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CETA comes back from near collapse

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he European Union’s Comprehensive Economic and Trade Agreement (CETA) with Canada was saved at the eleventh hour after the Wallonia region of Belgium, having previously deadlocked the deal, came to a compromise with its federal government allowing it to sign up to the pact. However, the agreement came too late for an official signing ceremony between the EU and Canada which had been scheduled for October 28. At the time of going to press, details of the deal struck with Wallonia, which will now have to be agreed by the other 27 member states, were not yet disclosed. CETA will now enter a process of formal ratification which will take between two and four years. Wallonia had voted against CETA because of fears that local workers will be laid off if the agreement leads to cheaper industrial imports. Opposition

Justin Trudeau, Canadian prime minister

“We are in the beginning of a change in international relations.” Martin Schulz, European Parliament

to the deal, and similar ones like the Transatlantic Trade and Investment Partnership (TTIP), has been growing among public and professional bodies, who argue that these deals will hinder standards on products and markets as well as on climate policies adopted in the EU. Commenting on the agreement with Wallonia, president of the European Parliament, Martin Schulz, says: “The Wallonia

government is representing a very small part of European citizens, but the worries they express are also worries in other countries in the EU. We answered those concerns and I feel citizens felt they were taken seriously – and that’s progress.” CETA negotiations are being watched closely, as they are considered by many to indicate not only the likely processes and outcomes of similar trade deals (namely

TTIP and future Brexit negotiations with the UK), but the credibility of the EU itself. Canadian prime minister Justin Trudeau posed the question “if Europe is unable to sign a progressive trade agreement with a country like Canada, then with whom does Europe think it could do business with in this postBrexit situation when there are many questions about Europe’s usefulness”? Other commentators have highlighted that the stalls from sub-national level, while slowing down agreements, should be welcomed, as this will lead to a more robust and legitimate economic globalisation. “We are in the beginning of a change in international relations and if we need a little more time, especially after Brexit, to regain trusts of citizens than you should take that time – and that’s exactly what happened,” says Schulz.

EC hits Apple with €13bn tax bill

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he European Commission (EC) has made a landmark ruling that US tech giant Apple received up to €13bn of illegal tax benefits from Ireland, which it says the country must now recover. The move has prompted angry responses from the US, which claims the ruling could jeopardise its trade relations with the European Union, while in Europe some are touting the idea of the UK taking Ireland’s place following Brexit and its potential independence from the bloc’s rules. The commission, which launched an in-depth investigation into Apple in 2014, says it has concluded

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“The heart of the issue is how intellectual property is treated by the tax authorities and what this means for where profits are created and therefore taxable.” Gregor Irwin, Global Counsel

that two tax rulings issued by Ireland to Apple have “substantially and artificially” lowered the tax paid by the company in the country since 1991. This “sweetheart” treatment of Apple gives it a significant advantage over other businesses that are subject to the same national taxation rules, making it illegal under EU state aid rules.

Apple’s preferential treatment meant it paid a 1% corporate tax rate on profits in 2003, which dropped to as low as 0.005% in 2014. “Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” says head of the investigation and commissioner in charge of competition policy, Margrethe Vestager.

The commission can order recovery of illegal state aid for a 10-year period preceding its first request for information in 2013, and says Ireland must now recover the unpaid taxes for the years 2003 to 2014 of up to €13bn, plus interest. “The EC ruling is more punitive than expected. The case has been brought under competition law, but the heart of the issue is how intellectual property is treated by the tax authorities and what this means for where profits are created and therefore taxable,” chief economist at Global Counsel Gregor Irwin, tells GTR. Apple and Ireland have strongly contested the ruling and pledged to appeal the decision.

November/December 2016 | 85

November/December 2016 issue  
November/December 2016 issue  
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