Category: finances

The European Commission released a statement in August 2019, affirming that while steel safeguard measures have overall been successful during the first year of implementation, they require further adjustments.

The safeguard measures were initially introduced provisionally in July 2018, to prevent harm to the EU steel industry, which was being affected by US tariffs. The EU steel industry was hit by a 12% increase in imports of finished steel products in 2018. As a result, the measures were later definitively introduced in February 2019.

The European Commission outlined three proposals in the communication, cutting an increase in import quotas to 3% from 5%, adjusting the functioning of the quota for some products, and updating the list of exclusions for developing countries. The proposal is expected to be discussed with affected World Trade Organization members and be submitted to EU Member States for approval ahead of the October implementation. The measures are expected to become effective by October 1, 2019.

The European Commission adopted a Communication and four reports addressing money laundering and terrorist financing risks in July 2019. The reports stress the need for the full implementation of the fifth anti-money laundering directive and reinforce the supervisory role of the European Banking Authority. The communication addressed the persistent shortfalls in anti-money laundering and terrorist financing efforts. The reports will feed future national and EU policies.

Member States are to transpose the fifth anti-money laundering directive into national law by January 2020, as well as a second directive on combating money laundering by criminal law by December 2020. A new EU AML blacklist is expected to be published in October, after Member States rejected a former list in January.

The European Commission is to discuss the harmonization of anti-money laundering rules and a single EU authority tasked with enforcing these rules, in the upcoming months.

The European Commission has recently published a recommendation for a Council Decision authorising the entering into negotiations on the modernisation of the Energy Charter Treaty (ECT).

The ECT, signed in Lisbon in 1994, is an international agreement that regulates cross-border cooperation in the energy industry. It covers all aspects of commercial energy activities, including trade, investments and energy efficiency. The EU aims at amending the treaty provisions by negotiating innovative rules on investment protection, which would guarantee greater legal certainty to investors in the sector. Furthermore, the EU will call for the inclusion of provisions on sustainable development, climate change and corporate social responsibility.

Given the relevance of the ECT for the energy industry, it will be necessary to monitor the negotiations which are set to start in the following months.

In the framework of the Capital Markets Union project, the European Parliament and Member States have recently reached a political agreement on new rules to strengthen financial supervision and to prevent anti-money laundering.

The new legal regime will improve the governance and the convergence powers of the European Supervisory Authorities. Furthermore, anti-money laundering will be tackled by granting the European Banking Authority a stronger mandate to collect and analyse information coming from the banking and financial sector. Thus, new stringent obligations are expected for market operators.

The politically agreed norms, however, will need to be followed by further technical work from both the European Parliament and the Council of the European Union. In light of the European elections, it will be important to monitor the orientations of the new parliament on this issue and to anticipate the developments in the inter-institutional negotiations.

The European Commission has launched a public consultation for drawing the list of Projects of Common Interest (PCI). Once identified and selected as PCI, these projects will benefit from faster permitting, lower costs and potentially even funding.

As a first step, projects for electricity, gas, smart grids, oil and CO2 networks need to be submitted. Next, they need to be identified as candidate for PCI. Then, there is the selection process. Several criteria need to be fulfilled. The project must contribute to energy market integration, boost competition, create security of supply and must be sustainable.

So far, three EU wide PCI lists have been completed. This is the forth call for PCI, which should be ready by the end of 2019. Companies and associations should promote their projects until 20 May 2019.

In February 2019, the European Commission came up with a proposal to include all countries that are not doing enough to fight money laundering and terrorism financing on a blacklist. This is the first time the European Commission has embarked on such initiative.

The decision requires EU banks to carry out detailed customer vetting. More specifically, all EU banks that handle payments connected to the blacklisted countries would have to conduct enhanced due diligence on any money moving to or from the jurisdiction on the blacklist. Also, EU banks would be obliged to act on suspicion by staying away from questionable transactions and reporting to the authorities.

The EU blacklist list is a living document. Countries can come clean if they improve their legislation and fulfil European standards. Other countries can be added to the list if the review of their respective legislation show deficiencies.

In 2018, the European Commission will introduce initiatives for the development of secondary markets for Non-Performing Loans (NPLs) and the protection of secured creditors from borrowers’ default. This comes against the alarming accumulation of NPLs. The sheer volume of NPLs have overstretched the administrative capacities of the European systemic banks, contributing to inefficiencies, reduced management flexibility and increased transaction costs. Therefore, the European Commission’s initiative is aimed at the development of a harmonized EU framework whereby services such as credit restructuring, collateral administration and debt collection can be efficiently delegated to secondary private market entities.

The above initiative goes in tandem with the need for protection of secured creditors from borrowers’ default. This second part of the initiative, aims to remedy the fragmentation of Member States laws and develop fair and adequate measures to recover value from secured loans when the debtor is in risk of default, which in turn will avert the risk of mounting anew NPLs. This new initiative will allow banks to acquire ownership of encumbered assets in an accelerated, extra- judicial in nature procedure. The new, sovereign backed security, will offer all parties increased access to finance as well as more credible options for creditors to secure their loans.

The expected proposals have already stirred opposition especially over financial protection and judicial oversight. Therefore, the shape of the final rules will depend on the negotiations and amendments prior the proposals are launched and during the decision-making phase.