EUROPEAN COMMISSION CONSULTATIONS
AND REQUESTS FOR COMMENT
DG ENERGY – Consultation on the list of Candidate Projects of Common Interest in Electricity Infrastructure – Deadline for comments: February 28, 2019
DG TAXUD – Evaluation of Administrative Cooperation in Direct Taxation – Deadline for comments: March 4, 2019
DG TRANSPORT – Decision Setting the Union-wide Performance Targets for the Third Reference Period 2020-2024 – Deadline for comments: March 25, 2019
DG JUST – Evaluation of the Consumer Credit Directive – Deadline for comments: April 8, 2019
U.S. – EU Trade
U.S. Administration Weighing Auto Tariffs
The U.S. Department of Commerce issued its report to the White House on the national security implications of imported autos and auto parts. The report has not yet been made public. The Chamber released a blog post on the topic earlier this week, highlighting the firm opposition to such tariffs across the domestic automobile industry—a major innovation and investment success story—which employs nearly 8 million workers.
The European Perspective
The European Parliament’s International Trade Committee gave conditional approval to launch talks to eliminate industrial tariffs and move forward with regulatory cooperation efforts, though only by a very slight 21-17 margin. The entire Parliament is due to consider the motion in early March.
Last Friday, EU trade ministers decided to wait before voting on the Commission’s draft negotiating mandates until the Parliament reaches its final conclusion. EU heads of state could give the Commission the final go-ahead at the next meeting of the European Council on March 21.
Brussels and Washington remain at odds on whether to include agriculture in the talks. And of course, uncertainty over the contents of the auto 232 report rattles nerves across Europe. In a related development, last week’s EU trade ministers’ meeting focused on potential EU retaliation on approximately $20 billion in U.S. exports if Europe is hit by the auto tariffs. Some countries, notably France, remain hesitant to negotiate while steel and aluminum tariffs remain in place. Others, like Germany and the Netherlands, are very eager to see tangible results.
President Trump Voices his Displeasure at EU Trade Surplus
The European Union reported a record goods trade surplus with the U.S. in 2018. President Trump recently spoke out against the EU’s trade surplus, including telling a meeting of governors that the EU needed to “play ball” in trade talks, or else the U.S. will “tariff the hell out of them,” claiming that the EU is “tougher than China.”
New EU Website Underlines Importance of Transatlantic Trade
This week, the EU Delegation to the U.S. unveiled a new report and website to underline that the U.S. goods trade deficit with the EU is merely one facet of our relationship. The EU is our largest foreign investor, nearly 7 million U.S. jobs are directly created either by EU investment or trade with Europe, and once you factor in foreign affiliate income and trade in services, the U.S. actually has a surplus with the EU. The website also underlines the strength of our relationship on a state-by-state basis.
Nord Stream 2
European Commission to Gain Regulatory Oversight of Pipeline
EU member states overcame their differences to back a plan to regulate Russia’s Nord Stream 2 pipeline. The decision will not rule out its construction, but is likely to slow its progress. The plan calls for all pipelines to meet EU energy market rules by: not being directly owned by gas suppliers; applying non-discriminatory tariffs; enforcing transparent reporting requirements; and allowing at least 10 percent of capacity to be made available to third parties. This political compromise was the culmination of debates between a series of competing views from various stakeholders impacted by the proposed pipeline.
U.S. Senate Resolution
In a sign of how controversial Nord Stream 2 is in Washington, last month Senator Ron Johnson (R-WI) introduced a resolution in opposition to the completion of the pipeline, calling instead for the EU to promote energy policies that lessen its dependence on Russian energy. The Resolution cites Russia’s illegal annexation of Crimea, and the precedent of Russia using its gas pipelines as a geopolitical tool against U.S. allies in Europe.
U.S. Delegations in Europe
Munich Security Conference
Tensions ran high last weekend in Munich amidst a clear rift between the United States and its European allies. U.S. Vice President Mike Pence delivered a speech challenging Europe to support the United States in its foreign policy priorities, including Iran Sanctions (a non-starter) and NATO spending (well underway, but not fast enough according to the Administration). German Chancellor Angela Merkel forcefully responded to Pence’s address with a strong defense of multilateralism to rapturous applause and warned against the Trump Administration’s tactics of isolationism and threats against its allies.
Congress seeks to reassure Brussels
House Speaker Nancy Pelosi and a large delegation of U.S. lawmakers visited Brussels following the Munich Security Conference. Pelosi sought to demonstrate Congress’ desire to preserve strong ties with America’s important European allies.
Secretary of State in Central and Eastern Europe
Mike Pompeo, the U.S. Secretary of State was on an official state visit in Europe last week to celebrate thirty years since the fall of the Berlin Wall and reinforce partnerships between the U.S. and Central Europe.
Latest on Huawei and Europe’s 5G Networks
The German government is leaning towards allowing Huawei to construct its 5G infrastructure despite Washington’s attempts to lobby its allies against working with the Chinese firm. A recent probe by Germany’s cybersecurity agency failed to demonstrate that Huawei could use its equipment to clandestinely siphon off data and did not uncover any indication of wrongdoing by the Chinese company.
Instead of outright bans, European countries are likely to pursue a “third way” option, where additional network security measures are introduced, alongside a willingness to work with Huawei.
The United Kingdom is also grappling with the same questions regarding Huawei and 5G. Many senior government officials note that the UK has successfully managed the risks from Huawei’s presence in the British market for more than 15 years through exceptionally strict security reviews.
Last December, the Czech Republic’s cyber security watchdog, NUKIB warned about the dangers in using Chinese companies ZTE and Huawei to build the country’s 5G infrastructure. This lead to a host of private and government-sponsored risk analyses. Huawei has repeatedly denied the claims, and now has claimed they are prepared to bring their case to the national courts.
Tech Policy Update
Twitter implements political ad restrictions
Twitter is set to introduce new restrictions on its political ad rules ahead of European Parliament elections in late May. The new rules will seek to stop non-EU entities engaging in political advertising on the platform in a move to prevent foreign interference. Twitter will also make details about the origins of ads publicly available in an effort to promote transparency on the platform.
Digitizing Europe Summit
The “Digitizing Europe” Summit, under the theme 'The Future of Made in Europe' took place last week in Berlin. In a keynote address, German Chancellor Angela Merkel promoted a rapid but realistic expansion of new digital and telecommunications infrastructure. The event brought together several high-ranking European politicians and business executives to debate how to promote a prosperous digital future for Europe.
Digital Services Tax
European Governments and the OECD are doubling down on their efforts to develop and implement digital service taxes on some of the continent’s largest tech companies in the countries where their users and customers live. “A change of balance” is on the horizon, declared Pascal Saint-Amans, the senior tax official at the OECD.
The OECD and the UK Government are both conducting open stakeholder consultations on how any new digital services taxes should be defined and developed. The U.S. Chamber will respond to both of these consultations.