Articles Tagged with EU

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The EU’s new Joint Communication on a European Economic Security Strategy proposes a methodology for an EU economic security risk assessment and identifies measures to mitigate these risks. The Strategy is noteworthy because it offers a comprehensive view of the EU’s overarching strategy for multiple existing or proposed new EU legislative and policy tools including export controls, FDI screening and domestic investment in critical technology through the EU’s own proposed Chips Act, and how these tools would work together to reduce EU economic security risks. It also signals the EU’s intention to align more closely with the U.S. regarding China, including with respect to reducing supply chain dependencies and new tools like outbound investment controls.

(This is the second post of a three-part series on U.S., UK and EU alignment on economic security strategy.)

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The EU Foreign Subsidies Regulation (FSR) entered into force on January 12, 2023 and will start to apply from July 12, 2023. Under the FSR, the European Commission will have powers to intervene against distortions to competition in the EU internal market caused by companies active in the EU that benefit from foreign subsidies. A new notification regime will be introduced for certain M&A transactions and public tenders that is independent from current EU/national merger control and foreign direct investment notification requirements, and the Commission will have powers to conduct investigations into potentially distorting foreign subsidies.

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The European Union has adopted the new EU Deforestation Regulation, whereby applicable companies must implement a rigorous due diligence process to ensure that certain products and commodities sold in or out of the EU are not the result of, or have led to, deforestation or forest degradation. The commodities subject to the Regulation are cattle, cocoa, coffee, palm-oil, soya and wood, as well as any products that contain, have been fed with or made using these commodities (e.g., leather, chocolate and beef). Once it enters into force, large companies will have 18 months to comply, while small and medium-sized companies will have 24 months. Failure to do so may result in a fine of at least 4% of total annual EU-wide turnover or the seizing revenue made from the sale of the commodities or products.

Companies should review whether (and how) they are caught by the new law and review existing processes, governance frameworks and supply chain risks to ensure that new obligations (e.g., with respect to due diligence) are adhered to.

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On February 27, 2022, the U.S., UK and EU announced their agreement that certain Russian banks would be delisted from the Belgian-based Society for Worldwide Interbank Financial Telecommunication (SWIFT). The EU, which has jurisdiction over SWIFT, implemented sanctions measures that will ban the organization, effective March 12, 2022, from providing financial messaging support anywhere in the world for the following Russian financial institutions and their Russian subsidiaries:

  • Bank Otkritie;
  • Novikombank;
  • Promsvyazbank (PSB);
  • Bank Rossiya;
  • Sovcombank;
  • Vnesheconombank (VEB); and
  • VTB Bank

The SWIFT announcement has raised questions about how this action relates to existing sanctions and general licenses for Russian banks. We explore the differences below.

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The EU and UK have imposed additional export controls and sanctions with respect to Russia and Belarus connected to the Russian invasion of Ukraine. Below is a summary of key developments over recent days since our last blog post on EU and UK developments [here]. This is a rapidly developing area and future blog posts will summarize further developments.

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On April 8, 2019, the United States Trade Representative (USTR) proposed imposing tariffs on $11.2 billion worth of products from the European Union (EU). USTR took this action in connection with an over decade long battle between the EU and the U.S. before the World Trade Organization (WTO) over mutual claims of illegal government subsidies to Airbus and its American rival, Boeing. In May 2018, the WTO Appellate Body upheld a panel finding that the EU failed to eliminate certain subsidies previously found to be WTO inconsistent, authorizing the U.S. to seek retaliatory tariffs on EU goods. USTR has estimated that the EU subsidies to Airbus have resulted in harm of $11 billion in trade annually to the U.S. This figure is subject to review by a WTO arbitrator who will determine the level of countermeasures to be authorized in the case. This report is expected to be issued this summer.

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On April 17, 2019, the Trump Administration announced that it will allow U.S. citizens whose property was seized by the Cuban Government after 1959 to sue foreign companies that “traffic” in their confiscated property. This step implements Title III of the “Cuban Liberty and Democratic Solidarity Act” or “Libertad,” often referenced as the “Helms-Burton Act”, which had been suspended for over 20 years. The announcement reflects the Trump Administration’s goals of rolling back the Obama Administration’s relaxation of sanctions on Cuba and pressuring Cuba to back off its support for Nicolás Maduro in Venezuela.

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