for Competition Margrethe Vestager was called before an Irish Parliament committee looking into the matter. She went and said that she was not complaining about the fact that Ireland has a corporate tax rate of 12.5 % but that not even this tax was collected. It seems that the Irish parliamentarians had nothing else to say and the meeting fizzled out.

EU restrictions on trade in certain metals

It’s long been known that oil finances war. ISIS is only one of the most recent examples. Oil finances the purchase of US$ 110 billions of arms by Saudi Arabia from the US. However, the first is illegitimate and the latter is legitimate. An important distinction for lawyers. Precious stones and certain metals can also finance war. The EU has already introduced rules in relation to precious stones. In the last month the EU has introduced rules on tungsten, tantalum, tin and gold or the 3TG metals. All metals are found in zones of the world subject to conflicts and at the same time all have importance in high tech products. So the idea is to allow trade to flow but to limit the possibility that the benefit does not go to illegitimate groups that control mines and exploit them in abuse of human rights.

Unfortunately, the new rules will only come into force in 2021. That’s another four and a half years of possible use of revenues by illegitimate mine exploiters. The hope is that the individual Member States will introduce laws to control trade in the short term. An EU compromise.

Where do the UK’s two EU agencies go?

The UK plays host to the European Medicines Agency and to the European Banking Authority. They will not stay in the UK after Brexit. So where will they go? And how much will it cost in money and in human terms to move them?

In the past the location of agencies was agreed in horse trading between heads of state and government. And sometimes the trading was rough. It had been agreed that the European Food Safety Authority was to go to Helsinki until Silvio Berlusconi stepped in to say that what do Finns know about food and that it must come to Parma. Essentially he blocked all EU business until the other Member States gave in and agreed that it should in fact go to Parma.

The Commission has decided to step-in to the decision on where the two UK agencies should go. It has come out with a paper saying that Member States have until 31 July to bid for the agency and that no one Member State could get both. The paper (supposedly authored by Juncker and Tusk) points out the Bulgaria, Romania, Croatia, Cyprus and Slovakia current have no agencies. To prevent that the banking agency should go to a country not famous for transparency or dynamism the paper recalls that that idea of a spreading out agencies to all Member States only applies to new agencies and not the relocation of existing ones. Clever.

The paper touches on the human cost of relocation and points out that 648 children of staffers in the agencies will have to move. This means that a European School will need to be available or established. If schooling is the criteria then northern Italy and northern Belgium have schools with places.

Decisions will have to be made in the Autumn so that the moves can be in place before the Brexit D-day.

And more thoughts on Brexit

Across does not need to, nor does it attempt to, compete with main stream media on the latest ups and downs of Brexit. At the same time we cannot leave it alone. Because there are so many legal issues to address. Take medicines as an example. It’s not just about where the Medicines Agency is located. It’s what it does. It grants authorisations to companies to sell to 500 consumers (soon to be 460 million). Getting authorisations is expensive. But if the market is 500 million then it can be worth it. But what if the UK has to set up its own authorisation system and wants it to be as rigorous as the EU system.

That means the same cost (both in the administering of the system and in the applying  for authorisations). But the potential market is just 60 million. So it makes sense that the UK stays part of the EU system. But is that a step too far. It means subjecting the UK to the EU Court of Justice, one of the Therese May red lines. How this will play out will determine much of what else happens in Brexit.

The other big issue is agriculture. If the UK cuts and pastes the EU’s WTO Country Schedule this will mean that food and agricultural trade from Ireland and the EU into the UK will face steep tariffs. No one wants that. But working out how to avoid it, and how to avoid that New Zealanders and Australians don’t replace Irish and Danish exports to the UK is not straightforward. Because as a stand-alone WTO member the UK will not be able to discriminate in favour of Ireland and Denmark and against NZ and Australia unless the EU and the UK do a free trade deal. Most commentators see that as a 7 year negotiation. So what happens in the short term? Kept watching this space.

And finally there is the decision by the Court of Justice on the Singapore free trade deal with the EU. The decision was in relation to who gets to ratify the deal: the EU alone or the EU and each and every one of the 28 Member States (and their sub bodies and provinces). Some in the general media have said it’s a good decision for Brexit. Others say the opposite. Meaning it’s a mixed decision just like the Free Trade Agreement that was under review. Hopefully the EU and the UK can be clever enough in their negotiations to ensure that the body of the free trade deal does not give competence to all 27 remaining Member States. If they can’t achieve that we really are not blessed with our current crop of politicians.