EU carbon border tax

The European Green Deal, proposed by President von der Leyen to be delivered in the initial 100 days in office, will include the first European Climate Law enshrining the 2050 climate-neutrality target into legislation. The Green Deal will include a more inclusive Emissions Trading System (ETS), as well as a Carbon Border Tax to mitigate ETS’s effects on the market.

An extension of the ETS in the airlines sector will be translated to increased costs for the industry and additional taxes. The adjustment tax is yet to be formally proposed, but it aims to prevent businesses from relocating to laxer jurisdictions, creating ‘carbon leakage’, and to protect them from non-EU competitors.

The additional tax-burdens are met with criticism due to their incompatibility to WTO rules and the distortion of the level-playing field. If not applied unanimously with European unilateral backing, the tax adjustment risks high costs for businesses and consumers. Additionally, sectors with a high degree of cross-border division of labour or a global supply chain will be most heavily affected. Ramifications of the supposed tax were also felt in wider sectors outside the energy industry, as the levy is feared to worsen trade relations with the US, causing increased tariffs on EU products.

EU to enforce rules on online payments

The European Payments Service Directive II (PSD2), in force since January 2018, is currently stirring debate among Member States regarding the process of its implementation. The Directive is designed to harmonize and simplify money transfers inside the EU, decrease fraud in online payments, and inform consumers about the rights and obligations.

The revised PSD2 extends several obligations concerning data protection and information to and from international payments. It mandates stronger security requirements for online transactions and obliges providers to request customer authentication and demands they register. While the PSD2 compliance date was set for September 2019, the European Banking Authority unconditionally extended the implementation period in order to allow for full application of the new requirements. Nevertheless, a fixed common EU-wide transition period, agreed upon by Member States, is anticipated by the European Commission in order to ensure state-wide compliance.

Enforcement of PSD2 will allow consumers and merchants to increasingly benefit from the internal market and e-commerce. Its efficient integration will increase competitiveness and cost-efficiency for consumers and service providers. PSD2 will allow companies, other than banks, to offer new financial services to the public with consumers’ consent.

EU restrictions on electrical and electronic materials

European legislation restricting the use of hazardous substances (RoHS) in electrical and electronic equipment was approved in 2003 and has since been reviewed in 2011 and 2017. The European Commission initiated in September a consultation to collect public and business’ opinions in order to assess the performance of the restriction of hazardous elements, the management of chemical waste and the impact of these materials on human and environmental health. Currently the use of lead, mercury, cadmium, hexavalent chromium, PBB and PBDE in electrical and electronic equipment is restricted. Four phthalates were recently added to this list in July 2019.

The evaluation will assess the effectiveness, efficiency, relevance and coherence of the current RoHS. The consultation will evaluate the functioning of the Internal Market, ensuring that the current legislation avoids distortion of competition that arises from differing product requirements among Member States. Input from the consultation will shape the Commission’s decision on policy options for the future. Amendments to the directive will affect a wide scope of manufacturers, as any product, which requires electric currents, is within scope. It has potential to affect the circular economy, restrict chemicals, and increase the standards of chemical waste management.

EU to regulate voice call termination rates

The European Commission has launched a public consultation to gather stakeholder and the public’s opinion on the scope and application of the future EU harmonized rules on voice call termination services. A termination rate is one component in the cost calculation for providing telephone service and is subject to most variation in the EU.

Commission is expected to adopt a Delegated Act in the field of voice call termination rates in Member States by 31 December 2020. The current differences have distorted cross-border competition and fragmented telecom markets. Therefore, the regulation is intended to standardise rates by establishing a pan-European maximum termination rate for fixed and mobile calls. This consultation will determine the services that fall under voice call termination. Telecommunication operators and consumers will benefit, as mitigating the risks of excessive pricing will increase consumption.

EU to review European Financial Benchmarks

As a result of the manipulation of two prominent benchmarks – the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) – the EU adopted the Benchmark Regulation (BMR) on indices used in financial instruments and contracts or to measure the performance of investment funds in January 2018. The European Commission has initiated a consultation on the review of the BMR, two years after its entry into force to collect stakeholders’ opinions on benchmarks’ efficiency.

The European Commission will review the regime for critical benchmarks and the effectiveness of the mechanism for authorisation and registration of administrators. It will equally evaluate the categorisation of benchmarks and the rules for third countries. The review of the EU Benchmark Regulation will reinforce the accuracy and integrity of indices, which will determine the strength of market confidence. The review of the BMR may introduce new compliance requirements for benchmark administrators, contributors and users with regard to interest rate, foreign exchange, and commodity.

EU guidelines on International Procurement Instrument

The European Commission released a new communication, guiding the participation of third country bidders and goods in the EU procurement market. The document aims to foment competition in public tenders and provide information to public buyers in Member States. The document advises on quality standards, how to assess abnormally low-priced offers and compliance with social and environmental obligations.

The EU’s open procurement market is the largest in the world, with an estimated value of €2 trillion yearly. However, many EU trading partners apply restrictive practices in their markets against EU companies; with more than half of the worldwide procurement market (totalling €8 trillion), closed to European businesses. These restrictions affect competitive EU sectors such as construction, transport, medical devices and pharmaceuticals. The Commission’s recent communication coupled with the sustained asymmetric market access has reignited the call for the adoption of the International Procurement Instrument (IPI) before the end of 2019.

The Commission is expected to call on the Parliament and Council to approve the IPI by 2020. The IPI will promote reciprocity, tackle protectionism and open up procurement opportunities for EU companies in third countries.

EU moves on Artificial Intelligence

In April this year, the European Commission put forward an EU approach to artificial intelligence and robotics. The EU’s plans include funding to encourage the uptake between public and private sectors. Moreover, the EU’s approach foresees support to education and labour to prepare for the deployment of AI. Last, while the EU is determined to stay at the front of this technological development, it will also work on ensuring a proper legal and ethical framework.

More recently, the European Union followed on the above Communication with a plan for AI made in Europe. The plan will foresee concrete measures that will be put forward by the European Commission and the Member States in 2019 and 2020. These will include AI ethics guidelines and a guidance on the Product Liability Directive. In addition, the regulatory framework on Digital Single Market will have to be completed to make AI a success. Completion of legislative proposals in the area of cybersecurity, open data and upcoming EU budgets, will be important to secure the legal framework and the funding opportunities for investment, research and innovation.

For the abovementioned reasons, all potential users, including small and medium-sized enterprises, companies from non-tech sectors and public administrations should engage in the process to shape the rules in order to take advantage of the opportunities.

EU to harmonise device chargers

After the failure of the negotiations with the industry for a new Memorandum of Understanding to harmonise chargers for data-enabled mobiles sold in the EU, the European Commission has initiated in May 2019 a public consultation to collect stakeholders’ opinions in order to find the best solution to the problem of fragmentation of the charging solutions.

The European Commission will take into consideration three policy options, including no common charging solution, voluntary approach, and a binding regulatory approach that should impose common chargers for the whole industry. This last option would determine economic benefits for consumers, as well as a positive impact on the environment through a reduction of e-waste. However, it will have a negative impact on producers and importers.

EU Retaliates by Targeting US goods

aviationThe European Union has picked up President Donald Trump’s tariffs challenge and is considering responding with trade countermeasures. The WTO rules afford its members the possibility to impose temporary levies as safeguard. At the same time, it allows its members to retaliate proportionately in case the new trade restrictions are not adequately compensated within 90 days.

The European Commission is ready to exercise these retaliatory policies against the announced tariffs by the US administration, namely 25% on steel and 10% on aluminum. Experts estimate that the tariffs to be imposed by President Trump could affect €6bn in steel and aluminum exports. While the EU still hopes to avoid a full-blown trade war, European Commission officials have already presented EU member states with €2.8bn list of more than 100 US products that could be affected.

The retaliation would likely affect a variety of products from sensitive Republican-dominated states, such as cosmetics and clothing, Harley-Davidson motorbikes, orange juice from Florida and bourbon-whiskey from Kentucky. This list is on hold for the time being and it would require the approval by EU member states.

More EU Burdens on Household Devices

household deviceOn February 2018, the European Commission has invited all interested parties to submit their views on the energy efficiency and eco-labelling of a series of commonly used electric and electronic devices. The European Commission, welcomes the views of stakeholders and citizens alike on the eco-design of refrigerators, washing machines, dishwashers, household lamps, televisions and computers. The public consultations will inform the ongoing evaluation and will result in the preparation of regulations specific to each product category.

Despite the positive objective to contribute to the energy efficiency and create a level playing field for EU manufacturers of such devices, the new initiative has already shown its dark side. The EU industry is afraid that it will take another hard-financial beating due to increased compliance costs and so are EU consumers. Non-EU manufacturers need to constantly adjust to an ever increasing in complexity matrix of environmental regulations that makes their access to the EU market difficult.

The open consultations will last until May 2018 and the results which will be published shortly after will shape the market of household devices.