Blog post by Fabio Panetta, Member of the Executive Board of the ECB |
The COVID-19 pandemic has caused the largest decrease in global economic activity on record. But the drop in carbon dioxide emissions has been only temporary. Although global CO2 emissions fell by 6.4% overall in 2020, they had already begun to increase in the second half of the year and have now returned to pre-crisis levels.
The fact that last year’s extraordinary circumstances still did not bring global emissions into line with the targets set by the 2015 Paris climate agreement is a stark reminder of the scale of the challenge we face. As the Nobel laureate economist William Nordhaus reminds us, climate change is the quintessential global externality. Its effects are spread around the world and no country has sufficient incentives or capacity to solve the problem on its own. International coordination is therefore essential.
Fortunately, a return to multilateral cooperation through the G7, the G20, and the Financial Stability Board (FSB) offers a unique window of opportunity. Following US President Joe Biden’s decision to rejoin the Paris agreement, the European Union’s commitment to reach carbon neutrality by 2050, and China’s pledge to do the same by 2060, we may now be at a turning point for global climate action.
Three priorities stand out on the international agenda. The first is the need to increase global carbon prices. Putting a higher price on carbon is the most cost-effective way to reduce emissions at the necessary scale and speed. By internalizing the social cost of emissions – making emitters pay – carbon pricing leverages the power of markets to steer economic activities away from carbon-intensive activities.
Currently, carbon prices are far too low. The International Monetary Fund calculates that the average global carbon price is only $2 per ton. And, according to the World Bank, only 5% of global greenhouse-gas emissions are priced within the range required to achieve the Paris agreement’s goals.
Here, advanced economies can lead by example and use the current policy window to commit to carbon-price paths consistent with the Paris accord. Although smaller advanced economies account for only a limited share of global emissions, their adoption of decisive decarbonization measures could encourage developing countries to follow suit.
The second priority is to use the recovery from the COVID-19 pandemic to “build back better.” Decisions made now will shape the climate trajectory for decades to come. Policymakers should seize this opportunity to set the global economy on a sustainable growth path. The EU recovery package – Next Generation EU – lives up to that ambition.
The third priority goes to the heart of the financial system and central banking: financing the green transition. Phasing out fossil fuels implies the need for massive investment, even if estimates of the precise figure are subject to significant uncertainty. Looking beyond emissions reductions to the broader sustainability agenda, the United Nations estimates that implementing the 2030 Sustainable Development Agenda will require global investments of $5-7 trillion per year. To fill this gap, it will be crucial to mobilize the resources of financial intermediaries, including banks.
Sustainable-finance products – such as green lending, green and sustainable bonds, and funds with environmental, social, and governance (ESG) characteristics – have grown dramatically in recent years. Unfortunately, the field suffers from information asymmetries and insufficient transparency.
To foster the growth of sustainable finance, many countries have started developing regulatory frameworks to combat “greenwashing,” and the EU is at the forefront of these efforts. Yet in the absence of global coordination, different jurisdictions have developed different approaches, and industry-based initiatives have proliferated.
The resulting edifice of inconsistent and incomparable standards, definitions, and metrics has fragmented sustainable-finance markets, reducing their efficiency and limiting the cross-border availability of capital for green investment. As jurisdictions compete to attract finance, the risk of regulatory arbitrage and a race to the bottom has grown. If left unaddressed, this trend could result in lower standards globally, increasing the likelihood of greenwashing.
But we now have an opportunity to start devising a common global approach. Sustainable finance is a top priority for both the G20 under its Italian presidency and the G7 under its British presidency. Moreover, in a public letter shortly after her confirmation, US Secretary of the Treasury Janet Yellen called for an upgrade to the G20’s sustainable-finance working group to “reflect its importance.”
A key first step is to agree on minimum standards for corporate disclosures. If a company’s sustainability performance is unclear or unknown, ascertaining the sustainability of the related financial assets is impossible. We must replace the current alphabet soup of reporting frameworks with a common standard. To that end, the EU’s approach – including the ongoing revision of the Corporate Sustainability Financial Reporting Directive – represents an advanced benchmark toward which any international standard should aim.
For a common standard to launch a race to the top, it must not fall short of the best international practices. It should cover all ESG aspects of sustainability. And it should require companies to disclose not just issues that influence enterprise value, but also information on the company’s broader environmental and social impact (known as “double materiality”).
A second and even greater challenge is to ensure that countries develop consistent classifications of what counts as sustainable investment. If an activity or asset is considered sustainable in one country but unsustainable in another, there cannot be a truly global sustainable-finance market.
To ensure a global level playing field, today’s leaders should aim for an agreement on common principles for well-functioning and globally coherent taxonomies. Just as governments need to be mindful of the risk of carbon leakage, they must account for the risk of carbon financing leakage.
Finally, we need to ensure that all segments of financial activity remain aligned with broader climate objectives. The enormous energy consumption and associated CO2 emissions of crypto-asset mining could undermine global sustainability efforts. Bitcoin alone is already consuming more electricity than the Netherlands. Controlling and limiting the environmental impact of crypto assets, including through regulation and taxation, should be part of the global discussion.
Climate change and sustainability are global challenges that require global solutions – and nowhere more so than in the financial sector. The current political environment offers us a rare opportunity to make substantial progress. We must not waste it.
This blog post first appeared as an opinion piece in Project Syndicate.
Compliments of the European Central Bank.
The post ECB | A global accord for sustainable finance first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Working group recommendations should help EURIBOR users comply with EU Benchmarks Regulation fallback obligations
Key milestone reached with publication of recommendations as working group enters new phase and secretariat passes from ECB to ESMA

The private sector working group on euro risk-free rates has today published its recommendations addressing events that would trigger fallbacks in EURIBOR-related contracts, as well as €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered). While there is currently no plan to discontinue EURIBOR, the development of more robust fallback language addresses the risk of a potential permanent discontinuation and is in line with the EU Benchmarks Regulation (BMR). The valuable feedback from the two market-wide consultations on the draft recommendations has been taken into account in the final recommendations.
As with similar for a in other currency areas, the working group’s recommendations are not legally binding for market participants. They do, however, provide guidance and represent the prevailing market consensus on EURIBOR fallback trigger events and €STR-based fallback rates, which market participants may consider in their contracts.
The decision approving these recommendations was unanimous.
Now that the working group on risk-free rates has delivered the last of its predefined deliverables, it will focus more on monitoring benchmark rate developments in general. It has been decided that the secretariat will move to the European Securities and Markets Authority (ESMA), which, as provided for in the BMR, will supervise the administrator of EURIBOR as of 2022. This means that the working group’s publications will, from now on, be available on ESMA’s website. Communication aspects (media enquiries, newsletter, etc.) will also be taken over by ESMA.
Contact:

William Lelieveldt | william.lelieveldt@ecb.europa.eu | tel.: +49 69 1344 7316

Notes

Fallbacks deal with the risk that a benchmark rate used in a financial contract becomes unavailable and that the benchmark rate used “falls back” to another rate. Under the EU Benchmarks Regulation, users of benchmarks are required to have fallback arrangements in their contracts.
The working group on euro risk-free rates, for which the European Central Bank (ECB) currently provides the secretariat, is an industry-led group established in 2018 by the ECB, the Financial Services and Markets Authority, ESMA and the European Commission. Its main tasks are to identify and recommend alternative risk-free rates and transition paths (see Terms of reference). The secretariat of the group will pass from the ECB to ESMA on 11 May 2021.

Compliments of the European Central Bank.
The post ECB | Private sector working group on euro risk-free rates publishes recommendations on EURIBOR fallbacks first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Amendments to give effect to the leverage ratio becoming a binding Pillar 1 own-funds requirement under the Capital Requirements Regulation (CRR)
Change will apply as of 28 June 2021

On May 7, the European Central Bank (ECB) has today published amendments to its monetary policy implementation Guideline[1] to give effect to the leverage ratio becoming a binding Pillar 1 own-funds requirement. The amended guideline implements a decision taken by the Governing Council on 6 May 2021. The decision is linked to this prudential requirement becoming binding as of 28 June 2021, in line with the entry into force of related regulatory requirements.[2]
Under the amended Guideline, automatic measures are applied in case of breaches of the leverage ratio requirement or in case the information on the leverage ratio is incomplete or not made available in time. As of 28 June 2021, the treatment of the leverage ratio in the Eurosystem monetary policy counterparty framework will be aligned with that of existing Pillar 1 own-funds requirements, consisting of the common equity tier 1 capital ratio, the tier 1 capital ratio and the total capital ratio.
Guideline ECB/2021/23 is available on the ECB’s website and will be published in the 23 official EU languages in the Official Journal of the European Union.[3]
Contact:

Eva Taylor | eva.taylor[at]ecb.europa.eu | tel.: +49 69 1344 7162.

Compliments of the European Central Bank.
The post ECB updates treatment of leverage ratio in the Eurosystem monetary policy counterparty framework first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

7 May, 2021, WASHINGTON |
Ambassador Katherine Tai today released a set of transparency principles that establish the foundation for a high transparency standard for the day-to-day operations of the Office of the United States Trade Representative (USTR).  These Transparency Principles reflect the Administration’s commitment to comprehensive public engagement, including outreach to historically overlooked and underrepresented communities, as it develops and implements a trade policy that advances the interests of all Americans.  USTR will continue to build on these Transparency Principles, and identify additional opportunities for thoughtful and inclusive two-way communication with the American public.
“Our trade agenda will only succeed if it reflects the views, and serves the interests, of all Americans” said Ambassador Katherine Tai.  “These Transparency Principles make clear that USTR will engage new, and frequently silenced, voices to find innovative solutions and forge consensus. Importantly, the principles announced today are just a starting point as we build a broad-based and equitable trade policy.”
Ambassador Tai also announced the designation of General Counsel Greta Peisch as the USTR Chief Transparency Officer.  This role was created by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 to engage with the public, advise the USTR and consult with the Congress on transparency policy, and coordinate transparency in trade negotiations.  As the Chief Transparency Officer, Ms. Peisch will lead the agency’s efforts to put the Transparency Principles released today into action, and to identify further opportunities for improving transparency in the development of U.S. trade policy.
The principles released by USTR are:

USTR is committed to providing inclusive opportunities for the public to participate in the development of trade policy and trade initiatives, including changes in policy that affect existing trade programs.  USTR will seek public input with respect to new major trade initiatives when feasible even when not required by law.
USTR will facilitate participation in trade policy development by a broad range of stakeholders.  In order to foster more inclusive and broader representation in terms of both geography and demographics, as well as stakeholder perspective, USTR will seek input using innovative and adaptable forms of communication, including virtual hearings and outreach, in addition to traditional means such as Federal Register notices.
USTR will ensure its website contains up to date information on current trade initiatives and programs.  USTR press releases and other materials related to agency programs, initiatives, and negotiations will contain sufficient information to adequately inform the public and will link to available background information on the USTR website.
USTR will strive to ensure that the membership of federal advisory committees includes a wide variety of expert interests, reflective of the diverse stakeholder perspectives.
USTR will adhere to the Guidelines for Consultation and Engagement adopted in October 2015.
USTR will periodically review and adjust these principles, practices, and the Guidelines for Consultation and Engagement to ensure that USTR provides full opportunities for communication and participation in development of trade policy by a broad and diverse range of stakeholders, including American workers, innovators, manufacturers, farmers, ranchers, fishers, service suppliers, underserved communities, and community-based stakeholders.

The USTR Transparency Principles are also available on the USTR website here.
Compliments of the Office of the United States Trade Representative.
The post USTR Releases Agency Transparency Principles first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Committee of the Regions (CoR) and the Organisation for Economic Co-operation and Development (OECD) invite representatives of local and regional authorities across Europe to participate in a survey on the Sustainable Development Goals. The consultation is open until Friday 11 June 2021.
In 2019, the UN launched the Decade of Action for Sustainable Development to accelerate efforts, scale up projects and mobilize contributions across all levels of governments and society for the realization of the SDGs. Regional and local authorities remain essential partners in the process of localization and effective implementation of the SDGs.
Today, the engagement and commitment of local and regional governments to the SDGs is more relevant than ever in a European Union harshly affected by the Covid-19 pandemic. The recovery is an oppor​tunity to build back better, following the roadmap traced by the SDGs, to design and implement long-term recovery strategies.
In this scenario, the survey is expected to gather evidence on the progress achieved by local and regional authorities in the two years following the first survey launched by the CoR and the OECD and to highlight the additional difficulties they are facing after the outbreak of the pandemic.
The insights captured by the survey will be used to identify the challenges faced by local and regional authorities in the effort to localize the Agenda 2030 during the pandemic and devise solutions to support them in this endeavour. Moreover, the survey is essential to make your voice heard at the EU level and give your opinion on the place that the SDGs should occupy among EU priorities and within the upcoming plans for recovery.
The results of the survey will be presented during the European Week of Regions and Cities in October. They will also contribute to a CoR opinion on SDGs and the broader OECD Programme on A Territorial Approach to SDGs: A role for cities and regions to leave no one behind​, which seeks to support cities and regions in fostering a territorial approach to the SDGs.
START THE SURVEY!

​The survey is available in all EU languages; to select your preferred language, click on the drop down menu on the right of the screen
The survey is open until Friday 11 June 2021 midnight
All responses will be kept confidential​

Contact:

econ-survey-cor@cor.europa.eu

Compliments of the European Committee of the Regions.
The post CoR/OECD | SDGs as a Framework for Covid-19 Recovery in Cities and Regions first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

WE ARE HIRING A PROGRAM & COMMUNICATION OFFICER
Our colleague Femke Hartog is heading back to the Netherlands and we are looking for someone to step into her shoes.
The position a great opportunity for someone with detailed and broad knowledge of the EU & US relationship, including related economic issues and the transatlantic business environment, to deploy that experience in an international affairs & trans-Atlantic business environment. The position has the potential to expand in scope and responsibilities as we are growing not only as a chapter but also as a network.
RESPONSIBILITIES:
The objective of the position is to ensure that the EACC-NY lives up to its mission to stimulate transatlantic trade & business development, to educate the business community on both sides of the Atlantic about the intricacies of transatlantic trade and to facilitate networking and relationships between European and American businesses and professional organizations.
This position has an important outward facing component and exposure to very senior level executives and ministers on a national and international level.
Educational Program Management (65%)

Help develop a pipeline of relevant topics & speakers for our educational seminars together with our members and committees
Work with the committees and members on a daily basis to build out these educational seminars (agenda development, speaker assignments, etc)
Responsible for day-to-day management of our seminars/workshops as well as the administrative aspects of our programs from the initial idea, logistics to the event execution on-site
Analyze the topics and focus of existing educational programs and recommend improvements

Marketing & Communications (35%)

Development and execution of marketing plan, incl. progress/result/ROI analysis
Updates and conceptual re-development of the organizations web-site
Conceptual development and updates to marketing collateral
Day-to-day hands-on responsibility for updates on digital marketing platforms
Help implement and develop CRM database

REQUIREMENTS:
You have 5 or more years of work experience and proven knowledge of transatlantic relations and the business issues related to trade & investment between Europe and the US. Valid Work Permit is required(!).
INTERESTED:
Send your CV & Salary Requirements to ybr@eaccny.com.
The post WE ARE HIRING A PROGRAM & COMMUNICATION OFFICER first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Throughout 2020 and into 2021, the global financial system withstood the effects of the global pandemic and economic lockdowns due to unprecedented policy support. Strong financial systems that are well regulated and well supervised help maintain financial stability. But like a well calibrated engine on a car, maintenance is key. Each year the IMF takes a look under the hood of select economies, which helps to unmask vulnerabilities that could present bigger problems down the road.
The Financial Sector Assessment Program, or “FSAP” as it’s widely known, helps to assess financial vulnerabilities and make financial systems stronger and better able to withstand adverse events. The IMF considers country-specific features of financial systems and tailors its analysis to the needs of each member participating in the program. Assessments for advanced economies are done by the IMF alone, while those for other economies are typically carried out jointly with the World Bank. The IMF’s Executive Board will soon conduct a periodic review of the FSAP.
In 2021, the IMF plans to assess the stability of six financial systems. Two assessments cover economies with large financial systems (United Kingdom, Hong Kong SAR). The remaining four focus on the emerging market (Chile, Philippines, South Africa) and frontier (Georgia) economies. For economies with large, systemically important financial systems it is mandatory to undergo financial stability assessments every five years. For others, assessments are carried out at the request of their governments.
The 2021 FSAP assessments include the following:
Chile features very large and deep local markets compared to other economies of similar size and level of development. The assessment will focus on the resiliency of the financial system, which exhibits a high level of interconnectedness between banks, mutual funds, pension funds, and insurance companies, particularly in light of the economic shocks that were experienced in the fourth quarter of 2019 and during the pandemic. It will also examine the effectiveness of banking, insurance, and financial market supervision following the reorganization and consolidation of the regulatory structure, with an emphasis on macroprudential policy coordination, the closing of regulatory gaps, and COVID-related forbearance measures.
Hong Kong SAR is a small, open economy, and a major international financial center. The FSAP will assess the financial sector’s cross-sectoral and cross-border linkages, in view of extensive linkages to mainland China, stretched real estate valuations, and exposure to shifts in global market and domestic risk sentiment. The assessment will review the regulatory and supervisory frameworks for fintech developments, in addition to regular risk and regulatory assessments of banking, securities and insurance markets, as well as a review of crisis management arrangements and macroprudential frameworks. In addition, there will be a detailed assessment of payments and financial market infrastructures.
Georgia is a small, open economy with a moderately-sized financial sector comprised almost entirely of banks. The banking system is relatively concentrated and highly dollarized in both deposits and lending—the latter leading to higher credit risks from unhedged borrowers of banks’ loans in foreign currency in case of currency depreciation. Against this backdrop, the FSAP will focus on banks’ solvency and liquidity risks, and carry out assessments of banking supervisory oversight, macroprudential policy (especially with regards to risks from financial dollarization), and financial safety nets, including bank resolution and deposit insurance. The World Bank will also examine financial sector competition, assess oversight of markets and payments systems, and provide guidance for development of capital markets and access to finance for small and medium enterprises.
The Philippines’ assessment was just concluded in March 2021. The country is now recovering from the impact of COVID-19. Banks dominate the financial system and entered the pandemic with solid capital and liquidity buffers. However, they are closely interconnected with nonfinancial corporations where market analysts forecast significant earning shocks, especially in retail, tourism, transportation, and construction industries. While recovering, the economy is also vulnerable to physical risks from climate change owing to its geographical position. The risk assessment examined bank resilience against COVID-19 shocks and physical risks (typhoon) and their interconnectedness with nonfinancial corporations. The assessment also evaluated bank oversight, macroprudential policy, and safety-net arrangements. The World Bank investigated oversight and developmental issues of insurers, payment systems, capital markets, and credit reporting, as well as climate change and environment risks supervision and deepening markets for green growth.
South Africa is home to Africa’s largest financial sector, with large cross-border banking groups and a well-developed investment fund and insurance sector. The assessment will examine the strength of the financial sector in a difficult environment of subdued growth and large fiscal deficits (exacerbated by a weak financial position of state-owned enterprises and the ongoing health and economic impact of COVID). The importance of capital flows to the financial sector will underpin the “capital-flows-at-risk” analysis, as well as the assessment of systemic liquidity management and macroprudential policy. The assessment will also examine banking, insurance, and securities markets; pension and cyber risk supervision; crisis management and resolution; fintech; financial inclusion; climate risk; and capital markets development.
The United Kingdom is one of the world’s most complex and open financial systems, hosting several globally systemic entities, and a large domestic financial sector. The 2021 FSAP will take place during a challenging macrofinancial period: While UK institutions have proven resilient to the pandemic’s sharp economic contraction, there could be scars that challenge the profitability prospects of the financial system. The United Kingdom’s exit from the European Union will lead to structural changes. And there are new developments—such as the growing share of market-based finance, adoption of new technologies, and the increasing importance of climate change and cyber risks—that deserve attention. The FSAP will examine risks in these areas and assess the adequacy of the oversight framework to safeguard financial stability.
Compliments of the IMF.
The post IMF | Economies in the Financial Spotlight in 2021 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Commission proposes today a new instrument to address potential distortive effects of foreign subsidies in the Single Market. Today’s legislative proposal follows the adoption of the White Paper in June 2020 and an extensive consultation process with stakeholders. It aims at closing the regulatory gap in the Single Market, whereby subsidies granted by non-EU governments currently go largely unchecked, while subsidies granted by Member States are subject to close scrutiny. The new tool is designed to effectively tackle foreign subsidies that cause distortions and harm the level playing field in the Single Market in any market situation. It is also a key element to deliver on the updated EU Industrial Strategy also adopted today, by promoting a fair and competitive Single Market thereby setting the right conditions for the European industry to thrive.
Executive Vice-President Margrethe Vestager, in charge of competition policy and responsible for the cluster Europe Fit for the Digital Age, said: “Europe is a trade and investment superpower. In 2019 the stock of foreign direct investments  was worth more than 7 trillion euros. Openness of the Single Market is our biggest asset. But openness requires fairness. For more than 60 years, we’ve had a system of State aid control to prevent subsidy races between our Member States. And today we are adopting a proposal to also tackle distortive subsidies granted by non-EU countries. It is all the more important to ensure a level playing field in these challenging times, to support the recovery of the EU economy.”
Executive Vice-President Valdis Dombrovskis, responsible for An Economy that Works for People and for Trade, said: “Unfair advantages accorded through subsidies have long been a scourge of international competition. This is why we have made it a priority to clamp down on such unfair practices. They distort markets and provide competitive advantages on the basis of the support received, rather than on the quality and innovativeness of the products concerned. Today’s proposal complements our international efforts in this regard. It will level the playing field within the EU and encourage positive change, while maintaining the openness that is so vital to our economic strength.”
Commissioner for the Internal Market, Thierry Breton, said: “Our Single Market is fiercely competitive and attractive to foreign investors and companies. But being open to the world only works if everyone who is active in the Single Market, invests in Europe or bids for publicly funded projects, plays by our rules. Today we are closing a gap in our rule book to make sure that all companies compete on an equal footing and that no one can undermine the level playing field and Europe’s competitiveness with distortive foreign subsidies. This will strengthen Europe’s resilience.” 
EU rules on competition, public procurement and trade defence instruments play an important role in ensuring fair conditions for companies operating in the Single Market.  But none of these tools applies to foreign subsidies which provide their recipients with an unfair advantage when acquiring EU companies, participating in public procurements in the EU or engaging in other commercial activities in the EU. Such foreign subsidies can take different forms, such as zero-interest loans and other below-cost financing, unlimited State guarantees, zero-tax agreements or direct financial grants.
Today’s proposal is accompanied by an Impact Assessment report, which explains in detail the rationale behind the proposed Regulation and describes several situations in which foreign subsidies may cause distortions in the Single Market.
The Proposed Regulation
Scope
Under the proposed Regulation, the Commission will have the power to investigate financial contributions granted by public authorities of a non-EU country which benefit companies engaging in an economic activity in the EU and redress their distortive effects, as relevant.
In this context, the Regulation proposes the introduction of three tools, two notification-based and a general market investigation tool. More specifically:

A notification-based tool to investigate concentrations involving a financial contribution by a non-EU government, where the EU turnover of the company to be acquired (or of at least one of the merging parties) is €500 million or more and the foreign financial contribution is at least €50 million;
A notification-based tool to investigate bids in public procurements involving a financial contribution by a non-EU government, where the estimated value of the procurement is €250 million or more; and
A tool to investigate all other market situations and smaller concentrations and public procurement procedures, which the Commission can start on its own initiative (ex-officio) and may request ad-hoc notifications.

With respect to the two notification-based tools, the acquirer or bidder will have to notify ex-ante any financial contribution received from a non-EU government in relation to concentrations or public procurements meeting the thresholds. Pending the Commission’s review, the concentration in question cannot be completed and the investigated bidder cannot be awarded the contract. Binding deadlines are established for the Commission’s decision.
Under the proposed Regulation, where a company does not comply with the obligation to notify a subsidised concentration or a financial contribution in procurements meeting the thresholds, the Commission may impose fines and review the transaction as if it had been notified.
The general market investigation tool, on the other hand, will enable the Commission to investigate other types of market situations, such as greenfield investments or concentrations and procurements below the thresholds, when it suspects that a foreign subsidy may be involved. In these instances, the Commission will be able to start investigations on its own initiative (ex-officio) and may request ad-hoc notifications.
Based on the feedback received on the White Paper, the enforcement of the Regulation will lie exclusively with the Commission to ensure its uniform application across the EU.
If the Commission establishes that a foreign subsidy exists and that it is distortive, it will, where warranted, consider the possible positive effects of the foreign subsidy and balance these effects with the negative effects brought about by the distortion.
When the negative effects outweigh the positive effects, the Commission will have the power to impose redressive measures or accept commitments from the companies concerned that remedy the distortion.
Redressive measures and commitments
With respect to the redressive measures and commitments, the proposed Regulation includes a range of structural or behavioural remedies, such as the divestment of certain assets or the prohibition of a certain market behaviour.
In case of notified transactions, the Commission will also have the power to prohibit the subsidised acquisition or the award of the public procurement contract to the subsidised bidder.
Next Steps
The European Parliament and the Member States will now discuss the Commission’s proposal in the context of the ordinary legislative procedure with a view of adopt a final text of the Regulation.
The proposal will also be open for feedback for 8 weeks.
Once adopted, the Regulation will be directly applicable across the EU.
Background
The European Council in its Conclusions of the meeting on 21 and 22 March 2019 tasked the Commission to identify new tools to address the distortive effects of foreign subsidies on the Single Market. The Council also referred to the Commission’s White Paper in its Conclusions of 11 September 2020 and called for ‘further instruments to address the distortive effects of foreign subsidies in the Single Market’ in its Conclusions of 1-2 October 2020,.
In its February 2020 report on competition policy, the European Parliament called on the Commission to ‘investigate the option to add a pillar to EU competition law that gives the Commission appropriate investigative tools in cases where a company is deemed to have engaged in distortionary behaviour due to government subsidies…’.
In its Communication “A New Industrial Strategy for Europe” of 10 March 2020, the Commission confirmed that by mid-2020 it would adopt a White Paper on an Instrument on Foreign Subsidies, to address distortive effects caused by foreign subsidies within the Single Market. The Updated Industrial Strategy, adopted today, also identifies the proposed Regulation on foreign subsidies as one of the key actions delivering on the objective of EU’s open strategic autonomy.
In the 2021 Commission Work Programme and its Communication “Trade Policy Review” of 18 February 2021, the Commission announced that it would propose a legal instrument on foreign subsidies by mid-2021.
On 17 June 2020, the Commission adopted a White Paper proposing ways to deal with the distortive effects caused by foreign subsidies in the Single Market.
The public consultation on the White Paper ended on 23 September 2020. The Commission also consulted the public on the Inception Impact Assessment and run a targeted consultation with a sample of most impacted stakeholders.
The Commission has thoroughly analysed the input received and has taken it into due account when formulating today’s proposal.
Compliments of the European Commission.
The post EU Commission proposes new Regulation to address distortions caused by foreign subsidies in the Single Market first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Commission is today complementing the successful EU Vaccines Strategy with a strategy on COVID-19 therapeutics to support the development and availability of much-needed COVID-19 therapeutics, including for the treatment of ‘long COVID’. Today’s Strategy covers the full lifecycle of medicines: from research, development and manufacturing to procurement and deployment.
It is part of the strong European Health Union, in which all EU countries prepare and respond together to health crises and ensure the availability of affordable and innovative medical supplies – including the therapeutics needed to treat COVID-19.
The Strategy includes clear actions and targets, including authorising three new therapeutics to treat COVID-19 by October 2021 and possibly two more by end of the year. Concretely:

Research, development and innovation

Invest €90 million in population studies and clinical trials to establish links between risk factors and health outcomes to further inform public health policy and clinical management, including for long-COVID patients.
Set up a ‘therapeutics innovation booster’ by July 2021 to support the most promising therapeutics from preclinical research to market authorisation. It will build on current initiatives and investments in therapeutic development, working in a close cooperation with the European Health Emergency Preparedness and Response Authority (HERA) preparatory action on mapping therapeutics. It will therefore ensure the coordination of all research projects on COVID-19 therapeutics, stimulating innovation and boosting therapeutic development.

Access to and swift approval of clinical trials

Invest €5 million under the EU4Health programme to generate better, high-quality safety data in clinical trials, which will help produce robust results in a timely manner.
Provide EU countries with financial support of €2 million under the EU4Health 2021 work programme for expedited and coordinated assessments to facilitate approval of clinical trials.
Explore how to support developers of therapeutics to build capacity to produce high-grade material for clinical trials.

Scanning for candidate therapeutics

Invest €5 million to map therapeutics and diagnostics to analyse development phases, production capacities and supply chains, including possible bottlenecks.
Establish a broader portfolio of 10 potential COVID-19 therapeutics and identify five of the most promising ones by June 2021.

Supply chains and delivery of medicines

Fund a €40 million preparatory action to support flexible manufacturing and access for COVID-19 therapeutics under the EU Fab project, which in turn will become over time an important asset for the future the European Health Emergency Preparedness and Response Authority (HERA).

Regulatory flexibility

Authorise at least three new therapeutics by October and possibly two more by the end of the year and develop flexible regulatory approaches to speed up the assessment of promising and safe COVID-19 therapeutics.
Start seven rolling reviews of promising therapeutics by end-2021, subject to research and development outcomes.

Joint procurement and financing

Launch new contracts for the purchase of authorised therapeutics by the end of the year.
Secure faster access to medicines with shorter administrative deadlines.

International cooperation to make medicines available to all

Reinforce engagement for the therapeutics pillar of the Access to COVID-19 Tools Accelerator.
Boost ‘OPEN’ initiative for international collaboration.

Next Steps
The Commission will draw up a portfolio of 10 potential COVID-19 therapeutics and by June 2021, identify the five most promising ones. It will organise matchmaking events for industrial actors involved in therapeutics to ensure enough production capacity and swift manufacturing. New authorisations, rolling reviews and joint procurement contracts will be up and running before the end of the year.
The therapeutics innovation booster, matchmaking events and preparatory action to support flexible manufacturing and access for COVID-19 therapeutics under the EU Fab project, will feed into the HERA, for which a proposal is due later in the year. The pilot project on access to health data will feed into the European Health Data Space proposal expected later this year.
Members of the College said:
Vice-President for Promoting our European Way of Life, Margaritis Schinas, said: “The situation in many intensive care units across the continent remains critical. We need to focus both on vaccines and therapeutics, as two powerful and complementary ways to combat COVID-19. But currently we have only one authorised medicine to treat COVID-19. By acting on better availability of medicines today, we are making sure patients receive the treatments they need while also preparing our future biomedical preparedness. A coordinated strategy on quick access to therapeutics will boost our strategic autonomy and contribute to a strong Health Union.”
Commissioner for Health and Food Safety, Stella Kyriakides, said: “Vaccinations save lives, but they cannot yet eradicate COVID-19. We need a strong push on treatments to limit the need for hospitalisation, speed up recovery times, and reduce mortality. Patients in Europe and across the world should have access to world-class COVID-19 medicines. This is why we have set a very clear goal: by October, we will develop and authorise three new effective COVID-19 therapeutics that can have the potential to change the course of the disease. We will do so by investing in research and innovation, the identification of new promising medicines, ramping up production capacity and supporting equitable access. Our Therapeutics Strategy is a strong European Health Union in action.”
Commissioner for Innovation, Research, Culture, Education and Youth, Mariya Gabriel, said: “By increasing vaccine availability across Europe, more and more Europeans are now protected against COVID-19. In the meantime, the development of innovative medicines to treat coronavirus patients remains a priority when it comes to saving lives. Research and innovation is the first step to finding effective and safe therapeutics, which is why we are proposing to establish a new COVID-19 ‘therapeutics innovation booster’ and will invest € 90 million in population studies and clinical trials.”
Background
The Strategy on COVID-19 therapeutics complements the EU strategy for COVID-19 vaccines from June 2020 and builds on ongoing work by the European Medicines Agency and the Commission to support research, development, manufacturing and deployment of therapeutics.
The Strategy forms part of a strong European Health Union, using a coordinated EU approach to better protect the health of our citizens, equip the EU and its Member States to better prevent and address future pandemics, and improve the resilience of Europe’s health systems.
Compliments of the European Commission.
The post Coronavirus: EU Commission proposes EU Strategy for the development and availability of therapeutics first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Advances in artificial intelligence (AI) technology promise to revolutionize our approach to medicine, finance, business operations, media, and more. But research has highlighted how apparently “neutral” technology can produce troubling outcomes – including discrimination by race or other legally protected classes. For example, COVID-19 prediction models can help health systems combat the virus through efficient allocation of ICU beds, ventilators, and other resources. But as a recent study(link is external) in the Journal of the American Medical Informatics Association suggests, if those models use data that reflect existing racial bias in healthcare delivery, AI that was meant to benefit all patients may worsen healthcare disparities for people of color.
The question, then, is how can we harness the benefits of AI without inadvertently introducing bias or other unfair outcomes? Fortunately, while the sophisticated technology may be new, the FTC’s attention to automated decision making is not. The FTC has decades of experience enforcing three laws important to developers and users of AI:

Section 5 of the FTC Act. The FTC Act prohibits unfair or deceptive practices. That would include the sale or use of – for example – racially biased algorithms.

Fair Credit Reporting Act. The FCRA comes into play in certain circumstances where an algorithm is used to deny people employment, housing, credit, insurance, or other benefits.

Equal Credit Opportunity Act. The ECOA makes it illegal for a company to use a biased algorithm that results in credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because a person receives public assistance.

Among other things, the FTC has used its expertise with these laws to report on big data analytics and machine learning; to conduct a hearing on algorithms, AI and predictive analytics; and to issue business guidance on AI and algorithms. This work – coupled with FTC enforcement actions – offers important lessons on using AI truthfully, fairly, and equitably.
Start with the right foundation. With its mysterious jargon (think: “machine learning,” “neural networks,” and “deep learning”) and enormous data-crunching power, AI can seem almost magical. But there’s nothing mystical about the right starting point for AI: a solid foundation. If a data set is missing information from particular populations, using that data to build an AI model may yield results that are unfair or inequitable to legally protected groups. From the start, think about ways to improve your data set, design your model to account for data gaps, and – in light of any shortcomings – limit where or how you use the model.
Watch out for discriminatory outcomes. Every year, the FTC holds PrivacyCon, a showcase for cutting-edge developments in privacy, data security, and artificial intelligence. During PrivacyCon 2020, researchers presented work showing that algorithms developed for benign purposes like healthcare resource allocation and advertising actually resulted in racial bias. How can you reduce the risk of your company becoming the example of a business whose well-intentioned algorithm perpetuates racial inequity? It’s essential to test your algorithm – both before you use it and periodically after that – to make sure that it doesn’t discriminate on the basis of race, gender, or other protected class.
Embrace transparency and independence. Who discovered the racial bias in the healthcare algorithm described at PrivacyCon 2020 and later published in Science? Independent researchers spotted it by examining data provided by a large academic hospital. In other words, it was due to the transparency of that hospital and the independence of the researchers that the bias came to light. As your company develops and uses AI, think about ways to embrace transparency and independence – for example, by using transparency frameworks and independent standards, by conducting and publishing the results of independent audits, and by opening your data or source code to outside inspection.
Don’t exaggerate what your algorithm can do or whether it can deliver fair or unbiased results. Under the FTC Act, your statements to business customers and consumers alike must be truthful, non-deceptive, and backed up by evidence. In a rush to embrace new technology, be careful not to overpromise what your algorithm can deliver. For example, let’s say an AI developer tells clients that its product will provide “100% unbiased hiring decisions,” but the algorithm was built with data that lacked racial or gender diversity. The result may be deception, discrimination – and an FTC law enforcement action.
Tell the truth about how you use data. In our guidance on AI last year, we advised businesses to be careful about how they get the data that powers their model. We noted the FTC’s complaint against Facebook, which alleged that the social media giant misled consumers by telling them they could opt in to the company’s facial recognition algorithm, when in fact Facebook was using their photos by default. The FTC’s recent action against app developer Everalbum reinforces that point. According to the complaint, Everalbum used photos uploaded by app users to train its facial recognition algorithm. The FTC alleged that the company deceived users about their ability to control the app’s facial recognition feature and made misrepresentations about users’ ability delete their photos and videos upon account deactivation. To deter future violations, the proposed order requires the company to delete not only the ill-gotten data, but also the facial recognition models or algorithms developed with users’ photos or videos.
Do more good than harm. To put it in the simplest terms, under the FTC Act, a practice is unfair if it causes more harm than good. Let’s say your algorithm will allow a company to target consumers most interested in buying their product. Seems like a straightforward benefit, right? But let’s say the model pinpoints those consumers by considering race, color, religion, and sex – and the result is digital redlining (similar to the Department of Housing and Urban Development’s case against Facebook in 2019). If your model causes more harm than good – that is, in Section 5 parlance, if it causes or is likely to cause substantial injury to consumers that is not reasonably avoidable by consumers and not outweighed by countervailing benefits to consumers or to competition – the FTC can challenge the use of that model as unfair.
Hold yourself accountable – or be ready for the FTC to do it for you. As we’ve noted, it’s important to hold yourself accountable for your algorithm’s performance. Our recommendations for transparency and independence can help you do just that. But keep in mind that if you don’t hold yourself accountable, the FTC may do it for you. For example, if your algorithm results in credit discrimination against a protected class, you could find yourself facing a complaint alleging violations of the FTC Act and ECOA. Whether caused by a biased algorithm or by human misconduct of the more prosaic variety, the FTC takes allegations of credit discrimination very seriously, as its recent action against Bronx Honda demonstrates.
As your company launches into the new world of artificial intelligence, keep your practices grounded in established FTC consumer protection principles.
Author:

Elisa Jillson

Compliments of the Federal Trade Commission.
The post FTC | Aiming for truth, fairness, and equity in your company’s use of AI first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.