Weekend Edicion Nº52 by eulawlive

Nº52

MARCH 20

2021

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A SPECIAL ISSUE ON TRANSATLANTIC TRADE EDITED BY ELAINE FAHEY

ELAINE FAHEY

INTRODUCTION. WHITHER TRANSATLANTIC TRADE? THE FUTURE OF INSTITUTIONAL SOLUTIONS KAI PURNHAGEN

THE EU’S “NEW EU-US AGENDA FOR GLOBAL CHANGE”: BRUSSELS EFFECT, WASHINGTON EFFECT, OR INTERGOVERNMENTALISM? EVA VAN DER ZEE

FIGHTING CLIMATE CHANGE TOGETHER? OPPORTUNITIES AND POTENTIAL HURDLES FOR AN EU-US TRANSATLANTIC TRADE AGENDA MARIA KENDRICK

THE EU AND TRANSATLANTIC AGENDA ON ‘FAIR’ CORPORATE TAXATION: IS A DIGITAL SERVICES TAX A WORKABLE ‘PLAN B’?

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Whither transatlantic trade? The future of institutional solutions Introduction to Special Edition Elaine Fahey

recognise the EU - behaviour that is now being copied by the Brexit Britain ‘playbook’. e new Biden Administration has many Obama Administration e line between transatlantic cooperation and disstaﬀ who are said to be ‘ba le-scarred’ from their putes has been painfully ne over many decades and involvement in the failed EU-US many respective administraTransatlantic Trade and Investtions. Institutionalisation of trament Partnership ( IP) negode has been a complex theme of Is it realistic to expect tiations. A re-excavation of the transatlantic engagement as a means to deepen cooperation. transatlantic convergence paused Transatlantic Trade and Investment Partnership ( IP) e EU proposed an EU-US on trade given the negotiations appears very unliJoint Agenda for Global Change kely in the future of the transathistory of relations? to the incoming Biden Adminislantic trade cooperation. tration very early on in the new

Overview

relationship, which would include a Transatlantic Trade and Technology Council (2). It would appear to be proposing a ‘loose’ institutionalisation of key global challenges currently not well covered or dealt with by, for example, the WTO. It seems like an interesting forum to generate transatlantic convergence. Yet is it realistic to expect any transatlantic convergence (3) on trade given the history of transatlantic relations? It goes without saying that relations between the EU and US reached rock-bo om, arguably the worst in six decades, with the Trump Administration, where the US brie y refused to diplomatically

e US Trump Administration reset transatlantic cooperation with the EU in 2018 and notably made an EU-US Joint Statement in 2018 a er a Trump-Juncker summit was ultimately agreed. It was not ambitious but was ostensibly a preferable development to trade wars and tariffs to work together towards zero tariffs, zero non-tariff barriers, zero subsidies on non-auto industrial goods; energy; and unfair global practices, for example through WTO reform. It took effect through an Executive Working Group and an EU-US Financial Regulatory Forum 2019 but its institutionalised

1. Professor of Law and Erasmus+ Jean Monnet Chair in Law & Transatlantic Relations, City Law School, City, University of London. ElaineFahey.1@city.ac.uk. Decision No. 2019 -1794-001-001. 2. Joint communication to the European Parliament, the European Council and the Council: A new EU-US agenda for global change JOIN (2021)22 nal here 3. See Elaine Fahey, Framing Convergence in the Global Legal Order: the EU and the World (Hart, 2020).

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components quickly tapered oﬀ and instead the EU has been ba ling signi cant tariﬀs wars with the US, for example on steel and aluminium, and through a US investigation on motor vehicles and automotive parts. Its modest ambitions were never realised and much has remained on hold during the COVID-19 crisis and since the US Presidential election, and some say those ambitions are worsening.

tor vehicles - and also through a Regulatory Cooperation Council with rule-making capacity (4). e IP negotiations involved developments far beyond the technical scope of the last EU-US Mutual Recognition Agreement from 1997. Its Regulatory Cooperation Chapter generated much concern as to the legitimacy of its operation, its eﬀects upon EU law and the executive nature of its actions.

Arguably, one development of interest with respect to institutionalisation developments was on conformity assessment in 2019, as a form of regulatory cooperation, which is considered here next.

Post- IP regulatory cooperation: IP-lite On 18 January 2019, the European Commission published a dra negotiating mandate for its trade talks with the US, following on from the EU-US Joint Statement to increase bilateral cooperation. e mandates covered two areas where the likelihood of an agreement was easier in less disputed terrains – eliminating tariffs on industrial goods and increasing conformity assessment (CA) cooperation, where one of the main negotiating objectives of both sides was to remove non-tariff barriers (NTBs) that are estimated to have an even more profound effect on trade than tariffs, suggested by the USTR to be one the main trade barriers for the US to the EU market in its 2018 Foreign Trade Barriers report. e cooperation was not about cooperation on the content of regulatory disciplines and would only relate to the recognition of testing, inspection or certi cation from US or EU authorities. It was in short IP lite (or ultra-lite), a far less ambitious mechanism than had been initially intended under the IP (‘Regulatory cooperation chapter’) (5). e question is what depth could lie between the extremes of IP and CA?

Transatlantic regulatory cooperation: a history doomed to failure? Transatlantic regulatory cooperation has traditionally been a ‘swi ’ rather than a ‘deep’ aﬀair, unlike its disputes which o en appear to run longer than its agreements. Arising from its last major framework, the New Transatlantic Agenda (NTA) of 1995, by 2003, nine formal binding and non-binding regulatory cooperation agreements had been entered into between the EU and US in areas as diverse as competition, privacy, customs and veterinary standards. Nonetheless, at whatever stage of its development, transatlantic cooperation has posed major challenges for regulatory independence, transparency and administrative law requirements, con dentiality, multi-level governance and regulatory sovereignty. e Transatlantic Trade and Investment Partnership ( IP) negotiations purported to develop a multilevel ‘postnational marketplace’ which would deepen and prospectively institutionalise EU-US relations in a range of elds - such as pharmaceuticals, chemicals, public procurement or mo-

4. Marija Bartl and Elaine Fahey ‘A Postnational Marketplace: Negotiating the Transatlantic Trade and Investment Partnership ( IP)’ in E. Fahey & D. Curtin (Eds.), A Transatlantic Community of Law: Legal Perspectives on the Relationship between the EU and US legal orders (Cambridge University Press, 2014). 5. Iulianna Romanchyshyna ,‘ e Post- IP Transatlantic Cooperation on Trade: Stepping up Conformity Assessment’ EJIL Talk, 25 February 2019.

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What depth could lie between the extremes of IP conformity assessment?

peared to be arguably grossly overhyped by both the EU and US, and show an interesting reminder of the impact of the EU on North America generally.

Lobster dinners, light lunches One of the next stages worthy of remark in transatlantic trade cooperation came in 2020. US Trade Representative Robert Lighthizer and former European Union Trade Commissioner Phil Hogan agreed a package of tariff reductions for market access worth hundreds of millions of dollars in US and EU exports (6). ese tariff reductions were the rst US-EU negotiated reductions in duties in more than two decades. Under the agreement, the EU eliminated tariffs on imports of live and frozen lobster products from the US. e value of US exports of these products to the EU was over 111 million USD in 2017. e EU would eliminate these tariffs on a Most Favoured Nation (MFN) basis, applying retroactively from 1 August 2020. e EU tariffs would be eliminated for a period of ve years. e European Commission proposed a regulation on the elimination of customs duties on lobster imports in September 2020. However, in reality, this was a meagre light-lunch rather than a lobster feast, where the US lobster shers had been adversely affected by the implementation of the EU-Canada Economic and Trade Agreement (CETA), causing much concern in the US lobster industry. e ‘small fry’ nature of the agreement was palpable and ap-

e future of the WTO and the EU-US relationship: institutionalisation outside? China inside? It is an understatement to say that a signi cant number of transatlantic disputes have taken place at the WTO over the years and have been ongoing for some time, especially the seemingly never-ending Boeing/Airbus dispute. In 2019, the US imposed countermeasures worth nearly 7.5 billion USD on certain EU goods following a favourable ruling by the WTO arbitrator in a long-standing dispute over measures affecting trade in large civil aircra (Airbus). In 2020 US tariffs on Airbus were increased from 10 to 15%. A similar case brought by the EU against the US over subsidies paid to Boeing is underway and a favourable ruling for the EU was delivered in October 2020, authorising the EU to take countermeasures covering 4 billion USD worth of imports. However, in March 2021, the US temporarily suspended all retaliatory tariffs on direct exports from the UK to the US resulting from the Air-

6. European Commission, Trade: Joint Statement of the USA and the EU, press release of 21 August 2020.

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Yet US dismay as to the EU-China Comprehensive Agreement on Investment of December 2020 has quickly ensued, as has signi cant critique from within the EU as to the embrace of China in this way. While EU-China-US cooperation arguably remains critical to the future of the international economic order, the institutionalised dialogues between the EU, US and China needed on a technical level in order to develop shared objectives and guidance may remain elusive for some time. Also, whether this can lead to the evolution of signi cant WTO reform remains to be seen.

bus dispute for four months, in an effort to reach a negotiated solution to the 16-year long dispute following on from the UK’s unilateral decision to suspend tariffs against the US from 1 January (7). e EU has disputed that the UK had the right to act unilaterally in a trade dispute between the EU and US when it le the EU. However, shortly therea er the EU and US agreed to suspend all retaliatory tariffs on EU and US exports imposed in the Airbus and Boeing disputes for a four-month period.

With the collapse of the WTO dispute se lement system it remains to be seen what the forum for future dispute se lement will be outEnforcement and be er, side of trade tariff wars. e US, greener and fairer tranlong before the Trump Adminis- It remains to be seen what satlantic trade? tration, had voiced signi cant the forum for dispute concerns as to the development e next USTR appears to have of WTO dispute se lement. e se lement will be outside a signi cant focus upon fair traEU along with several other maof trade tariff wars, and de and the emphasis of the new jor developed economies has demonstration upon green trade been involved in interim workawith the collapse of the similar to the EU, as a likely userounds. e place of the WTO at ful set of cooperative planks. HoWTO system the epicentre of world trade rewever, the new USTR will enmains very much in doubt even counter a somewhat different under new leadership without roEU, one with a new emphasis upon strategic autobust functioning dispute se lement. e extent to nomy - however still unde ned - albeit now with a which the EU and US will be able to commit to roTrade Enforcement officer and enforcement regulabust institutionalisation of global trade will be critition, and a systematised approach for dealing with cal and it seems likely that evolution of the WTO bruising global encounters not like before. Many will be high on the agenda. However, the place of within the EU are staggered by its EU-China InvestChina and its market State status will be of much ment Agreement, with problematic challenges for concern. China has sought to a very considerable exhuman rights. e EU is testing the limits of its trade tent to embed itself within WTO law and practice agreements with developed economies such as Koand to engage in litigation and institutionalise the rea, on thorny issues of labour. e European ComWTO within its trade system and procedures e mission has sent le ers of formal notice to the Unifuture of EU-US engagement with China appears ted Kingdom for breach of its obligations under the central to the global economic order’s equilibrium. Protocol on Ireland and Northern Ireland under the 7. Office of the US Trade Representative, Joint US-UK Statement on Suspension of Large Civilian Aircra Tariffs, press release of 3 April 2021.

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A lot of discussion on transatlantic institutionalisation omits the institutions ‘within’

so being taken by the EP on the thorny issue of EUUS visa reciprocity for certain Eastern Europe Member States with respect to the US. Its involvement in any future EU-US trade agreement will likely become intricate (8). Yet, as the CETA saga demonstrates, the EP is not a decisive actor in EU international trade and increasingly Member States are seeing the rise of the rati cation veto emerging in new ways through their parliaments - under mixed agreements at least. e future of deeper cooperation with the US will have a special salience for the EP, which experienced considerable exclusion during the Trump administration relationship. e deepening institutionalisation of EU trade is a new reality. Yet it is imbalanced in terms of its multi-level identity - across the Member States, national parliaments continue to engage badly with international negotiations and litigate mostly unsuccessful to block trade accords in areas. Transparency and be er participation of civil society will be key to future deepening of transatlantic relations. e role of the EP in this will nonetheless become quite pivotal as it likely seeks to extend its voice and possible powers of review if it can exercise meaningful in uence outside of the EP in a courtroom or in its own territory, commi ees and sphere of in uence.

Withdrawal Agreement. China will remain a common transatlantic concern. e challenge for be er, greener and fairer trade and its institutionalisation may be signi cantly more complex beyond the transatlantic relationship than ever but this is arguably a constant feature of the era of global governance currently taking eﬀect.

e institutions within? e European Parliament and the future architecture transatlantic trade A lot of discussion on transatlantic institutionalisation omits the institutions ‘within’. A transatlantic legislators dialogue has been ongoing for several years, between the European Parliament (EP) and the US Congress. It should not be forgo en that the EP was excluded signi cantly from the last EU-US trade cooperation eﬀorts. On 14 March 2019, the EP rejected a dra resolution recommending the opening of EU-US trade talks (on both industrial goods and conformity assessment following a tight vote. An EP resolution on talks with Washington was defeated by 223 votes against 198, with 37 abstentions. e resolution had called on EU countries not to endorse negotiating mandates that authorise the European Commission to start talks with Washington. Opponents of negotiations won key amendments, but lost the nal vote. e complicated position of the EP on these trade talks makes for unhappy reading for those used to the narrative of the rising power of the EP. Signi cant litigation is al-

In this Special Edition e future of EU-US economic relations is considered in this Special Edition from several perspectives (institutions, regulatory standards, climate change

e future of EU-US economic relations is considered in this Special Edition from several perspectives

8. European Parliament,EU-US visa reciprocity: the Commission must defend the rights of all EU citizens, press release of 22 October 2020.

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strong domestic legislation on climate change. Given the current composition of the Senate, such legislation may be difficult to achieve. It, therefore, remains to be seen whether the Biden Administration will succeed in strengthening EU-China-US relations, as well as securing the needed bipartisan support for such taxation measures. Maria Kendrick, City Law School argues that whilst it may appear that the digitalisation imperative is moving global tax policy in one direction, the reality is likely to be made up of differentiation and minimum standards set in limited areas at EU level, on limited aspects of tax policies. e unilateral adoption of Digital Services Taxes ‘DSTs’ has shown that whilst a DST is possible, at the international and EU level it is at best a ‘Plan B’ and difficult to achieve - not likely to aggravate transatlantic relations in the foreseeable future.

and taxation). Kai Purnhagen of the University of Bayreuth sketches three scenarios which may follow from a proposed EU-US Trade and Technology Council: (1) A ‘Brussels eﬀect’, (2) a ‘Washington eﬀect’, or (3) an approach based on a case-by-case mediated deliberative intergovernmentalism. Which of these forms will materialise he argues will largely depend on the chosen institutional framework for such a transatlantic partnership. He argues for a realisation of the proposed EU-US Trade and Technology Council, based on a transatlantic economic constitution and the establishment of a powerful forum for negotiations, which is robust, strong and meaningful. Eva Van der Zee, University of Hamburg considers the place of the EU’s Green Deal and climate change in the future of EU-US trade relations. She shows how transatlantic cooperation on a ‘Carbon Border’ tax is already proving to be fractious. While the Biden Administration is commi ed to imposing such a tax, US interest in it may be tempered if they do not manage to enact

We hope that the reader enjoys this selection of topics on surely the most cu ing-edge areas of the future of the international economic order.

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The EU’s ‘new EU-US agenda for global change’: Brussels Eﬀect, Washington Eﬀect, or Intergovernmentalism? Kai Purnhagen

A er Joe Biden was elected as President of the US, the EU published a Communication on ‘A new EUUS agenda for global change’. Arguably, it reaches out to reboot transatlantic institutionalisation. It is unlikely that such a new institutionalisation would resemble a IP 2.0, as challenges the world faces nowadays have changed signi cantly since 2017. While the Communication focuses on some aspects of the IP (such as the harmonisation of trade standards), it also re ects more than the IP on recent challenges such as working together for a healthier world, working together to protect our planet and prosperity, working together towards a safer, more prosperous and more democratic world and, probably as a response to the lessons learned from the Trump administration, on a principled partnership.

Introduction According to Eurostat, at 12 billion euros, the food product group recorded the fourth largest foreign trade surplus with the US in 2019, behind machinery and automobiles, chemicals, and other manufactured goods. Alcoholic beverages were in the top 20 most traded goods with the US. e volume of trade in foodstuﬀs between the two partners, in terms of value of goods, has almost doubled since 2009. To give this market an appropriate legal framework, transatlantic institutionalisation of trade relationships between the US and the EU had been in full swing until 2017, not least because the Transatlantic Trade and Investment Partnership ( IP) was close to a binding agreement. With the election of Donald Trump as President of the US, not only was the IP cancelled but the entire political strategy behind transatlantic institutionalisation was brought to a halt (2). China lled this void, successfully investing further in global institutionalisation, with the result that it has meanwhile taken over the position of the USA and the EU as the world’s biggest trading partner, measured in value of imports and exports.

While it would be worthwhile to investigate the contents of the entire Communication, due to space constraints this Long Read will focus only on the part concerning technology, trade, and standards. I will rst summarise the respective content of the Communication. Based on previous scholarly analysis mainly from the pre-Trump area, I will then sketch three scenarios which may follow from this

1. Professor of Food Law at the University of Bayreuth. anks to Alexandra Molitorisová, Alessandro Monaco and Federica Ronche i for comments. e usual disclaimers apply. 2. See Robert G. Finbow, ‘Can Transatlantic Trade Relations Be Institutionalised A er Trump? Prospects for EU-US Trade Governance in the Era of Antiglobalist Populism’, in Elaine Fahey (Ed.), Institutionalisation beyond the Nation State, (Springer, 2018), p. 187.

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proposal: (1) A ‘Brussels Eﬀect’, (2) a ‘Washington Eﬀect’, or (3) an approach based on a case-by-case mediated deliberative intergovernmentalism. Which of these forms will materialise, I conclude, will largely depend on the chosen institutional framework for such a transatlantic partnership. As to the heterogeneity of both legal systems I consider that an institutional form which facilitates solution (3) should be given priority. I will hence argue for a strong realisation of the proposed EU-US Trade and Technology Council, based on a transatlantic economic constitution and the establishment of a powerful forum for negotiations.

Data transfers, tech exchange, joint regulation and standards are identi ed by the Communication for a renewed transatlantic partnership

e EU’s ‘new EU-US agenda for global change’ Data transfers, technological exchange, joint regulation, and standards are one of the ve focal areas (3) identi ed by the Communication for a renewed transatlantic partnership. Regarding technological exchange the EU argues for a joint EU-US tech agenda, which shall work towards ‘managing the digital transition of our economies and societies’. In particular, the US and EU shall ‘join forces as tech-allies to shape technologies, their use and their regulatory environment’. More concretely, the EU proposes the introduction of: 1) common risk-based assessments on digital supply chain security; 2) a transatlantic AI Agreement; 3) high standards and safeguards to facilitate free data ow; and 4) some action to combat harmful market behaviours, illegal content or algorithm-fuelled propagation of hate speech and disinformation.

e focal point of the Commission to tackle these issues are online platforms, the responsibility of which shall be discussed as part of a transatlantic dialogue. Likewise, cooperation between antitrust enforcement agencies shall be strengthened and the development of a fair taxation system for the digital economy is being proposed. Trade-related aspects concern a strategy to advance a level-playing eld in trade ‘by se ing high standards, make critical supply chains more resilient and address the challenges of protectionism and unilateralism’.

3. e other ones being: A principles partnership, working together for a healthier world, working together to protect our planet and prosperity, working together towards a safer, more prosperous and more democratic world.

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mediated deliberative intergovernmentalism, in which case-by-case decisions are made in a powerful negotiating forum based on a transatlantic economic constitution.

Here, the Communication in particular seeks to deepen regulatory and standards cooperation. Such cooperation shall be achieved by re-engaging on conformity assessment negotiations and, where possible, systematic alignment with international standard se ing bodies.

e Communication carries an undertone which seems to favour a Brussels Eﬀect

Bilateral trade disputes shall be solved primarily via negotiations, which are solution-oriented while at the same time acknowledging that there may be In many ways, the Communication carries an undifferent approaches on both sides of the Atlantic. dertone which seems to favour a Brussels Effect. Institutionally, the EU hopes for a strengthening of One may read this as a realisation of the von der Lethe multilateral approach, envisages a concerted reyen-Commission’s approach, form of the World Trade Organiwhich aims at making certain zation and the formation of an that in international trade relaEU-US Trade and Technology In many ways, the tionships the EU’s interests are Council to accompany transatbeing maintained (see to this lantic institutionalisation. Communication carries end in particular Regulation an undertone which 2021/167 amended Regulation How these demands will play out 654/2014 in such a way to introin concrete terms and which of seems to favour a duce language concerning the these proposals will be supported exercise of the EU’s rights for the by the United States is unclear. Brussels Effect application and enforcement of Cross-border regulation is about international trade rules which providing a legal standard for a safeguards that EU interests are cross-border issue, which can eitbeing maintained when exercising these rights). her take a substantive form (such as providing a leRisk-based assessment of technologies and supply vel playing eld by for example the se ing of comchains, high standards of data protection (4) and mon standards) or procedural forms (such as proviplatform regulation have been featured in European ding a forum for negotiations to reach a certain outregulatory policies in many of the areas mentioned. come). More precisely, a renewed transatlantic insFor most of these areas, a de-facto Brussels Effect titutionalisation can hence have three main consehas already been identi ed. is concerns in partiquences: (1) a Brussels Effect, in which the US will cular data protection and supply chain regulation essentially adopt the protective standards of the (in particular on foods) (5). In these areas, the BrusEU; (2) a Washington Effect, in which the EU will sels Effect has been particularly successful as it adopt standards from the US; or (3) a case-by-case

4. Gregory Shaffer, ‘ e Power of EU Collective Action: e Impact of EU Data Privacy Regulation on US Business Practice’, 5 European Law Journal 419 (1999). 5. Anu Bradford, e Brussels Effect, 107 Northwestern University Law Review 1, pp. 32-35 (2012); Anu Bradford, e Brussels Effect: how the European Union rules the world (OUP, 2020); Dominique Sinopoli and Kai Purnhagen, ‘Reversed Harmonization or Horizontalization of EU Standards?: Does WTO Law Facilitate or Constrain the Brussels Effect?’, 34 Wisconsin International Law Journal (2016), pp. 101-128.

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wards standards and standard-se ing on both sides of the Atlantic, and their corresponding diﬃculties with further institutionalisation (8). While the EU follows a preference for strict rules, the US system has shown itself to be more heterogeneous as compared to the EU system in its organisation of standards and standard se ing (9). If business supports such an approach, a Brussels Eﬀect is very unlikely to succeed in this area.

seems that for exporters it was more cost-effective to adopt the higher EU standards (6) globally than to adjust to production to meet varying regulatory standards. Indeed, several aspects have been identied to make cer tain that such an ex traterritorialisation of standards occurs. ey include sufficient market power of the standards se er, regulatory capacity, preference for strict rules, predisposition to regulate inelastic targets and the nondevisability of standards (7). While a Brussels Effect is hence likely to occur towards regions with, for example, less market power, in trade with nations such as the US, one needs to carefully assess under which circumstances and in areas of trade a Brussels

Likewise, the realisation of a Washington Eﬀect may prove to be diﬃcult in the EU. e EU legal system is built on the provision of providing predictability via strict norms, hence it had been incentivising EU

Effect would prove to be successful. is is particularly true as both, the EU and the US, have similar interests in trade with China. In many of the regulatory areas mentioned in the Communication the US legal systems and business are arguably unlikely to favour strict rules. Hence, a Brussels Effect may not work well in product safety standards. Previous research on the subject ma er in the area of the Transatlantic Trade and Investment Partnership negotiations has illustrated the different approaches to-

consumers and businesses to be rather hostile towards regulating inelastic targets. is had been shown by the example of the debate concerning chlorine-rinsed chicken, which had been prominent when IP was being debated. While the US approach to food law largely builds on providing non-adulterated and safe foods at the end of the chain (bluntly speaking regardless of how it achieves this goal), the EU’s approach requires all food law obligations to be met along the chain and in

6. Anu Bradford, e Brussels Effect, 107 Northwestern University Law Review 1 (2020), p. 48; Anu Bradford, e Brussels Effect: how the European Union rules the world (OUP, 2020) Ch. 2, 3. 7. Anu Bradford, ‘ e Brussels Effect’, 107 Northwestern University Law Review 1 (2020), pp. 11-19; Anu Bradford, e Brussels Effect: how the European Union rules the world (OUP, 2020) Ch. 2. 8. Kai Purnhagen, ‘Who Recognises Technical Standards in IP?’ in Elaine Fahey (Ed.), Institutionalisation beyond the Nation State (Springer, 2018), p. 97. 9. Ibid, p. 97, pp. 104-107.

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every part of it. is approach is arguably preferred by European citizens, who are used to having their food being regulated in the same way along the supply chain. Successful campaigning may also contribute to an exaggeration of these diﬀerences, leading to a situation where policy makers have to take diﬀerences in the regulatory systems into account at a disproportionate level.

Admi edly, these diﬃculties primarily arise when supra- or international law aims at the harmonisation of already established regulatory systems. However, in emerging technology markets, which are not (yet) governed by established regulatory approaches, maximum harmonisation in the form of strict trade rules is more likely to be successful. erefore, in the area of technological regulation, a real transatlantic regulatory system such as an AI agreement or even a rulebook may be preferable. is is likely to be possible only, however, if the EU and the US could nd an agreement on data protection regulation.

Where regulation is not yet well established, such as in AI regulation, coordinated strict rules between the USA and the EU are preferable

While the Communication seems to prefer the solution of a level-playing eld which works towards a Brussels Effect, it also recognises that there are different regulatory approaches on both sides of the Atlantic, which need to be straightened out by outcome-oriented negotiations. is tension recalls the previously voiced difficulties of heterogeneous regulatory approaches of the EU and the US and the corresponding difficulties of successfully introducing the extra-territorialisation of standards. Research on harmonisation abounds, and there is evidence that in other markets level playing elds displaying maximum harmonisation needed adjustment early on. For example, shortly a er the EU introduced maximum harmonisation of safety provisions for product features in the 1970s, these regulations had to make room for a regulatory approach which would allow for more diversity of consumer and business preferences, while not jeopardizing harmonisation (10). It is indeed this heterogeneity in markets which enables trade, provides room for innovation, and fosters societal acceptance of regulation.

Conclusions and looking ahead How to move ahead for the governance of a new transatlantic relationship? Where regulation is not yet well established, such as in AI regulation, coordinated strict rules between the USA and the EU are preferable. e framework for such agreements is already set by Regulation 654/2014, as amended by Regulation 2021/167, which makes certain that such agreements are conducted in a way that the EU’s interests are being maintained. Within that framework there is a real opportunity for a transatlantic rulebook, based on harmonised rules and standards. In areas of established heterogenous regulatory approaches such as those governed by safety standards, an institutional form that facilitates caseby-case negotiations should still be realised. Given the heterogeneity of both regulatory systems and

10. Andrew McGee and Stephen Weatherill, ‘ e Evolution of the Single Market: Harmonisation or Liberalisation’, 53 e Modern Law Review 5 (1990), p. 582; Kai Purnhagen, ‘Beyond reats to Health: May Consumers' Interests in Safety Trump Fundamental Freedoms in Information on Foodstuﬀs? Re ections on Berger v Freistaat Bayern’, 38 European Law Review 5 (2013), pp. 711-719.

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employing strict rules which apply in the same way on both sides of the Atlantic. In market areas where product safety regulation applies and where regulatory systems and institutions are heterogenous and well-established, mutual recognition may be the preferred approach to design the respective agreements. However, in order to not engage too much with the heterogeneity of the systems, mutual recognition should not focus on the recognition of the measures per se. Rather, the constitution should focus on whether the respective measures are potent to achieve the appropriate level of protection of the respective importing country. e rules on dispute resolution may take inspiration from what has already been successfully implemented at WTO level, maybe barring the possibility for one party to block the entire system.

institutional frameworks in these areas, this approach is probably the more promising one. It would therefore make sense to strongly implement the proposed Trade and Technology Council as a negotiating forum for con icts between the EU and the US. Such a strong Council would also need common rules which determine the basis for the dispute se lement. e Council hence needs to be accompanied by a transatlantic economic constitution (11), se ing out both a level playing eld for dispute resolution and the mechanisms for dispute resolution themselves. e regulatory approaches to determine the level playing eld in this constitution should be carefully designed according to the existing regulatory approaches on both markets. As already discussed, in an area where approaches are not yet established such as in the regulation of AI, this constitution can take the form of a rulebook,

11. See further on this idea, Gunter Teubner, Transnationale Wirtscha sverfassung: Franz Böhm und Hugo Sinzheimer jenseits des Nationalstaates, ZaöRV 2014, pp. 1-28.

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Fighting climate change together? Opportunities and potential hurdles for an EU-US Transatlantic Trade Agenda Eva van der Zee

1. Introduction In 2019, the European Commission launched the European Green Deal, an ambitious package of measures with the overarching aim to make Europe climate neutral by 2050. At the same time, the Trump Administration repealed and so ened nearly 100 rules and regulations on pollution in the air, water and atmosphere further damaging the global climate. Furthermore, the Trump Administration decided to formally withdraw from the Paris Agreement that had been adopted in 2015 by 196 State parties to strengthen the global response to the threat of climate change, aiming to keep the global temperature below 2 degrees Celsius. Clearly, transatlantic cooperation on climate change was hopeless during the Trump era.

Agreement and revising the Trump Administration’s actions on the environment. Moreover, he appointed John Kerry, one of the leading architects of the Paris Agreement, as his climate envoy, further signalling his commitment to ghting climate change.

However, when Joe Biden was elected President of the United States, the future looked a li le brighter (and greener) as he, on several occasions, expressed his commitment to ghting climate change, se ing the ambitious Biden Plan for a Clean Energy Revolution and Environmental Justice (‘Biden’s Climate Plan’). Furthermore, since taking oﬃce, President Biden has signed several executive orders to tackle the climate crisis, including re-joining the Paris

A er President Biden’s election, the EU published a Communication on ‘A new EU-US agenda for global change’, focusing, amongst others, on working together to protect our planet and prosperity by esta-

1. Junior Professor at the Institute of Law and Economics, Hamburg University.

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e Carbon Border Adjustment Mechanism aims to ensure the price of imports re ects more accurately their carbon content

e CBAM is envisaged to further address the risk of carbon leakage potentially caused by the EU’s Emissions Trading System (ETS). e ETS sets a cap on the total amount of certain greenhouse gases that can be emi ed by the covered installations. Within this cap, companies can receive or buy emission allowances that they can trade with one another. On an annual basis, companies must surrender enough allowances to cover all their emissions. If they are not capable of doing so, they can expect heavy nes. While the ETS grants free allowances to sectors that are exposed to the risk of carbon leakages (such as steel), the CBAM is meant to further reduce such carbon leakage. e CBAM is expected to be unveiled by the European Commission in June 2021.

blishing a Transatlantic Green Trade Agenda. at Agenda sets a global template for Carbon Border Adjustment Mechanisms (CBAM); develops a joint Trade and Climate initiative within the World Trade Organization (WTO); and would lead to the forming of a new Green Technology Alliance (GTA). is Long Read takes a closer look at this Agenda, focusing particularly on possibilities for cooperation on CBAMs, the joint WTO Trade and Climate initiative, and the GTA.

2. Transatlantic Trade and Carbon Border Adjustment Mechanism Legislation e European Green Deal emphasises that ‘should diﬀerence in levels of ambition worldwide persist, as the EU increases its climate ambition, the Commission will propose a CBAM, for selected sectors, to reduce the risk of carbon leakage’. More speci cally, the CBAM aims to ensure that the price of imports re ects more accurately their carbon content. Carbon leakage occurs when a country adopts a strict climate policy resulting in a reduction of greenhouse gas emissions, while other countries, with a more relaxed policy, take over demand and increase their emissions (either through more carbon-intensive imports or by taking over production).

Biden’s Climate Plan also includes a CBAM proposal stating that the Biden Administration ‘will impose carbon adjustment fees or quotas on carbonintensive goods from countries that are failing to meet their climate and environmental obligations’. e EU hopes that the CBAM could be part of the Transatlantic Green Trade Agenda.

Biden's Climate Plan also includes a Carbon Border Adjustment Mechanism proposal

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Enthusiastic expectations of increased US interest in transatlantic cooperation on a Carbon Border Adjustment Mechanism should be tempered

te, while Democrats only have a 51-vote majority. In addition, Republicans may take back control of one or both houses of Congress two years from now. Furthermore, while it has been argued that with the right political framing, bipartisan support may exist in the US for a CBAM, John Kerry recently warned the EU that a carbon border tax adjustment should be a “last resort”, urging the EU to wait until a er the November 2021 United Nations Climate Change Conference (COP26) to move forward. As such, enthusiastic expectations of increased US interest in transatlantic cooperation on CBAM should be tempered.

However, there are some caveats. While the EU o en discusses the CBAM in relation to strengthening the ETS, President Biden has never pledged to introduce a federal emission trading scheme. Some States have introduced emission trading schemes, most notably the California Cap and Trade system and the Regional Greenhouse Gas Initiative, but it seems that a federal emission trading scheme would be politically diﬃcult to achieve. Nevertheless, even without a federal emission trading system, the Biden Administration aims, similarly to the EU, to achieve net-zero greenhouse gas emissions by 2050. To achieve that without a federal emission trading system, the Biden Administration will likely need to resort to climate regulation and targeted investments. e current control of the Democrats over both houses of Congress opens up the possibility of strong domestic legislation on climate change beyond executive orders, possibly further increasing the US’s interest in transatlantic cooperation on CBAM.

3. Transatlantic Trade and a WTO Trade and Climate initiative e CBAM is part of the EU’s wider Transatlantic Green Trade Agenda to be launched in mid-2021 which aims to develop a joint Trade and Climate initiative within the WTO. e core objective is to ensure that multilateral trade rules support the global transition towards a climate-neutral and resilient economy. e European Commission has stipulated that WTO reform will be a priority for EU-US

It should be noted, however, that most climate laws will require a 60-vote majority in the 100-seat Sena-

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they would prefer the EU to wait until a er President Biden’s inauguration to allow for a joint coordinated policy towards China. It remains to be seen whether the Biden Administration can convince the EU to coordinate a common approach towards China (arguably, requiring more dialogue and less diktat from the US) and the eﬀect thereof on EUChina-US relations (and, hence, EGA negotiations).

trade cooperation. Possible building blocks for the Trade and Climate initiative, according to informal discussions of the European Commission, include retaking negotiations on the Environmental Goods Agreement (EGA), and improving the functioning of the Commi ee on Trade and Environment (CTE) to act as the main forum to discuss trade and environment and to further develop the cooperation with other international organisations.

e other building block suggese negotiations for the EGA e breakdown in negotiated by the European Commission started in 2014. During these negotiations, 46 WTO Members, tions for a WTO Environ- is the CTE. e CTE was created by the 1994 Ministerial Decision including the EU and the US, nemental Goods Agreement on Trade and Environment. Memgotiated the establishment of is problematic when con- bership is open to all WTO memthe EGA seeking to eliminate tariffs on several important prosidering building a possible bers, with some international organisations as observers. e ducts that can help achieve enviTrade and Climate Initiative CTE contributes to identifying ronmental and climate protecand understanding the relationstion goals. e EGA negotiahip between trade and the envitions came to a halt in 2016 ronment to promote sustainable development. In when negotiators failed to nd common ground on November 2020, the EU, together with 49 WTO which goods would be covered by the EGA. Most Members, launched a new initiative to intensify notably, China wanted to include bicycles while the WTO work on trade and the environment. e iniEU and the US did not. e Trump Administration tiative stipulates the intention to organise structudid not, to say the least, improve the US-China relared discussions for interests WTO Members to adtionship (Chinese officials have publicly said that vance work on trade and environmental sustainabithe Trump Administration is to blame for a relality by promoting transparency and information shationship between the US and China that analysts ring, identifying areas for future work within the say is at its lowest point in decades), making it even WTO, supporting technical assistance and capacity more difficult to envisage an agreement on environbuilding needs, particularly for least-developed mental goods during the Trump Administration. countries, and working on ‘deliverables’ of environis is problematic as EU-China-US cooperation mental sustainability in the various areas of the remains critical to the future of the EGA. WTO. While the US was not part of the communication of the initiative to intensify WTO work on trae issue of relations with China is one of the bigde and the environment, given that addressing cligest issues the EU and the US need to se le this mate change is a core priority for the Biden Admiyear. On 30 December 2020, the EU agreed in prinnistration, it is likely the US will become involved in ciple on a deal with China governing their bilateral this initiative as well. investment, even though the Biden team indicated

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5. Conclusion and Outlook

A New Green Technology Alliance could strengthen transatlantic ties and improve green technology

An EU-US Transatlantic Green Trade Agenda could strengthen transatlantic relations while limiting global warming. Easy steps toward reconciliation and unity with the EU on the global climate, a er the traumatic last four years, would be for the US to join the initiative within the CTE to intensify WTO work on trade and the environment, as well as joining the new GTA proposed by the EU. Given the prime importance of addressing climate change for the Biden Administration, it would be very likely that the US will join this initiative. Also joining the new GTA proposed by the EU would be worthwhile for the US, given that the EU is currently a leader in green tech.

4. Transatlantic Trade and Forming a New Green Technology Alliance While the EU-US trade relationship is an avenue for cooperation on climate change, it is also an avenue for competition to gain rst-mover advantage on green tech. e European Investment Bank (EIB) Investment Report 2020/2021 shows that the EU is leading the way in green technology investment. For example, the EU has registered 50% more patents in green technologies than the US, with Japan and China further behind. Moreover, the EU has registered 76% more patents that combine both green and digital technologies than the US, and four times more than China. However, President Biden’s promise to inject 2 trillion USD (1.7 trillion euros) into clean energy during his four-year term (almost double the size of the EU budget for 2021-2027) may overshadow the EU’s eﬀorts.

However, there are still many hurdles to overcome. In particular, negotiations on an EGA may prove diﬃcult to achieve due to the current EU-China-US relations. Furthermore, transatlantic cooperation on CBAMs may not be as straightforward as one may think. While the Biden Administration is commi ed to imposing a CBAM, at least as a ‘last resort’, US interest in CBAMs may be even further tempered if they do not manage to enact strong domestic legislation on climate change. Given the current composition of the Senate, such legislation may be diﬃcult to pass. It remains to be seen therefore whether the Biden Administration will succeed in strengthening EU-China-US relations, as well as securing the needed bipartisan support for a CBAM.

e EU emphasises the importance of transatlantic cooperation to capitalise on the EU and US experience and expertise by forming a new GTA to create lead markets and cooperate on clean and circular technologies. Such an approach may be worthwhile to strengthen transatlantic ties, improve green technology, and prevent China from establishing dominance on green tech.

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The EU and transatlantic agenda on ‘fair’ corporate taxation: Is a Digital Services Tax a workable ‘Plan B’? Maria Kendrick

Introduction

e EU and States unilaterally resort to digital services taxes as a lesser Plan B option

No international consensus has yet been reached on how to transform the international tax system in order to grapple with the global imperative of digitalisation. e need to raise tax revenue to fund public spending has been around since time immemorial, however, the modern mix of digitalisation and globalisation of the economy has created a new focus on tax avoidance and good governance (2) in the area of taxation, and essentially ‘fair’ taxation. is has been spurred on, especially at the EU level, by the need to generate resources in order to ‘support’ the COVID-19 recovery. is Long Read will consider both EU and US/transatlantic agendas on ‘fair’ corporate taxation in a digitalised economy. What will become apparent is that trying to harmonise corporate tax to make it ‘fair’ is so diﬃcult that we see both the EU and individual states unilaterally resorting to considering digital services taxes (DSTs) as a lesser, but not easier, ‘Plan B’ option.

cerns, or allegations, of aggressive tax planning and tax avoidance, MNCs are the target set in the sights of the G20/OECD, the UN and the EU. It is therefore the pursuit of fairness in taxation, being a question of economic justice among States regarding the distribution of the authority to tax and therefore obtain revenue from taxation (3), which has seen many initiatives and legislative proposals at the EU and international level dealing with, or a empting to deal with, corporate income tax. Harmonised ‘fair’ corporate taxation is the ideal, the effective ‘Plan A’ – at both transatlantic and EU level. e difficulty of achieving a global solution is that it requires a uniform - not a differentiated - approach. It is hardly a surprise that it is difficult to achieve agreement on a transnational scale, despite the fact that globally all

e goal of addressing the tax challenges perceived to arise from digitalisation is inextricably linked to the goal of achieving a uni ed transnational agreement on corporate taxation, particularly regarding Multinational Corporations (MNCs). Beset by con-

Harmonised ‘fair’ corporate taxation is the ideal, the eﬀective ‘Plan A’

1. Lecturer in Law at the City Law School at City, University of London. 2. Whilst many international instruments refer to these concepts and use this terminology, a pertinent example for the purpose of this article is the UK-EU Trade and Cooperation Agreement, Part Two, Title XI, Chapter 5, Article 5.1 and 5.2. 3. Gianluigi Bizioli, ‘Fairness of the Taxation of the Digital Economy: Challenges and Proposals for Reform’, in W. Haslehner, G. Ko er, K. Pantazatou and A. Rust (eds) Tax and the Digital Economy (Wolters Kluwer, 2019).

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de nition of ‘digital economy’ and whether it can be ring-fenced, whether it would be able to produce neutral and equitable and therefore ‘fair’ taxation, and ultimately whether it would produce the level of tax revenue to actually encourage States to abandon their own sovereignty in exchange for the revenues generated in their jurisdiction. ere is also a dispute over the essentials of the proposals; whether tax reform should be focused on pro t or revenue/turnover.

States can agree on the revenue-raising premise behind taxation. Eradication of differences effectively means eradication of competition, and States are tempted to compete as much as MNCs. Against this backdrop there has been politically complex, somewhat disjointed and spasmodic a empts to make proposals for transnational and EU harmonised corporate taxation. is does not occur in a political vacuum, but is rather set within the context of the triangular relationship between the US, Europe and China. A combination of global politics and a desire to raise revenue and maintain competitiveness is inevitably going to lead to unilateralism, not just at State level but also between the international community and the EU. In addition, sovereignty and a desire to remain competitive means that State unilateralism will continue, and agreement at the global level will therefore be difficult to reach.

Consequently, ‘Plan A’ has so far not been achieved, and DTSs, with varying designs and scope, have been proposed, and in some States implemented. What is now apparent is that there are varying a empts to achieve global solutions, but on minimum or less ambitious scales, concurrently with the imposition of, and proposals for, DSTs temporarily in lieu, or perhaps permanently instead of, harmonised global corporate income tax. A digital services tax is therefore not the number one choice but the interim solution, or the ‘Plan B’.

In addition, data and analysis demonstrates that behind the proposals there are questions about the

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(CCCTB), envisages a global consolidated revenue, with an application threshold of 750 million euros. Upon implementation of the Pillar One proposal, the idea is that any unilateral measures that have e proposals have featured discussions on a minibeen implemented by jurisdictions to taxmum global corporate tax rate and a shi to source digitalised businesses, such as DSTs, should be abotaxation. In essence, the issue concerns the measulished with this global consensus-based solution prerement of income, or taxable ‘value’, generated in vailing. Both measures need consolidation and coothe source jurisdiction through digital business moperation to work, they also need to replace unilatedels without a necessarily corresponding to a ‘brickralism to be effective. It is within the context of the and-mortar’ physical presence or establishment. It broader agenda on consolidation of global corporais the de nition and application of these terms, te taxation that digital services taamong others, which has been xes should be considered as a the cause of international nego‘Plan B’. In comparing DSTs with tiation and acrimony for many Comparing DSTs with ‘Plan A’ the key components years, and which has led to unilaPlan A, consolidation and which are missing in the current teral action. state of play, in adopting the harmonisation are key la er, are consolidation or hare UN’s proposal has a digital monisation. focus with a global or regional bacomponents that sed choice. e OECD’s Base Since 2015, the OECD has been are missing Erosion Pro t Shi ing (BEPS) releasing interim reports on the initiative proposes, in Pillar One, progress of adopting the BEPS Pia new nexus and pro t allocation llars, outlining the speci c charules, whereas Pillar Two effectiracteristics and tax challenges of the digitalisation of vely seeks to enforce a global (but still to be deterthe economy. e G20/OECD Inclusive Framemined) minimum level of effective taxation on incowork commi ed to delivering a consensus-based some derived from large MNCs involving reallocation lution by the end of 2020. As in any a empt to reach and apportionment of income between jurisdica uni ed approach there remain differences of tions. e jurisdiction to which the reallocation is views. With an underlying desire to remain compemade can tax the income on the difference between titive and raise revenue, it is unsurprising that the the globally agreed rate and the MNEs actual effecsticking point appears to be pro t reallocation. e tive tax rate. Still at blueprint stage, Pillar Two incluaim is for the approximately 140 States to reach at des an income inclusion rule (IIR) and an undertaleast political agreement by the mid-2021. is is a xed payment rule (UTPR), which together form deadline which has been pushed back, not least the ‘GloBE’ rules. is includes the method for defrom mid-2020, affected of course by the pandemic, termining the effective tax rate and for imposing tax but this imperative can work both ways, due to the on a coordinated basis. acceleration in global digitalisation the pandemic has caused. Pillar One of the BEPS initiative, like the EU’s proposed Common Consolidated Corporate Tax Base

e Absence of Tax Consolidation and EU / Transatlantic Cooperation

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e shi ing deadlines from mid 2020 to 2021 can also be explained by the change in the US Administration, which has seen the new Biden Administration appoint a series of tax academics to his Treasury team in the Oﬃce of Tax Policy, notably in favour of a global minimum tax and an OECD level solution. For instance, the United States’ Global Intangible Low Taxed Income Regime (GILTI) would be treated as Pillar Two compliant under the IIR, and as the US has now ‘dropped’ its desire for a ‘safe harbour’, which would have seen companies eﬀectively opt-in to the system on a voluntary basis, renewing hope for global cooperation. However, the US ‘will engage robustly to address both pillars of the OECD project, the tax challenges of digitisation and a robust global minimum tax’, and it has shown opposition to state unilateralism, where the former USTR of the Trump Administration stated that it considers the Austrian, Spanish and UK digital taxes to be discriminatory against US rms. Meanwhile, the EU is still simultaneously pursuing its own proposals for a DST, without dropping its hopes of delivering the CCCTB. ere seems to be an absence of true global cooperation.

e EU will pursue its own DST if a global solution is not forthcoming

Will the EU go it alone? Will the US help or hinder? Although the EU has been very vocal about contributing to, or trying to in uence the shape of, global solutions, it has also been very vocal in asserting that should a global solution not be found it will pursue its own EU level policies. e EU reiterated its position, in its July 2020 Communication on an Action Plan for Fair and Simple Taxation Supporting the Recovery Strategy, that it is prepared to pursue its own EU DST should a global solution not be forthcoming. 'In fact, according to recent reports, it may even do so regardless, con rming the lack of cooperation internationally and EU unilateralism.'

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venues above 750 million euros and EU revenues of 50 million euros. At the ECOFIN Council meeting held on 4 December 2018, France and Germany urged the adoption of a DST on a more limited tax base described as ‘referring to advertisement’, but stated that a Directive enacted on this basis ‘would not prevent Member States from introducing in their domestic legislation a digital tax on a broader base’, which France, among other Member States, has subsequently done.

e EU DST has been described by the Commission as an ‘interim’ less preferred option to a comprehensive policy, which would optimistically see harmonisation of EU law on the subject of digital permanent establishments and pro t allocation rules being incorporated into its proposals on the CCCTB. e CCCTB ‘Plan A’ envisages harmonisation to the corporate tax base only, not corporate tax rates, including a facility to opt-in. It is a relatively broad and ambitious proposal, which has so far failed to be implemented in the EU, with many Member States opposed. It is because of the diﬃculty in achieving harmonisation of corporate tax on a broad scale, that use of diﬀerentiated integration has been considered, and an interim DST suggested. e ‘Plan B’ DST has still to be agreed upon, coming up against some of the same objections as ‘Plan A’ in terms of its workability and ultimately its revenue raising ability.

On 14 January 2021 the Commission launched its impact assessment ‘roadmap’ for an EU digital tax, on the rationale of achieving fair taxation, with a view to proposing a dra Directive around the middle of 2021, deliberately corresponding with the new OECD timeline. Even as a ‘Plan B’ the DST is the Commission’s more desirable option for addressing the digitalisation of the economy than what has subsequently occurred, which is that some Member States, and the UK, have implemented their own versions of a DST, although at varying tax rates and varying qualifying revenue thresholds.

In its Communication to the European Parliament and Council on ‘A Fair and Eﬃcient Tax System in the European Union for the Digital Single Market’, the Commission declared the establishment of the digital single market as one of its ten political priorities. is was in 2017. Since then, the DST, explained previously as an interim measure forming part of the harmonising agenda in taxation, has so far failed to be adopted, following a negative vote in the Council in March 2019. is is even on a proposal of limited scope, which had reduced the DST to a sales tax on digital advertising services. e previous, comparatively extensive, proposal was for a uniform tax rate of 3% on revenues generated by selling online advertising space, from digital intermediary activities between users for facilitating the sale of goods and services, and from the sale of data generated from the user-provider information. It would have applied only to companies with total worldwide re-

A unilateral approach sees the UK with a 2% DST, 5% in Austria, 3% in France and Spain, and up to 7.5% in Hungary, with France’s DST having the widest tax base. State sovereignty is still apparent in the arena of transnational taxation. In fact, approximately half of all European OECD countries have either announced, proposed, or implemented a digital services tax. Many OECD countries have digital taxes or plans to impose them. Several US States also have proposals for taxing the digital economy. Whilst the UK has expressed a commitment to disapply its DST in the event that an appropriate international solution is reached, there is no guarantee as to whether it, or indeed other countries, will repeal their DSTs at all nor how quickly they would

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be prepared to do so and how much revenue raising at the EU or international level is required to tempt them to do so. e tax base, rates, global and domestic revenue thresholds all diﬀer. Even the OECD admits the absence of a consensus-based solution would likely lead to a proliferation of uncoordinated and unilateral tax measures. One could expect that more and more EU countries will actively try to defend taxation rights and try to extract more revenues from value created within their own State borders.

Overall, there is still con ict on de nitions of nexus (where to tax) and value (what to tax) sed at a rapid pace because of the pandemic, differentiation and minimum harmonisation are likely, in light of the struggle, to be the subject of any agreement. Whilst it may appear that the digitalisation imperative is moving global tax policy in one direction, the reality is likely that there will be differentiation and minimum standards set in limited areas, on limited aspects of tax policies. e unilateral adoption of DSTs has shown that whilst a DST is possible, at the international and EU level it is at best ‘Plan B’ and difficult to achieve. However, what, if anything, is agreed, we should not underestimate the likely fervour with which it will be presented as an agreement to take action on fair taxation, rather than at best, ‘Plan B’.

Competitive Harmonisation within or between the EU and the US? Overall, there is still con ict on de nitions of nexus (where to tax) and value (what to tax). e diﬃculty in de ning value creation in the digital context is the need to address the question of how to a ribute pro t in new business models driven by intangible assets, data and knowledge. From the discussion on the digitalisation of the economy being increa-

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News Highlights Week 15 to 19 March 2021

Post-Brexit tensions: Commission starts infringement process against UK for breach of Ireland/Northern Ireland Protocol Monday 15 March

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Marking the beginning of an infringement process, the European Commission sent a le er of formal notice to the United Kingdom for ‘breaching the substantive provisions of the Protocol on Northern Ireland/Ireland’, and the good faith obligation under the Withdrawal Agreement.

General Court to hear action for annulment on European Environmental Agency’s failure to refer questions to the Court of Justice Monday 15 March

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In Stichting Comité N 65 Ondergronds Helvoirt v EEA (T5/21), the General Court will hear an annulment action brought by a citizens’ council against the European Environmental Agency’s refusal to refer questions to the Court of Justice on the interpretation of part of the Air Quality Directive.

Commission publishes market access oﬀers of the EU-China investment agreement Monday 15 March

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e European Commission published the schedules of commitments agreed under the EU-China Comprehensive Agreement on Investment.

EU’s changes to lists of sanctions concerning Egypt and Ukraine now published Monday 15 March

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e Council of the EU announced last week that it would be making changes to its list of sanctions concerning Egypt, and Ukraine, which have now been made oﬃcial through publication of CFSP Decisions and Implementing Regulations.

Council approves conclusions on the EU Chemicals Strategy for Sustainability

e role of Asset Management Companies in relieving banks of NonPerforming Loans: brie ng papers published by European Parliament Commi ee

Monday 15 March

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Conclusions were adopted by the Council of the EU endorsing the EU Chemicals Strategy for Sustainability, which forms a key component of the EU’s climate and sustainability policy contained in the European Green Deal.

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David Ramos Muñoz and Marco Lamandini, in a brie ng paper requested by the European Parliament’s ECON Commi ee, examine how Asset Management Companies can be a key instrument to relieve banks of Non-Performing Loans, exploring an EU level-strategy.

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EUIPO and Eurojust sign cooperation agreement to tackle abuse of IP rights in counterfeiting and online piracy

European Securities and Markets Authority selects candidate for Executive Director position

Monday 15 March

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e European Union Intellectual Property Oﬃce and the European Union Agency for Criminal Justice Cooperation signed a Service Level Agreement to increase Eurojust’s capacity and expand its expertise to support investigations related to the abuse of IP rights in the eld of counterfeiting and online piracy.

e European Securities and Markets Authority selected Natasha Cazenave as its candidate for the position of Executive Director, to replace the outgoing Verena Ross (whose mandate will end on 29 May 2021). e decision has now been communicated to the European Parliament.

Ireland joins the Schengen Information System

e Institutional Aspects necessary for Asset Management Companies to be eﬀective in managing Non-Performing Loans

Monday 15 March

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Ireland is joining the EU’s Schengen Information System for internal security and external border management to ght cross-border crime and terrorism, meaning Irish law enforcement authorities will now receive real time information on people accused or convicted of crimes in other EU countries, Norway, Iceland, Switzerland and Lichtenstein.

Tuesday 16 March

A brie ng paper on Non-Performing Loans (NPLs) and Asset Management Companies (AMCs) by Christos Gortsos, conducted as a member of the ECON Commi ee’s Expert Group on nancial resolution, focuses on the institutional, governance and operational conditions that must be met for AMCs to eﬃciently facilitate the management and recovery of NPLs.

Council adopts Regulation on online terrorist content Tuesday 16 March

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e Council of the EU adopted a Regulation addressing the dissemination of terrorist content online. is comes a er it had reached agreement with the European Parliament on the content of the new act in December 2020, on the basis of a proposal presented by the Commission in 2018.

Commission opens investigation into Greece’s Public Power Corporation behaviour in wholesale electricity market Tuesday 16 March

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e European Commission opened an investigation into Greece’s Public Power Corporation behaviour in the wholesale Greek electricity sector, particularly on whether it has distorted competition and slowed down investment in greener energy, in breach of Article 102 TFEU.

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AG Pikamäe: under certain circumstances a pilots’ strike can be an ‘exceptional circumstance’ meaning no compensation under EU law is available

ECtHR: refusal by Belgian courts to rule on alleged crimes against international humanitarian law does not breach right to a fair trial

Tuesday 16 March

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Advocate General Pikamäe advised the Court of Justice in an Opinion (Airhelp Ltd v Scandinavian Airlines System SAS (C28/20)) that a pilots’ strike can amount to an ‘exceptional circumstance’ under Article 5(3) Regulation 261/2005 in certain circumstances.

e European Court of Human Rights ruled in Hussein and Others v. Belgium (application no. 45187/12) that the Belgian courts did not breach the right to a fair trial under Article 6(1) of the ECHR by declining jurisdiction to hear a dispute concerning crimes against international humanitarian law in 2003.

Court of Justice: Polish and Hungarian progressive taxes on the turnover of undertakings do not infringe EU State aid law

Eurogroup statement on the euro area scal policy response to the COVID-19 crisis and the path forward: main takeaways

Tuesday 16 March

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e Court of Justice, si ing in Grand Chamber formation, delivered its judgments in Commission v Poland (C-562/19 P) and in Commission v Hungary (C-596/19 P), nding that the Polish tax on the retail sector and the Hungarian advertisement tax, do not infringe EU State aid rules, which allow for progressive taxation measures.

Following its meeting yesterday, the Eurogroup published a statement on the scal policy in response to the COVID-19 crisis and its future prospects once the COVID-19 pandemic is under control.

Temporary requirement for net short position holders to disclose positions of 0.1 % and above to expire on 19 March

European Ombudsman: Vacancy for temporary position of Legal Expert

Tuesday 16 March

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e European Securities and Markets Authority decided not to renew its decision requiring holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority when the position reaches, exceeds or falls below 0.1% of the issued share capital, and will thereby expire on 19 March 2021.

Tuesday 16 March

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A vacancy notice for the position of Legal Expert at the European Ombudsman’s Oﬃce was oﬃcially published.

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A taxable person acting as such includes a charity carrying on a noneconomic activity in a business capacity where services are acquired from a non-EU supplier, Court of Justice rules

Court of Justice: ‘working time’ notion applies to all working contracts concluded by the same worker and employee Wednesday 17 March

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In Academia de Studii Economice din Bucureşti (C-585/19), the Court of Justice ruled that the notion of ‘working time’ under the Working Time Directive applies to all employment contracts concluded by the same worker and employee.

Wednesday 17 March

Article 44 of VAT Directive 2006/112 was clari ed by the Court of Justice in HMRC v Wellcome Trust Ltd (C-459/19) as meaning that a taxable person carrying on a non-economic activity in a business capacity, and acquiring services from a non-EU supplier for that purpose must be receiving those services as a taxable person ‘acting as such’.

European Parliament to vote on how to tackle discrimination in the AI eld

EU, UK and Norway reach arrangement on management of sheries stock in North Sea Wednesday 17 March

Wednesday 17 March

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e European Parliament’s Culture and Education Commi ee adopted a resolution on Tuesday calling for discrimination through gender, social or cultural bias in AI technologies to be addressed through proper regulation and training. is will be followed by a Plenary vote.

e EU reached an arrangement with Norway and the UK regarding jointly managed sheries stocks in the North Sea for 2021, as well as two other separate agreements with Norway concerning total allowable catches and quotas, also in the North Sea

Court of Justice: national courts are required to provide relief when Directives are not transposed in all oﬃcial languages Wednesday 17 March

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European Banking Authority: Vacancy for temporary position of Legal Oﬃcer Wednesday 17 March

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A vacancy notice for the position of Legal Oﬃcer at the European Banking Authority was oﬃcially published.

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In its rst-ever reference for a preliminary ruling in the Irish language, the Court of Justice ruled that a national court must provide relief when national law confers on it the power to declare that its respective Member State has failed to correctly transpose a Directive (UH v An tAire Talmhaíochta Bia agus Mara, Éire agus an tArd-Aighne (C-64/20).

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‘Free COVID-19 vaccine-visas’ proposed by European Commission to allow intra-EU travel Wednesday 17 March

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Court of Justice rules that EAW surrender procedure applies when sentencing has occurred in a third State and been recognised in the issuing Member State

e European Commission proposed to create a Digital Green Certi cate for EU citizens, their family members, and EU residents, a type of COVID-19 vaccine-visa, aimed at ‘safe free movement inside the EU during the COVID-19 pandemic’.

Wednesday 17 March

ESMA publishes annual report on risks, trends and vulnerabilities in EU nancial markets

Court of Justice: dual diﬀerentiated system of protection of collective redundancies not under the scope of Collective Redundancies Directive

Wednesday 17 March

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e Court of Justice delivered a ruling relating to the surrender of a Lithuanian national to carry out a sentence imposed by a third State, that individual having absconded to Ireland, (Minister for Justice and Equality v JR, (C-488/19)), con rming the applicability of, and clarifying the interpretation of, the European Arrest Warrant (EAW) Framework Decision 2002/584/JHA.

e European Securities and Markets Authority published a report analysing the impact of COVID-19 on nancial markets during the second half of 2020, the increasing credit risks linked to signi cant corporate and public debt overhang, and the risks linked with investments in non-regulated cryptoassets.

Wednesday 17 March

AG Campos Sánchez-Bordona: energy solidarity is a true legal principle subject to judicial review

European Court of Human Rights re nes its case-processing strategy

ursday 18 March

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In Consulmarketing (C-652/19) the Court of Justice ruled that national law providing for a dual and diﬀerentiated system of protection for collective redundancies does not fall under the scope of the Collective Redundancies Directive, and its compatibility with EU law cannot be examined.

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Advocate General Campos Sánchez-Bordona delivered his Opinion in Germany v Commission (C-848/19 P) advising the Court of Justice on how to interpret the content and scope of application of the principle of energy solidarity provided for in Article 194(1) TFEU.

ursday 18 March

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e European Court of Human Rights announced that it has recently introduced a more targeted and more eﬀective caseprocessing strategy, as a follow-up of the Interlaken reform process and the prioritisation policy launched in 2010 to reduce its backlog and improve its functioning.

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AG Tanchev’s Opinion on the compatibility with EU law of the Italian system of subsequent xed-term employment contracts for teachers of Catholic Faith in public schools ursday 18 March

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Advocate General Tanchev delivered his Opinion in GILDAUNAMS and Others (C-282/19) advising the Court of Justice on EU discrimination law concerning recourse to xedterm employment contracts in the public sector in Italy (recruiting Catholic teachers) and domestic rules precluding an upgrade contracts of indeterminate duration.

What is a ‘subsequent application’ for international protection under Directive 2013/32? AG Saugmandsgaard Øe’s Opinion ursday 18 March

ursday 18 March

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e Court of Justice handed down its ruling in the case X v Kuoni Travel Ltd, clarifying the interpretation of Article 5(2) of Package Travel Directive 90/314 as potentially extending liability to a package travel organiser when the contract has not been (or not been properly) performed by an employee of a service suppliers (in this case a hotel employee raped the consumer in the hotel).

ECtHR: procedural rights breached by excessive delay in criminal investigations precluding access to compensation claims before criminal courts

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ursday 18 March

Advocate General Saugmandsgaard Øe delivered his Opinion in L.R. (C-8/20), in a case concerning the EU rules for granting and withdrawing international protection under Article 33(2)(d) and Article 2(q) Directive 2013/32.

AG Bobek: Takeover Directive precludes res judicata decisions imposing administrative penalties to parties not part of the proceedings ursday 18 March

Package travel organisers vicariously liable under civil law for hotel employee’s rape of consumer under EU Directive: Court of Justice’s ruling in Kuoni

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Advocate General Bobek delivered his Opinion in Adler Real Estate and Others (C-546/18 and C-605/18), advising the Court to rule that Articles 4 and 17 of the Takeover Directive, in conjunction with Article 47 of the Charter, preclude national law provisions that provide for a decision with res judicata eﬀects from imposing, in a subsequent administrative procedure, sanctions on parties who were not part of the preliminary proceedings.

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e European Court of Human Rights ruled in Petrella v. Italy (application no. 24340/07) that Italy breached several procedural rights under the ECHR on account of the length of the criminal preliminary investigation, the lack of an eﬀective remedy in respect of the length of the proceedings, and the time-barring of proceedings.

Court of Justice reduces ne of steel abrasives cartel ursday 18 March

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e Court of Justice delivered its judgment in Pometon v Commission (C-440/19 P) partially se ing aside the General Court’s judgment in Pometon v Commission (T-433/16), with respect to the ne imposed concerning Article 2 of Commission Decision C(2016) 3121 nal (Case AT.39792 – Steel Abrasives), and xed the ne imposed on Pometon in the sum of 3,873,375 euros.

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AG Saugmandsgaard Øe: EU law precludes national law obligations to pay advance VAT for intra-Community acquisition of motor fuels ursday 18 March

European Innovation Council launched to support transition of scienti c ideas into business innovations Friday 19 March

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At an online event, the European Commission launched the European Innovation Council for 2021-2027 to develop and expand breakthrough innovations. e rst annual work programme of the EIC has also been published, and two prizes for Women Innovators and the European Capital of Innovation are open for applications.

Advocate General Saugmandsgaard Øe issued his Opinion advising the Court of Justice in a case concerning whether EU primary and secondary tax law precludes national law obligations (aiming at fraud prevention) to pay advance VAT for intra-Community acquisition of motor fuels, G. sp. z o.o. v Dyrektor Izby Administracji Skarbowej w Bydgoszczy (C855/19).

Court of Justice: non-residents having to expressly select same capital gains tax treatment as residents is contrary to free movement of capital Friday 19 March

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European Data Protection Supervisor on a European Health Union Friday 19 March

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e European Data Protection Supervisor issued Formal Comments on three legislative proposals for a European Health Union, which the European Commission presented as a response to the COVID-19 pandemic and perceived need to strengthen EU competences in this eld.

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e Court of Justice ruled in Autoridade Tributária e Aduaneira (C-388/19) that Articles 63 and 65 TFEU preclude diﬀerent capital gains tax treatment for residents and nonresidents, even if non-residents can speci cally apply a tax regime that would provide for the same treatment as residents.

Connecting a travel authorisation system to JHA databases: Council Presidency and European Parliament reach provisional agreement

EMA concludes that bene ts of COVID-19 AstraZeneca vaccine still outweigh its risks despite possible link to rare thromboembolic events

Friday 19 March

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e Council Presidency and European Parliament representatives reached a provisional agreement on rules connecting the European travel information and authorisation system (ETIAS) to relevant Justice and Home Aﬀairs EU databases.

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e Pharmacovigilance Risk Assessment Commi ee of the European Medicines Agency (EMA) on ursday nished its preliminary review of blood clots showing in people vaccinated with AstraZeneca’s COVID-19 vaccine, concluding that the bene ts of the vaccine continue to outweigh the risk of side eﬀects.

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Insights, Analyses & Op-Eds Europe and the COVID-19 Crisis – Looking back and looking forward’ 2nd EBI Policy Conference 2020

e Commission launches a public consultation to improve the situation of taxpayer rights in the Single Market

by Lukas Böﬀel

by Darya Budova

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Analysis of the policy discussion of the European Banking Institute (EBI) at its 2nd Policy Conference entitled ‘Europe and the COVID-19 Crisis – Looking back and looking forward’ on 4-5 November 2020, showing that the banking system entered into this crisis in a much be er shape than ten years ago.

Analysis of the Commission’s recent public consultation on simpli ed procedures for be er tax compliance, designed to collect information on direct tax-related problems that citizens currently face when they exercise their freedoms to carry out cross border activities, as well as certain indirect tax issues speci cally aﬀecting small and medium enterprises (SMEs).

AG Hogan’s Opinion in Avis 1/19 regarding the Istanbul Convention

EU and international law at a crossroads in EU-UK enforcement mechanisms under the Ireland/Northern Ireland Protocol

by Merijn Chamon

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Op-Ed commenting on Advocate General Hogan’s Opinion 1/19 regarding the Istanbul Convention, discussing the main points and agging up the more remarkable ndings in the Opinion.

by Trajan Shipley

Progressive Turnover Taxes and EU State aid law: Green light for digital services taxes? by Saturnina Moreno González

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Op-Ed examining two signi cant reasons arising from the Grand Chamber of the Court of Justice’s judgments dismissing the Commission’s appeals in Commission v Poland (C562/19 P) and Commission v Hungary (C-596/19 P), nding that the Polish tax on the retail sector and the Hungarian advertisement tax, do not infringe EU State aid law.

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Insight looking into intertwining EU and international enforcement and se lement mechanisms to resolve disputes arising between the EU and the UK under the Withdrawal Agreement, in light of recent developments, especially the EU’s recent initiation of an infringement process against the UK due to its intention to unilaterally extend grace periods under the Ireland/Northern Ireland Protocol.

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Library - Book Review

By András Jakab

By Armin von Bogdandy, Piotr Bogdanowicz, Iris Canor, Christoph Grabenwarter, Maciej Taborowski, Ma hias Schmidt (Eds.)

Defending Checks and Balances in EU Member States. Taking Stock of Europe’s Actions Review of a book that presents the lively academic debate about what the European Union can and should do about its illiberal Member States, nding it to contain sophisticated and smart doctrinal analysis and an excellent summary of the latest developments.

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