Recent Developments September 2017
EU State of the Union
On 13 September 2017, European Commission President Juncker delivered his 2017 State of the Union Address before the Members of the European Parliament in Strasbourg. He presented the priorities for the year ahead and outlined a Roadmap for a stronger, more united and more democratic Union. President Juncker announced plans for a European Economy and Finance Minister to serve as an advocate for the euro and the EU economy. He also proposed a new EU framework for foreign investment screening (see hereunder). This new EU framework would be set up to protect Europe's strategic assets and businesses from hostile foreign takeovers. The State of the Union also announced plans for a European Labour Authority that would ensure that EU rules on labour mobility are enforced in an effective way. As regards labour mobility and social dumping, the Commission proposed a reform of the current rules on posting of workers, which establishes the principle of equal pay for equal work at the same place, thus going significantly beyond the requirements of minimum remuneration of the existing directive. Other elements of this reform include: (i) rules set by universally applicable collective agreements will become mandatory for posted workers in all economic sectors; (ii) all labour law rules applicable to local workers will apply to posted workers after a certain duration; and (iii) the new rules will also apply to temporary agency workers to ensure the principle of equal pay for equal work. After the speech, President Juncker and First Vice-President Timmermans sent a letter of intent to the President of the European Parliament and the Presidency of the Council that sets out in detail the actions the Commission intends to take by means of legislation and other initiatives until the end of 2018.
On 13 September 2017, the Commission published its proposal for a Regulation establishing a framework for screening of foreign direct investments into the European Union. As new investment trends are appearing, with some emerging economies playing an increasing role as providers of foreign direct investment, the Commission has found it necessary to be able to act when such foreign investment patterns change. This is especially relevant in cases when foreign investors seek to acquire control of or influence in European undertakings whose activities have repercussions on critical technologies, infrastructure, inputs or sensitive information. Nearly half of the EU Member States already have screening mechanisms in place, but they differ from one another. The mechanism now proposed by the Commission would establish a framework for screening on grounds of security or public order, while providing a non-exhaustive list of factors that may be taken into account in determining whether a foreign direct investment may impact security or public order. At the same time, the proposal maintains the necessary flexibility for Member States in screening foreign direct investments, allowing them to adapt to rel="noopener noreferrer" changing circumstances and rel="noopener noreferrer" their specific national rel="noopener noreferrer" context.
On 12 September 2017, the European Parliament (Economic and Monetary Affairs and Budgets committees) and the Member States reached agreement on the European Fund for Strategic Investment (EFSI). The EFSI, implemented by the European Investment Bank, was established for an initial period of three years, with the aim of mobilising at least €315 billion of investments in the real economy. The European Commission proposed extending the fund’s duration until the end of the EU’s current Multiannual Financial Framework (MFF) in December 2020 with a view to reaching an investment target of €500 billion. This has now been agreed. The EFSI will focus on addressing market failures or investment gaps and funding projects with a high-risk profile which would not otherwise be supported. Investments should boost Europe's future job creation, particularly for young people, growth and competitiveness. The investments will target areas such as energy, environment and climate action in line with the COP21 agreement, healthcare, research rel="noopener noreferrer" and innovation, sustainable rel="noopener noreferrer" transport, the digital rel="noopener noreferrer" sector and creative industries.
On 1 September 2017, the EU-Ukraine Association Agreement, including its Deep and Comprehensive Free Trade Area (DCFTA), fully entered into force. The Association Agreement was negotiated between 2007 and 2011, and signed on 21 March 2014 and 27 June 2014. Substantial parts of the Association Agreement have been applied provisionally since 1 November 2014 and 1 January 2016 for the DCFTA. Under the Association Agreement, Ukraine has committed to structural reforms in the areas of democracy, human rights, rule of law, good governance, trade and sustainable development. Enhanced cooperation on environmental protection, social development and protection, transport, consumer protection, equal opportunities, education, youth and culture, industry and energy is also envisaged in the Association Agreement. The entry into force of the agreement will give a new impetus to cooperation in areas such as foreign and security policy, justice, taxation, public finance management, science and technology, education, and digital technology.