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What Australian politicians call carbon tariffs, the European Union labels a carbon border adjustment mechanism.

While one sounds bad (the World Trade Organisation has rules that restrict tariffs) the other sounds understandable if the European Union is imposing a carbon tax on its own products as Australia once did, surely it is reasonable to impose it on products from overseas.

The argument is that if a German steel manufacturer has to pay a tax of, say, $77 a tonne for the carbon it emits while making the steel, an Australian manufacturer should be charged the same when its product enters the country, unless it has already paid the same tax here.

To do otherwise would give the Australian product an unfair price advantage it would create carbon leakage of the kind Australian businesses used to warn about in the leadup to Australias carbon price.

The European Union approved the idea in principle on March 10.

The details are less than clear, in part because it is possible that carbon tariffs are not permitted under the rules of the World Trade Organisation to which European nations and most other nations belong.

The rules say taxes or charges of any kind can only be imposed on imported products the same way as they are domestically.

That appears to mean that they can be imposed on importers but not on producers, which isnt quite what the European Union has in mind.

Ideally the World Trade Organisation would be able to provide guidance, but (in part because of the actions of the US Trump administration) it isnt really in a position to do.

The WTO has a new director general in Ngozi Okonjo-Iweala who took office this month, but it will remain in an induced coma for as long as its appellate body is unable to hear disputes.

Under Trump, the US kept vetoing appointments to the appellate body until the expiration of terms of its existing members meant it no longer had a quorum.

Disputes can still be initiated by countries such as Australia, forcing consultations, but without final determinations.

Although the European Union says it wants to ensure that its adjustment mechanism complies with the WTOs rules, it hasnt ruled out the possibility of relying on provisions that allow exceptions.

Exceptions are allowed for the protection of human, animal or plant life or health or the protection of an exhaustible natural resource.

The catch is these exceptions are not allowed to discriminate between countries and must not be disguised restrictions on trade.

It is arguable that an adjustment mechanism designed to protect the competitiveness of European industries will breach these provisions.

Read more: No point complaining about it, Australia will face carbon levies unless it changes course

The European Union has suggested that border adjustments will be unnecessary when the rest of the world has matched it in committing to achieve net zero emissions by 2050, so long as these commitments are back up by real actions.

But that hasnt happened yet, and despite talk by Prime Minister Scott Morrison of his hope that Australia can get to net zero by 2050, Australia hasnt made a commitment, and hasnt backed it with tax-like instrument.

With any World Trade Organisation determination uncertain and perhaps impossible, apart from complaining about carbon tariffs or border adjustments, there may be little Australia can do.

See the article here:
The European Union wants to impose carbon tariffs on Australian exports. Is that legal? - The Conversation AU

The deal reached between HM Government and the European Union on December 24, 2020, does not include any framework for the coordination and mutual recognition of cross-border insolvencies and restructurings. For the purposes of insolvency law, the deal represents a "Hard Brexit."

Therefore, following Brexit, UK insolvency proceedings no longer benefit from automatic recognition across the European Union pursuant to Regulation (EU) 2015/848 of the European Parliament ("EU Insolvency Regulation"), and vice versa (save for those proceedings commenced prior to December 31, 2020). UK insolvency proceedings commenced after December 31, 2020, will, where necessary, need to be recognized in each relevant EU Member State.

Without the benefit of mutual recognition, cross-border insolvency proceedings involving both the European Union and the United Kingdom will undoubtedly become more complex, time-consuming, and expensive as stakeholders, advisers, and insolvency practitioners seek to navigate this new landscape. In many situations, parallel proceedings in multiple jurisdictions may now be required. Going forward, it is hoped that a new framework for the mutual recognition of insolvency proceedings can be agreed between the European Union and the United Kingdom. However, in the short term at least, notwithstanding the increased levels of financial distress and insolvency proceedings that are likely to follow as and when government support programs in the United Kingdom and Europe are withdrawn, mutual recognition of insolvency proceedings does not appear to be a high priority for the European Union and the United Kingdom at this time.

The Status Quo

Before the transition period ended on December 31, 2020, the United Kingdom enjoyed the benefit of the EU Insolvency Regulation. The EU Insolvency Regulation provides, inter alia, a framework for the automatic and mandatory recognition of insolvency proceedings between Member States of the European Union (excluding Denmark). The EU Insolvency Regulation also determines the applicable law in the case of cross-Member State insolvency proceedings.

The New Landscape

Outbound UK Insolvency Proceedings. Following Brexit and the end of the transition period on December 31, 2020, insolvency proceedings involving both an EU Member State and the United Kingdom are now in a rather different position.

If a UK insolvency proceeding requires recognition in the European Union, the company or relevant insolvency practitioner will need to seek recognition in each EU Member State where it is considered expedient to do so. In each casewith the exception of Greece, Poland, Romania, and Slovenia, which have each adopted the UNCITRAL Model Law on Cross-Border Insolvency ("Model Law")the availability of recognition and the terms thereof will depend on any applicable terms for the recognition of a third country under the EU Insolvency Regulation or local laws for the recognition of foreign insolvency proceedings in each relevant Member State. Where a UK insolvency proceeding has been commenced in the United Kingdom, but an EU Member State considers that the center of main interests ("COMI") of the relevant entity is in the European Union, the EU Insolvency Regulation will continue to apply without regard to the UK proceeding.

Schemes and Restructuring Plans. For schemes of arrangement and the new restructuring plan, it was generally considered (but never tested) that the recognition of such proceedings across the European Union fell under the ambit of Regulation (EU) 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) ("EU Judgments Regulation"). Following December 31, 2020, the EU Judgments Regulation has also ceased to apply to the United Kingdom, and therefore the United Kingdom and European Union will no longer benefit from mutual recognition of civil judgments.

As an alternative to the EU Judgments Regulation, there are a number of different routes pursuant to which English schemes and restructuring plans may be recognized in Europe. These routes include the Hague Convention and Regulation (EC) No. 593/2008 of the European Parliament ("Rome I"), both of which continue to apply to the United Kingdom and the European Union in the context of civil proceedings. The Hague Convention provides for the recognition of exclusive jurisdiction clauses where both contracting parties have agreed to the exclusive jurisdiction of a contracting state. Similarly, Rome I seeks to uphold and recognize the governing law of a contract as agreed between contracting parties. Like the EU Judgments Regulation, the application of the Hague Convention and Rome I have not as yet been tested in respect of schemes and restructuring plans.

Going forward, the United Kingdom has applied to join the Lugano Convention. Parties to the Lugano Convention include the European Union, Switzerland, and Norway. The Lugano Convention provides a framework for the recognition of civil law judgments between contracting states in a similar way to the EU Judgments Regulation. Given the generally accepted principle that schemes sanctioned by the English court constitute civil law judgments, it was anticipated that the Lugano Convention would provide an alternative route for the recognition of schemes and restructuring plans within the European Union and beyond.

However, in the recent case of Re gategroup Guarantee Limited [2021] EWHC 304 (Ch), the English High Court held that a restructuring plan constituted a bankruptcy proceeding and therefore fell outside the scope of the Lugano Convention. There are a number of distinguishing features between a scheme and a restructuring plan, and in coming to its decision, the court placed great emphasis on these differences. In particular, while a company may propose a scheme irrespective of its financial state, in order to propose a restructuring plan: (i) the company must have encountered, or is likely to encounter, financial difficulties that are affecting, or will or may affect, its ability to carry on business as a going concern; and (ii) the purpose of the restructuring plan must be to eliminate, reduce, prevent, or mitigate the effect of any of the financial difficulties noted in (i) above. Accordingly, the context in which a restructuring is proposed could be entirely different for a scheme or a restructuring plan and may justify the potential classification of a restructuring plan as a bankruptcy proceeding, but not a scheme. While the decision in Re gategroup does not directly affect schemes, this decision does create greater uncertainty as to the basis for recognition of both schemes and restructuring plans in Europe. Further, it may follow that restructuring plans will now similarly fall within the bankruptcy exception to the Hague Convention, thereby further limiting the available frameworks for the recognition of restructuring plans in Europe.

Inbound EU Insolvency Proceedings. Any EU insolvency proceedings commenced after December 31, 2020, will similarly cease to benefit from automatic mutual recognition in the United Kingdom. However, there are a number of different routes in the United Kingdom pursuant to which foreign companies and officeholders can seek recognition in the United Kingdom of foreign insolvency proceedings. These routes include:

The grant of recognition and/or the provision of assistance pursuant to one of the above routes does not replicate the same terms as are applicable under the EU Insolvency Regulation. However, such frameworks: (i) do provide a clear and tested procedure for recognition of foreign proceedings; and (ii) are not dependent on there being reciprocal arrangements in place for the recognition of English insolvency proceedings. The existing regime in the United Kingdom will therefore undoubtedly assist foreign companies and insolvency practitioners in coordinating cross-border insolvency matters involving UK companies and/or assets.

For money judgments only, the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement Act) 1933 each provide a regime for the recognition of debt claims. However, utilization of such regimes is dependent on equivalent arrangements being available to assist UK parties in the jurisdiction seeking the assistance of the English court.

The Rule in Gibbs. As a matter of English law, a contract governed by English law may be amended, discharged, or otherwise compromised pursuant to an English proceeding only, unless the relevant counterparty has submitted itself to the jurisdiction of the foreign proceeding. Submission to the jurisdiction of a foreign proceeding can occur in a number of ways, including a creditor submitting a proof of debt or voting in the relevant foreign proceeding.

Prior to December 31, 2020, the Rule in Gibbs was not applied while the United Kingdom was subject to the EU Insolvency Regulation. However, post-Brexit, contracts governed by English law will need to be carefully considered by all stakeholders in the context of any restructuring proceeding that attempts to compromise the rights of creditors with English law-governed contracts without such creditors submitting to the laws of the relevant jurisdiction.

In practice, a foreign proceeding that seeks to compromise the rights of creditors pursuant to an English law-governed contract may still (subject to the eligibility criteria being satisfied) be recognized in the United Kingdom, for instance pursuant to the CBIR. However, recognition does not mean that the English courts will be prepared to enforce the terms of the foreign proceeding on a creditor who has not submitted to the jurisdiction of the foreign court. This is a different and complicated question that will need to be considered on a case-by-case basis.

Jurisdiction of English Courts. As a consequence of the United Kingdom no longer being subject to the EU Insolvency Regulation, by virtue of the Insolvency (Amendment) (EU Exit) Regulations 2019, the English courts will no longer be limited to opening certain insolvency proceedings, such as administration, in those situations where a company has its COMI in the United Kingdom. In certain circumstances, this may provide additional flexibility to open proceedings in the United Kingdom where this was not previously possible. Issues of recognition will still need to be considered on a case-by-case basis, but this increased flexibility could be helpful in some cross-border situations.

Outlook

The EU Insolvency Regulation undoubtedly provides an important framework for the recognition of cross-border insolvency and restructuring situations. The fact that the United Kingdom and the European Union will no longer enjoy the benefits of mutual recognition of insolvency proceedings and civil judgments is regrettable, but not fatal.

The CBIR will provide an important gateway into the United Kingdom for the recognition of EU insolvency proceedings. The implementation of the Model Law across the European Union would similarly go some way to restoring the confidence of mutual recognition in EUUK insolvency proceedings under the EU Insolvency Regulation, even if recognition under the Model Law is secured by court application as opposed to being automatic.

In the meantime, English law finance documents retain the primacy conferred on them by the Gibbs Rule, which, in spite of significant hostile commentary from other jurisdictions, continues to hold that foreign insolvency proceedings cannot discharge debts put in place by an English law contract. Moreover, the fact that the overwhelming majority of standard LMA-form international financing agreements will benefit from the protection of Rome I will be of some reassurance to certain stakeholders in the interim. Schemes and restructuring plans will therefore continue to play an important role in cross-border restructurings both within the European Union and in respect of non-EU companies that may continue to access schemes and restructuring plans in much the same way as before.

Moving forward, the Lugano Convention could provide an alternative route for the recognition of schemes. However, in the case of restructuring plans, the decision in Re gategroup has, for now, ruled out the possibility of the Lugano Convention providing any framework for the recognition of restructuring plans. In the case of restructuring plans, on the other hand, the decision in Re gategroup has, for now, ruled out the possibility of the Lugano Convention providing any framework for the recognition of restructuring plans. In any event, the United Kingdom is not yet a signatory to the Lugano Convention (the European Union and Denmark have yet to give their support to the United Kingdom's accession). It is also worth noting that there would be a delay of three months between the United Kingdom's accession and it taking effect.

However, before further steps are taken to re-homogenize insolvency and recognition procedures between the United Kingdom and the European Union, stakeholders should prepare for the need to implement more complex and carefully planned restructurings, including, for example, parallel proceedings both in the United Kingdom and relevant EU Member States, in order to achieve certainty of outcome in any given situation.

Robin Muir, an associate in the London Office, assisted in the preparation of this article.

See the original post here:
Uphill Struggles in the Sunlit Uplands? The Brexit Deal and UK-EU Insolvencies - JD Supra

Offer of closer economic ties mixed with threats reflects complex relationship between Turkey and the bloc.

The European Union should start negotiations on deeper trade ties with Turkey but be ready to impose economic sanctions if Ankara moves against the blocs interests, according to a report prepared for a summit of EU leaders this week.

The offer of closer economic links, mixed with threats, reflects the complex relationship between Turkey, an EU candidate, and the worlds largest trading bloc, which have drifted apart but are now seeking improved ties.

Strengthening our already substantial economic ties is another win-win situation for both sides At the heart of this would be the modernisation and expansion of the scope of the current EU-Turkey Customs Union, said the report by EU foreign affairs chief Josep Borrell and the European Commission.

The report, made public on Tuesday, said Turkey deserved more financial support for hosting millions of Syrian refugees, as well as visa-free travel to the EU, more high-profile diplomatic contacts and an expanded customs union.

But such progress would only be possible if Turkey respected human rights and showed greater flexibility over the divided island of Cyprus and hydrocarbon rights in the eastern Mediterranean.

Taking back almost 1,500 migrants and refugees living on Greek islands, and whose legal appeals have now been exhausted, would also be critical.

The situation of refugees in Turkey continues to deteriorate, aggravated by the COVID-19 pandemic and the economic downturn. Therefore, continued EU support will be required over the next years, said the report.

The EU is expected to provide fresh funds from 2022 for the four million refugees that Turkey hosts, following some six billion euros ($7.12bn) spent over the past four years.

The report said Turkey had failed to align its sanctions policy with that of the EU in the area of foreign policy, as it should have. Its policy on Libya often ran contrary to EU aims.

In December, EU leaders proposed asset freezes and travel bans over Turkeys unauthorised drilling activities for natural gas in disputed waters in the eastern Mediterranean.

But a more constructive tone from Turkish President Recep Tayyip Erdogan this year prompted the EU to halt work on those sanctions.

The report said a sliding scale of sanctions, to be used only as leverage, could include punitive measures on individuals, moving up towards important sectors such as energy and tourism.

Targeting tourism, which accounts for up to 12 percent of the Turkish economy, appeared to be a new threat from Brussels, which has decried Erdogans rule. Turkeys EU membership talks are frozen.

Should Turkey not move forward constructively in developing a genuine partnership with the EU, it should be made clear that this would bear political and economic consequences, the report said.

See the rest here:
Deepen trade with Turkey but ready sanctions, EU report says - Al Jazeera English

On 25 February 2021, the Council adopted Council Decision (CFSP) 2021/353 [1]amending Council Decision 2012/642/CFSP.

The Council Decision prolongs the restrictive measures against Belarus for one year, until 28 February 2022.

The Candidate Countries the Republic of North Macedonia, Montenegro and Albania[2] and the EFTA countries Iceland, Liechtenstein and Norway, members of the European Economic Area, align themselves with this Council Decision.

They will ensure that their national policies conform to this Council Decision.

The European Union takes note of this commitment and welcomes it.

[1] Published on 26.02.2021 in the Official Journal of the European Union no. L 68, p.189

[2] The Republic of North Macedonia, Montenegro and Albania continue to be part of the Stabilisation and Association Process.

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Declaration by the High Representative on behalf of the EU on the alignment of certain third countries concerning restrictive measures against Belarus...

Read: The one area where the U.S. COVID-19 strategy seems to be working

The European Union is partly to blame for this debacle. It approached vaccine procurement in its right-minded European way, using the purchasing power of a bloc that represents 446 million people to negotiate for lower prices, and protecting the peoples interests by holding pharmaceutical companies responsible in case of problems with new vaccines rushed to market. By contrast, early last year, Donald Trump and his British fraternal twin, Boris Johnson, moved swiftly to partner with drug companies in vaccine development, dismissed liability concerns, and secured first dibs on the end product.

So far, the Anglo-American approach looks like the better one: The United States is already awash with vaccines, and expects more than a billion doses to be delivered by the end of this year. Americans are getting vaccinated at an astonishing clipan average of 2 million shots in a single daywhile here in France, three months into the vaccination campaign, only 2.5 million people, out of a population of 67 million, had been fully vaccinated as of March 24. The United Kingdom has also been vaccinating up a storm. Add a little post-Brexit bitterness to our seething European envy when we see more than 844,000 people vaccinated on a single day in Britain. While less than 10 percent of the French population has received a first dose at this point, 29 million Britons have had their first jab.

The bitterness we feel watching Britain and the United States do better is compounded by a sense of unfairness. European countries, unlike the majority of countries in the world, have the wherewithal to produce their own COVID-19 vaccines. AstraZeneca is an Anglo-Swedish company. Pfizers vaccine was developed jointly with BioNTech, which is German. The multinational corporation Johnson & Johnson manufactures in Europe. The problem is that not all the vaccines produced in Europe stay in Europe. While the European Union has struggled to fulfill its vaccine needs, its been exporting vaccines to countries around the worldsome 41 million doses to more than 30 countries, including 10 million to Britain and even a million doses to the United States. Exasperated, the EU moved on March 24 to block for six weeks the export of vaccines produced in Europe to countries with higher vaccination rates.

Read: Britains vaccine nationalism

Europes frustrations are particularly understandable with the Johnson & Johnson vaccine. A multinational giant with a global supply chain, J&J produces COVID-19 vaccine in Europe and ships it to the United States for bottling. But the finished vials are blocked from being re-exported to Europe, thanks to an outright ban on the export of vaccines or vaccine components, the European Council president, Charles Michel, has complained. Europe learned during the Trump years that it could not count on the United States. Its learning now that in an era of vaccine nationalism, the moral high ground of international cooperation has yielded in the United States and Britain to an our-people-first-because-we-can approach to a terrible global crisis.

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Why America Is Beating Europe on Vaccination - The Atlantic