U.S.-China Relations: Good Start but Difficult Challenges Ahead

At the U.S.-China Summit in Mar-a-Lago in April, President Trump and President Xi agreed to set up a new four-track dialogue mechanism to replace the previous Strategic and Economic Dialogue established between China and the United States under the Obama Administration. This mechanism allows the two governments to conduct more specialized and higher-level discussions along four different tracks: 1) Diplomatic and Security Dialogue; 2) Comprehensive Economic Dialogue; 3) Law Enforcement and Cybersecurity Dialogue; and 4) Social and Cultural Issues Dialogue.

Diplomatic and Security Dialogue

Last week, China and the United States conducted the first of the four-track dialogue mechanisms in Washington. Secretaries of State Tillerson and Secretary of Defense Mattis held a full day of meetings on June 21 with China’s State Councilor Yang Jiechi and People’s Liberation Army Chief of Joint Staff Fang Fenghui in the first session of the Diplomatic and Security Dialogue (D&SD). This dialogue was particularly significant because it raised the level of U.S.-China bilateral security discussion from the previous Undersecretary and Deputy to the Cabinet level, and came at a critical time in Asia as the two governments strive to coordinate and address a looming crisis on the Korean peninsula where the DPRK has been rapidly developing its nuclear and ballistic missile capability.

As Tillerson told the press after the session, “the most acute threat in the region today is posed by the DPRK.” He went on to say that “China understands that the United States regards North Korea as our top security threat” and urged the Chinese to “exert much greater economic and diplomatic pressure on the regime if they want to prevent further escalation in the region.” In particular, he underscored the critical role of Chinese companies in curtailing the sources of revenue to fund the DPRK’s nuclear program. Mattis stressed further that “we will continue to take necessary measures to defend ourselves and our allies.”

Tillerson also reiterated the long-held U.S. position opposing “changes to the status quo” and the “militarization of outposts” as well as “excessive maritime claims” in the South China Sea, while upholding the “freedom of navigation and overflight.” Last, and somewhat unexpectedly, Tillerson added that the administration “will stand up for American and universal values like human rights,” noting that “we would not be shy about raising our concerns about China’s human rights record” and indicated there were “direct and candid” exchanges at the meetings.

While it remains to be seen whether China would indeed be willing to enforce UN sanctions more forcefully and exert greater pressure on the North Korean regime, and how the latter would respond, it is significant that the United States was able to deliver such a strong, clear and public message at this high level at the outset of new bilateral dialogues with China under the Trump Administration. This session, taking place in the wake of the death of U.S. college student Otto Warmbier shortly upon his return to the United States after about 17 months of imprisonment in North Korea, buttressed the U.S. position demanding stronger Chinese implementation of UN-approved sanctions against the DPRK regime. It highlighted China’s responsibility in addressing this pressing crisis in the region.

The 100-Day Action Plan and the Comprehensive Economic Dialogue 

Meanwhile, China and the United States also made some progress on the economic front with an agreement in May on a 100-Day Action Plan (the Plan) as part of the Comprehensive Economic Dialogue (CED). For the United States, the key deliverables included an agreement to allow the resumption of U.S. beef exports to China (suspended since 2003 due to concerns about mad cow disease) and further opening of the financial market to wholly-owned U.S. companies engaged in credit rating, electronic payment and bond underwriting services by July 16, 2017. The Plan also calls for expediting the safety evaluation of eight pending U.S. biotechnology product applications and the eventual granting of certificates, if and when approved.

For China, the Plan would permit the export of China origin cooked poultry to the United States as soon as possible and the eventual import of liquefied natural gas (LNG) into China from the United States. The United States also committed to assuring the normal operation of Chinese financial clearing houses and banking institutions in the country. Finally, the United States agreed to send a U.S. delegation (led by the NSC Senior Director for Asia) to the Belt and Road Forum in Beijing in May as a symbolic gesture acknowledging the importance of China’s Belt and Road initiative.

With the completion of this “early harvest” Plan, China and the United States thus began the process of addressing some issues in the bilateral trade and investment relationship. While some have noted that the Plan merely completed negotiations begun years ago under previous administrations and raised questions about implementation, the Plan nonetheless represented substantive progress in bilateral economic relations. The two governments have announced that they will be meeting later this summer to work on a One-Year Action Plan at the inaugural session of the CED that will be headed by U.S. Treasury Secretary Mnuchin and Commerce Secretary Ross on the American side and by Chinese Vice Premier Wang Yang on the Chinese side. It is expected that US Trade Representative Lighthizer will eventually assume a leading role in this process as well.

Good Start but Difficult Challenges Ahead

Most analysts acknowledge that developments in U.S.-China relations since the Mar-a-Lago summit have been surprisingly positive in contrast to election campaign rhetoric vis-à-vis China particularly from candidate Trump himself. The early convening of the D&SD in Washington and the completion of the 100-Day Action Plan are generally seen as a good start in addressing the broad and longstanding issues in U.S.-China relations. From the Chinese perspective, this has certainly been a most welcome turn of events, especially with respect more broadly to the U.S. administration’s reaffirmation of its “One China” policy vis-s-vis Taiwan.

At the same time, however, there are critical challenges ahead that will be very difficult to resolve and may pose future problems for U.S.-China relations. In the case of the bilateral security discussion at the D&SD, for example, while there was stated agreement on the ultimate goal of a denuclearized North Korea, there are still important differences between China and the United States on how to bring that about. The key issue for the United States is whether China will in fact begin to implement fully the UN sanctions by taking stronger enforcement actions to curb smuggling across the border and to prevent Chinese companies and individuals from doing business with designated North Korean entities. Doing so will incur risks for China in terms of antagonizing the DPRK regime as well as imposing constraints and costs on Chinese companies. It is also unclear as to how the DPRK regime will respond to increased pressure.

Meanwhile, as Madame Fu Ying, former Vice Foreign Minister and currently Chairperson of the Foreign Affairs Committee of China’s National People’s Congress, wrote in a Brookings article in May, China continues to argue that the United States needs to “address the DPRK’s legitimate security concerns,” without which China “has no leverage to convince this foreign nation to stop its nuclear program.” Specifically, China has put forth a “double suspension” proposal in which the DPRK would agree to suspend nuclear and ballistic missile tests in exchange for a suspension of U.S.-Korea military exercises in the south. At this point, insofar as this proposal appears to be a non-starter for the Trump administration, the two sides continue to be at an impasse. Unless the Chinese show concrete evidence of applying “much greater economic and diplomatic pressure on the regime” and the DPRK responds by suspending its nuclear and ballistic missile tests, as Tillerson said, it appears that the two sides will not be able “to prevent further escalation in the region.” This could result in the United States unilaterally imposing secondary sanctions against Chinese companies and individuals seen as violating the UN sanctions.

As for the 100-Day Action Plan, as many have pointed out, it clearly does not go very far to address the broad and fundamental issues in our bilateral economic relations over the past couple of decades. For the United States, these issues include, for example, Chinese currency control policies, predatory pricing and dumping practices, widespread IPR violations, government subsidies and interference in the market, forced technology transfers, and general market access imbalance that have contributed to the current massive trade deficit with China. President Trump recently signed an executive order to initiate a government review of “unfair trade practices” as well as two memoranda to initiate Section 232 review of the impact of steel and aluminum imports on U.S. national security that could have an impact of U.S.-China trade relations.

More recently, American companies have also expressed increasing concerns about China’s failure to follow through on market reforms and the continued pursuit of industrial policies that aim to provide tens of billions of dollars of government financial support to promote “national champions” in designated advanced technology sectors, as laid out in part in the recently-published “Made in China 2025” State Council report. In light of the dramatic growth of Chinese foreign direct investments and acquisitions in the United States, there are increasing calls for establishing some form of “reciprocity” in bilateral investment relations. The upcoming Comprehensive Economic Dialogue will need to begin addressing these challenges and to come up with some results.

In sum, it is significant that China and the United States have quickly begun to engage actively to address key security and economic issues in the bilateral relationship under the new Trump administration. While some progress has been made, difficult challenges still lie ahead.

Rep. Gowdy Plans Deeper Oversight

The new chairman of the House Committee on Oversight and Government Reform, Representative Trey Gowdy (R-S.C.), outlined his plans for the Committee last week.  As we expected, Mr. Gowdy said that he would pursue more methodical investigations.  Noting that hearings are “an inefficient way to gather facts,” Mr. Gowdy said that the Committee would pursue investigations outside of the public spotlight and then use hearings to present the Committee’s findings.

This shift in focus could have significant implications for private sector companies and executives that are investigated by the Committee.

First, more methodical investigations usually mean more extensive document requests, including discovery of electronic records such as internal company e-mails.  It may also mean that the Committee will conduct more interviews and depositions, or request that targets give sworn, written answers to detailed interrogatory requests.  These investigative tools and techniques are the same methods that are used by criminal prosecutors.  Mr. Gowdy, of course, is a former federal and state prosecutor.

Second, if the Committee conducts most of its investigation before proceeding to a hearing, hearings could be harder for company witnesses.  Mr. Gowdy is a strong questioner, and he is at his strongest when confronting witnesses about past statements.  If the Committee develops a detailed record of past statements, such as historical e-mails or deposition testimony taken in the context of the investigation, the hearings may look a lot like courtroom cross-examinations.

We previously noted that the Committee has sometimes been criticized for flitting from topic to topic, conducting a large number of relatively high level investigations.  For the targets of these investigations, the high-profile hearings are a significant challenge to be sure, but the legal and public relations risks are relatively contained.  Longer and deeper investigations carry significantly more risks to companies facing investigations by Mr. Gowdy and the Committee.

Efforts to End Super PACs Moving Forward, Face Uphill Climb

Last summer there was much ado about the two parallel efforts of a “Dream Team” of attorneys to “end Super PACs.” Their goal was to get the Supreme Court to overturn the decision of the D.C. Circuit in SpeechNow v. FEC, and similar decisions in other circuits, which led to the creation of Super PACs. Those efforts have continued to move forward, with developments on both fronts last week. However, intervening events have made it increasingly unlikely that the group will achieve its goal via either approach.

The first approach flows through the Federal Election Commission (“FEC”). The attorneys filed a complaint alleging that various donors and Super PACs had made or received contributions in excess of the pre-SpeechNow limits on PAC contributions. However, the FEC has officially recognized since 2010 that SpeechNow makes those limits unenforceable against Super PACs. Press reports indicate that the FEC dismissed the Dream Team complaint based on SpeechNow. Last week the complainants announced their plans to sue the FEC over the decision, on the grounds that it was arbitrary, capricious, and contrary to law. The complainants hope to take this case to Supreme Court. Among various challenges that have always faced the effort, however, there is one glaring new one: the confirmation of Justice Neil Gorsuch. His elevation (instead of Merrick Garland or another Democratic nominee) makes it less likely that the Court would reject the holding in SpeechNow and abolish Super PACs.

In the parallel effort, an aligned nonprofit has been working hard to pass an ordinance in St. Petersburg, Florida that would abolish Super PAC activity in that city. Last week, the ordinance passed a preliminary vote of the city council 5-3. This sets up a final vote in July to pass the ordinance. Having passed once already, it seems likely the ordinance will become law. The city is expecting an immediate lawsuit challenging the ordinance. That lawsuit would theoretically head to the Supreme Court by way of the 11th Circuit, which, unlike many other of the federal appellate courts, has not decided on this SpeechNow issue before. A decision upholding the ordinance would create a circuit split and potentially entice Supreme Court action. However, in the time since the ordinance was first introduced, the 11th Circuit reached a decision in Alabama Democratic Conference v. Broussard that appears to acknowledge that SpeechNow was rightly decided, though it does not directly address the issue. See Ala. Dem. Conf. v. Broussard, 838 F.3d 1057 (11th Cir. 2016), cert. denied sub nom. Ala. Dem. Conf. v. Marshall, No. 16-832, 2017 WL 1427593 (Apr. 24, 2017). This makes a circuit split unlikely, reducing the chances that the Supreme Court would take up the issue via this path. Even if the 11th Circuit upholds the ordinance, the Supreme Court would still likely strike it down as unconstitutional.

The Week Ahead in the European Parliament – June 23, 2017


Next week will be a political group week and a committee week in the European Parliament.  Members of the European Parliament (“MEPs”) will hold meetings with their respective political groups to prepare the plenary session, to be held from July 3 to 6, 2017, in Strasbourg.

A few interesting discussions will take place in committee.

On Thursday, the Committee on Civil Liberties, Justice and Home Affairs (“LIBE”) will discuss with the Commission its report on the Commission proposal on “countering money laundering by criminal law”.  The proposal seeks to enhance the fight against terrorism.  It introduces minimum rules that require Member States to define money laundering as a criminal offence, establish a regime to apply this offence when it relates to terrorism, and approximate sanctions.  The new rules are also aimed at improving cooperation between national authorities, including through a greater exchange of information, so as to reinforce the EU’s initiatives to tackle terrorism.  See the Commission proposal here. 

On the same day, the LIBE Committee will hold a discussion on EU-Africa partnership.  They will hold discussions with representatives of the Commission’s Directorate General for International Cooperation and Development (“DG DEVCO”) and representatives of the European External Action Service (“EEAS”).  MEPs and the representatives of the other EU institutions are likely to explore ways and define a strategy to foster cooperation between the EU and Africa for the coming years, based especially on the Commission’s “Communication for a renewed impetus of the Africa-EU Partnership”.  See the Commission Communication here.

Meetings and Agenda

Monday, June 26, 2017 

Committee on Foreign Affairs

15:00 – 18:30

  • Discussion with the EEAS on the situation in the Maldives
  • Establishing an instrument contributing to stability and peace (2016/0207(COD)) –  Rapporteur: Arnaud Danjean (EPP, FR) –  Consideration of amendments

Tuesday, June 27, 2017 

  • No meetings scheduled.

Wednesday, June 28, 2017 

  • No meetings scheduled.  

Thursday, June 29, 2017

Committee on Regional Development

9:00 – 12:30

  • Joint REGI-COTER Hearing on the Implementation of the Urban Agenda for the EU, State of Play

Committee on Civil Liberties, Justice and Home Affairs

9:00 – 17:30

  • Eurojust 2016 Foreign Terrorist Fighters report – discussion with Michèle Coninsx, President of Eurojust (09.00-10.00)
  • Countering money laundering by criminal law (COD) – discussion with the Commission (10.00-10.20)
    • Rapporteur: Ignazio Corrao (EFDD, IT)
  • Frontex Consultative Forum on Fundamental Rights (10.20-11.00) – discussion on the 2016 annual report
  • Development of a European Integrated Border Management strategy – discussion with the Commission (11.00-11.45)
  • Africa-EU Partnership – renewed impetus – discussion with representatives of DG International Cooperation and Development of the European Commission and representatives of the European External Action Service (EEAS) (11.45-12.10)

Votes (12.25-12.30)

  • European Union Agency for Asylum- vote on the provisional agreement resulting from interinstitutional negotiations
    • Rapporteur: Péter Niedermüller (S&D, HU)
  • Uniform format for residence permits for third-country nationals (COD) – vote on the provisional agreement resulting from interinstitutional negotiations
    • Rapporteur: Jussi Halla-Aho (ECR, FI)
  • Jointly with the Committee on Petitions
  • Hearing on Statelessness (14.00-17.30)

Will the FEC Declare War on Russia?

Noting that we are at an “all hands on deck” moment for our democracy, FEC Commissioner Ellen Weintraub circulated to the Commission yesterday a document citing former Vice President Dick Cheney for the proposition that the United States is now at war with Russia, and that “[e]very part of our government that has jurisdiction over [reported Russian attempts to affect the 2016 presidential election] must exercise every scrap of its jurisdiction as fully as it can.”  She calls on the FEC to “find out the facts of what happened during the 2016 Presidential election, and move firmly and swiftly to fix any problems we might find.”  As with any declaration of war, this one comes with a Churchillian reference to the FEC’s “finest hour,” and an insistence that this struggle must not be a partisan one, citing Senator Mitch McConnell for the proposition that we need strong action against Russia.

Despite what some may feel is overheated rhetoric, Commissioner Weintraub presents some quite sensible proposals about what the agency might do to ensure the integrity of our electoral system.  While her list also includes proposals that some commissioners are certain to view as unsupported by the current factual record, it would be better if the commissioners were able to focus on the points where they agreed, rather than disagreed.Specifically, Commissioner Weintraub outlines six actions she will ask her fellow commissioners to support, including:

  • Having the Justice Department, Treasury and similar agencies brief the FEC to get it up to speed on the problem;
  • Ensure the FEC’s enforcement teams are fully staffed and form interagency task forces if the problem proves too big;
  • Assure the public that the FEC’s data is safe;
  • Begin a rulemaking to adopt a test that will treat more corporations as foreign nationals, barred from participating in American politics;
  • Hold hearings on whether more rulemakings might be necessary; and
  • Give Congress guidance on which pending legislation it should pass and if new bills are needed.

If the Republicans on the FEC can look beyond the overheated rhetoric, and identify reasonable steps the agency could take, progress could be made.  There is no doubt the FEC should ensure its legal team is adequately staffed, and if particular expertise is lacking, seek it out in other agencies.  If the Russians made efforts to hack the FEC’s computer system, an assurance as to the quality of the agency’s defenses would be welcome.  And if the FEC had a more reliable source of information on the threat we face than the public reports in Time and The Intercept, that would be a good thing.

But there are certainly proposals that will not meet with majority support, and with that comes a significant risk that Thursday’s meeting is a repeat of past performances at the FEC, where one side accuses the other of being indifferent to the imminent threat of lawlessness, and the other accuses its opponents of stripping citizens of their liberties.  It would be unfortunate, for the issue at hand is a significant one, and both sides have something meaningful to say about how to make improvements to the agency’s handling of it.

China Releases Draft National Intelligence Law for Public Comment

On May 16, 2017, the Legislative Affairs Commission of the National People’s Congress (NPC) Standing Committee of China released for public comment a draft of the National Intelligence Law (“the Draft Law”). The Draft Law, if enacted as drafted, would be the first Chinese statute to systematically address national intelligence related issues, including institutional structures, the scope of intelligence-gathering powers, and potential effects on private entities.

Background of the Draft Law

The Draft Law is part of the Chinese government’s initiative to strengthen national security during President Xi Jinping’s administration. In 2013, President Xi created the National Security Committee as well as the Committee for Inspection of State Affairs. A series of laws related to national security, including the National Security Law, Counter-Espionage Law, Counter-Terrorism Law, and Cybersecurity Law have been enacted since then. The Draft Law is the latest effort by the Chinese government to strengthen and safeguard national intelligence and to protect national security and interests, by calling for the establishment of a comprehensive national intelligence system.

Summary of the Draft Law

The Draft Law consists of five (5) chapters and twenty-eight (28) articles. Chapter 1 discusses general principles; Chapter 2 addresses the powers of the national intelligence agencies; Chapter 3 covers recruitment, training, and protection of agents; Chapter 4 provides the penalties for violating the law; and Chapter 5 provides that the Law shall take effect upon issuance.

The Draft Law divides the national intelligence system into three branches—the State Security Institution, the Public Security Intelligence Institution and the Military Intelligence Institution. It grants national intelligence agencies and relevant agents broad authority to conduct intelligence-gathering activities. For example, Article 16 grants intelligence agents power to enter certain restricted areas and facilities during emergencies. Article 9 grants national intelligence institutions the power to employ “all necessary methods, tactics, and channels” to carry out intelligence-gathering efforts “domestically and abroad,” so long as such activity is conducted “according to law.” The intelligence-gathering authority is also extended to individuals and private organizations that work under the authorization of intelligence institutions per Article 12. This Article implies that private intelligence organizations may be developed (or officially recognized) in the future and could work as government contractors in response to national intelligence needs.

Despite the potentially broad scope of the Draft Law, each substantive Chapter contains language that prohibits abuses of power by intelligence authorities. For example, Article 7 and 18 require the intelligence agencies to respect “human rights” protection and the legal rights of citizens and organizations, such as property rights, personal privacy, and trade secrets. Article 24 provides that any person may report potential violations of the law by intelligence agencies, and prohibits retaliation against such persons. Article 27 imposes civil and criminal liabilities on those who are convicted of corruption or abuse of power.

Potential Implications           

Companies active in China should assess how the National Intelligence Law might affect their operations, data assets, and relations with local and national authorities. Under the Draft Law, it is possible that trade secrets or other proprietary information may be accessed by the Chinese government if deemed necessary. For instance, Article 15 provides that companies or other organizations can be asked to produce documents and other property as part of investigations, so long as such requests comply with procedural requirements. The practical effect of the Law’s checks on abuse of power will also depend on how it is implemented by authorities and interpreted by courts.

Chao Qu and Xinyi Song contributed research for this article.

Grassley Defends Congressional Oversight; House Democrats Turn to Statutory Oversight Authority

The Trump administration’s efforts to curtail congressional oversight of executive branch agencies by individual Members of Congress, including ranking Democratic Members of Committees, ran into significant opposition from an unlikely source:  Senator Chuck Grassley (R-Iowa), the Republican Chairman of the Senate Judiciary Committee.  Sen. Grassley’s strong reaction is consistent with his role as perhaps Congress’s most effective pursuer of oversight conducted outside of the formal committee process.

On May 1, 2017, the acting head of the Department of Justice’s Office of Legal Counsel, Curtis Gannon, issued a short legal opinion for the White House Counsel, Don McGahn, that “briefly explained” Congress’s “constitutional authority to conduct oversight.”  The opinion stated that congressional oversight can “be exercised only by each house of Congress or, under existing delegations, by committees and subcommittees” and their respective chairmen.  Individual Members of Congress, including ranking minority members of Committees, cannot engage in oversight, the opinion stated, because such requests are “not legally enforceable through a subpoena or contempt proceeding.”

The legal opinion appears to be the basis for several recent attempts by administration officials to rebuff information requests from various Members of Congress.  Politico recently reported that the “White House is telling federal agencies to blow off Democratic lawmakers’ oversight requests.”  At a hearing in May, the acting administrator of the General Services Administration told Congress that the “administration has instituted a new policy that matters of oversight need to be requested by the committee chair.”

This new policy did not sit well with Sen. Grassley.  Although he currently serves as the Chairman of the Senate Judiciary Committee, and would therefore not be immediately affected by the policy, Sen. Grassley has spent decades pursuing congressional oversight of agencies as a chairman, ranking minority member, and individual Senator.

In a June 7, 2017, letter to President Trump, Sen. Grassley tore into the Gannon opinion.  He contended that both the Constitution and applicable court precedents provide that “all members need accurate information from the Executive Branch in order to carry out their Constitutional function.”  He criticized the opinion for basing its conclusion on subpoena enforcement.  This position, Sen. Grassley said, conflated Congress’s ability to compel a response and Congress’s ability to seek information voluntarily from the executive:  “[T]he scope of information Members of Congress need from the Executive Branch in order to carry out their Constitutional duties is far broader than merely what is obtained through compulsory process.”  The “vast majority of information Congress obtains . . . is obtained voluntarily, not by compulsion,” he added.  (He also took the Office of Legal Counsel to task, noting that the opinion “fails to cite and analyze any authority that challenges its conclusion.”)

In a separate action partially in response to the Office of Legal Counsel’s opinion, on June 5, 2017, Rep. Elijah Cummings, the ranking Democratic Member of the House Committee on Oversight and Government Reform, sent a document request letter to the acting administrator of the General Services Administration.  The letter requested a variety of documents related to a lease by President Trump’s business interests of the Old Post Office (now known as the Trump International Hotel Washington D.C.).

Notably, the letter was signed by all eighteen Democratic members of the Committee, and it invoked the Members’ statutory authority to access executive branch information under the little-know “seven Member rule.”  The statutory seven Member rule, which dates from the 1920s, requires an executive branch agency to provide information requested by “the Committee on Government Operations of the House of Representatives, or of any seven members thereof.”  (The Committee on Government Operations was the Committee’s name at the time.)  According to the Democratic letter, the General Services Administration has failed to comply with a request by eight Members of the Committee earlier this year.  It is likely that the administration will have a harder time resisting oversight requests conducted under this statutory provision.  For example, in 2002, Rep. Henry Waxman successfully sued the Bush administration for access to census data under the seven Member rule.

There are additional risks for the administration, most obviously the theoretical possibility that today’s ranking Democratic Members could become tomorrow’s chairmen after the 2018 elections.  Sen. Grassley knows this first hand.  He conducted numerous, lengthy investigations, even as he moved from ranking to Chairman and back again throughout his career.

The Week Ahead in the European Parliament – June 16, 2017

Next week will be very busy in the European Parliament as it is a committee week.

On Tuesday, the Committee on International Trade (“INTA”) will vote on a draft report prepared by Salvatore Cicu (European People’s Party, Italy) on EU trade defence tools. The report proposes reforms of EU anti-dumping measures, which aim to safeguard EU businesses from unfair competition from countries outside of the bloc. The suggested measures target states with “substantial market distortions”. According to the European Commission, “significant distortions” refers to circumstances where the domestic prices and costs would not provide a reasonable basis to determine the normal value. Rapporteur Cicu, however, believes that the European Parliament should amend the proposal to clarify the meaning of “significant distortions”. The draft report can be found here.

On June 1, the European Parliament adopted by 475 votes to 102 (with 61 abstentions) amendments to the proposal for a regulation of the European Parliament and of the Council on the introduction of temporary autonomous trade measures for Ukraine, supplementing the trade concessions available under the Association Agreement. The matter was then referred back to the responsible committee, the Committee on International Trade (“INTA”). On Tuesday, the Committee will vote on additional trade concessions to Ukraine for improved economic and political recovery. The provisional Parliamentary proposal can be found here.

Also on Tuesday, Mariya Gabriel, Bulgarian Commissioner-designate for the Digital Economy and Society portfolio, will be interviewed by MEPs on her skills and competencies for the role. The Commissioner for the Digital Economy and Society will support the implementation of the Digital Single Market Strategy, which underwent its mid-term review in May. Ms Gabriel was nominated for the position by Commission President Jean-Claude Juncker.

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The Week Ahead in the European Parliament – June 9, 2017


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 Monday, the Committee on Economic and Monetary Affairs (“ECON”) and the Committee on Legal Affairs (“JURI”) will jointly vote on an opinion regarding the taxation of multinationals conducting business in the EU. According to the Committees’ opinion, these multinationals with a turnaround of over €40 million, would be required to publish information relating to where their profits are made, as well as the amount of tax they pay, on a country-by-country basis. It would broaden the scope of disclosure, including to intra-group payments. The opinion can be found here.

On Tuesday, MEPs will vote on new rules on energy labelling for household appliances. The new ratings will use an A-G scale to specify consumption of energy, replacing the current A+/A++/A+++ system. As a first step, MEPs propose to carry out an initial rescaling of existing labels on the market, to help consumers avoid confusion. The Commission’s proposal can be found here; and the final text, subject to revisions by the legal linguists, can be found here.

Also on Tuesday, the plenary session will press the EU Commission to answer an oral question on glyphosate, one of the most used herbicides in the world. The question was posed by MEPs from the Committee on the Environment, Public Health and Food Safety (“ENVI”). The MEPs take note of the recent correspondence released by Monsanto, which casts doubt on the reliability of several company-sponsored studies on the herbicide. The MEPs are therefore inquiring whether the EU Commission will investigate allegations of undue influence from Monsanto over the EU’s approval of glyphosate.

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EU Policy Update

Elections in Europe, Brexit, and a Presidential Visit

On June 7th, 2017, the UK went to the polls in a “snap” general election called by the Prime Minister, Theresa May.  The outcome was inconclusive, a “hung Parliament” with no single party holding a majority of the seats.

The Conservative Party holds the largest number of seats, 318 of the 650 Members of Parliament (and one still too close to call). The Northern Irish Democratic Unionist Party (10 MPs) will support a minority Conservative government – which would command a bare majority of the MPs in Parliament, as the seven Sinn Fein MPs will follow tradition and not take their seats in the UK Parliament.  This is likely to complicate the Brexit negotiations, and will make it hard for the Conservative Party to implement its domestic policy platform – and many commentators expect a further UK election, sooner rather than later.

Last month, on May 7, Emmanuel Macron was elected President of France with a two-thirds majority over Marine Le Pen, leader of the extreme right party “Front National”. The same evening, Macron greeted his jubilant supporters in the grounds of the Louvre, to the sound of the Ode to Joy, the anthem of the European Union. If President Macron is to implement his ambitious program aimed at restoring France’s competitiveness, he will first need his party, re-named “La République en Marche” to succeed in two-stage Parliamentary elections on June 11 and 18. For Covington’s full analysis of Macron’s victory in the presidential elections, and its implications for the Brexit negotiations, see a Covington blog post here.

On May 22, the EU27 European Affairs ministers formally appointed Michel Barnier as the EU negotiator for the Brexit talks, and adopted detailed negotiating directives with almost no dissent (see here). It was agreed later with the British team that the negotiation would start on Monday, June 19. This allows sufficient time for the new British government to be in place after the UK general election on June 8.

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