The Week Ahead in the European Parliament – September 15, 2017

Summary

Next week is constituency week for Members of the European Parliament (“MEPs”).  MEPs will go back to their home countries to handle national issues, or convene in their parliamentary delegations to work on matters related to non-EU Member States.

However, this week was a plenary in the European Parliament.  A number of interesting votes took place.

On Tuesday, MEPs approved a report of the Committee on Industry, Research and Energy (“ITRE”) on the proposal for a regulation concerning measures to safeguard the security of gas supply.  Under new rules that were informally agreed by MEPs and ministers, Member States that are confronted with a gas supply crisis will be able to trigger an emergency alert and thereby receive help from neighboring Member States, in the “spirit of solidarity”.  The aim of the proposal is to reinforce the security of gas supplies across the EU.  The new rules should become effective before winter. See the Commission’s proposal here, and the Parliament’s position at first reading here.

On the same day, MEPs approved a report of the Committee on Industry, Research and Energy (“ITRE”) on the proposal for a regulation on the promotion of Internet connectivity in local communities and public spaces (WiFi4EU).  The scheme would promote over 5,000 free Wi-Fi connectivity spots for citizens and visitors in public spaces such as hospitals, parks, squares, public buildings, libraries, or museums all across Europe.  The scheme would also create a single EU-wide authentication system for access to these hotspots, and forms part of efforts to create a Digital Union.  See the Commission’s proposal here, and the Parliament’s position at first reading here.

On Wednesday, as trailed in our last “week ahead” newsletter (see here), MEPs voted on a non-binding own-initiative report and motion for a resolution on arms exports and the implementation of the Council Common Position 2008/944/CFSP, which defines common rules governing control of exports of military technology and equipment. The report, which was adopted in the Committee on Foreign Affairs (“AFET”) on July 18, 2017, provides that EU Member States must ensure consistency between their arms export control decisions; and that, should it be deemed necessary, an EU supervisory body should be established to oversee such decisions.  See the approved resolution here.

On the same day, MEPs also adopted their position at first reading on the proposal for a regulation to continue current limitations in the scope of the EU Emissions Trading System for aviation activities and to prepare to implement a global market-based measure from 2021.  The Parliament tabled several amendments to the Commission proposal.  Amendments put forward by the Parliament include: the introduction of a platform allowing Member States to exchange best practices and lessons learned in the sector of low-emission mobility, with the aim of achieving the emission reduction targets; and an enhanced obligation imposed on the Commission to report to the Council and the Parliament on the progress of the ICAO negotiations.  See the proposal for a regulation here, and the Parliament’s position at first reading here.

Also on Wednesday, European Commission President Jean-Claude Juncker delivered his annual State of the Union before the European Parliament.  The Commission President’s focus included: cyber security, proposing the establishment of an EU cyber security agency to ensure the defense of the EU (see the proposal for a regulation here); finance, proposing the establishment of a common EU finance minister; labor, stating that the EU aims to create a labor market conditions agency to ensure that workers have the same rights regardless of their location in the EU; defense, calling for a Defence Union by 2025; and the EU’s institutional organization, proposing that a single individual be appointed to both Presidencies of the European Commission and Council of the EU – an idea that was given currency by Covington’s Senior Policy Advisor, Jean de Ruyt.  See President Juncker’s full speech here.

Meetings and Agenda

No meetings scheduled for this week

SEC Pay-to-Play Rule Set to Expand to Capital Acquisition Brokers

The universe of those covered by the SEC’s pay-to-play restrictions is expanding. If a newly proposed SEC rule is adopted as expected, pay-to-play restrictions will now extend to cover the recently created class of broker-dealers called Capital Acquisition Brokers (“CABs”).  In this advisory, we discuss the background on the proposed rule and its implications for CABs themselves and for investment advisers that retain CABs to solicit business from government entities.

EU Policy Update

Brexit and International Policy Developments

The usual quiet of Brussels’ August recess was disturbed by the arrival, in the middle of the month, of a flurry of position papers from the British government.

The two most important of these dealt with the EU’s customs union and the border between Northern Ireland and the republic of Ireland.  According to the customs union paper, the UK would leave the existing EU customs union, maintain a “close association” for a limited period, and then seek either a new customs border with the EU, with border “facilitations” to reduce and remove trade barriers, or a “new customs partnership,” aligning the EU and the British approach to customs.  This would allow the suppression of the customs border between Northern Ireland and the republic of Ireland, thereby solving the Irish border problem.  In the interim, Britain would seek new trade agreements with third countries.

These proposals were not well received in Brussels.  The EU side saw the paper on the customs union as a “surrealistic” exercise, since it is not possible to leave the customs union and get back to it after having concluded separate trade agreement with third parties.  Another reason for criticism was that the papers did not respect the “sequencing” that had been agreed – first settling the past, and only then discussing the future relationship.  Furthermore, no position paper was forthcoming from London on the financial settlement – though this was supposed to be the main topic of the third round of the talks planned for the last week of August.

In this context, a breakthrough at this session was obviously not possible.  The discussion was tense; some technical agreements were reached, some possible compromises explored informally, but as was noted at the end of the session by Michel Barnier, the EU negotiator, “We haven’t noted any decisive progress on the principal subjects.”

On the financial settlement, the British side continued to claim that there is no legal obligation for the UK to contribute anything after the exit.  The British negotiator David Davis conceded that there might be “a moral obligation” to do so, but hinted that this should better be discussed “in the spirit of continuing the partnership with the EU”i.e., alongside the future relationship.

The current deadlock will have obvious consequences on the timing of the negotiations.  The expectation was indeed that the second phase could be opened on the occasion of the European Council of October 19 to 20.  This will now probably not happen.  As Barnier added in his concluding remarks: “At the current state of progress, we are far from assessing that progress has been sufficient to be able to recommend to the European Council that it engage in discussions on the future relationship”.

The impasse on the financial settlement and the absence of a clear UK position on the future relationship will probably be discussed intensely on the occasion of the Conservative Party Conference on October 4, but any clarity will come too late to make “sufficient progress” in time for the October European Council.

Meanwhile, officials in London and Brussels continue to reflect on a way out of the tricky Article 50 two-year deadline, through a “transition period”.  The UK’s official position continues to be that the UK will leave the single market and the customs union immediately at the end of the two-year notice period, and “get back control” of immigration.  However, the discussion about a transition period is also used by UK politicians who are not enthusiastic about Brexit to promote a “softer” outcome.  Some see it as a way to demonstrate the advantages of the status of member of the European Economic Area (“EEA”) by adopting that model (at least) for the transition period; others look already to the 2022 general election, and see the transition period as a way to keep the UK’s options open until then.

An important development in this context is the new position on Brexit expressed by Keir Starmer, the Labour Shadow Secretary for Exiting the EU, in an article at the end of August.  He advocated “a transitional deal that maintains the same basic terms that we currently enjoy with the EU”; that transition, he added, should be “as short as possible but as long as necessary”.

Meanwhile, a draft UK Home Office position paper leaked to the Guardian on September 5 suggested that the May government would seek to end the free movement of labor from the EU into the UK immediately after Brexit.  The plan aims to reduce the number of low skilled migrants by giving them residence permits of a maximum two years, while giving longer term permits for “highly skilled occupations”.  The position paper also suggests restricting the right of EU citizens to bring over family members – a highly sensitive issue for the EU 27.

Tech and Digital Single Market Policies

On September 13, 2017, European Commission President Jean-Claude Juncker announced the EU Cybersecurity Strategy in his State of the European Union speech.  President Juncker said  “Cyber-attacks can be more dangerous to the stability of democracies and economies than guns and tanks. […]  Today, the Commission is proposing new tools, including a European Cybersecurity Agency, to help defend us.”  As part of EU Cybersecurity Strategy, on the same day the European Commission published the following documents:

  • A report on the evaluation of the European Union Agency for Network and Information Security (“ENISA”, see here).  According to the report, the evaluation of ENISA activities suggests that there is a need for an EU Agency organized on a cross-sectoral basis with a strong mandate.  As a result of such a conclusion, the European Commission proposed a new Regulation (see here) to enhance ENISA’s responsibilities and capabilities.
  • A Communication (see here) outlining how to effectively implement the Network and Information Security Directive (see here), and which is designed to improve the security of network and information systems across the EU.
  • A report (see here) assessing the extent to which the Member States have taken the necessary measures in order to comply with Directive 2013/40/EU on attacks against information systems (see here).

On September 13, 2017 the European Commission also published a proposed regulation on a framework for the free flow of non-personal data in the European Union (see here).  According to the proposal, its general policy objective is to achieve a more competitive and integrated internal market for data storage and other processing services and activities.  It would do so by: (a) improving the mobility of non-personal data across borders in the single market; and (b) making it easier for professional users of data storage or other processing services to switch service providers and to port data; whilst (c) ensuring that the powers of competent authorities to request and receive access to data for regulatory control purposes remain unaffected.

On September 5, 2017 the European Court of Human Rights issued a decision in the Bărbulescu case.  This case could to set an important precedent on employers’ rights to monitor their employee’s work emails and other means of electronic communications.  Mr. Bogdan Bărbulescu, a Romanian national, was fired from a Romanian company for using his professional Yahoo messenger account for private communications.  According to the Council of Europe’s Grand Chamber, his employer, by accessing his electronic communications, violated his right to privacy and breached the right to private life which is protected by the European Convention of Human Rights.

The Court also noted that, “although it was questionable whether Mr. Bărbulescu could have had a reasonable expectation of privacy in view of his employer’s restrictive regulations on internet use, of which he had been informed, an employer’s instructions could not reduce private social life in the workplace to zero. The right to respect for private life and for the privacy of correspondence continued to exist, even if these might be restricted in so far as necessary.”  See the judgment here, a press release here, and commentary by Covington’s Helena Milner-Smith here.

On August 24, 2017 the UK Government published a position paper on shared approaches to data protection, entitled “The exchange and protection of personal data – a future partnership paper” (see here).  The paper provides that an EU-UK model for protecting and exchanging personal data which allows free flows of data to continue is essential.  It further calls for ongoing regulatory cooperation and certainty for businesses as well as other stakeholders.

Matt Hancock, Minister of State for Digital, stated that “a strong future data relationship between the UK and EU, based on aligned data protection rules, is in our mutual interest.” He added that such a deal would have to “respects UK sovereignty, including the UK’s ability to protect the security of its citizens and its ability to maintain and develop its position as a leader in data protection.”

However, the paper also raises several questions.  Firstly, the UK wants the British data protection authority (the Information Commissioner’s Office), to have a role in the EU’s decision-making on data protection laws and complaints.  Secondly, the UK seeks a transition window in which the EU would acknowledge the strength of the UK’s data protection rules to allow for the continued transfer of data.  Thirdly, the position paper makes no mention of the Investigatory Powers Act, a controversial surveillance law that has been deemed as excessive and unnecessary by the Court of Justice of the European Union in the past – and which could therefore put EU recognition of UK data protection rules at risk after Brexit.

Looking ahead, the European Commission and the U.S. administration are due to meet in September for the first annual review of the EU-U.S. Privacy Shield.  The review procedure will begin in the second half of September, during the week of September 18, 2017, when Commissioner Věra Jourová will conduct the political opening of the review in Washington, D.C.  Once the talks have concluded, the Commission will present its report evaluating the Privacy Shield’s first year of operation in light of these discussions.

Communication and Media Policies

On August 29, 2017, Digital Commissioner Mariya Gabriel said she wants to hold a public consultation and create a high-level expert group on fake news.  She added that Europe, and not just individual member countries, needs tools to tackle fake news.  Commissioner Gabriel also said that she will need the next two or three months to build a basis for this consultation.  The European Commission’s communication on flagging and removing illegal online content is expected on September 27, 2017.

In addition, the Polish government could soon have rules in place for internet service providers and on how they handle fake news.  Moreover, it will seek to oblige internet service providers to follow Polish law regardless of where they are based.  The draft is expected in September, 2017.

Energy and Environment Policies

By the end of September, the European Commission is expected to bring forward a proposal (see here) that would ban the use in cosmetic products of numerous substances classified as Category 1 or 2 carcinogens, mutagens and toxic to reproduction substances (“CMRs”).  The proposed so-called “Omnibus Act” would ban the CMRs listed therein by including them in Annex II to Regulation 1223/2009 on cosmetic products (the “Cosmetics Regulation”, see here).

The Omnibus Act would ban the use in cosmetic products of substances including formaldehyde, chloracetamide, and perboric acid and sodium perborate compounds.  The proposal confirms that an amendment to Annex II to the Cosmetics Regulation is necessary before the use of a CMR in cosmetics is banned – thus exposing the Commission’s reversal of its initial view that substances are banned in cosmetic products as soon as they are classified as Category 1 or 2 CMRs, without the need for an amendment to Annex II.

In response to a public consultation that the Commission held between June 26 and July 24, 2017, industry criticized the proposed Omnibus Act strongly (see here) for banning several substances without correctly and thoroughly applying the exception criteria of Article 15(2) of the Cosmetics Regulation.

Member State representatives are expected to vote on the proposal in October or November 2017 by qualified majority.  After a positive vote of the Member State representatives, the Council and European Parliament will have three months to review the proposal and potentially oppose it on limited grounds.  The Omnibus Act could be adopted by early 2018 and the ban on the listed substances could be in force by early February 2018.  The current draft proposal does not have a transitional period;  the ban could therefore apply immediately to cosmetic products that are on the shelf of distributors and retailers.

Internal Market and Financial Services Policies

On August 11, the European Commission adopted a Commission Implementing Regulation that stipulates a standardized presentation format for the information document accompanying insurance products, such as car or house insurances.  In order to facilitate consumers’ understanding of the content of an insurance product, the Regulation provides for clear headings, including “What is insured?”, or “When and how do I pay?”, as well as the use of icons.  The Regulation was based on a technical standard developed by the European Insurance and Occupational Pensions Authority, and implements a provision of the Directive (EU) 2016/97 on insurance distribution.  Additional implementing acts on product oversight and governance requirements for insurance undertakings and distributors, as well as information requirements for insurance-based investment products, are currently under consideration.  Directive (EU) 2016/97 must be implemented by February 23, 2018.  See the Commission Implementing Regulation on the information document accompanying insurance products here, and the underlying Directive (EU) 2016/97 on insurance distribution here.

On August 15, Germany’s  Constitutional Court in Karlsruhe refused to hear a case relating to the €2.3 trillion asset purchase scheme of the European Central Bank (“ECB”), the Public Sector Purchase Programme (“PSPP”).  The court instead referred the case to the Court of Justice of the European Union, stating that they saw “significant reasons” to suggest that the ECB overstepped its monetary policy mandate when it commenced the scheme in 2015.  The scheme, started in 2015, saw the ECB buy up government debt in order to inject liquidity into the Eurozone, and seek to improve its economic recovery.  See further information here.

Life Sciences and Healthcare Policies

On August 23, the European Commission, the European Medicines Agency (“EMA”) and the U.S. Food and Drug Administration struck a deal to allow the sharing of non-public commercially confidential information and the full reports of drug manufacturing inspections.  This derives from the agreement between the U.S. and the EU on the mutual recognition of the inspections of human drug manufacturers performed by the authorities of their respective territories, concluded in March 2017.  This agreement is aimed at facilitating the work of drug regulators on either side of the Atlantic, and at enhancing controls on pharmaceutical companies.  See more information here, the Commission commitment here, and the FDA commitment here.

On August 1, the EMA published a new paper in its Brexit series.  The paper outlined the EMA’s business continuity plan.  The EMA’s plan is aimed at protecting the agency’s ability to protect human and animal health post-Brexit.  The EMA seeks to avoid any disruption in drug assessment post-Brexit and to ensure that patients still benefit from quality treatment.  This plan sets out the EMA’s priorities for a smooth transition post-Brexit, and is likely to be updated on a regular basis.  See the press release here, and more information here.

In late July, the EMA published a revised version of its “Guideline on first-in-human clinical trials”.  The Guideline was revised to help industry identify and mitigate the risks for clinical trial participants.  It takes account of the evolution in clinical trials of the last decade, and addresses various new considerations, such as single and multiple ascending doses, food interactions, and different age groups.  In particular, it provides guidance on the starting dosage and criteria for calculating the maximum dosage a treatment may reach as a result of an escalation scale.  The new guideline is of importance for pharmaceutical companies, as it will impact how clinical trials are performed.  See the revised Guideline here.

Trade Policy and Sanctions

In a policy paper dated July 29, 2017, Germany, France and Italy recalled their initiative of February this year, aimed at having the EU play a bigger role in protecting Europe’s technologically advanced companies from what they see as politically motivated Chinese acquisitions – proposals sometimes termed “European CIFIUS”, after the similar U.S. mechanism.  The three countries propose that the European Commission should determine whether acquisitions are steered by a foreign state’s political objectives rather than market forces.  In such cases, Member States would be granted greater leeway to reject such proposed investments.

As outlined in last month’s newsletter, EU Commission President Jean-Claude Juncker announced this initiative in his State of the Union address, today, September 13.  Concrete proposals are expected to be released in the coming days.

British Prime Minister Theresa May travelled to Japan in the last week of August.  She obtained a pledge from the Japanese government to “work quickly to establish a new economic partnership between Japan and the UK based on the final terms of the Economic Partnership Agreement”, the political agreement signed in July between the EU and Japan.  However, the trip also highlighted the anxiety of Japanese companies for the future of their UK investments, which could be impacted by the withdrawal of the UK from the EU internal market.  Japanese Prime Minister Shinzō Abe, during a joint press conference with Mrs. May in Tokyo, repeatedly called for a “transparent and predictable” Brexit process.

The Week Ahead in the European Parliament – September 8, 2017

Summary

Next week, there will be a plenary sitting of the European Parliament in Strasbourg, France. Several significant debates, votes and committee meetings will take place.

On Tuesday, MEPs will debate a report of the Committee on Industry, Research and Energy (“ITRE”), authored by Carlos Zorrinho (S&D, PT) on the proposal for a regulation on the promotion of Internet connectivity in local communities and public spaces (WiFi4EU).  The scheme would promote over 5,000 free Wi-Fi connectivity spots for citizens and visitors in public spaces such as hospitals, parks, squares, public buildings, libraries, or museums all across Europe.  The scheme would also create a single EU-wide authentication system for access to these hotspots, and forms part of efforts to create a Digital Union.  See the Commission’s proposal here, and ITRE’s report here.

On the same day, the plenary will debate a report of the Committee on Industry, Research and Energy (“ITRE”), authored by Jerzy Buzek (EPP, PL) on the proposal for a regulation concerning measures to safeguard the security of gas supply. Under new rules that were informally agreed by MEPs and ministers, Member States that are confronted with a gas supply crisis will be able to trigger an emergency alert and thereby receive help from neighbouring Member States, in the “spirit of solidarity”. The aim of the proposal is to reinforce the security of gas supplies across the EU. The new rules should become effective before winter. See the Commission’s proposal here, and ITRE’s report here.

Continue Reading

The Congressional Agenda for September

For the first months of united Republican governance in Washington, the new administration and Congress accomplished little: confirmation of a new Supreme Court justice, repeal of some late Obama-era regulations, and reform of the Department of Veterans Affairs. The failure to repeal and replace the Affordable Care Act, despite seven years of promises lingers as a signal failure of Republican administration. And now, with apologies to T. S. Eliot, September is looking to be the cruelest month. The September work period will be a critical test for the President and the Republican majority in Congress, as members return this week to face a daunting workload of time-sensitive legislation with only three weeks within which to get it all done.

Congress must pass a measure to keep the government funded beyond the end of the current fiscal year, which ends on September 30. Congress also faces a September 29 deadline to raise the nation’s debt limit and avoid default. Now, on top of these two controversial items, Congress will have to make an initial down-payment on relief for Houston and parts of Texas and Louisiana in the wake of Hurricane Harvey.

Beyond keeping the government open and able to pay its debts, Congress will need to renew the authorizations for a number of important federal programs that are set to expire at the end of this month, adding pressure to a time-limited legislative calendar. Finally, Republicans are also eager to pass a budget resolution is order to enable the use of the reconciliation process, which is the most likely path forward to enacting some version of tax reform.

Republicans in Congress are divided on how to go about raising the debt ceiling. Treasury Secretary Steven Mnuchin has asked for a “clean” debt ceiling increase, one that does not come with any policy riders or conditions. Members of the House Freedom Caucus, on the other hand, want to pair any increase in the debt ceiling with spending cuts, which are not agreeable to more moderate Republicans and will certainly be opposed by Democrats. In the Senate, where Republicans hold a slim majority, a measure to lift the debt ceiling will need the support of at least eight Democratic members in order to pass. Senate Majority Leader Mitch McConnell has stated “there is zero chance” Congress does not succeed in increasing the debt ceiling, and House Speaker Paul Ryan, who favors a clean bill, has separately and repeatedly given positive assurances that the debt ceiling will be raised before the end of the month.

There is speculation on Capitol Hill that a measure to increase the nation’s borrowing authority could be paired with a funding bill that will be needed to avert a government shutdown when the current fiscal year ends on September 30. The new, urgent need to begin to provide disaster relief to the communities inundated by Hurricane Harvey could also find such a bill to be a convenient legislative vehicle. A bill that funds that government for several weeks, or months, raises the debt ceiling, and makes a down-payment on Harvey relief would likely command majorities in both chambers. Such a package would allow Congress to address simultaneously its most pressing issues on the September agenda.

Although this path would appear to contain something for everyone, nothing comes that easily these days in Washington. While there is little appetite among congressional Republicans for a government shutdown to start the new fiscal year, President Trump has complicated the process by threatening to veto any funding bill that does not provide the funds requested by the Administration for construction of a border wall with Mexico. Congress may be able to sidestep the veto threat for the stopgap funding measure it will consider in September, but if the issue is avoided this month it will certainly return when Congress tackles a spending bill for the rest of the fiscal year, probably in December. Democrats are united in their opposition to the border wall funding, and a number of Republican members are opposed, as well, which sets up a difficult task for congressional leadership. Earlier this year, President Trump made similar demands for border wall funding during debate over the remainder of FY 2017 appropriations, but was appeased by the eventual bill that included other enhancements for border security. Recent comments by some House Republicans suggest that the fight over the border wall will be put off till December, a tip of the hat, perhaps to the need to come up with emergency funding for Harvey victims.

Rumors surrounding the potential that the administration will revoke President Obama’s Deferred Action for Childhood Arrivals program, which allowed persons who are in the country illegally but were brought here by their parents when they were children to remain in the country and work or attend school, may provide one path to resolving the issue of border-wall funding. Some are suggesting the President could trade support for legislation protecting the same population in return for wall funding. At the moment, both the White House and congressional Democrats reject such a package, as do immigration restrictionists, who might be willing to support legislation protecting those brought illegally to the country as minors but whose price is not a border wall but more stringent restrictions on legal immigration to curb family-based and unskilled immigrants from coming legally.

While these issues play out, the House of Representatives will forge ahead on its appropriations work for FY 2018. The chamber has already passed four of the 12 annual appropriations bills, and during its first week back in session members will take up the remaining eight appropriations bills as one package. H.R. 3354, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2018, will serve as the legislative vehicle for the remaining appropriations bills, subject to a rule. House Republicans plan to bundle this package of bills with the two packages into a single omnibus measure for FY 2018. Despite this work, it is highly unlikely that the House legislation would ever become law. The discretionary funding levels established in the legislation would exceed the limits set by the Budget Control Act (BCA). Democrats oppose these spending levels, as well as many of the policy riders included in the legislation. The support of eight Democratic members of the Senate would be necessary in order for the House legislation to pass. It is a forgone conclusion that House and Senate leaders and appropriators will have to negotiate a bipartisan agreement for FY 2018 spending, as they did in 2013 and 2015. How much time they have to work out the details will depend on the duration of the stopgap funding measure the House and Senate are able to adopt this month. Most observers think the stopgap bill will fund the government until December, allowing time to try to negotiate a spending deal for the balance of the fiscal year.

Beyond requiring emergency relief funding, the flooding caused by Hurricane Harvey is a blunt reminder that Congress must reauthorize the National Flood Insurance Program (NFIP) before it expires on September 30. The program, administered by the Federal Emergency Management Agency, helps homeowners obtain flood insurance, which is not otherwise provided by private insurers. The policies are heavily subsidized, and the program has been under intense scrutiny following its handling of claims following Superstorm Sandy in 2012 and a ballooning $25 billion debt. Numerous members have called for reforms, including proposals for privatization, to the program. Texas Republican Jeb Hensarling, Chairman of the House Financial Services Committee, is calling on Congress to pass a package of seven NFIP-related bills approved by his committee in late June to reform the program and reauthorize it for five years. There is opposition, however, to Chairman Hensarling’s legislation, with opponents arguing that the reforms would increase deductibles for policyholders and limit coverage. The debate over the issue tends to be less partisan and more geographic, with members’ positions determined by their states’ tendency to flooding. The Senate Banking Committee is also reportedly working on a draft bill, and some of its members have already introduced their own legislation, but the committee has not yet acted on a bill. Given the extensive damage already sustained in Texas and with a few months left in the Atlantic hurricane season, there may be enough public pressure for Congress to act before the deadline on either a less polarizing version of the Hensarling legislation or a short-term extension of current authority, allowing members more time to debate a long-term measure that will resolve the financing issues while maintaining affordable coverage.

Congress must also act in September to reauthorize the Federal Aviation Administration in order to ensure its authorities and funding do not lapse after September 30. Committees in both chambers have been hard at work on developing legislation, but their proposals differ significantly in some areas. House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) introduced the 21st Century Aviation Innovation, Reform & Reauthorization (AIRR) Act, a six-year reauthorization bill which contains a controversial proposal to privatize the country’s air traffic control (ATC) system, a move supported by President Trump and included in his first budget submission to Congress. The full committee voted to approve Chairman Shuster’s legislation on a party-line vote, 32-25, but the proposal has yet to be considered by the full House because it does not appear to have enough support for passage. A bipartisan proposal has emerged in the Senate, where Commerce, Science, and Transportation Committee Chairman John Thune (R-SD) and Ranking Member Bill Nelson (D-FL) have introduced a four-year reauthorization bill that does not privatize ATC operations. The bill was approved and reported to the Senate by the Committee on a voice vote. Chairman Thune has acknowledged publicly that there is insufficient support in the Senate for the ATC privatization. With little time to conference the two measures and a lack of consensus over the ATC privatization provision, Congress will likely move to enact a short-term extension of current authority until a long-term solution can be negotiated. Rep. Sam Graves (R-MO), Chairman of the House Transportation & Infrastructure Subcommittee on Highways and Transit, has told the press that the drafting of a short-term extension measure is already underway.

Also set to expire on September 30 is the funding for the Children’s Health Insurance Program (CHIP). The popular program, which enjoys broad, bipartisan support, is a major source of healthcare coverage for children nationwide, providing insurance to more than 8 million children from low and middle-income families. Funding was last reauthorized by Congress in 2015, by a vote of 392–37 in the House and 92–8 in the Senate. Due to the bipartisan support, there is optimism for quick action in both chambers, but legislation has yet to be introduced in either chamber. Members of relevant committees will have to determine the length of the reauthorization and whether any additional proposals will be attached. (The reauthorization passed in 2015 was part of a larger Medicare program reform package.) The CHIP reauthorization may be paired with a provision to continue funding for federally qualified health centers (FQHCs), community-based health care providers that receive federal funds to provide services in underserved areas; this program is also set to expire on September 30. Another possible hitchhiker on the CHIP renewal is a package to extend several Medicare provisions that are scheduled to expire in December. Congress will also have to decide whether to include CHIP provisions that were instituted through the Affordable Care Act (ACA), including a 23 percent increase in the federal matching rate that states receive for CHIP and a “maintenance of effort” requirement for states to maintain current Medicaid and CHIP eligibility standards for children until 2019. President Trump’s FY 2018 budget proposal to Congress eliminated both of these CHIP policies, and their inclusion could spark a renewed debate over the ACA.

Another healthcare deadline will also draw the attention of Congress during this work period. Insurance companies have until September 27 to notify the federal government of the insurance plans they intend to sell on the public health care exchange for 2018, which could affect upwards of 18 million Americans who purchase their coverage on the individual market. Despite the failure to repeal and replace the ACA earlier this year, there appears to be a bipartisan effort underway to provide legislative fixes to the ACA aimed at stabilizing the individual insurance market and ensuring that premiums are affordable. A bipartisan caucus in the House of Representatives, the Problem Solvers Caucus, has endorsed an outline of proposals to address ACA issues. On the Senate side, Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) have announced plans to begin working on legislation to stabilize the markets. To initiate this effort, the HELP Committee has announced two separate hearings this week: one featuring several bipartisan governors and another comprised of state insurance commissioners. The hearings will focus on stabilizing health-exchange premiums and affordability for constituents who depend on the individual market for healthcare coverage. While it would be ironic for Congress to coalesce behind a bipartisan healthcare proposal to reform portions of the ACA in a year that has been so sharply divided over GOP efforts to repeal and replace the legislation, the chances for passage are still slim. Speaker Ryan’s office has stated that “he remains focused on repealing and replacing Obamacare,” and President Trump has publicly expressed his view that Congress should let President Obama’s signature law “implode.” Still, a package of minor legislative fixes that are acceptable for members of both parties, perhaps attached to a CHIP reauthorization measure, might provide a small victory for bipartisanship in an otherwise contentious and chaotic September.

While Congress navigates these must-pass measures, GOP leadership in the House will start laying the groundwork for one of its major legislative priorities, comprehensive tax reform, later this fall. Last week, the House Budget Committee released its FY 2018 budget resolution. Adoption of a budget is a necessary precondition to a reconciliation bill, a budgetary tool that will allow the tax bill to pass the Senate with only a simple majority, rather than the traditional cloture-proof 60-vote threshold. Without the budget resolution, Republicans would need some Democratic support in order to pass the tax overhaul, but that path is highly unlikely. The House Budget Committee is set to consider the FY 2018 budget resolution on Wednesday. Even if the measure is approved by the committee, it is unclear whether there is enough Republican support to pass it through the full House of Representatives, or when it would be scheduled for floor action, given the already-long list of items on the September agenda. Senate Republicans have yet to draft their own budget resolution for FY 2018, but given the likely need for a reconciliation vehicle, the budget resolution provides one more agenda item for an already too-busy month. Failure to adopt a budget resolution could complicate tax reform by requiring Republicans to pick up Democratic votes in the Senate, and that need would likely produce some version of legislation to reduce some taxes rather than legislation to reform the tax code.

Beyond these issues, the Senate also has nominations to consider, with an unusual number of executive branch positions still unfilled, either with nominees pending in the Senate or still awaiting nominees.

The Week Ahead in the European Parliament – September 1, 2017

Summary

Next week will be a committee and political groups week in the European Parliament. Members of the European Parliament (“MEPs”) will slowly increase their activities ahead of the plenary sitting, to be held from September 11 to 14 in Strasbourg.

On Monday, the Subcommittee on Security and Defence will host a Public Hearing on “Security developments in the post-Soviet space, particularly in Ukraine and Belarus”. The Subcommittee will examine Russian and other actions in former Soviet Bloc territories that impact on regional stability and beyond. It will do so in the context of the continued fragile security situation in Eastern Europe, the resurgence of Russian power politics, and the upcoming Russian-Belorussian military exercise, “Zapad 2017”, which will take place in Belorussia in mid-September, close to the EU’s external borders.

On Thursday, the Committee on International Trade and the Delegation to the EU-Russia Parliamentary Cooperation Committee are organising a workshop on “Russia’s and the EU’s sanctions: economic and trade effects, compliance and the way forward”.

Also on Thursday, the Committee on Legal Affairs (“JURI”) will discuss proposed amendments to the draft Regulation on Copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes.

Meetings and Agenda

Monday, September 4, 2017

Subcommittee on Human Rights

15:00 – 18:30

  • The recent and forthcoming HRC sessions – Discussion with Peter SOERENSEN, Head of Delegation of the European Union to the United Nations Office and other International Organisations in Geneva

Subcommittee on Security and Defence

15:00 – 18:30

(15.00 – 16.00)

  • Election of the 3rd Vice-Chair
  • Public Hearing – “Security developments in the post-Soviet space, particularly in Ukraine and Belarus”

Committee on Budgetary Control

15:00 – 19:30

  • Workshop on “The implementation of the Common provisions (Reg. EU 1303/2013) for structural, agricultural, social and fisheries funds in practice, with view to their effectiveness” (15.45-18.30)

Committee on Industry, Research and Energy

15:00 – 17:30

  • Energy efficiency – Consideration of amendments
  • Rapporteur: Adam GIEREK (S&D, PL)
  • Promotion of the use of energy from renewable sources (recast) – Consideration of amendments
  • Rapporteur: José BLANCO LÓPEZ (S&D, ES)

Committee on the Internal Market and Consumer Protection

15:00 – 18:30

  • Election of the 4th Vice-Chair

Committee on Culture and Education

15:00 – 18:30

  • Agenda not available

Committee on Civil Liberties, Justice and Home Affairs

15:00 – 18:30

Votes (16.40 – 16.45)

  • Draft Council implementing decision on subjecting N-(1-phenethylpiperidin-4-yl)-N-phenylacrylamide (acryloylfentanyl) to control measures (NLE)
  • Rapporteur: Brice HORTEFEUX (EPP, FR) – vote on a draft reportEnd of votes
  • Progress towards the interoperability of EU information systems  -discussion with Dimitris AVRAMOPOULOS, European Commissioner for Migration, Home Affairs and Citizenship, and Krum GARKOV, Director of eu-LISA (16.45 – 18.30)

Committee on Constitutional Affairs

16:00 – 18:30

  • Agenda not available.

Committee on Women’s Rights and Gender Equality

15:00 – 18:30

  • Workshop on “Increasing female participation in the labour market” organised by the Policy Department C (15.00 – 16.45)

Tuesday, September 5, 2017

  • No meetings scheduled.

Wednesday, September 6, 2017

  • No meetings scheduled.

Thursday, September 7, 2017

Committee on International Trade

10:00 – 12:00

  • Committee on International Trade and Delegation to the EU-Russia Parliamentary Cooperation Committee, are organising a workshop on “Russia’s and the EU’s sanctions: economic and trade effects, compliance and the way forward”.

Committee on Budgetary Control

09:00 – 12:30

  • Agenda not available.

Committee on Transport and Tourism

09:00 – 18:30

  • Discussion with Henrik HOLOLEI,  Director General DG MOVE, European Commission
  • Discussion with Markku MYLLY, Executive Director, European Maritime Safety Agency

Committee on Regional Development

09:00 – 18:30

  • ECA Special Report 2/2017 (partnership agreements) – discussion with Ladislav BALKO, European Court of Auditors
  • Smart specialisation and on the current state of implementation of 2014-2020 cohesion policy programmes – discussion with Marc LEMAITRE, European Commission

Committee on Legal Affairs

09:00 – 16:00

Votes (10.00 – 10.30)

  • Application of Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage (the ‘ELD’) (INI) –  vote on draft report
  • Rapporteur: Laura FERRARA (EFDD, IT) End of votes 
  • Copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes (COD) – discussion on amendments (10.30)
  • Rapporteur: Tiemo WÖLKEN (S&D, DE)

Committee on Civil Liberties, Justice and Home Affairs

09:00 – 17:00

  • European Commission Comprehensive Assessment of EU Security Policy and ninth progress report towards an effective and genuine Security Union – joint discussion with Julian KING, Commissioner for the Security Union (11.00-12.30)

Committee on Petitions

09:00 – 18:30

  • Agenda not available.

Friday, September 8, 2017 

Pre-session briefing

11:00 – 11:30

  • Agenda not available.

FY17 Reconciliation Instructions Expire September 30.

Procedural questions over when a budget resolution’s reconciliation instructions become stale have swirled for years.  There were three options:

  • the end of a fiscal year;
  • until the next budget resolution overtakes it (and next budget resolution could certainly affirmatively preserve it); or
  •  the end of a Congress. 

The huge news out of the Senate today (as reported by Ranking Member Bernie Sanders (D-VT, Senate Budget Committee) is that the Senate Parliamentarian has determined that the first option applies:  the reconciliation instructions that allowed a repeal/replace of Obamacare with 51 votes will expire on September 30.  Given the political difficulty (and unlikelihood) of passing a repeal/replace bill in September, with all the other must-pass bills, 60 votes will now be required to consider amendments to Obamacare.   

But this also has implications for tax reform.  Congressional staffers have explored the possibility of hijacking the Obamacare reconciliation instructions for tax reform.  That would have involved a complicated, but potentially doable, procedure of (a) recommitting the current repeal/replace bill to the Budget Committee (an acceptable procedure as the vote that failed in July was actually a vote on an amendment in the nature of a substitute and not final passage) and (b) the Budget Committee then reporting the bill to the floor as a tax bill.  This now is also off the table. 

For the Senate to be able to depend on the procedural protections of reconciliation, Congress will have to adopt an FY18 budget resolution, which could include reconciliation instructions for both Obamacare repeal/replace and tax reform…although the budget rules permit only one bill each for revenues, spending, and debt limit, potentially requiring tax reform and healthcare to be combined into one mega reconciliation bill.

US Launches Investigation into China’s Technology Transfer & IP Practices

United States Trade Representative (“USTR”) Robert E. Lighthizer launched an investigation under Section 301 of the Trade Act of 1974 (“Section 301”) into acts, policies, and practices of the Chinese government as they relate to “technology transfer, intellectual property [IP], and innovation.” The August 18 announcement of the investigation came just days after President Donald Trump signed a memorandum directing the USTR to consider whether to launch an investigation of China’s IP laws and practices that “may inhibit United States exports, deprive United States citizens of fair remuneration for their innovations, divert American jobs to workers in China, contribute to our trade deficit with China, and otherwise undermine American manufacturing, services, and innovation.”

While Section 301 was a frequently used tool between the 1970s and 1990s (including when Ambassador Lighthizer was Deputy USTR during the 198os), the number of such investigations declined significantly after the World Trade Organization (WTO) dispute settlement system was established. Use of Section 301, however, is consistent with this Administration’s apparent willingness to use a broader range of trade tools to more aggressively combat potential unfair trade practices.

Section 301 allows—and, in certain circumstances, requires—the USTR to investigate and take unilateral retaliatory action in response to certain trade-related harms. The USTR must take appropriate action if the rights or benefits of the United States under any trade agreement are denied, violated, or otherwise harmed, or if its international legal rights are infringed in a way that burdens or restricts U.S. commerce. The USTR may take action at his or her discretion if an act, policy, or practice is unreasonable or discriminatory and burdens or restricts U.S. commerce. Among other things, a Section 301 action may be taken if a foreign country denies adequate and effective intellectual property protection or fair and equitable market opportunities, even if its behavior is consistent with its obligations under the World Trade Organization’s (“WTO”) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

The Federal Register notice launching the investigation highlights concerns that the Chinese government uses the transfer of foreign technology and intellectual property to advance its industrial policy goals. The USTR investigation will first examine acts, policies, and practices of the Chinese government that fall into the following four categories:

  1. The use of “a variety of tools, including opaque and discretionary administrative approval processes, joint venture requirements, foreign equity limitations, procurements, and other mechanisms to regulate or intervene in U.S. companies’ operations in China, in order to require or pressure the transfer of technologies and intellectual property to Chinese companies;”
  2. Acts, policies, and practices that “reportedly deprive U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations with Chinese companies and undermine U.S. companies’ control over their technology in China;”
  3. Direction and/or unfair facilitation of “systematic investment in, and/or acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate large-scale technology transfer in industries deemed important by Chinese government industrial plans;” and
  4. Conduct or support of “unauthorized intrusions into U.S. commercial computer networks or cyber-enabled theft of intellectual property, trade secrets, or confidential business information” (as well as the harm they may cause to U.S. companies and the competitive advantages they may bring to Chinese companies).

Beyond the categories enumerated above, which are focused on technology/IP transfer and cyber-theft, the USTR notice also invites submissions of “information on other acts, policies and practices of China relating to technology transfer, intellectual property, and innovation described in the President’s Memorandum,” leaving open the possibility for the investigation to widen. The announced scope of the investigation highlights the discretionary factors to be considered under the statute, indicating that USTR is not focused solely on actual violations of China’s obligations under international trade law.

Consistent with the statute, the notice provides that USTR has 12 months to make a determination as to whether action is warranted. If it is determined that action is warranted, USTR may consider a broad range of retaliatory tools, including the withdrawal of trade concessions, the imposition of duties or other import duties, and “all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take…to enforce such rights or to obtain the elimination of such act, policy, or practice…[with actions that may be taken being] within the power of the President with respect to trade in any goods or services, or with respect to any other area of pertinent relations with the foreign country.” Retaliatory actions may be targeted at industries other than those directly linked to the identified harm. USTR also has the discretion to come to an agreement with the foreign country’s government to eliminate or obtain compensation for the identified harm. As required by law, USTR has requested formal consultations with the Chinese government regarding the issues under investigation.

The behavior targeted by this Section 301 investigation reflects concerns of the international business community in China. For instance, 43 percent of companies responding to AmCham China’s annual Business Climate Survey in 2017 reported that reducing the need to engage in technology transfer would have at least a somewhat significant impact on increasing their investment levels in China. These companies may find this investigation to be an opportunity to advance their specific concerns. Meanwhile, Chinese companies that may be at risk for retaliatory action under Section 301, and U.S. companies potentially vulnerable to counter-retaliation by Chinese authorities, should carefully monitor the situation.

The Chinese government has expressed its concerns about the investigation. Suggesting that the United States is sending the wrong signal to the international community, a statement from the Ministry of Commerce asserts, “The United States’ disregard of World Trade Organization rules and use of domestic law to initiate a trade investigation against China is irresponsible, and its criticism of China is not objective.” While launching an investigation of China’s unfair trade practices is not, in and of itself, inconsistent with U.S. WTO obligations, imposition of some—though not all—of the retaliatory measures authorized under U.S. law could potentially violate WTO rules. China’s statements indicate that should the U.S. investigation lead to unilateral retaliatory action, China will respond in various ways, including by considering a challenge to such measures at the WTO.

The USTR notice calls for written comments by interested persons to be submitted by September 28. The interagency Section 301 Committee, which is chaired by the USTR, is scheduled to hold a hearing in Washington, D.C., on October 10. Requests to appear at the hearing are also due on September 28.

Zhijing Yu of Covington & Burling LLP contributed to the preparation of this article.

The Week Ahead in the European Parliament – August 25, 2017

Summary

Next week will be a committee week in the European Parliament.  All Members of the European Parliament (“MEPs”) will slowly resume their activities.  Only a few committee meetings will take place as MEPs gear up for the increase in activities during the week of September 4 ahead of the plenary sitting, to be held from September 11 to 14 in Strasbourg.

On Wednesday, the European Parliament Brexit Coordinator Guy Verhofstadt will give a presentation to the members of the Committee on Employment and Social Affairs (“EMPL”), where he will provide an update on the state of play of the Brexit negotiations and next steps, with a particular focus on social and labor policies.

On the same day, the EMPL Committee will vote on the provisional interinstitutional agreement on the Commission proposal to amend Directive 2004/37 on the protection of workers from the risks related to exposure to carcinogens or mutagens at work, reached with the Council of the EU in July 2017.  Amendments are aimed at limiting harmful substances that workers may be exposed to, such as hard wood dust, chromium IV and vinyl chloride monomer.  The Parliament’s final position will be subject to a vote during the next plenary sitting.  See the draft interinstitutional agreement here, and the Commission proposal here.

Finally, on Thursday, Commission officials from DG Health and Food Safety will give a presentation on the “Illegal use of fipronil containing substance in laying hen farms and the consequences for the food chain” before the members of the Committee on Agriculture and Rural Development (“AGRI”).

Meetings and Agenda

Monday, August 28, 2017

  • No meetings scheduled.

Tuesday, August 29, 2017 

  • No meetings scheduled. 

Wednesday, August 30, 2017

Committee on Foreign Affairs

09:00 – 18:30

  • Conclusion of the Agreement establishing the EU-LAC International Foundation (NLE) – vote on a draft resolution
    • Rapporteur: Javier Couso Permuy (GUE/NGL, ES)
  • Discussion with Alexander Rondos, EU Special representative for the Horn of Africa

Committee on Development

09:00 – 18:30

Jointly with the Committee on Civil Liberties, Justice and Home Affairs (LIBE)

  • Addressing shrinking civil society space in developing countries (INI) – vote on draft resolution
    • Rapporteur: Teresa Jiménez-Becerril Barrio (EPP, ES)

Committee on International Trade

09:00 – 18:30

  • Protocol to the Agreement establishing an association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part, to take account of the accession of the Republic of Croatia to the European Union (NLE), vote on draft recommendations
    • Rapporteur: Inmaculada Rodríguez-Piñero Fernández (S&D, ES)

Committee on Budgets

15:00 – 18:30

  • General budget of the European Union for the financial year 2018 – all sections (BUD) – Presentation of Working document on Council position
    • Co-rapporteurs: Siegfried Muresan (EPP, RO) and Richard Ashworth (ECR, UK)

Voting time

  • Mobilization of the European Union Solidarity Fund to provide assistance to Italy (BUD) – Consideration and adoption
    • Rapporteur: Giovanni La Via (EPP, IT)
  • Draft amending budget no. 4 to the general budget 2017 accompanying the proposal to mobilize the European Union Solidarity Fund to provide assistance to Italy (BUD) – Consideration and adoption
    • Rapporteur: Jens Geier (S&D, DE)
  • Mobilization of the European Globalization Adjustment Fund – EGF/2017/002 FI/MICROSOFT 2 – Finland (BUD) – Consideration and adoption
    • Rapporteur:  Petri Sarvamaa (EPP, FI)

Committee on Employment and Social Affairs

09:00 – 18:30

  • Discussion on supplementary measures in support of EU countries experiencing high unemployment with Rania Antonopoulos (Greek Alternate Minister of Labor, Social Security and Social Solidarity) and Nicolas Schmit (Luxembourg’s Minister for Labour, Employment, and the Social and Solidarity Economy) (11.30-12.30)

Votes (15.00-16.00)

  • Amendment to Directive 2004/37/EC on the protection of workers from the risks related to exposure to carcinogens or mutagens at work (COD) – Vote on the provisional agreement resulting from interinstitutional negotiations
    • Rapporteur: Marita Ulvskog (S&D, SE)

End of votes

  • Discussion and update on Brexit negotiations by EP Brexit Coordinator Guy Verhofstadt (16.00-17.00)

Committee on Fisheries

14:00 – 17:30

Voting time with Commission and Council of the EU

  • General budget of the European Union for the financial year 2018 – all sections
    • Rapporteur: Alain Cadec (PPE, FR)

End of votes

  • Amendment of Regulation (EU) No 1380/2013 on the common fisheries policy – Consideration of draft report
    • Rapporteur: Alain Cadec (PPE, FR)
  • Exchange of views with the Commission on the annual progress report on achieving maximum sustainable yield and on the situation of fish stocks (application of Article 50 of Regulation (EU) No 1380/2013)
  • Presentation of the study on ‘International ocean governance’ requested by the Committee on Fisheries and organized by Policy Department B
  • Exchange of views with the Commission on the ex post assessment of the European Fisheries Fund (EFF) 2007-2013
  • Report on the Committee on Fisheries’ visit to Mecklenburg/Vorpommern, Germany from 17 to 19 July 2017

Committee on Agriculture and Rural Development

09:00 – 18:30

Voting time

  • General budget of the European Union for the financial year 2018 – all sections
    • Rapporteur: Szanyi Tibor (S&D, HU)
  • Adapting a number of legal acts providing for the use of the regulatory procedure with scrutiny to Articles 290 and 291 of the Treaty on the Functioning of the EU
    • Rapporteur: Buda Daniel (PPE, RO)

End of votes

  • Recommendation on the negotiating mandate for EU trade negotiations with Australia
    • Rapporteur: Andrieu Eric (S&D, FR)
  • Recommendation on the negotiating mandate for EU trade negotiations with New Zealand
    • Rapporteur: Nicholson James (ECR, UK)
  • Presentation by Chris Botterman of GEOPA-COPA’s Report on “Social Dialogue as the most effective means of combating social dumping and undeclared work in the agriculture sector”
  • Rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers
    • Rapporteur: Ropė Bronis (Verts/ALE, LT)
  • Presentation of a STOA study on “Precision Agriculture and the future of farming in Europe” 

Thursday, August 31, 2017

Committee on Development

09:00 – 11:00

  • Joint DEVE-INTA Hearing on “the Revision of the EU Strategy on Aid for Trade”

Committee on International Trade

09:00 – 12:30

  • Joint DEVE-INTA Hearing on “the Revision of the EU Strategy on Aid for Trade”

Committee on the Environment, Public Health and Food Safety

09:00 – 12:30

  • No information available before Monday morning.

Committee on Transport and Tourism

09:00 – 12:30

Voting time

  • General budget of the European Union for the financial year 2018 – all sections
    • Rapporteur: Tošenovský Evžen (ECR, CZ)

End of votes

  • Promotion of the use of energy from renewable sources (recast)
    • Rapporteur: Eickhout Bas (Verts/ALE, NL)
  • ‘Infrastructure funding challenges in the sharing economy’ – Presentation by Prof Juan J. Montero, representing the European University Institute. Study requested by the TRAN Committee, commissioned and managed by the Policy Department
  • Presentation by the Commission of Progress report on the implementation of the TEN-T network in 2014-2015 – COM(2017)0327

Committee on Foreign Affairs

09:00 – 12:30

  • Exchange of views with Markus Ederer, newly appointed Head of the EU Delegation to Russia (in compliance with the Declaration on Political Accountability of the HR/VP)
  • Exchange of views with Ketil Karlsen, newly appointed Head of the EU Delegation to Nigeria (in compliance with the Declaration on Political Accountability of the HR/VP)
  • Exchange of views with Isabel Brilhante Pedrosa, newly appointed Head of the EU Delegation to Venezuela (in compliance with the Declaration on Political Accountability of the HR/VP) (to be confirmed)
  • Exchange of views with Claudia Wiedey, newly appointed Head of Delegation for the Kingdom of Morocco (in compliance with the Declaration on Political Accountability of the HR/VP) (to be confirmed)

Committee on Agriculture and Rural Development

09:00 – 12:30

  • “Illegal use of fipronil containing substance in laying hen farms and the consequences for the food chain” – presentation by a Commission representative (DG SANTE)

Committee on Civil Liberties, Justice and Home Affairs

09:00 – 12:30

  • Recent developments in Poland and their impact on the Rule of Law (9.00 – 10.30) – Discussion with First Vice-President Frans Timmermans, European Commission

China’s State Council Releases Draft Revisions to Process for Formulating Administrative Regulations

For years, the foreign business community has called for greater transparency and opportunities to provide more input into China’s legislative and regulatory rule-making processes. In a small step forward, on July 19, the Legislative Affairs Office of the State Council (“SCLAO”) released draft revisions to the Regulations on Procedures for Formulating Administrative Regulations (“Draft Revisions”) that trend towards greater transparency. These regulations govern the drafting of “administrative regulations” that are promulgated by the State Council, and first went into effect in January 2002. This post summarizes key aspects of the proposed revisions.

Transparency & Public Comments

Since China joined the World Trade Organization, the State Council has often sought public comments when formulating administrative regulations. This practice however has never been codified. The Draft Revisions propose mandating at least one round of public comments in the rule-making process. Unless specifically excepted by the State Council, a ministry or ministries designated by the State Council to draft an administrative regulation would have to release a preliminary draft to the general public with at least a 30-day period for public comment.

A second round of public comments with at least a 30-day period is recommended, but not required, when a draft is ready for final approval. The promotion of public comment periods in these Draft Revisions are a welcome step towards greater transparency, even though in practice it may still be difficult for foreign industry associations and other affected parties to prepare well-considered comments in Chinese within such a tight time frame.

Relatedly, the Draft Revisions provide that the State Council’s annual legislative work plan should, after approval, be released to the public. This may create greater visibility and provide some advance warning for businesses and other parties who may be affected.

Input During Drafting

In many countries, third parties (including industry) play an important role in providing input to resource-strapped regulators. The Draft Revisions allow more opportunities for such engagement during the drafting process. They state that SCLAO may collect recommendations from the public for administrative regulations, including new proposals and suggestions for adjustments ―something that already happens to a limited extent on an ad hoc basis.

Under the proposed revisions, ministries designated by the State Council to draft administrative regulations may also invite relevant experts and organizations to participate in the drafting process, and may even entrust them with some degree of responsibility for drafting. Additionally, legal experts or organizations may be invited to weigh in on controversial points in drafts pending final approval. It remains to be seen whether foreign experts and organizations will be invited to participate during the drafting process more frequently than they have been in the past.

Post-Promulgation Assessments of Administrative Regulations

Finally, the Draft Revisions incorporate explicit language stating that SCLAO and ministries may organize post-promulgation assessments of regulations, and make adjustments as necessary. If a regulation is deemed unsuitable for economic and social development or for deepening reform efforts, or if it is found to be in conflict with superseding laws, recommendations may be submitted for it to be amended or canceled. While post-hoc reviews of regulations are not new, the inclusion of explicit language suggests a desire to emphasize or even systematize them. More systematic efforts to review regulations could create new openings for businesses to provide input to regulators on how they have been affected and seek modifications to ameliorate negative effects.

Public comments are due by August 20. Interested parties may submit comments to the State Council using the methods outlined in the announcement.

Zhijing Yu of Covington & Burling LLP contributed to the research and drafting of this article.

LexBlog