While you are looking forward to departing on your well-deserved summer holidays (or are reading our newsletter while at your holiday destination already), the EU institutions have likewise reduced their activities to a minimum as from last week until the end of August.
The month of July, however, has been particularly eventful for the EU Institutions. The major re-shuffle of EU top jobs (i.e. the infamous 'package deal') was settled after intense negotiations amongst EU Member States and between the Member States and the European Parliament, this month. European Commission President-elect Ursula von der Leyen is now engaged in dialogue with the Member States to assemble her College of Commissioners, which Parliament is scheduled to approve in October.
The new Commission is expected to assume office on 1 November, and its re-calibration of the EU's policy and legislative priorities (in coordination with the Member States) will have significant implications for all businesses operating across the EU.
Although the next Commission Work Programme is only expected to be published in November 2019, the 'Political Guidelines' of future Commission President von der Leyen may already provide an indication of the EU's priorities for the coming term. According to these Guidelines, the next Commission's (and hence the EU's) policy priorities for 2019-2014 will focus on the fields of climate/sustainability, economy, the digital agenda, security, a strong EU globally, and European democracy/the rule of law.
In the meantime, while continuing to monitor the above developments of medium- and long term importance to companies from different sectors, we are pleased to provide you with the below updates on specific EU policy and legislation of relevance to businesses:
- EU-Vietnam Trade and Investment Agreements signed
- Political agreement reached for a comprehensive EU-Mercosur trade agreement
- Sustainable Finance: Commission hosted stakeholder dialogue to discuss latest expert reports
- Commission calls for better implementation of anti-money laundering and terrorist financing rules
- EU Cybersecurity Act introduces EU-wide cybersecurity certification rules
Enjoy the read, and happy summer holidays!
Your EU Regulatory, Trade and Government Affairs team in Brussels
EU-Vietnam Trade and Investment Agreements signed
Following the adoption of the decision by the EU Member States in the Council to sign an EU-Vietnam free trade agreement (FTA) and an investment protection agreement (IPA), both agreements were signed in Hanoi on 30 June 2019. The agreements are expected to increase trade flows and create jobs and growth on both sides by:
- eliminating 99 percent of customs duties and partly alleviating the remaining ones through limited zero-duty quotas;
- reducing regulatory barriers;
- introducing protection of geographical indications (GIs);
- facilitating access for EU companies to Vietnamese services and public procurement markets;
- facilitating investments by EU companies in Vietnam's key manufacturing sectors; and
- ensuring enforcement of the agreed rules.
The deal also contains provisions relating to the respect for human rights, environmental protection and workers' rights.
For European exporters and investors, the agreements are expected to facilitate access to Vietnam's substantial agricultural, industrial and services market. The agreements should also result in lower prices for consumers.
The texts will enter into force after completion of the ratification process by each Party, in line with their respective legal procedures. The agreements require the signature of the Vietnamese National Assembly for ratification and the European Parliament's consent, as well as - in the case of the Investment Protection Agreement - ratification by the national parliaments of the EU Member States.
Political agreement reached for comprehensive EU-Mercosur trade agreement
On 28 June 2019, the EU and the Mercosur countries Argentina, Brazil, Paraguay, and Uruguay have reached political agreement on a comprehensive trade deal. The EU is Mercosur's most important partner in trade and investment, with EU exports in goods having reached EUR 45 bn in 2018. The agreement aims to further expand mutual trade and investment, including by reducing barriers for EU exporters and investors in Mercosur markets.
The EU-Mercosur trade agreement (as agreed in principle) represents the trade pillar of a comprehensive new Association Agreement (AA) between the two regions. General agreement on the political and cooperation (e.g. on digital economy, research, corporate responsibility) pillars has already been reached earlier in June 2018.
The EU-Mercosur trade agreement, in particular, aims to:
- eliminate tariffs for key EU export products such as cars, machinery and pharmaceuticals;
- simplify customs and compliance procedures;
- facilitate the selling of services and establishing a business presence;
- enable EU firms to access public contracts;
- protect from imitation traditional products recognised as Geographical Indications (GIs); and
- provide SMEs with an online platform to facilitate access to information.
The agreement also stipulates EU standards for food safety and consumer protection, and principles relating to sustainable development, labour rights and environmental protection.
The agreed text will now be legally revised by both parties, with the aim of compiling the final version of the Association Agreement, including its trade elements. This final version of the AA will require the approval of the EU Member States and the European Parliament.
Sustainable Finance: Commission hosted stakeholder dialogue to discuss latest expert reports
On 24 June 2019, the European Commission organised a discussion on the latest reports of its Technical expert group on sustainable finance (TEG) and presented the new guidelines on corporate climate-related information reporting. The Commission established the TEG in June 2018 to take forward the EU's efforts on sustainable finance, which are expected to increasingly impact EU companies operating in all sectors.
The following three reports were issued:
- a report on the EU taxonomy - reflecting feedback received on the TEG's proposals to develop a comprehensive classification system for climate change mitigation and adaptation. A call for feedback is open until 13 September 2019;
- a report on the EU Green Bond Standard (GBS) - recommending criteria for issuing green bonds on the basis of a voluntary, non-legislative GBS; and
- an interim report on climate benchmarks and benchmark's Environmental, Social and Governance (ESG) disclosures - reflecting feedback obtained on the TEG's effort to define minimum standards for the methodologies of the EU climate transition and benchmarks in line with the Paris agreement. Stakeholders can contribute views via an ongoing call for feedback.
The non-binding guidelines on corporate climate-related information reporting aim to help companies to disclose non-financial information under the Non-Financial Reporting Directive to share climate-related information in a consistent manner.
Once the Taxonomy Regulation has been agreed, the Commission is expected to draft delegated acts, likely to be adopted by early 2020. It will be up to the next Commission to take forward the TEG's proposals on the EU-GBS and climate benchmarks.
Commission calls for better implementation of anti-money laundering and terrorist financing rules
On 24 July 2019, with the aim of helping EU and Member States' authorities better address the risks of money laundering and terrorist financing, the European Commission adopted a Communication accompanied by four reports.
In view of the Commission's objective to strengthen the EU's anti-money laundering (AML) and counter terrorist financing rules, this latest effort follows the introduction of the fourth and fifth AML Directives and expansion of the European Banking Authority's supervisory function.
The reports reiterate the need for implementation of existing rules, calling for structural deficits to be addressed:
- Supranational risk assessment - Report assessing the risks of money laundering and terrorist financing affecting key EU sectors, with the newly assessed sectors including ATMs, professional football, free ports, and investor citizenship and residence schemes ('golden passports').
- Financial Intelligence Unit (FIU) - Report assessing the rules for FIUs' cooperation with third countries and obstacles and opportunities to enhance EU-wide inter-FIU cooperation.
- Interconnection of central bank account registries - Report assessing the conditions for secure and efficient interconnection of central bank account registers.
- Assessment of recent alleged money laundering cases involving EU credit institutions - Report.
The Commission has indicated that next steps could include further harmonisation of the EU's AML and counter terrorism financing legislation regarding the duties of credit institutions and supervision. This might include transposing the AML Directive into a Regulation, making it directly applicable in the Member States. It will be up to the incoming Commission, scheduled to take office on 1 November 2019, to take any such future decisions.
EU Cybersecurity Act introduces EU-wide cybersecurity certification rules
On 27 June 2019, the European Cybersecurity Act entered into force, introducing the first-ever EU-wide rules on the cybersecurity certification of products, processes and services, and strengthening the role of the EU Agency for Cybersecurity (ENISA).
The European cybersecurity certification framework establishes tailored and risk-based EU certification schemes, aiming to increase the cybersecurity of online services and consumer devices. Such European cybersecurity certification scheme comprises a comprehensive set of EU-wide rules, technical requirements, standards and procedures serving to evaluate a specific product, service or process on the basis of its cybersecurity properties. Each certificate will carry one of three assurance levels, and will be recognised EU-wide.
The harmonised rules are expected to facilitate cross-border trade of relevant products and services, reduce market-entry barriers, and simplify the process of cybersecurity certification.
ENISA has received a permanent mandate with additional responsibilities and resources to better help Member States in addressing cybersecurity threats and incidents. This includes support to policy implementation, standardisation, certification, crisis management and coordinated vulnerability disclosure. ENISA's mandate has been applicable since 27 June 2019. The Commission is currently preparing the requests for ENISA to design certification schemes and to establish two expert groups:
- the European Cybersecurity Certification Group, consisting of Member States representatives; and
- the Stakeholder Cybersecurity Certification Group, mandated to advise ENISA and the Commission.
I.a. on the basis of a public consultation, the Commission will identify strategic priorities for certification and a list of ICT products, services and processes to be included in the scheme.