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14 Apr
EACC

IMF | The Right Labor Market Policies Can Ease the Green Jobs Transition

Measures include job training, tax credits for lower-income workers, green infrastructure and R&D investment push, and a carbon tax.
Consensus on the need to build a greener economy often founders on concern over potential job losses. It’s one thing to agree that a transition away from fossil fuels is needed. But how easily can a coal miner, say, shift to a job installing solar panels?
The answer shouldn’t be a surprise: for some workers, the change will be difficult. But there is good news. With the right mix of policies, countries should be able to achieve net-zero greenhouse-gas emissions by 2050—while easing the pain for workers in more emissions-intensive industries such as utilities. These policies include job-training programs and investment in green technologies, according to our recent analysis in Chapter 3 of the IMF’s World Economic Outlook.
Achieving emissions objective
Limiting the average global temperature increase to well below 2 degrees Celsius over pre-industrial levels, an objective endorsed by policy makers in the 2015 Paris Agreement, will require a dramatic reduction in net emissions of greenhouse gases. This green transformation will also entail a transformation of the labor market, with jobs moving between occupations and sectors. But the overall magnitude of that shift won’t necessarily be as dramatic as it might seem.
For advanced economies, a policy package designed to put the economy on a path for net zero emissions by 2050 would shift about 1 percent of employment from higher to lower-emissions work over the next decade, our analysis shows. The shift is bigger for emerging markets at about 2.5 percent. Still, those figures are smaller than the shift from manufacturing to services in advanced economies since the mid-1980s. That has come to almost 4 percent of jobs each decade.
As our analysis shows, part of the reason why the employment shifts in advanced economies could be modest is that a minority of jobs are either green-intensive, meaning they improve environmental sustainability (like electrotechnology engineers), or pollution-intensive, meaning they are particularly predominant in highly polluting sectors (like paper mill operators). Most jobs are neutral—neither green- nor pollution-intensive.
Higher wages on greener jobs could also help ease the transition. In our analysis of advanced economies, we find that the average green-intensive job earns about 7 percent more than the average pollution-intensive job, even when skills, gender, and age profiles are controlled for. This is good news, as the premium could attract workers to greener jobs.
Policies to ease adjustment
Nevertheless, workers may still face significant challenges during the transition. Indeed, the data suggest that it is tough to become greener. Our analysis estimates that the probability of an individual moving from a pollution-intensive to a green-intensive job is between 4 percent and 7 percent.
The odds are slightly better for someone moving from neutral to green—9 percent to 11 percent. In contrast, the chance of finding a green-intensive job, if your last job was also green, is much higher at around 41 percent to 54 percent. This doesn’t mean that workers in pollution-intensive jobs have no chance of finding greener employment, but they may need some help.

This explains why it is so important to craft labor-market policies that can help shift the balance toward greener jobs and ease the transition for workers. That means boosting workers’ ability to find greener jobs—through offering training programs—and reducing the incentives to stay in more pollution-intensive occupations. This includes gradually rolling back the job retention support introduced early in the pandemic as the recovery takes hold, since such policies can weaken incentives to change jobs.
Which brings us back to the policy package that, our model-based analysis suggests, can help economies achieve net zero emissions by 2050. It has four elements:

An initial green infrastructure and R&D investment push starting in 2023, with spending gradually reduced after 2028. This would support a modest productivity increase in less emissions-intensive sectors.
A tax on carbon emissions rising gradually from 2023, with a sharper increase from 2029 onwards. This raises the relative price of more emissions-intensive goods and spurs growth in less emissions-intensive sectors.
A training program to help less-skilled workers move to greener sectors, starting in 2023. The training would help address distributional concerns by increasing the productivity of lower-skilled workers in low-emissions sectors, encouraging firms to hire them and raise their wages.
An earned-income tax credit (EITC), which reduces taxes owed by lower-income workers. This would start in 2029 and offset the impact of the carbon tax on those workers. It would also encourage more people to enter the workforce.

For the representative advanced economy, we estimate that the policy package generates a labor reallocation to greener industries of about 1 percent over 10 years. It also increases total employment by 0.5 percent and boosts after-tax income for lower-skilled workers, reducing inequality.
Emerging markets
The impact would be somewhat different for emerging-market economies, where a higher proportion of workers are employed in sectors such as mining. It would generate a shift of 2.5 percent of the workforce over 10 years. There would be an overall increase in employment in the near term as green investments kick in, but that would change to a 0.5 percent decline by 2032.
Also, emerging economies generally have more employment in so-called informal sectors, where income taxes aren’t always paid. Therefore, the package would have to be supplemented by direct cash transfers to low-income workers starting in 2029, alongside the EITC and the carbon tax.
Policy actions are essential to provide incentives for the transition to a net-zero economy by 2050. Correctly timed and implemented, these actions can ease the switch to greener jobs for a relatively modest segment of the workforce while also boosting skills and incomes for the lowest paid workers and reducing inequality. This will ensure that the path towards a greener economy is also an inclusive one.
Authors:

John Bluedorn
Niels-Jakob Hansen

—This blog, based on Chapter 3 of the World Economic Outlook, “A Greener Labor Market: Employment, Policies, and Economic Transformation,” also reflects research by Diaa Noureldin, Ippei Shibata, and Marina M. Tavares.
Compliments of the IMF.
The post IMF | The Right Labor Market Policies Can Ease the Green Jobs Transition first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

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14 Apr
EACC

IMF | Global Trade Needs More Supply Diversity, Not Less

Countries with trade partners that implemented more stringent lockdowns had a sharper drop in imports. Though trade flows have adjusted, more diversified global value chains could help lessen the impact of future shocks.
The demand and supply shocks unleashed by the pandemic were expected to lead to a dramatic collapse in trade, but international commerce has proven more resilient than during previous global crises.
While goods trade fell sharply in the second quarter of 2020, it bounced back to pre-pandemic levels later in the year. The decline for services in 2020 (such as tourism) was worse, and has recovered more slowly, given persistent restrictions to contain infection in some countries.
International spillovers
Factors specific to the pandemic help explain these trade patterns.
First, goods imports were larger in 2020 than would be predicted by demand (and relative prices) alone, more so in countries with stringent lockdowns or severe outbreaks.
Second, lockdowns had significant—if unintended—international spillovers. Countries with trade partners that implemented more stringent lockdowns experienced larger declines in imports of goods. Trade partner lockdowns accounted, on average, for up to 60 percent of the decline in imports in the first half of 2020. These impacts were larger in industries that rely heavily on global value chains, and are further downstream in the production process (such as electronics).
The effects were short-lived, however, suggesting that global supply chains were resilient. And remote work also lessened the trade spillovers from lockdowns.
Even so, disruptions wrought by the pandemic led to calls for more domestic production of goods (reshoring). Our latest World Economic Outlook shows that dismantling global value chains is not the answer—more diversification, not less, improves resilience.
Global value chains adapted
Trade data affirm this. By mid-2020, Asian countries, which were hit early by COVID-19 but then managed to contain it (just when many European countries imposed severe mobility restrictions) saw an increase in their market share of GVC-related products of 4.6 percentage points in Europe, and 2.3 percentage points in North America. These gains were large and quick by historical standards but as countries adjusted to the pandemic, they’ve partially unwound, suggesting that the changes were likely temporary.Though global value chains have adjusted, some industries such as automobiles have faced large supply disruptions, pointing to the need to enhance resilience. We analyze two options for building supply chain resilience: diversifying inputs across countries, and greater substitutability of inputs.
Boosting trade resilience
We simulated the effects of disruptions in a global economic model and compared outcomes under higher levels of diversification, or higher substitutability (how easily a producer can switch inputs from a supplier in one country to another). We considered two scenarios: supply disruption in a single, large, input supplier country; and supply shocks to multiple nations.
Our analysis shows that diversification significantly reduces global economic losses in response to supply disruptions. Following a sizable (25 percent) labor supply contraction in a single, large global supplier, gross domestic product for the average economy falls by 0.8 percent under the baseline. In the high-diversification scenario, this decline is reduced by almost half.
Higher diversification also reduces volatility when multiple countries are hit by supply shocks. We estimate that the volatility of economic growth in the average country is reduced by around 5 percent in this scenario. Diversification offers little protection, however, when a major disruption hits all economies at the same time, like the first four months of the pandemic.
Countries can diversify by sourcing more intermediate inputs from abroad. Currently there is a significant “home bias” in the sourcing of such supplies. Firms in the Western Hemisphere, for example, source 82 percent of their intermediates domestically. Re-shoring of production would thus lower diversification further.
Substitutability can be achieved in two ways: through greater flexibility in production, such as when electric vehicle maker Tesla Inc. rewrote software to enable its cars to use alternative semiconductors in response to the semiconductor shortage; or by standardizing inputs internationally. For example, General Motors Co. recently announced that it is working with semiconductor suppliers to reduce the number of unique chips that it uses by 95 percent, down to just three families of microcontrollers. This standardization would replace a host of chips, eliminating the costs of substituting between them.
Considering again the scenario of a 25 percent labor supply contraction in a large global supplier of intermediate inputs, we find that with greater substitutability, GDP losses in all countries (other than the source country) are reduced by about four-fifths.
Policy implications
Ensuring equitable access to vaccines and treatments remains the first policy priority. Recent targeted lockdowns in China are a reminder that pandemic-related restrictions continue to have an impact far beyond the affected country. It is in the self-interest of all countries, including those with high vaccination rates to end the acute phase of the pandemic everywhere.
Amid rising concerns regarding global economic fragmentation and “friendshoring” following the war in Ukraine, our analysis also shows that greater diversification and substitutability in inputs can enhance resilience. While corporate decisions will predominantly shape the future resilience of global value chains, government policies can help by providing a supportive environment and lowering the costs.
One obvious area is improved infrastructure. The pandemic has shown that infrastructure investments in certain areas are critical to mitigate supply disruptions related to trade logistics. For example, upgrading and modernizing port infrastructure on key global shipping routes would help reduce global chokepoints. Better digital infrastructure to facilitate telework can also help mitigate spillovers to other countries.
Governments can also help to make information more widely available, so firms can make more strategic decisions. For example, automobile manufacturers on average conduct business directly with about 250 Tier1 suppliers, but this number rises to 18,000 suppliers in the full value chain. Improving access to information on inter-firm transactions and supply chain networks, by for example, digitalizing firms’ document filings, such as tax returns, can be helpful, especially for smaller firms with fewer resources.
Finally, reducing trade costs can help diversify inputs. There is room to reduce non-tariff barriers, which would give a significant medium-term economic boost, especially in emerging markets and low-income developing countries. In addition, reducing trade policy uncertainty, and providing an open and stable, rules-based trade policy regime, can support greater diversification.
Authors:

Davide Malacrino
Adil Mohommad
Andrea Presbitero

— This blog, based on Chapter 4 of the April 2022 World Economic Outlook, “Global Trade and Value Chains During the Pandemic,” includes research by Galen Sher and Ting Lan, under the guidance of Shekhar Aiyar, and support from Shan Chen, Bryan Zou, Youyou Huang, and Ilse Peirtsegaele. The analysis was concluded in early 2022, prior to Russia’s invasion of Ukraine, and does not focus on the implications of the war for global trade and value chains.
Compliments of the IMF.
The post IMF | Global Trade Needs More Supply Diversity, Not Less first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

13 Apr
EACC

FTC charges battery maker in first case under Made in USA Labeling Rule

For people who prefer to buy Made in USA merchandise, products from Lithionics Battery LLC seemed like an attractive option. According to the FTC, Lithionics and General Manager Steven Tartaglia used phrases and American flag images to convey a Made in USA marketing message for their battery, battery module, and battery management system products. But don’t wave Old Glory just yet. As the FTC’s first action under the new Made in USA Labeling Rule alleges, the lithium ion cells Lithionics used were actually made in China. The proposed settlement includes a civil penalty of $105,319.56 and requires changes in how the company makes Made in USA claims.
Lithionics sells battery products for recreational vehicles, marine applications, and similar uses. The defendants labeled their merchandise with an image of the flag image surrounded by the words “Made in U.S.A.” Sometimes they added the phrase “Proudly Designed and Built in USA.” The defendants doubled down on those representations on the Lithionics website, in mail order catalogs, and in social media. For example, the complaint cites YouTube videos featuring Tartaglia and company employees putting Made in USA labels on Lithionics products. Other marketing materials featured a chart comparing the “advantage[s] of Lithionics battery systems” to what are described as “imports.”
Under the Made in USA Labeling Rule, marketers are prohibited from labeling products as “Made in USA” unless all or virtually all ingredients or components are made and sourced in the United States. What’s more, the final assembly or processing – and all significant processing that goes into the product – must occur in the US.
But according to the FTC, Lithionics battery and battery module products incorporated Chinese-made lithium ion cells, and Lithionics battery management systems included significant imported components. That’s why the FTC says the defendants’ “Made in USA” claims were deceptive.
The complaint, which names both Lithionics and Tartaglia, alleges violations of the Made in USA Rule and Section 5 of the FTC Act. In addition to a civil penalty of $105,319.56 authorized under the new Rule, the proposed settlement includes injunctive provisions that will change how the defendants do business going forward. For example, the order prohibits them from making unqualified U.S.-origin claims unless they have proof that the product’s final assembly or processing – and all significant processing – takes place in the US and that all or virtually all ingredients or components are made and sourced here.
The order further requires that any qualified Made in USA claims include clear disclosures about the extent to which the product contains foreign parts, ingredients, or components, or involved foreign processing. Finally, if the defendants convey that a product is assembled in the United States, they must ensure it was last substantially transformed in the US, its principal assembly took place here, and US assembly operations are substantial.
If your company makes Made in USA claims, the case offers two important compliance notes.

Review the Rule to keep your representations red, white, and true. If you make Made in USA claims, do they comport with the Made in USA Labeling Rule? The new civil penalty remedy can make non-compliance costly.

If necessary, take care to qualify your claims. If you make Made in USA claims that are “unqualified “ – in FTC parlance, that means claims that aren’t modified or limited – you must to live up to the “all or virtually all” standard. If you made “qualified claims” – claims that include caveats or explanations – the legal onus is on you to ensure those qualifications are clearly understood by consumers. The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides more guidance on making Made in USA claims.

Authors

Lesley Fair

Compliments of the U.S. Federal Trade Commission.
The post FTC charges battery maker in first case under Made in USA Labeling Rule first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

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13 Apr
EACC

IMF | Fast-Moving FinTech Poses Challenge for Regulators

‘Emerging firms are quickly making inroads into critical financial services, and often taking on more risk than traditional banks.’
Technology sometimes moves at a dizzying pace. When it comes to innovation in financial activities, often referred to as FinTech, the world is seeing major advances.
For banks, FinTech disrupts core financial services and pushes them to innovate to remain relevant. For consumers, it means potentially wider access to better services. Such changes also raise the stakes for regulators and supervisors—while most individual FinTech firms are still small, they can scale up very rapidly across both riskier clients and business segments than traditional lenders.
This combination of fast growth and increasing importance of FinTech financial services for the functioning of financial intermediation can come with system-wide risks, which we cover in our latest Global Financial Stability Report.
Adding risk
Digital banks are growing in systemic importance in their local markets. Also known as neobanks, they are more exposed than their traditional counterparts to risks from consumer lending, which usually has fewer buffers against losses because it tends to be more uncollateralized. Their exposure also extends to higher risk-taking in their securities portfolio, as well as higher liquidity risks (specifically, liquid assets held by neobanks relative to their deposits tend to be lower than what would be held by traditional banks).
These factors also create a challenge for regulators: the risk management systems and overall resilience of most neobanks remain untested in an economic downturn.
Not only do FinTech firms take on more risks themselves, they also exert pressure on long-established industry rivals. Look for instance at the United States, where FinTech mortgage originators follow an aggressive growth strategy in periods when home lending is expanding, such as during the pandemic. Competitive pressure from FinTech firms significantly hurt profitability of traditional banks, and this trend is set to continue.

Another technological innovation, which has grown rapidly in the past two years, is decentralized finance, a crypto-based financial network without a central intermediary. Also known as DeFi, it offers the potential of delivering more innovative, inclusive, and transparent financial services thanks to greater efficiency and accessibility.
However, DeFi also involves the buildup of leverage, and is particularly vulnerable to market, liquidity, and cyber risks. Cyberattacks, which can be severe for traditional banks, are often lethal for these platforms, stealing financial assets and undermining user trust. The lack of deposit insurance in DeFi adds to the perception of all deposits being at risk. Historically, large customer withdrawals often follow news of cyberattacks on providers.

DeFi activities mainly occur in crypto-asset markets, but growing adoption by institutional investors has strengthened the links to traditional financial institutions. In some economies, DeFi is helping to accelerate cryptoization, in which residents embrace crypto assets instead of the local currency.
Stepped-up regulation
As more financial-services activity moves from regulated banks to entities and platforms with little or no oversight, so do the associated risks. Despite FinTech stepping in to challenge traditional banks on their own playing field, they bring more than competition. In fact, the two often remain intertwined, including through the provision of liquidity and leverage by banks to FinTechs.
These pose challenges for financial authorities in the form of regulatory arbitrage (in which firms move or set up operations in less-regulated sectors and regions) and interconnectedness that may require supervisory and regulatory action, including better consumer and investor protection.
Policies that target both FinTech firms and traditional banks proportionately are needed. This way, the opportunities that FinTech offers are fostered, while risks are contained. For neobanks, this means stronger capital, liquidity, and risk-management requirements commensurate with their risks. For incumbent banks and other established entities, prudential supervision may need greater focus on the health of less technologically advanced banks, as their existing business models may be less sustainable over the long term.
The absence of governing entities mean DeFi is a challenge for effective regulation and supervision. Here, regulation should focus on the entities that are accelerating the rapid growth of DeFi, such as stablecoin issuers and centralized crypto exchanges. Supervisory authorities should also encourage robust governance, including industry codes and self-regulatory organizations. These entities could provide an effective conduit for regulatory oversight.
Authors:

Antonio Garcia Pascual
Fabio Natalucci

Compliments of the IMF.
The post IMF | Fast-Moving FinTech Poses Challenge for Regulators first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

12 Apr
EACC

EU adopts fifth round of sanctions against Russia over its military aggression against Ukraine

In light of Russia’s continuing war of aggression against Ukraine, and the reported atrocities committed by Russian armed forces in Ukraine, the Council decided today to impose a fifth package of economic and individual sanctions against Russia.
The agreed package includes a series of measures intended to reinforce pressure on the Russian government and economy, and to limit the Kremlin’s resources for the aggression.

These latest sanctions were adopted following the atrocities committed by Russian armed forces in Bucha and other places under Russian occupation. The aim of our sanctions is to stop the reckless, inhuman and aggressive behaviour of the Russian troops and make clear to the decision makers in the Kremlin that their illegal aggression comes at a heavy cost.
Josep Borrell, High Representative for Foreign Affairs and Security Policy

The package comprises:

a prohibition to purchase, import or transfer coal and other solid fossil fuels into the EU if they originate in Russia or are exported from Russia, as from August 2022. Imports of coal into the EU are currently worth EUR 8 billion per year.
a prohibition to provide access to EU ports to vessels registered under the flag of Russia. Derogations are granted for agricultural and food products, humanitarian aid, and energy.
a ban on any Russian and Belarusian road transport undertaking preventing them from transporting goods by road within the EU, including in transit. Derogations are nonetheless granted for a number of products, such as pharmaceutical, medical, agricultural and food products, including wheat, and for road transport for humanitarian purposes.
further export bans, targeting jet fuel and other goods such as quantum computers and advanced semiconductors, high-end electronics, software, sensitive machinery and transportation equipment, and new import bans on products such as: wood, cement, fertilisers, seafood and liquor. The agreed export and import bans only account for EUR 10 billion and EUR 5.5 billion respectively.

– a series of targeted economic measures intended to strengthen existing measures and close loopholes, such as: a general EU ban on participation of Russian companies in public procurement in member states, the exclusion of all financial support to Russian public bodies. an extended prohibition on deposits to crypto-wallets, and on the sale of banknotes and transferrable securities denominated in any official currencies of the EU member states to Russia and Belarus, or to any natural or legal person, entity or body in Russia and Belarus,.
Furthermore, the Council decided to sanction companies whose products or technology have played a role in the invasion, key oligarchs and businesspeople, high-ranking Kremlin officials, proponents of disinformation and information manipulation, systematically spreading the Kremlin’s narrative on Russia’s war aggression in Ukraine, as well as family members of already sanctioned individuals, in order to make sure that EU sanctions are not circumvented.
Moreover a full transaction ban is imposed on four key Russian banks representing 23% of market share in the Russian banking sector. After being de-SWIFTed these banks will now be subject to an asset freeze, thereby being completely cut off from EU markets.
In its conclusions of 24 March 2022, the European Council stated that the Union remains ready to close loopholes and target actual and possible circumvention of the restrictive measures already adopted, as well as to move quickly with further coordinated robust sanctions on Russia and Belarus to effectively thwart Russian abilities to continue the aggression.
Russia’s war of aggression against Ukraine grossly violates international law and is causing massive loss of life and injury to civilians. Russia is directing attacks against the civilian population and is targeting civilian objects, including hospitals, medical facilities, schools and shelters. These war crimes must stop immediately. Those responsible, and their accomplices, will be held to account in accordance with international law. The siege of Mariupol and other Ukrainian cities, and the denial of humanitarian access by Russian military forces are unacceptable. Russian forces must immediately provide for safe pathways to other parts of Ukraine, as well as humanitarian aid to be delivered to Mariupol and other besieged cities.
The European Council demands that Russia immediately stop its military aggression in the territory of Ukraine, immediately and unconditionally withdraw all forces and military equipment from the entire territory of Ukraine, and fully respect Ukraine’s territorial integrity, sovereignty and independence within its internationally recognised borders.
The relevant legal acts will soon be published in the Official Journal.
Compliments of the European Council
The post EU adopts fifth round of sanctions against Russia over its military aggression against Ukraine first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

12 Apr
EACC

Future of Europe: Conference nears finalisation of policy recommendations

The Conference on the Future of Europe Plenary session on 8-9 April debated concrete proposals.
The Chairs and spokespersons of nine Working Groups tabled consolidated draft proposals, grouped by theme, to the Conference Plenary. The proposals were mainly based on the recommendations of European Citizens’ Panels, as well as national panels, and enriched by ideas from the Multilingual Digital Platform. These proposals were discussed by all Plenary Members.
Vice-President for Democracy and Demography, Dubravka Šuica, said: “We are now in the decisive stage of the Conference on the Future of Europe, where dialogue and collaboration are more important than ever. I was heartened to see this in action during the Plenary session. The progress we have made so far has exceeded my expectations, in particular due to the exceptional commitment and hard work of our citizens. I look forward to working together over the coming weeks towards the final result.”
Next steps
The final Conference Plenary session is scheduled for 29-30 April in Strasbourg, where proposals are expected to be approved by the Plenary on a consensual basis. The Conference’s Executive Board will include these proposals in the Conference’s final report, which will be delivered to the Presidents of the EU institutions on 9 May in Strasbourg, at the ceremony that will bring the Conference to a close.
For More Information
Recordings of the plenary sessions by topic are available on the following links:

Health
European Democracy
Migration
Values and rights, rule of law, security
Education, culture, youth
Stronger economy, social justice and jobs
Climate change and the environment
EU in the World
Digital Transformation

You can watch recordings from the Working Group meetings on EBS. The press conference with the three co-chairs can be found here.
The post Future of Europe: Conference nears finalisation of policy recommendations first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

12 Apr
EACC

Mergers: EU Commission approves Parker’s acquisition of Meggitt, subject to conditions

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Meggitt by Parker. The approval is conditional on full compliance with commitments offered by Parker.
Executive Vice-President Margarethe Vestager, in charge of competition policy, said: “Manufacturers of civil and military aircraft depend on competitive supply chains for all aerospace components. Parker and Meggitt are leading global suppliers of wheels and brakes for a range of aircraft types, including military helicopters and drones. The remedy package offered by Parker will preserve competition in these markets and ensure that aerospace and defence customers have access to sufficient choice of component suppliers and will continue benefitting from competitive prices.”
Parker and Meggitt are both leading global aerospace component suppliers, with wide product portfolios. They compete among others in the design, manufacture and supply of aircraft wheels and brakes and aerospace pneumatic valves.
The Commission’s investigation
Given the parties’ leading positions, the Commission investigated the impact of the proposed acquisition on competition in the markets for the design, manufacturing and supply of aircraft wheels and brakes for certain types of aircraft.
The market investigation revealed that the transaction would further reduce the already limited number of suppliers of wheels and brakes for small general aviation aircraft, business jets, civil and military helicopters, and military fixed-wing drones. The merged entity would have been further strengthened as the largest supplier in these markets. This would have impacted the prices and innovation in these important components. Competitors generally have a smaller presence in the supply of wheels and brakes for these aircraft types and often do not offer all types of brakes.
The Commission did not find competition concerns in other aerospace component markets in which the parties compete, including aerospace pneumatic valves, as sufficient alternative suppliers would remain active following the transaction.
The proposed remedies
To address the Commission’s competition concerns, Parker committed to divest its entire aircraft wheels and brakes division. The commitments include the divestment of Parker’s plant in Ohio, US, and a range of provisions to ensure that a buyer can operate the business viably and independently from the merged entity.
These commitments fully remove the overlaps in the design, manufacturing and supply of aircraft wheels and brakes between Parker and Meggitt, globally. The commitments therefore ensure that the current level of competition is maintained in the markets where the Commission identified competition concerns, thus preserving customer choice.
The Commission therefore concluded that the proposed transaction, as modified by the commitments, would not raise competition concerns. The decision is conditional upon full compliance with the commitments.
Companies and products
Parker, headquartered in the US, is active globally in the design, manufacture and supply of motion and control technologies and systems, and in the provision of precision engineered solutions for a variety of mobile, industrial and aerospace markets.
Meggitt, headquartered in the UK, is active globally in the design, manufacture and supply of components and sub-systems for aerospace and defence markets, and selected energy applications.
Merger control rules and procedures
The transaction was notified to the Commission on 21 February 2022.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the European Economic Area or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.
More information will be available on the competition website, in the Commission’s public case register under the case number M.10506.
Compliments of the European Commission.
The post Mergers: EU Commission approves Parker’s acquisition of Meggitt, subject to conditions first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

11 Apr
EACC

Energy Security: EU Commission hosts first meeting of EU Energy Purchase Platform to secure supply of gas, LNG and hydrogen

In order to secure the EU’s energy supply at affordable prices in the current geopolitical context and to phase out dependency on Russian gas, the European Commission has established with the Member States an EU Platform for the common purchase of gas, LNG and hydrogen. A first virtual meeting, chaired by Director General for Energy, Ditte Juul Jørgensen, was held yesterday, with representatives of the 27 Member States.
As agreed by the Heads of State and Government in the European Council on 25 March, it will be a voluntary coordination mechanism, bringing together the Commission and the Member States, supporting the purchase of gas and hydrogen for the Union, by making optimal use of the collective political and market weight of the EU.
The Platform will help ensuring security of supply, in particular for the refilling of gas storage facilities in time for next winter, in line with the Commission’s proposal presented on 23 March. It will also see to an optimal use of existing gas infrastructure. In addition, it will enhance long-term cooperation with key supply partners, extending also to hydrogen and renewables, possibly through Memoranda of Understanding.
Frans Timmermans, Executive Vice-President for the European Green Deal, said: “It is abundantly clear that the European Union is too dependent on Russia for our energy needs. The answer lies in renewable energy and, in the more immediate term, diversification of supply. Through the EU Energy Purchase Platform Member States can now work together on purchasing gas from other suppliers and developing an international market for hydrogen, to the benefit of all countries. For the EU, replacing gas imports from Russia will help to end our over-dependence and provide much needed room to manoeuvre”.
Kadri Simson, Commissioner for Energy, said: “The Russian aggression against Ukraine has radically changed the geopolitical context of Europe’s energy security. We have decided to end our dependence on Russian fossil fuels and need to partly replace them with alternative sources of supply. To succeed in this task, the EU must use its collective political and market power on global gas markets. With the EU Energy Platform, we build on the experience gained over the past months to ensure a coordinated European approach to securing gas imports at the best possible conditions.”
The EU Energy platform will ensure cooperation in areas where it is more effective to act in a coordinated way at EU level rather than at national level. These areas include:

Demand pooling: The Platform will work with Member State representatives to maximise leverage to attract reliable supplies from global markets and at stable prices that reflect the predictability and the size of the common EU market. This will allow moving, when appropriate, towards joint purchases.

Efficient use of EU gas infrastructure: the Platform will coordinate actions to maximise Liquefied Natural Gas imports absorption, comply with gas storage obligations [1] and ensure security of gas supply. It will also help identifying additional infrastructure needs, suitable to cater for future hydrogen use.

International outreach: Considering the need to secure significant volumes of non-Russian gas already in 2022 and the global market tightness, the EU Energy Purchase Platform will also coordinate and reinforce EU’s international outreach to gas partners and markets. This will include the main LNG exporting and importing countries with a view to define and agree on potential arrangements for diversification, including towards hydrogen. This work will take account of partners’ supply capacities, long-term contracts and existing as well as planned interconnections and storage infrastructure in the EU. The recently announced EU–US Joint Statement on European Energy Security is a guiding example.

The Platform will build on existing EU policy initiatives with Member States, transmission system operators, associations and market players. It will make use of existing coordination structures for security of supply (Gas Coordination Group, including network of gas operators ENTSO-G) and the regional assessment of energy infrastructure (e.g. High-Level Groups: CESEC, BEMIP, South West Europe).
The Commission will operate the Platform covering all aspects of the value chain, global supply and demand, market mechanisms, infrastructure and security of supply.
Working with EU industry
To ensure access to market insights and expertise on the gas supply chain, the Commission will establish a dedicated consultative working group consisting of industry experts. The group will have an advisory role and operate in compliance with EU antitrust rules, with strong safeguards against conflict of interests.
Compliments of the European Commission.
The post Energy Security: EU Commission hosts first meeting of EU Energy Purchase Platform to secure supply of gas, LNG and hydrogen first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

11 Apr
EACC

ESMA | Launch of the EU Digital Finance Platform – virtual event (8 April 2022)

Speech by Verena Ross, ESMA Chair |
Thank you for inviting me to the launch of the EU Digital Finance Platform. Before we draw this very productive and interesting event to a close, I’d like to share a few reflections with you.
Today we have launched an important joint initiative between the EC, ESAs and national competent authorities. As proposed by the EU Digital Finance Strategy, the Digital Finance Platform will support financial innovation and embrace digital technologies, for the good of our economy and EU citizens.
One effect of ongoing platformisation of financial services in Europe is to make it easier to access various offers, compare services and get information at the touch of a button. By the same token, the EU Digital Finance Platform will bring together a wealth of information, data and communications in one place, supporting innovative firms and regulators. It will build links between financial authorities and the industry.
This initiative is about us regulators being innovative ourselves. We are adapting the existing regulatory and supervisory tools to the increasingly digitalised financial markets and developing new ways of cross-border cooperation.
Supporting innovation facilitators
The Digital Finance Platform will primarily support cross-border activities of national financial facilitators in their engagements with innovative FinTechs in Europe. And when I talk about innovation facilitators here, I use the term broadly. I have in mind any sort of regulatory approach to innovation that involves a dialogue between regulators and market participants, whether the latter are regulated or unregulated. Fundamentally, innovation facilitators help us as regulators to create a dialogue and encourage openness to new ideas.
National innovation facilitators include hubs, sandboxes and accelerators. The events they host have a range of eye-catching names – such as techsprints, hackathons and buildathons. But they all have a common aim to make regulation and supervision support innovation, while staying alert and responsive to emerging risks. Innovation facilitators therefore promote smart regulation, where innovation and supervision go hand in hand.
When someone has a good idea, it tends to spread quickly, and innovation facilitators are no exception. All Member States have now established innovation hubs or sandboxes. They see that this approach in regulating innovation brings major benefits.
Building on the work of the European Forum of Innovation Facilitators (EFIF)
As you know innovation facilitators operate at the national level in Europe. Coordinating their activities at the EU level is key to ensure supervisory convergence. We should aim to find common approaches to innovation across the Union where possible. There is already a mechanism of coordination between hubs and sandboxes in place – the European Forum of Innovation Facilitators (EFIF). Established by the EC and the ESAs in 2019 following the joint ESA report on innovation facilitators, it has brought together firms and regulators. The Digital Platform we are launching today will complement and enhance the work of the EFIF by supporting cross-border activities of the national innovation facilitators.
The EFIF was created to promote greater coordination and cooperation between national innovation facilitators and the EU-level authorities and with that support the scaling up of FinTech across the single market. And it has proved to be a success, on which the Digital Finance Platform will be able to build.
In the past three years the EFIF has organised 12 meetings bringing together European and national competent authorities, experts and FinTechs. Although the EFIF is a voluntary forum, its meetings have consistently enjoyed excellent participation – around 60 attendees at a time
– and strong positive feedback from those involved. Representatives of national financial facilitators have shared their experiences and technological expertise from their engagements with innovative firms through regulatory sandboxes and hubs. NCAs have been able to discuss common approaches on the regulatory treatment of innovative products and services. The result has been stronger coordination and closer supervisory convergence.
The aim of the EFIF is also to help digital financial service scale up across the single market. As part of this, it monitors for potential regulatory obstacles to the scaling up of technology- enabled products, services and business models.
EFIF meetings have covered many different areas of innovation. To give you a flavour of the breadth of work, let me list a few: tokenisation, DLT, stablecoins, AI, Big Data, platformisation, green FinTech, Open Finance, APIs and crypto-assets. Additionally, some meetings have examined topical themes, such as how FinTech has been affected by the pandemic, and how the Covid-19 response in turn has shaped the FinTech market.
An important focus across meetings has been to examine specific case studies. For example, delegates have examined many RegTech business models and solutions. Supervisors have been able to collaborate in responding to firm -specific issues, for example questions about licensing.
Enabling the Cross-Border Testing Framework
The Cross-Border Testing Framework is one of the most prominent projects of the EFIF in the past year, and links closely to the Digital Finance Platform. The Framework assists innovative FinTechs in their engagement with innovation facilitators cross-border through digital tools.
The ultimate purpose of this initiative is to help innovators save time and money as they deliver new products and services to the market. At the same time, the Framework helps regulators and supervisors identify emerging risks. Which new products and services should be regulated through current rules? Where might new rules be needed? Answering these questions is a core part of our work, though of course it is no easy task.
You have already heard much discussion this morning of the Framework’s goals and features. So I will simply reiterate our common aspiration for the Framework – to be a success and be another solid building block of the European Single Market.
The Digital Platform that we are inaugurating today will act as the basis for the Cross-Border Testing Framework. Today we are therefore marking not only the start of the Digital Platform but also the opening of the Cross-Border Testing Framework.
An ambitious agenda for the Digital Finance Platform
Let me conclude by taking stock of where we are and then turning to the future. The EU Digital Finance Platform is a timely and promising initiative. ESMA, together with the other ESAs, has supported and will continue to support it. A key part of this support has been the information and data needed to design it, which we have been collecting from the market and from other authorities. As of today, the Platform will support several functionalities, including the European Fintech Map, Sharing Knowledge and Policy Corner. It provides a single access point for all the information related to facilitating financial innovation in Europe. It will also enable the functionalities related to cross-border testing, as I mentioned earlier.
But the ambition for the Platform is greater than this. In phase 2 the Platform will host a Data Hub to be used by the industry and supervisory authorities to enhance their toolkit and their capacities in testing innovations. We look forward to working on the Data Hub with the Commission and making the Digital Platform a tool that will be recognised and used by FinTech in Europe.
With that exciting outlook, I close this launch event and thank you for your participation and attention.
Compliments of the European Securities and Markets Authority (ESMA).
The post ESMA | Launch of the EU Digital Finance Platform – virtual event (8 April 2022) first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

11 Apr
EACC

Green Deal: Modernising EU industrial emissions rules to steer large industry in long-term green transition

Today, the Commission is presenting proposals to update and modernise the Industrial Emissions Directive, key legislation to help prevent and control pollution. Updated rules will help guide industrial investments necessary for Europe’s transformation towards a zero-pollution, competitive, climate-neutral economy by 2050. They aim to spur innovation, reward frontrunners, and help level the playing field on the EU market. The revision will help provide long-term investment certainty, with first new obligations on industry expected in the second half of the decade.  
The revision builds on the overall approach of the existing Industrial Emissions Directive, which currently covers some 50,000 large industrial installations and intensive livestock farms in Europe. These installations need to comply to emissions conditions by applying activity-specific ‘Best Available Techniques’. These techniques are determined together by industry, national and Commission experts, and civil society. The new rules will cover more relevant sources of emissions, make permitting more effective, reduce administrative costs, increase transparency, and give more support to breakthrough technologies and other innovative approaches.  
Executive Vice-President for the European Green Deal Frans Timmermans said: “By 2050, economic activity in the European Union should no longer pollute our air, water and the wider environment. Today’s proposals will enable important reductions of harmful emissions coming from industrial installations and Europe’s largest livestock farms. By modernising Europe’s industrial emissions framework now there is certainty about future rules to guide long-term investments, increase Europe’s energy and resource independence, and encourage innovation.”  
Commissioner for the Environment, Oceans and Fisheries Virginijus Sinkevičius said: “These new rules will enable large industrial plants and intensive livestock farming to play their part in achieving the objective of the European Green Deal and its zero-pollution ambition. Solely from action on livestock farms, benefits to human health would amount to at least €5.5 billion per year. The changes will create more jobs, as the EU’s eco-innovation sector has shown successfully in the past. Measures that proactively tackle the pollution, climate and biodiversity crises can make our economy more efficient and more resilient.”  
Updating a proven approach for the long term
Following extensive consultation with industry and stakeholders and a thorough impact assessment, the existing framework will be enhanced with new measures to boost its overall effectiveness. The main changes include: 

More effective permits for installations. Instead of settling for the least demanding limits of the best available techniques, as some 80% of installations do currently, permitting will have to assess the feasibility of reaching the best performance. It will also tighten the rules on granting derogations by harmonising the assessments required and securing a regular review of derogations granted.  

More help for EU innovation frontrunners. As an alternative to permits based on well-established best techniques, frontrunners will be able to test emerging techniques, benefitting from more flexible permits. An Innovation Centre for Industrial Transformation and Emissions (INCITE) will help industry with identifying pollution control solutions. Finally, by 2030 or 2034 operators will need to develop Transformation Plans for their sites to achieve the EU’s 2050 zero pollution ambition, circular economy and decarbonisation aims.  

Supporting industry’s circular economy investments. New best available techniques could include binding resource use performance levels. The existing Environmental Management System will be upgraded to reduce the use of toxic chemicals.  

Synergies between depollution and decarbonisation. Energy efficiency will be an integral part of permits, and systematic consideration will be given to technological and investment synergies between decarbonisation and depollution when determining best available techniques.  

The new rules will also cover more installations, notably: 

More large-scale intensive livestock farms. Under the new rules, the largest cattle, pig, and poultry farms would be gradually covered: about 13% of Europe’s commercial farms, together responsible for 60% of the EU’s livestock emissions of ammonia and 43% of methane. The health benefits of this extended coverage are estimated at more than €5.5 billion per year. As farms have simpler operations than industrial plants, all farms covered will benefit from a lighter permitting regime. The obligations stemming from this proposal will reflect the size of farms as well as the livestock density through tailored requirements. The Common Agricultural Policy remains a key source of support for the transition. 

Extraction of industrial minerals and metals and large-scale production of batteries. These activities will significantly expand in the EU to enable the green and digital transitions.  This requires that the best available techniques are employed to ensure both the most efficient production processes and the lowest possible impacts on the environment and human health. The governance mechanisms of the Directive that closely associate industry experts to the development of consensual and tailored environmental requirements, will support the sustainable growth of these activities in the Union.  

Finally, the new rules will increase transparency and public participation in the permitting process. In addition, the European Pollutant Release and Transfer Register will be transformed into an EU Industrial Emissions Portal where citizens will be able to access data on permits issued anywhere in Europe and gaining insight into polluting activities in their immediate surroundings in a simple way.  
Next steps
The Commission proposal stipulates that Member States will have 18 months to transpose this directive into national legislation, after the proposal is finally adopted by the European Parliament and by the Council. After that, the Best Available Techniques will be developed and once adopted by the Commission, industrial operators will have four years and farmers three years to comply. 
Background
Industrial activities, like electricity and cement production, waste management and incineration, and the intensive rearing of livestock, are responsible for emissions of harmful substances to air, water and soil. These emissions include sulphur oxides, nitrogen oxides, ammonium, dust and mercury and other heavy metals. Pollution caused by them can lead to health problems such as asthma, bronchitis and cancer, and it generates costs measured in billions of euro and hundreds of thousands of premature deaths each year. Industrial emissions also damage ecosystems, crops, and the built environment.  
Thanks to the Industrial Emissions Directive, in the last 15 years emissions to air for many pollutants have been reduced by between 40% and 75% from Europe’s largest industrial plant and intensive livestock farms. Heavy metals emissions to water have also declined by up to 50% during this period.  
Despite successes in curbing emissions, the over 50,000 industrial installations covered still account for around 40% of greenhouse gas emissions, over 50% of total emissions to air of sulphur oxides, heavy metals and other harmful substances and around 30% of nitrogen oxides and fine particulate matter air emissions, warranting further action. 
Compliments of the European Commission.
The post Green Deal: Modernising EU industrial emissions rules to steer large industry in long-term green transition first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

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