News Update EU | Recent Developments June 2017
CJEU limits power of Member States to sign free trade agreement with Singapore
The Court of Justice of the European Union ("CJEU") issued an opinion stating that the Free Trade Agreement between the EU and Singapore (the ‘EUSFTA’) in its current form cannot be signed by the European Union on its own, but needs the cooperation of the Member States. According to the CJEU it is ultimately in respect of only two aspects of the agreement that the EU is not endowed with exclusive competence, namely the field of (i) non-direct foreign investment (‘portfolio’ investments made without any intention to influence the management and control of an undertaking) and (ii) the regime governing dispute settlement between investors and States. The opinion of the CJEU has implications for e.g. a future EU-UK trade agreement. It will depend on the specific matters of the future agreement whether the Commission, acting on behalf of the EU, can conclude it on its own or whether it will have to act with the Member States jointly.
Reflection on the EMU
On 31 May 2017 the European Commission published its Reflection Paper on deepening the Economic and Monetary Union ("EMU"). The paper is intended to stimulate the debate on the EMU and to help reach a shared vision of its future design. Important steps are needed to complete a genuine Financial Union, achieve a more integrated Economic and Fiscal Union and anchor democratic accountability into strengthened euro area institutions. The options proposed in the reflection paper are intended to help build a broad consensus on how to take on the challenges ahead and to give a fresh impetus to this important debate.
Council agrees on EU-US insurance agreement
On 29 May 2017, the Council adopted a decision authorising the signing of a bilateral agreement with the United States on prudential measures regarding insurance and reinsurance. The agreement will provide legal certainty for EU and US insurers and reinsurers in the application of regulatory frameworks. It will enable improved protection for policyholders and other consumers through cooperation between supervisors and the exchange of information.
Reviving the EU securitisation market
On 30 May 2017 the European Parliament, the Council and the European Commission reached an agreement to revive the EU´s securitisation market through a package setting out criteria for simple, transparent and standardised securitisation (STS). Securitisation can allow diversification of funding sources and a broader distribution of risk by allowing banks to transfer the risk of some exposures to other institutions or long-term investors, such as insurance companies and asset managers. This allows banks to free the capital they set aside to cover for risks of those exposures, allowing them to generate new lending to households and SMEs. STS securitisations will also provide new investment opportunities for institutional investors such as pension funds and insurance companies. The new regulatory framework sets out a risk-sensitive, transparent and prudential treatment of securitisation. At the same time, the package also ensures an appropriate capital treatment of securitisation instruments in general.
OECD Business and Finance Outlook 2017
On 30 May 2017 the OECD published its annual Business and Finance Outlook. The 2017 edition addresses some forces influencing economic developments that have contributed to recent surprises in elections and referenda. The report focuses on ways to enhance “fairness”, in the sense of strengthening global governance to ensure a level playing field in trade, investment and corporate behaviour, through the setting and better enforcement of global standards. A brief review of important developments contributing to post-war globalisation is provided and a number of policy domains are covered. These include exchange rates and capital account management, financial regulation since the recent financial crisis, the rising weight of state-owned enterprises in the global economy, competition policy to deal with international cartels, the cost of raising capital, responsible business conduct and bribery and corruption.
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