1. ECONOMIC ENVIRONMENT 1.5 Foreign direct investment (FDI) Page 22 (Para 1.35)
The EU continues to be the world's largest recipient and supplier of FDI. In addition, it continues to be a net investor in the rest of the world. Both stocks held by the EU and those held by the rest of the world have risen steadily during the last years (Chart 1.9); however the trend of flows reflected the impact of the financial turmoil.
Question(s):
1. The financial turmoil has influenced the confidence of investors, especially in member countries with serious financial crises. Will the EU or its members be adopting any new policies aimed at increasing flows of investment and capital?
EU reply: The EU and its Member States are well aware of the impact of the recent years' sovereign debt crisis on investors' confidence at large.
The EU, euro area and Member States have, respectively engaged in a comprehensive strategy to address weaknesses and to restore stability and competitiveness:
At Member States' level, and in particular in vulnerable Member States, ambitious measures of fiscal consolidation and structural reforms have been taken over previous years, reinforced, in the countries under programme, by the programme conditionality framework.
The framework of governance of economic and fiscal policies in Member States has been profoundly strengthened.
The euro area established very efficient and large mechanisms, the EFSF and the ESM, to act as crisis intervention tools in case of liquidity crises facing any of the Member States belonging to the euro area.
The establishment of the Single Supervisory Mechanism will profoundly strengthen financial supervision in Europe. This element, together with the forthcoming bank resolution and framework, will mark important steps towards a full-scale banking union.
At EU level, legislation, following G-20 commitments and beyond, on financial-sector regulation has been profoundly overhauled and led to a more resilient financial sector.Information on all these measures to overcome the root causes and effects of the crisis is widely available, for example under http://ec.europa.eu/economy_finance/focuson/crisis/index_en.htm. 2. TRADE AND INVESTMENT REGIME
2.1 Legal and Institutional Framework Page 28 (Para 2.10)
The European Parliament ratifies trade agreements by simple majority, while the Council generally needs a qualified majority to give consent. Unanimity by the Council is required for agreements on trade in services, trade-related intellectual property rights, and foreign direct investment that include "provisions for which unanimity is required for the adoption of internal rules", as well as for agreements on trade in cultural and audiovisual services that "risk prejudicing the Union's
linguistic and cultural diversity", and for agreements in the field of social, education, and health services that "risk seriously disturbing the national organization of such services and prejudicing the responsibility of a member State to deliver them".
Questions:
2. It would be appreciated if the EU could please define precisely what is meant by the descriptions "prejudicing" and "seriously disturbing" in the context of the above?
3. Are there any specific criteria for evaluating whether or not agreements "risk prejudicing the Union's linguistic and cultural diversity" or "seriously disturbing the national organization" of the relevant services"?
EU reply to questions 2 and 3: The Treaty on the Functioning of the European Union does not define these terms, nor does it provide specific criteria for their evaluation.
2.4.2 Reciprocal preferences Page 35 (Para 2.44)
On 29 November 2012, the Commission was mandated to open free-trade negotiations with Japan. Question(s):
4. Now that EU-Japan FTA negotiations are underway and in light of concerns expressed by Europe's automakers that this FTA will benefit the Japanese auto-industry at their expense, what specific measures will the Commission be taking to address these concerns and consolidate domestic opinions with a view to moving the negotiations forward?
EU reply: In the FTA negotiations with Japan, the Commission will pursue both the offensive and the defensive interests of the EU auto industry. The defensive interests of the auto industry will be taken into account when negotiating tariff concessions with Japan. On the offensive side, the Commission will aim at solving NTBs currently hindering access of European producers to the Japanese market, in particular via the objective of seeking full convergence of Japan's national requirements with the relevant UNECE regulations.
2.5.2 Bilateral investment treaties Page 37 (Para 2.56)
On 12 December 2012, the European Parliament and the Council adopted the Regulation establishing transitional arrangements for bilateral investment agreements between member States and third countries. This Regulation provides legal certainty in EU law for bilateral investment agreements which were signed by EU member States before the entry into force of the Lisbon Treaty. The regulation confirms that member States may maintain in force these agreements notwithstanding the EU's competences relating to investment, until they are replaced by investment agreements concluded by the EU. Member States must notify the Commission which agreements they want to maintain. The regulation also provides for a mechanism authorizing member States, under certain conditions, to negotiate bilateral investment agreements with third countries not immediately scheduled for EU-wide investment negotiations, or to re-negotiate existing agreements.
Question(s):
5. What exactly are the "certain conditions" referred to in the above paragraph in the Report, and does the relevant regulation contain any precise provisions that define the "conditions" under which member States may negotiate bilateral investment agreements with third countries not immediately scheduled for EU-wide investment negotiations, or re-negotiate existing agreements?
EU reply: The conditions under which Member States may negotiate or re-negotiate existing bilateral investment agreements are set out in Article 9 of the Regulation establishing transitional arrangements for bilateral investment agreements between member States and third countries. It provides that the Commission shall authorise the Member States to open formal negotiations with a third country unless it concludes that the opening of such negotiations would:
be in conflict with Union law other than the incompatibilities arising from the allocation of competences between the Union and its Member States;
be superfluous, because the Commission has submitted or decided to submit a recommendation to open negotiations with the third country concerned;
be inconsistent with the Union's principles and objectives for external action as elaborated in accordance with the general provisions laid down in Chapter 1 of Title V of the Treaty on European Union;
constitute a serious obstacle to the negotiation or conclusion of bilateral investment agreements with third countries by the Union.
3. TRADE POLICIES AND PRACTICES BY MEASURE 3.1 Measures directly affecting imports
3.1.9 Sanitary and phytosanitary standards (SPS) Page 67 (Para 3.123)
As indicated in the Report, plants and plant products listed in Council Directive 2000/29/EC (Annex V, Part B) must be accompanied by a phytosanitary certificate issued by the competent authority of the exporting country.
Question(s):
6. Does the European Union adopt a range of different phytosanitary requirements for plants of different risk categories? (For example, are the requirements for tissue culture plants in sterile condition the same as those for field-grown plants?)
EU reply: The EU has adopted a range of phytosanitary import requirements according to different levels of risk posed by different types of plants or plant products, including in some cases a differentiation between field-grown plants and tissue culture plants. Council Directive 2000/29/EC, Annex IV.A.I points 11.4, 39., 40. and a number of other specific points in the Annex can be given as examples of such risk-specific approach. In addition, the existing requirements are subjected to a risk-based review if new scientific information becomes available.
4. DEVELOPMENTS IN SELECTED SECTORS 4.3 Services
4.3.1 Financial services
4.3.1.2.5. Third–country regime Pages 144-146 (Para 4.107)
Table 4.24 (State of play of equivalence decisions) gives an overview of the equivalence decisions adopted under the EU financial services legislations.
The following abstract is from Table 4.24 on page 146. UCITS Directive
Directive 2001/108/EC of 21 January 2002 (viewed at: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2002:041: 0035:0042:EN:PDF)
Equivalence decisions are taken by the competent authorities of the UCITS home member State.
According to Article 50(2)(a) of the UCITS Directive, UCITS can invest in a third country's investment funds, including TPKM's investment funds, which are other than those referred to in Article 50(1) of the UCITS Directive.
On 20 November 2012, the European Securities and Market Authority (ESMA) published Opinion 2012/721. In this Opinion, ESMA said that UCITS may only invest in units or shares of collective investment undertakings as defined in Article 50(1)(e) of the UCITS Directive. ESMA expected that any portfolio adjustments required to ensure compliance with this opinion will be made taking into account the best interests of investors and at the latest by 31 December 2013. According to this Opinion, UCITS cannot have any exposure to TPKM's investment funds after the end of this year. We believe that this Opinion has created an unfair barrier to trade in services.
Question(s):
7. What is the rationale behind ESMA's policy expressed in Opinion 2012/721?
8. Would the EU consider revising or modifying the ESMA Opinion 2012/721 in the future to ease the constraints on UCITS investments?
EU reply to questions 7 and 8: According to Art. 50(2)(a) of the UCITS Directive a UCITS is not allowed to invest more than 10 % of its assets in transferable securities or money market instruments other than those referred to in Art. 50(1) of the UCITS Directive.
Art. 50(2) is a derogation from a general rule set out in Art. 50(1) UCITS Directive, notably that UCITS may solely invest in the categories of assets set out in that article. It follows from the nature of a derogation that it has to be interpreted strictly, therefore UCITS could only invest in units or shares of open-ended collective investment undertakings which comply with the conditions provided for in Art. 50(1) point (e) of the UCITS Directive. The reference to 'transferable securities or money market instruments other than those referred to in paragraph 1' in Article 50(2) should be understood as a derogation from the provisions of Art. 50(1) points (a) to (d) and it does not cover point Art. 50 (1) point (e).
ESMA's opinion is based on Art. 29 (1)(a) of the ESMA Regulation. According to this provision ESMA shall play an active role in building a common Union supervisory culture and consistent supervisory practices, as well as in ensuring uniform procedures and consistent approaches throughout the Union. Therefore, in order to ensure a common understanding of Art. 50 (2) of the UCITS Directive and to avoid different kind of practices throughout Member States ESMA issued an opinion.
ESMA is an independent European Authority and therefore the European Commission cannot revise or modify the ESMA opinion. Also, the Commission services are of the view that ESMA's opinion contains an appropriate interpretation of the UCITS Directive.
UCITS are still allowed to invest in units or shares of open-ended collective investment undertakings provided that they fulfil the conditions outlined in Art. 50(1) point (e) of the UCITS Directive. According to this provision, UCITS are in principle also allowed to invest in funds which are established in a third country.
RESPUESTAS DE LA EU A LAS PREGUNTAS DE COLOMBIA