OPENNESS TO, AND RESTRICTIONS UPON, FOREIGN INVESTMENT
EU Treaty Provisions Governing Investment/Historical Background
The European Union has one of the most hospitable climates for U.S. investment in the world, with the historical book value of U.S. investment in the 27 EU member states at nearly $2 trillion. This is a result, in part, of the process of European integration. The 1957 Treaty of Rome (now renamed, with the December 2009 entry into force of the Lisbon Treaty, the “Treaty on the Function of the European Union” - TFEU) established the European Community among six European countries (Belgium, France, Germany, Italy, the Netherlands and Luxembourg; this has now grown into a European Union of 27 countries covering virtually all the territory of Europe. TFEU Article 43 requires all of the EU “Member States” to provide national treatment to investors from other Member States regarding the establishment and conduct of business.
The TFEU also continues and deepens the Treaty of Rome’s “four freedoms” (free movement of capital, labor, goods and persons) within the European Union. The free movement of capital requirement in particular benefits all potential investors, whether they originate from an EU Member State or not. Any violation of these rights can be adjudicated by the European Court of Justice, which may hear cases related to violations of Treaty rights directly, or overturn national court decisions found inconsistent with the Treaty.
Prior to the 1992 Treaty on the European Union (TEU, often known as the “Maastricht” Treaty), the Community had virtually no role in determining conditions that would affect the entry of investors from third countries into the territories of the Member States. Member States were compelled by the Treaty to grant national treatment to investors from other EU countries (including subsidiaries owned by third countries), but could erect and maintain barriers to investors coming directly from non-EU countries, consistent with their international obligations. These obligations include the Treaties of Friendship, Commerce and Navigation (FCNs) and Bilateral Investment Treaties (BITs) which the United States has with most EU countries, as well as obligations under the OECD codes on capital movements and invisible transactions. The only role Community law played was to ensure that a foreign-owned company that was established in one Member State received non-discriminatory treatment in other Member States.
EU power to regulate Member State treatment of incoming foreign investment increased considerably in 1993. A Treaty revision that year abolished all restrictions on the movement of capital, both between EU Member States and between Member States and third countries (Article 56). However, Member State measures in force on December 31, 1992 denying national treatment to third-country investors were grandfathered. The generally accepted interpretation of the revision was that EU law governed the treatment of incoming investments (excepted where grandfathered provisions existed) and their treatment after establishment, while the Member States were responsible for ensuring the treatment of their investors outside the territory of the EU.
In June 1997, the European Commission issued a Communication clarifying the scope of EU Treaty provisions on capital movements and the right of establishment. The Commission was reacting to limits that some Member States had imposed on the number of voting shares investors from other Member States could acquire during privatization. The Commission stressed that free movement of capital and freedom of establishment constitute fundamental and directly applicable freedoms established by the Treaty. Nationals and companies of other Member States should, therefore, be free to acquire controlling stakes, exercise the voting rights attached to these stakes and manage domestic companies under the same conditions laid down by a Member State for its own nationals. The European Court of Justice ruled in three precedent-setting cases in 2002 against golden shares in France, Belgium and Portugal, triggering several infringement actions by the Commission. The Court subsequently ruled against golden share cases in other Member States.
Lisbon Treaty Impacts
The entry into force in December 2009 of the Lisbon Treaty changed EU jurisdiction over direct investment issues in major respects. Article 207 of the Lisbon Treaty now brings “Foreign Direct Investment” under the umbrella of the EU common commercial policy, making it an exclusive EU competence. The EU gains the ability to negotiate Bilateral Investment Treaties (BITs) or investment chapters of Free Trade Agreements. Also, the Lisbon Treaty requires the consent of the European Parliament for new EU investment agreements.
On July 7, 2010, the Commission issued a Communication setting out its thoughts on what the EU’s future investment policy framework should be, and a draft regulation meant as a “transitional mechanism” that stipulates that the existing Bilateral Investment Treaties Members States have with third countries will remain in force. Both documents can be found here: http://ec.europa.eu/trade/creating-opportunities/trade-topics/investment/. In addition to providing an “explicit guarantee of legal certainty” regarding current agreements, it proposes that Member States could still negotiate new BITs with third countries where an EU agreement is not contemplated in the foreseeable future. The original proposal calls for a review within five years, at which time, according to the proposal, the Commission could “deauthorize” BITs or parts of them.
The European Parliament issued its stance on the proposed regulation with a number of proposed amendments in May 2011. The Council (comprising the Member States) has not yet issued its formal position and continues to negotiate with the Parliament, meaning no legislative deadlines have been triggered. The timeline for adoption of the legislation remains unclear. The degree of authority to override existing BITs remains a major focus of the negotiations.
U.S.-EU Efforts to Promote Open Investment
In August 2011, the Transatlantic Economic Council (TEC) established a High Level Working Group on Investment, affirming the importance of open investment policies as drivers of global economic growth, both in our bilateral relationship and in our economic engagement with third countries. The Working Group will build on the June 2008 U.S.-EU Open Investment Statement.
Ownership Restrictions and Reciprocity Provisions
EU Treaty Articles 43 (establishment) and 56/57 (capital movements) helped the EU to create one of the most hospitable legal frameworks for U.S. and other foreign investment in the world. However, restrictions on foreign direct investment do exist. Under EU law, the right to provide aviation transport services within the EU is reserved to firms majority-owned and controlled by EU nationals. The right to provide maritime transport services within certain EU Member States is also restricted. Currently, EU banking, insurance and investment services directives include "reciprocal" national treatment clauses, under which financial services firms from a third country may be denied the right to establish a new business in the EU if the EU determines that the investor's home country denies national treatment to EU service providers. In addition, as with the United States, a number of regulatory measures, particularly in the financial sector, are also subject to “prudential exceptions” and thus are not guaranteed national and most favored nation treatment under the EU’s GATS and other international commitments.
In March 2004 the Council of Ministers approved a Directive on takeover bids (“Takeover Directive”), which sought to create favorable regulatory conditions for takeovers and to boost corporate restructuring within the EU. The Directive authorizes Member States and companies to ban corporate defensive measures (e.g. “poison pills” or multiple voting rights) against hostile takeovers. It includes a “reciprocity” provision to allow companies that otherwise prohibit defensive measures to sue if the potential suitor operates in a jurisdiction that permits takeover defenses. Article 12.3 of the text is ambiguous as to whether the reciprocity principle applies to non-EU firms. However, the preamble states that application of the optional measures is without prejudice to international agreements to which the Community is a party. For example, French companies may suspend implementation of a takeover if they are targeted by a foreign company that does not apply reciprocal rules.
Energy Sector Liberalization
On June 25, 2009, after passage by the European Parliament, the European Union officially adopted the Third Energy Package, legislation consisting of two directives and three regulations designed to promote internal energy market integration and to enhance EU energy security. Specifically, the legislation mandates the separation of energy production and supply from transmission through the unbundling of European energy firms. The objective is to create a level playing field by preventing companies engaged in the generation and distribution of gas and electricity from using their privileged position to prevent access to transmission systems or limit connectivity of transmission networks. Energy firms that operate within the European market have three options: 1) full ownership unbundling; 2) an Independent System Operator (ISO); and 3) an Independent Transmission Operator (ITO).
Additionally, the package includes a "Third Country Clause" that requires all non-EU countries to comply with the same unbundling requirements as EU companies before they are certified to own and/or operate transmission networks in the Common Market. Moreover, the clause permits Member States to refuse a foreign company certification/permission to acquire or operate a transmission network – even if it meets other requirements – if it is deemed to have a potential negative impact on the security of energy supply of an individual Member State or the EU as a whole.
Member States were required to seek the opinion of the Commission with regards to their plans to comply with the unbundling rules and meet the “security of supply” requirements. The Commission has not yet opined on all of their proposals. Its opinion is not binding, but Member States must take it into consideration. Member States have up to 18 months to put most of the package into effect; however, implementation of the Third Country Clause can take up to three-and-a-half years. The Commission has also set up a working group to work with the Russian government and state-owned Gazprom, both of which have extensively criticized the unbundling provisions.
CONVERSION AND TRANSFER POLICIES
Europe's single currency, the Euro, and the ten remaining national EU Member State currencies are freely convertible. The EU, like the U.S., places virtually no restrictions on capital movements. Article 56 of the EU Treaty specifically prohibits restrictions on the movement of capital and payments between Member States and between Member States and third countries, with the grandfathered exceptions noted above. The adoption of the Euro in 17 of the 27 EU Member States has shifted currency management and control of monetary policy to the European Central Bank (ECB).
EXPROPRIATION AND COMPENSATION
The European Union does not have the authority to expropriate property; this remains the exclusive competence of the Member States.
Foreign investors can, and do, take disputes against Member State governments directly to local courts. In addition, any violation of a right guaranteed under the EU law - which has been ruled supreme to Member State law, including constitutional law - can be heard in local courts or addressed directly by a foreign investor with a presence in a Member State to the European Court of Justice. Further, all EU Member States are members of the World Bank's International Center for the Settlement of Investment Disputes (ICSID), and most have consented to ICSID arbitration of investment disputes in the context of individual bilateral investment treaties. While the EU is not itself a party to ICSID or other such arbitration conventions, it has stated its willingness to have investment disputes subject to international arbitration. The Commission’s proposed regulation issued July 7, 2010 has language requiring Member States to seek permission from the Commission before activating any dispute settlement mechanisms. The proposed language also stipulates that the Commission could compel Member States to activate dispute settlement and foresees Commission participation in such processes. This proposed language is also controversial for Member States and the final form of the legislation is difficult to predict.
PERFORMANCE REQUIREMENTS AND INCENTIVES
European Union grant and subsidy programs are generally available only for nationals and companies based in the EU, but usually on a national treatment basis. For more information, see Chapter 7 “Trade and Project Financing” in the EU Country Commercial Guide as well as individual Country Commercial Guides for Member State practices.
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
The right to private ownership is firmly established in EU law, as well as in the law of the individual Member States. See individual country commercial guides for EU Member State practices.
PROTECTION OF PROPERTY RIGHTS
The EU and its Member States support strong protection for intellectual property rights (IPR) and other property rights. The EU and/or its Member States adhere to all major intellectual property rights agreements and offer strong IPR protection, including implementation of the WTO TRIPS provisions. Together, the U.S. and the EU have committed to enforcing IPR in third countries and at our borders in the EU-U.S. Action Strategy endorsed at the June 2006 U.S.-EU Summit.
Despite overall strong support for property rights enforcement, several EU Member States have been identified in the U.S. Special 301 process due to concerns with protection of certain intellectual property rights. The United States continues to be engaged with the EU and individual Member States on these matters.
Enforcement of Intellectual and Industrial Property Rights
In April 2004, the EU adopted the Intellectual Property Enforcement Directive (IPRED) (http://ec.europa.eu/internal_market/iprenforcement/directives_en.htm). This Directive requires Member States to apply effective and proportionate remedies and penalties to form a deterrent against counterfeiting and piracy and harmonizes measures, procedures, and remedies for right holders to defend their IPR within Member States. Remedies available to right holders under IPRED include the destruction, recall, or permanent removal from the market of illegal goods, as well as financial compensation, injunctions, and damages. Commission studies have shown that the Directive has provided a solid basis for the enforcement of IPR but also led to “very diverging interpretations by Member States and their courts.” The studies have suggested “that the Directive is not fit to deal with new issues related to the Internet.” (See: http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/332.) The European Commission is thus expected to propose a review of IPRED in mid-2012.
In January 2008 the European Court of Justice (ECJ) issued a decision confirming that EU rules do not require countries to disclose names of Internet file sharers in civil cases. Spanish firm Promusicae and other European rights holders had hoped that the ECJ would rule that Telefonica (a Spanish Internet service provider) had to provide the proper data to protect its property rights. The Court, however, ruled that Member States could – but do not have to - require communication of personal data to ensure effective copyright protection in the context of civil proceedings as long as such national laws are not in conflict with the fundamental EU rights of respect for private life and protection of personal data.
At the 2nd High Level Conference on Counterfeiting and Piracy April 2, 2009, the Commission launched the European Observatory on Counterfeiting and Piracy. The role of the Observatory, which is composed of private industry representatives and designees chosen by Member States, is to serve as the central resource for gathering, monitoring and reporting information related to IPR infringement in the EU. The first meeting of the Observatory took place September 4, 2009. In May 2011 the Commission proposed to entrust the Office for Harmonisation in the Internal Market (OHIM) with the tasks and activities relating to the management of the European Observatory on Counterfeiting and
Piracy Counterfeiting and Piracy.
Specific Enforcement Measures
Copyright: In 2001, the EU adopted Directive 2001/29 establishing pan-EU rules on copyright and related rights in the information society. In December 2006, the Council and Parliament passed an updated version of the 2001 Copyright Directive modified to clarify terms of copyright protection. This new Directive (2006/116/EC) entered into force in January 2007. Despite these directives aimed at harmonizing certain aspects of copyright and related rights in the information society, there currently isn’t a legal instrument specifically addressing the clearing of copyright and related rights for cross-border on-line audiovisual media services. The Commission will therefore in 2012 present proposals to improve the collective management of copyright including by increased transparency and better governance of collecting societies, with the aim of ensuring that collective management evolves and responds to the needs of multi-territorial licensing.
In September 2011 the EU amended Directive 2006/116/EC regarding the term of protection of copyright and certain related rights. The agreed text will extend the term of copyright protection for performers and record producers from 50 to 70 years and introduce a 'use-it-or-lose-it' provision that allows performers to recover their rights after 50 years, should the producer fail to market the sound recording, and a so-called 'clean slate' which prevents record producers from making deductions to the royalties they pay to featured performers. The proposal also creates a new claim for session players amounting to 20 percent of record labels' offline and online sales revenue.
On December 14, 2009, the European Union and Member States ratified the World Intellectual Property Organization (WIPO) Copyright Treaty and the WIPO Performances and Phonograms Treaty.
In October 2007, the U.S. and key trading partners announced their intention to negotiate an Anti-Counterfeiting Trade Agreement (ACTA) in order to bolster efforts to combat counterfeiting and piracy by identifying a new, higher benchmark for enforcement that countries can join on a voluntary basis. . The United States, Australia, Canada, Korea, Japan, New Zealand, Morocco, and Singapore signed ACTA at a ceremony on October 1, 2011, in Tokyo. The EU and 22 EU Member States signed ACTA on 26 January 2012, also in Tokyo. The required consent of the European Parliament has been requested and the EP is expected to act during the first half of 2012.
Trademarks: Registration of trademarks with the European Union’s Office for Harmonization in the Internal Market (OHIM) began in 1996. OHIM issues a single Community Trademark (CTM) that is valid in all EU Member States. In October 2004 the European Community acceded to the World Intellectual Property Organization (WIPO) Madrid Protocol. The accession of the Community to the Madrid Protocol established a link between the Madrid Protocol system, administered by WIPO, and the Community Trademark system, administered by OHIM. Since October 2004 Community Trademark applicants and holders have been allowed to apply for international protection of their trademarks through the filing of an international application under the Madrid Protocol. Conversely, holders of international registrations under the Madrid Protocol are entitled to apply for trademark protection under the Community trademark system. The link between the OHIM and the WIPO registration systems allows firms to profit from the advantages of each while reducing costs and simplifying administrative requirements.
On March 31, 2009, the Commission announced new, lower fees and simplified procedures for EU-wide trademark rights, eliminating registration fees and reducing application fees by 40 percent. The new rates entered into force May 1, 2009, and applications for trademarks can be done online. In 2010 more than 98,000 trade mark applications were filed. In recognition that stakeholders increasingly demand faster, higher quality, and more streamlined trade mark registration systems which are technologically up-to-date, the European Commission is expected to soon present proposals to revise both the Community Trade Mark Regulation and the Trade Mark Directive.
Designs: The EU adopted the Community Designs Regulation, a Regulation introducing a single Community system for the protection of designs, in December 2001. The Regulation provides for two types of design protection, directly applicable in each EU Member State: the Registered Community Design (RCD) and the unregistered Community design. Under the Registered Community Design system, holders of eligible designs can use an inexpensive procedure to register them with OHIM, and will then be granted exclusive rights to use the designs anywhere in the EU for up to twenty-five years. Unregistered Community designs that meet the Regulation’s requirements are automatically protected for three years from the date of disclosure of the design to the public. Protection for any registered Community design was automatically extended to Romania and Bulgaria when those countries acceded to the European Union on January 1, 2007.
In September 2007 the EU acceded to the Geneva Act of the Hague Agreement concerning international registration of industrial designs. This allows EU companies to obtain protection for designs in any country that belongs to the Geneva Act, reducing costs for international protection. The system became operational for businesses in January 2008. In April 2008 OHIM updated the guidelines for renewal of Registered Community Designs. In February 2009 OHIM announced it would accept priority documents that do not include views of designs, such as German registration certificates. The change will help accelerate the registration process, and is in line with the practice in most EU member states.
Patents: After failing to reach agreement during 2010 on a single EU patent, a number of Member States decided at the Competitiveness Council meeting in December 2010 to pursue “enhanced cooperation,” which will allow those Member States to pursue a common patent process that will apply in those countries. The number of participating states has since grown to encompass all EU Member States but Italy and Spain. Italy and Spain would have the opportunity to opt-in at a later stage. A final agreement, including on where to host the patent court, is expected in 2012. According to the Commission, a unitary patent should make it possible for inventors to protect their innovations across the participating 25 Member States by submitting a single application, and should therefore make the existing rules simpler and less burdensome for inventors. The Commission estimates that the new rules will reduce the average cost of patents in Europe by up to 80%.
Until the realization of a Community Patent System, the most effective way to secure a patent across EU national markets is to use the services of the European Patent Office (EPO). EPO offers a one-stop-shop enabling right holders to obtain various national patents using a single application. However, these national patents have to be validated, maintained and litigated separately in each Member State. In September 2008 the EPO and the U.S. Patent and Trademark Office (USPTO) launched the Patent Prosecution Highway, a joint trial initiative leveraging fast-track patent examination procedures already available in both offices to allow applicants to obtain corresponding patents faster and more efficiently. This will permit each office to exploit work already done by the other office and reduce duplication. In addition, the two offices, along with the patent offices of Japan, Korea, and China, announced a joint agreement (IP5) in November 2008 to undertake projects to harmonize the environment for work sharing and eliminate unnecessary work duplication.
Geographical Indications: The United States continues to have concerns about the EU’s system for the protection of Geographical Indications (GIs). In a WTO dispute launched by the United States, a WTO panel found that the EU regulation on food-related GIs was inconsistent with EU obligations under the TRIPS Agreement and the General Agreement on Tariffs and Trade of 1994. In its report, the panel determined that the EU regulation impermissibly discriminated against non-EU products and persons, and agreed with the United States that the EU could not create broad exceptions to trademark rights guaranteed by the TRIPS Agreement. The panel’s report was adopted by the WTO Dispute Settlement Body (DSB) in April 2005. In response to the DSB’s recommendations and rulings, the EU published an amended GI regulation, Council Regulation (EC) 510/06, in March 2006 (amended by Council Regulation (EC) 179/2006 and Commission Regulation 417/2008). The United States continues to have some concerns about this amended regulation, about Council Regulation (EC) 479/08, which relates to wines, and about Commission Regulation (EC) 607/09, which relates inter alia, to GIs and traditional terms of wine sector products.
The EU adopted on 10 December 2010 a “Quality Package Regulation” which includes a proposal for a new 'Agricultural Product Quality Schemes Regulation' which reinforces the scheme for protected designations of origin and geographical indications (PDOs and PGIs); overhauling the traditional specialties guaranteed scheme (TSGs), and lays down a new framework for the development of Optional Quality Terms to provide consumers with information such as 'free range' and 'first cold pressing.' It also includes a proposal to streamline adoption of marketing standards by the Commission, including the power to extend place of farming labeling in accordance with the specificity of each agricultural sector and new guidelines on best practices for voluntary certification schemes and on the labeling of products using geographical indications as ingredients. This legislative proposal was sent to the Council and European Parliament for review and possible amendments and should be adopted by 2012. The United States is carefully monitoring the application of these regulations.
EU international efforts to expand GI protection: The EU continues to campaign to have its geographical indications protected throughout the world without regard to consumer expectation in individual markets, and to expand the negotiations for a registry of geographical indications beyond wines and spirits to other foodstuffs. This has developed into a major EU priority in the context of the Doha Development Agenda negotiations in the WTO, in which a discussion is ongoing concerning the extension of so-called “additional” GI protection to products in addition to wine and spirits. The U.S. and other WTO members continue to oppose the EU’s proposals to extend “additional” GI protection, noting that the objective of effective protection of such indications can be accomplished through existing GI obligations.
U.S.-EU coordination on IP counterfeiting and piracy: Since the U.S.-EU summit of June 2005, where leaders agreed to more closely cooperate on IPR enforcement, the U.S. and the EU have intensified customs cooperation and border enforcement, strengthened cooperation with and in third countries, and built public-private partnerships and awareness raising activities together. The U.S.-EU action strategy for the enforcement of intellectual property was launched at the US-EU Summit in June 2006. Since then, U.S. and EU officials have regularly met with stakeholders to identify new areas for cooperation including capacity building, joint messaging, and coordinated border actions.
TRANSPARENCY OF REGULATORY SYSTEM
The EU is widely recognized as having a generally transparent regulatory regime. The Commission, which has the sole authority to propose EU-level laws and regulations, generally announces an interest in legislating in a certain area, issuing a “green paper” for broad discussion, followed by a “White Paper” with more detail on the proposed measure, and eventually a formal legislative proposal. The Member State ministers and experts examine and amend these proposals in Council in tandem with European Parliament consideration of them; Council decisions and EP amendments are publically available. Informal working documents are not published, but interested parties usually can get fairly detailed information as these processes unfold. All adopted measures are published in 22 languages in the EU’s Official Journal, which is available on line.
The EU's Better Regulation policy, adopted in 2005, aims at simplifying and improving existing regulation and at better designing new regulation. In October, 2010, the Commission announced Smart Regulation, which expands on the Better Regulation policy and emphasizes three points: the continued importance of evaluating existing legislation and conducting impact assessment statements for proposed legislation in order to provide evidence and transparency on the benefits and costs of regulatory policy choices; shared responsibility and commitment between the Commission, European Parliament, the Council and Member States for making legislation clearer and more accessible; and facilitating the ability of citizens and stakeholders to engage policy makers on the impact of existing and proposed regulations. See: http://ec.europa.eu/governance/better_regulation/index_en.htm
U.S.-EU Regulatory Cooperation
The U.S and EU have worked together to minimize the impact of unnecessary regulatory divergences since at least the December 1997 Agreement on Regulatory Cooperation Principles. Much of this work is now subsumed under the High Level Regulatory Cooperation Forum (HLRCF), established in 2005 as a place for regulators to exchange best practices. The HLRCF is co-chaired on the U.S. side by the Administrator of OMB’s Office of Information and Regulatory Affairs (OIRA) and on the EU side by the Director General of Enterprise and Industry. The HLRCF has now met 14 times and reports regularly to the cabinet-level Transatlantic Economic Council (TEC). http://www.state.gov/p/eur/rt/eu/tec/index.htm While the HLRCF is the principal formal tool for broad regulatory cooperation, significant contacts also exist between individual regulators in the U.S. and in EU.
At the November 28, 2011 meeting of the HLRCF, U.S. and EU officials emphasized a continued shared commitment to streamlining regulation and a joint recognition that improving the compatibility of American and European regulation would lead to economic growth and jobs. Both sides celebrated an agreement to “build bridges” between the different systems for setting standards in the U.S. and EU and expressed optimism that this agreement will result in comparable standards emerging from the different systems. Both sides agreed in principle on the importance of notifying one another of proposed legislation that might impact trade, and committed to formalizing an understanding to provide such notice, notwithstanding fundamental differences in the way that legislation is formulated in the EU and U.S. In the future, the HLRCF is likely to focus on promoting consistency and cooperation in the regulation of cross-cutting issues, particularly proposed regulation of key, new, enabling technologies, such as nanotechnology.
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
The EU Treaty specifically prohibits restrictions on capital movements and payments between the Member States and between the Member States and third countries.
The single market project has spurred efforts to establish EU-wide capital markets. The EU has acted to implement the 1999 Financial Services Action Plan (FSAP) to establish legal frameworks for integrated financial services (banking, equity, bond and insurance) markets within the EU. FSAP measures include Directives on: Prospectuses (permitting one approved prospectus to be used throughout the EU), Transparency (detailing reporting requirements for listed firms, including adoption of International Accounting Standards), Markets in Financial Instruments (MiFID - providing framework rules for securities exchanges and investment firms), Takeover Bids (to facilitate cross-border takeovers), and Capital Requirements (implementing the rules developed by the Basel Committee of Banking Supervisors (BCBS).
Markets in Financial Instruments Directive: In November 2007, the EU’s Markets in Financial Instruments Directive (MiFID) came into force. This law seeks to eliminate many barriers to cross-border stock trading by establishing a common framework for European securities markets, increasing competition between market exchanges, raising investor protection and providing investors a broader range of trading venues. It gives EU securities exchanges, multilateral trading facilities and investment firms a “single passport” to operate throughout the EU on the basis of authorization in their home Member States. MiFID is broadly considered a success but came under the Commission’s normal review process in 2011.
On October 20, 2011, the Commission issued its proposal for modifying the Markets in Financial Instruments Directive and Regulation (MiFID/MiFIR). The European Parliament and Council will discuss this complex proposal over the course of 2012. This proposal implements the G-20 commitment to promote trading of standardized derivatives on exchanges on electronic trading platforms, where appropriate, as well as revised market structure rules, including new rules for trading platforms and high frequency trading. In particular, the MiFID proposal seeks to introduce “organized trading platforms” and central clearing of derivatives trades, end vertical silos between clearing and trading, and establish equivalence findings for jurisdictions outside the EU.
Outlook: The stated aim is to have the law adopted by end-2012, but this may prove optimistic.
Market Abuse Directive: Connected to the review of MiFID is the revision of the Market Abuse Directive (MAD). On October 20, the Commission presented its legislative proposals reviewing the Market Abuse Regulation (MAR) and the Market Abuse Directive (MAD). The proposals aim to increase market integrity and investor protection. The new MAR seeks to create a single, directly applicable EU-wide rulebook for market abuse enforced by national administrative sanctions. MAD would require all Member States to introduce criminal sanctions for intentional insider dealing and market manipulation.
Outlook: The Commission aims for adoption in 2012.
Solvency II: Solvency II is the new risk-based solvency regime for the EU insurance sector, approved in 2009 and due to come into force in January 2013. It introduces the concepts of group solvency and group supervision. Third-country insurers will be allowed to operate in the EU if their home country regulatory framework is found to be equivalent to the EU’s by a formal Commission decision. Third-country insurers whose home jurisdictions are not found equivalent will likely have to establish a holding company in the EU.
In October 2010, the European Commission (EC) announced that it will include in the first wave of equivalence assessments under Solvency II, the regulatory systems of Bermuda and Switzerland (for Reinsurance, Group solvency and Group supervision), and of Japan (for Reinsurance only). To account for the exclusion of the United States from the first wave of assessments, and even though the Solvency II Directive does not foresee a transitional regime for equivalence, the EC suggested that time-limited transitional measures be developed as secondary legislation, to allow eligible third-countries (including the U.S.) to enjoy the full benefits of equivalence. The eligibility criteria will be specified by the EC in the implementing measures, but will likely require a commitment to converge towards a regime capable of meeting the equivalence criteria at the end of the transitional period.
Outlook: The Commission expects that the Omnibus II Directive, which will introduce the necessary legal basis to set up the transitional regime for eligible third-countries, will be approved by the European Parliament and the Council by end of 2012.
Reform of mutual funds: In January 2009 the European Parliament adopted legislation to achieve a less fragmented and more efficient investment fund market in the EU. UCITS IV -- Undertakings for Collective Investment in Transferable Securities -- are investment funds sold under a common set of EU rules for investor protection and cost transparency, and that meet basic requirements on organization, management and oversight of funds. UCITS funds manage approximately €6.4 trillion and account for 11.5% of EU household financial assets. The legislation includes a provision for a management “passport,” which will make it easier and less expensive for investment funds to operate outside their state of origin. Member States are required to implement the legislation by 2011.
In 2012 the EC intends to amend the UCITS IV. The amendment (UCITS V) aims to increase the level of investor protection and to ensure a level playing field for UCITS across Europe. In particular, the Directive is expected to address the issue of depositaries’ responsibilities.
Outlook: A Draft directive reviewing the UCITS regime (UCITS V Directive) is expected by Q1/2012.
Retail Services: The EU has also focused on deepening integration of retail financial services markets, although this has become less immediate as a result of the financial crisis. The retail investment market is largely dominated by Packaged Retail Investment Products (PRIP). While they provide retail investors with easy access to financial markets, they can also be complex for investors to understand. Sellers can also face conflicts of interest since they are often remunerated by the product manufacturers rather than directly by the retail investors. To address these issues, the Commission is expected to publish legislation to introduce changes in product transparency (pre-contractual disclosures) and sales rules.
Outlook: Draft legislation is expected during Q1/2012.
Regulatory Responses to the Financial Crisis
In response to the growing impact of the global financial crisis in Europe during Fall 2008, the EC put forward several legislative proposals that go beyond the measures envisaged by the 1999 FSAP, to address what was increasingly perceived as an unacceptable degree of deregulation in the financial sector, particularly in the wake of massive injections of public money to rescue weak financial institutions.
Credit Rating Agencies (CRAs): The current Regulation on Credit Rating Agencies entered into force in 2009 and introduced an authorization and supervision regime. For ratings issued by third-country CRAs to be used in the EU for regulatory purposes, the Regulation introduced two mechanisms:
a) Equivalence: Ratings by non-systemically relevant CRAs established outside of the EU can be used in the EU if the CRA’s home jurisdiction is deemed equivalent and the home jurisdiction supervisor (e.g. SEC) has concluded a cooperation agreement with ESMA. In May 2010, CESR (now ESMA) found the U.S. regulatory system “broadly equivalent to that of the EU.” After the entry into force of the Dodd-Frank Act, the Commission asked ESMA for an additional analysis of the changes it introduced.
b) Endorsement: An EU-registered CRA may endorse ratings issued by an unregistered affiliate located outside of the EU. The endorsing CRA must demonstrate that the ratings have been developed following internal standards “at least as stringent as” the EU’s, that the affiliate is registered and supervised and that a cooperation agreement between supervisors is in place. As they are likely to be deemed systemically relevant, endorsement will be the only mechanism for ratings issued by Moody’s, S&P and Fitch to be used in the EU.
On October 2011, ESMA announced that it successfully completed the registration process for DBRS, Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s (S&P) as Credit Rating Agencies. These CRAs have indicated their intention to endorse the ratings they produce in third-countries. However, only Japan has so far been found equivalent, and for the U.S., ESMA claims that in order to deliver its final equivalence advice it needs to assess the SEC’s final implementing rules, which have not yet been approved. ESMA has granted a transitional period that will allow market participants to continue using in the EU credit ratings issued in third countries.
On November 2011, the Commission published a new proposal for a regulation on credit rating agencies (CRA). The proposal, known as CRA II, aims to address the over-reliance on credit ratings by financial market participants, the high degree of concentration in the rating market, the conflicts of interest in the issuer-pays model, and to introduce civil liability of credit rating agencies vis-à-vis investors, as well as rules for CRAs’ shareholder structure. The key aspects of the regulation are:
· CRAs would be required to submit any changes in rating methodologies, models or key rating assumptions to investor consultation and verification by ESMA.
· CRAs would be required to assess sovereign ratings every six months (instead of 12). The ratings or rating outlooks would have to be accompanied by a detailed research report. Where the rating changes, more detailed disclosure would be required.
· Issuers would be required to rotate the agencies rating either the issuer itself or its debt instrument, according to precise rules.
· Issuers of structured finance instruments would be required to have two separate credit rating agencies issue parallel and independent credit ratings.
· CRAs would be liable to investors for infringements affecting ratings, either intentional or due to gross negligence. The burden of proof would fall on the CRA.
· Financial institutions should undertake their own credit risk assessments and not rely “solely or mechanistically” on credit ratings.
· Many provisions applicable to credit ratings would be extended to rating outlooks.
A much publicized provision empowering ESMA to temporarily ban sovereign ratings in exceptional situations subject to certain conditions was removed from the final proposal.
Outlook: The EC aims for adoption before the end of 2012.
Deposit Guarantees: In December 2008 the Council and Parliament approved a Commission proposal to raise the minimum threshold for deposit insurance to €100,000 in two steps, and to harmonize the time period for repayment of deposits. As a result, minimum deposit guarantees were raised to €50,000 on June 30, 2009, and the payout period shortened from the current three months to 20 days. Coverage applies to all depositors in all Member States, regardless of whether the member state is a member of the euro area. The threshold was raised to €100,000 on January 1, 2010.
In June 2010, the Commission published draft legislation amending the Directive on Deposit Guarantee Schemes. It proposes that:
· Deposit guarantees in all Member States be set to €100,000 for all deposit-taking institutions, even though some Member States currently offer higher levels;
· Deposit Guarantee Schemes (DGS) must hold “1.5% of eligible deposits at hand after a transition period of 10 years”;
· Borrowing from other DGS in the EU be allowed if necessary;
· Shorten from 20 to seven days the time-lag for receiving funds after the activation of the guarantees.
Outlook: Adoption is planned for 2012.
Alternative Investment Fund Managers Directive (AIFMD): AIFMD will enter into force mid-2013. EU managers will be allowed EU-wide market access on the basis of a passport. Third-country managers will be eligible for this passport in 2015 at the earliest. National private placement regimes will remain in place at least until 2018.
On November 16, the European Securities and Markets Authority (ESMA) published its final technical advice to the Commission on the implementing rules for AIFMD, which includes the provisions applicable to third country managers and depositaries.
· Third country managers could be granted rights under AIFMD, including the passport, subject to the existence of MoUs between ESMA and the third country supervisor providing for exchange of information for supervisory and enforcement purposes and the ability to carry out on-site inspections.
· Third country depositaries should be publicly regulated and subject to prudential supervision performed by an independent competent authority. Third country rules must have “the same effect as Union law” and be effectively enforced, rather than being “equivalent”. Appropriate co-operation arrangements between competent authorities must also exist.
· Delegation of portfolio or risk management duties to a third country undertaking is subject to criteria similar to those applicable for depositaries. A written agreement between the home Member State of the AIFM (or ESMA) and the supervisory authorities of the delegated undertaking is necessary, allowing for on-site inspections, exchange of information and ensuring that sufficiently dissuasive enforcement actions exist.
Outlook: In light of ESMA’s final advice, the Commission will now develop implementing rules. ESMA will now begin negotiations with third-country competent authorities to adopt the required MoUs on supervisory co-operation agreements.
Capital Requirements Directives: On July 20, 2011 the Commission issued its proposal to implement the Basel III framework in a two document package that includes the fourth amendment to the Capital Requirements Directives (CRD IV) and the first Capital Requirements Regulation (CRR I). The European Parliament’s Economic and Monetary Affairs Committee (ECON) is now reviewing the proposals. The Europeans hope to reach final adoption by the end of the Danish presidency in June 2012, which would allow the EU to implement the new standards by January 2013, consistent with the Basel accord.
· CRR I contains most of the capital and liquidity rules for banks and investment firms. The decision to use a regulation, rather than a directive, signals the Commission’s intention to achieve maximum harmonization in the way the rules are applied across Member States by promoting a “single rulebook.” Some Member States – particularly the UK and Sweden – have opposed this approach because it would limit their macro-prudential authorities’ ability impose higher standards nationally.
· CRD IV prescribes measures on enhanced corporate governance, supervision, and capital buffers that need to remain within the competence of individual Member States for legal or practical reasons.
The EU proposal is largely consistent with Basel III with a few notable exceptions, including:
· Minority Interest: The proposal permits the use of non-standard methods for calculating regulatory capital in conglomerates, in a way that benefits European banc-assurance models. Instead of the Basel III cap of 10 percent on minority interest as a share of core Tier 1 capital, CRR I allows European firms to use methodology specified in the EU’s 2002 Financial Conglomerates Directive (FCD) that effectively reduces the deductions from capital related to minority interest.
· Leverage Ratio: While Basel III calls for migration of the simple leverage ratio from a transition period to mandatory Pillar I treatment in 2018, CRR I does not include a legal mechanism to ensure the transition from Pillar II to Pillar I. The CRR I text also does not include the 3 percent ratio calibration established in Basel III.
· Liquidity Coverage Ratio (LCR): CRR I allows national supervisors an option to apply the LCR at the group level only, while Basel III calls for liquidity standards to apply at the level of legal entities as well. In addition, while CRR I creates a legal vehicle to establish the LCR, it does not provide such a vehicle for the net stable funding ratio.
Outlook: The EC plans on implementing the law by January 2013, in keeping with G-20 commitments.
Short-selling/Credit Default Swaps Regulation: On November 15, 2011 the European Parliament (EP) adopted the Commission’s regulation on “Short Selling and certain aspects of credit default swaps (CDS).” The law will ban naked sales of sovereign CDS, as well as naked bond and share sales, unless used to hedge exposures. Investors may continue to buy CDS on sovereign debt only if they own the bond or other assets whose price is correlated to that of the bond, as it will be defined by ESMA and the Commission. National authorities could “opt-out” to protect the functioning of their sovereign debt market. The publication of the regulation in the Official Journal is due in early 2012. The Regulation will be applicable from Nov. 1, 2012.
Financial Conglomerates Directive: The legislation amending the current Financial Conglomerates Directive (FCD) was approved. The revision of the FCD gives national supervisors new powers to better oversee the conglomerates' parent entities. Supervisors would be able to apply banking supervision, insurance supervision and supplementary supervision at the same time and to receive better information at an earlier stage. The main objective of the revision is to correct the unintended consequences of the current rules, and its proposed changes are the following:
· Supervision: Supervisors could apply banking and insurance supervision and supplementary supervision to the conglomerate's parent entity, including if it concerns a holding company. Under the current rules, supervisors have to choose which type of supervision to apply.
· Group risk: Supervisors would be allowed to identify a group as a financial conglomerate and apply supplementary supervision, using risk-based assessments in addition to the current rules by which the balance sheet is determinant.
New Financial Supervisory Architecture
Supervisory authority and enforcement in the fields of banking, securities and insurance remains a Member State competence. However, in late 2008, the European Commission asked former IMF Director General Jacques de Larosière to review the EU’s financial supervisory architecture and make recommendations for improvement. The “de Larosière” report, published on February 25, 2009, recommended the creation of a European System of Financial Supervisors (ESFS) and a European Systemic Risk Board (ESRB) and served as the basis for legislative proposals by the Commission seeking to reform the European system of financial supervision at macro and micro prudential levels. Legislation adopted in September 2010 created as of January 1, 2011 three new European Supervisory Authorities (ESAs) - the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) – as well as the European Systemic Risk Board (ESRB).
European System of Financial Supervisors (ESFS): The new European Supervisory Authorities replaced the EU “Level 3” Committees (CESR, CEBS, and CEIOPS). While the Level 3 Committees were only consultative bodies, the ESAs will gain limited but real powers to carry out their four primary tasks:
· Develop technical standards to establish a single EU rule book. The ESAs will be empowered to develop rules and technical standards. (However, Commission approval will be necessary to make them legally binding.) The ESAs will continue to provide the Commission with expert technical advice, as the Level 3 Committees did. However, while previously the Commission could modify on its own the advice it received from the Level 3 Committees, the new procedure will require Council and EP approval to modify the ESA’s advice. No scrutiny is needed to affirm the ESA’s advice.
· Ensure the consistent application of Community rules. In cases of breach of EU law, the ESAs can require national authorities to intervene. In case of refusal of the national supervisor to intervene, the ESAs can directly address individual firms, but only if the breach relates to legislation targeted to firms. .
· Act in emergency situations. Once the Council declares a banking emergency (after consulting the Commission and the ESRB), the ESAs can take binding decisions to coordinate national supervisory responses, and to require national supervisors to jointly take specific actions to remedy an emergency situation. However, the ESAs’ actions cannot “impinge” on a Member State’s fiscal responsibility. If a Member State believes that is the case, it has three days to notify the ESA that it is challenging its decision, suspending its enforceability. The Council has ten days to decide by simple majority whether to uphold the ESAs' decision. If the Council allows the ten day deadline to lapse without taking action, the ESA's decision is terminated.
· Binding mediation powers: The ESAs will have the power to settle disagreements between national supervisors, arbitrating between them in the areas (to be specified in separate legislation) where national supervisors will be required to cooperate with one another (such as on bank capital, model approval, home/host information sharing, joint inspections). However, ESA decisions as part of binding mediation can be challenged. To do so, a Member State has one month to notify the ESA of its intention, which suspends its enforceability. After notification, the ESA will have one month to amend or maintain its decision. If the ESA maintains its decision, the Council has two months to vote to uphold it, acting by qualified majority voting (QMV). If the Council allows the two month deadline to lapse without taking action, the ESA's decision is terminated.
In addition, the ESAs will have a role (soft powers) in the identification and measurement of systemic risk (in coordination with the ESRB) posed by market participants, and in the protection of consumers. The ESAs will be able to adopt non-binding guidelines and recommendations to which the “comply or explain” principle would apply.
The main decision-making body of the ESAs will be the Board of Supervisors. It will decide by simple majority of its members, and will be composed of: the Chairperson, the head of each national supervisor, and representatives of the Commission, the ESRB, and of each of the other two ESAs (all non-voting, except national supervisors). The Board of Supervisors will name the Chairperson on the basis of a short-list of eligible candidates drawn up by the Commission. The EP will confirm the appointment.
Day-to-day supervision will remain national. The EU may expand the ESAs pan-European reach by including a role for them in future sectoral legislation. The recent proposals to regulate CRAs, OTC derivatives and short-selling do in fact include a role for ESMA in overseeing and authorizing credit rating agencies, trade repositories, and in coordinating national temporary bans of short-selling practices. ESAs will also promote the efficient functioning of Colleges of Supervisors, assess market developments and interface with the ESRB through the collection of information from national authorities and firms.
The main function of the ESRB will be to monitor and collect information relevant to potential threats and risks to financial stability arising from macro-economic developments and the EU financial system. Its tasks will be the following:
· Identify and prioritize systemic risks;
· Issue warnings where such systemic risks are deemed to be significant;
· Issue recommendations for remedial action in response to the risks identified including, where appropriate, for legislative initiatives;
· Monitor the follow-up to warnings and recommendations;
· Coordinate with international institutions, as well as the relevant bodies in third countries on matters related to macro-prudential oversight;
Warnings or recommendations may be either of a general or specific nature and can be addressed to the whole EU, to one or more Member States, to one or more of the ESAs, or to one or more national supervisory authorities. They will not cover monetary policy, fiscal policy, or specific financial institutions. Warnings and recommendations may or may not be made public, at the discretion of the ESRB. Its recommendations will not have legal force, but the addressees will have to communicate the actions undertaken in response to them to the Council and the ESRB and provide adequate justification in case of inaction (“comply or explain”). The ESRB will report every six months to the Council and the EP.
Political violence is not unknown in the European Union, but is rare. Such incidents are generally regional in nature, and individual Country Commercial Guides should be consulted for details on problems in specific areas.
The Commission acquired a new competence for corruption policy through the Lisbon Treaty, and is still formulating its strategy for using its new authority. The Commission now has the ability to harmonize criminal law relating to corruption and trafficking in drugs, persons, and weapons across member states. EU Commissioner Cecilia Malmstrom has said that in 2011 she plans to propose an anti-corruption package will include an update of the EU anti-corruption policy, with a follow-up on how Member States use the existing regulations on a national level, and a European reporting mechanism to target and tackle the blind spots in the work already done by Member States. The EU’s Anti-Fraud Office (OLAF) publishes an annual report on its activities which can be found online at the EU’s Anti-Fraud Office website: http://ec.europa.eu/anti_fraud/reports/olaf/2009/en.pdf The report broadly outlines the steps that the EU has taken in terms of protecting its financial interests and addressing fraud and reviews major developments in 2009.
BILATERAL INVESTMENT AGREEMENTS
The EU as a whole does not yet have any traditional bilateral investment treaties (BITs), although virtually all the Member States have extensive networks of such treaties with third countries. The EU "Europe," "Association" and other agreements with preferential trading partners have contained provisions directly addressing treatment of investment, generally providing national treatment after establishment and repatriation of capital and profits.
The adoption in December 2009 of the Lisbon Treaty will change in major respects how the EU treats investment (see Openness to Foreign Investment, above). Since Lisbon makes Foreign Direct Investment an exclusive EU competence, a broad definition of FDI extends EU authority over much of the subject matter hitherto addressed under Member State BITs. The Council has so far granted the Commission authority to negotiate investment chapters in the free trade agreements under negotiation with Canada, India, and Singapore. The Commission has indicated that it does not plan to develop a model investment treaty, preferring instead to establish general objectives and principles. The Commission has further proposed to examine the content of existing bilateral agreements, to determine their consistency with EU law and common commercial policy. Commission officials and several European leaders have, however, stressed that Member State bilateral agreements will remain valid under Lisbon, and that existing BITs will be “grandfathered” until and unless an EU-level agreement is concluded with a country in question. The exact treatment will not be defined until the Council and EP conclude their negotiations on the Commission’s proposed investment regulation.
Other regional or multilateral agreements addressing the admission and treatment of investors to which the Community and/or its Member States have adhered include:
a) The OECD codes of liberalization, which provide for non-discrimination and standstill for establishment and capital movements, including foreign direct investment;
b) The Energy Charter Treaty (ECT), which contains a "best efforts" national treatment clause for the making of investments in the energy sector but full protections thereafter; and
c) The GATS, which contains national treatment, market access, and MFN obligations on measures affecting the supply of services, including in relation to the mode of commercial presence.
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
OPIC programs are not available in the EU as a whole, although individual Member States have benefited from such coverage.
Issues such as employment, worker training, and social benefits remain primarily the responsibility of EU Member States. However, the Member States are coordinating ever more closely their efforts to increase employment through macroeconomic policy cooperation, guidelines for action, the exchange of best practices, and programmatic support from various EU programs. The best information regarding conditions in individual countries is available through the labor and social ministries of the Member States.
Helpful information from the EU can be found on the websites for the European Commission’s Directorate-General for Employment and Social Affairs, http://ec.europa.eu/social/home.jsp?langId=en, and on the Eurostat website
In general, the labor force in EU countries is highly skilled and offers virtually any specialty required. Member States regulate labor-management relations, and employees enjoy strong protection. EU Member States have among the highest rates of ratification and implementation of ILO conventions in the world.
There is a strong tradition of labor unions in most Member States. In many cases, the tradition is stronger than the modern reality. While Nordic Member States (Denmark, Finland, and Sweden) still have high levels of labor union membership, many other large Member States, notably Germany and the United Kingdom, have seen their levels of organization drop significantly to levels around 20-30 percent. French labor union membership, at less than 10 percent of the workforce, is lower than that of the U.S. (where it was 12.3 percent in 2009 according to the Bureau of Labor Statistics).
FOREIGN-TRADE ZONES / FREE TRADE ZONES
EU law provides that Member States may designate parts of the Customs Territory of the Community as free trade zones and free warehouses. Information on free trade zones and free warehouses is contained in Title IV, Chapter Three, of Council Regulation (EEC) no. 2913/92 establishing the Community Customs Code, titled, "Free Zones and Free Warehouses" (Articles 166 through 182).
Article 166 states that free zones and free warehouses are part of the Customs Territory of the Community or premises situated in that territory and separated from the rest of it in which:
a) Community goods are considered, for the purposes of import duties and commercial policy import measures, as not being on Community customs territory, provided they are not released for free circulation or placed under another customs procedure or used or consumed under conditions other than those provided for in customs regulations;
b) Community goods for which such provision is made under Community legislation governing specific fields qualify, by virtue of being placed in a free zone or free warehouse, for measures normally attaching to the export of goods.
Articles 167-182 detail the customs control procedures, how goods are placed in or removed from free zones and free warehouses and their operation.
The use of free trade zones varies across Member States. For example, Germany maintains a number of free ports or free zones within a port that are roughly equivalent to U.S. foreign-trade zones, whereas Belgium has none. A full list of EU free trade zones last updated June 2008 is available at: http://ec.europa.eu/taxation_customs/resources/documents/customs/procedural_aspects/imports/free_zones/list_freezones.pdf.
FOREIGN DIRECT INVESTMENT STATISTICS
According to U.S. statistics (the U.S. Bureau of Economic Analysis), the value of U.S. investment in the Member States of the European Union, on a historical-cost basis as of the end of 2010, was $2.2 trillion. The Netherlands was the largest EU host to U.S. foreign direct investment, with $521 billion, followed by the United Kingdom ($508 billion), Luxembourg ($275 billion), and Ireland ($190 billion).
For virtually all EU Member States, the largest "foreign" investors are in fact other Member States. More statistics on U.S. investment abroad are available at: http://www.bea.gov/international/di1usdbal.htm.
According to the European Commission’s statistics, FDI flows accounted for 2.3% of European GDP in 2009. The biggest investors in the United States include the United Kingdom at $454 Billion, The Netherlands ($238 Billion), and Germany ($218 Billion. http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/dataset?p_product_code=TEC00046
DG Internal Market and Services
DG Economic and Financial Affairs
DG Employment and Social Affairs
Office for Harmonization in the Internal Market (trademarks and designs)
EU Anti-Fraud Office
Eurostat – EU Statistical Office
U.S. Bureau of Economic Analysis – Department of Commerce
European Patent Office