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UNCLAS SECTION 01 OF 17 BRUSSELS 000171 
 
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SUBJECT: EU INVESTMENT CLIMATE STATEMENT, 2009 
 
REF: 08 STATE 123907 
 
¶1.  Per reftel, this is the 2009 Investment Climate 
Statement for the European Union.  Post will email 
Word versions as instructed in reftel.  The 
statement covers the following categories: 
 
--Openness to Foreign Investment 
Q-Conversion and Transfer Policies 
--Expropriation and Compensation 
--Dispute Settlement 
--Performance Requirements and Incentives 
--Right to Private Ownership and Establishment 
--Protection of Property Rights 
--Transparency of Regulatory System 
--Efficient Capital Markets and Portfolio Investment 
--Political Violence 
--Corruption 
--Bilateral Investment Agreements 
--OPIC and Other Investment Insurance Programs 
--Labor 
--Foreign-Trade Zones/Free Ports 
--Foreign Direct Investment Statistics 
--Web Resources 
 
OPENNESS TO FOREIGN INVESTMENT 
------------------------------ 
 
EU Treaty Provisions Governing Investment/Historical 
Background 
 
¶2.  The European Union has perhaps 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 exceeding $1 
trillion.  This is a result, in part, of the process 
of European integration.  The 1957 Treaty of Rome 
(now known as the EU Treaty) established the 
European Community (now Union).  EU Treaty Article 
43 requires EU Member States to provide national 
treatment to investors from other Member States 
regarding the establishment and conduct of business. 
In addition, the EU Treaty creates "four freedoms" 
(free movement of capital, labor, goods and persons) 
within the European Union.  The free movement of 
capital in particular benefits all potential 
investors, whether they originate from an EU Member 
State or not.  The EU Treaty also grants investors 
national treatment.  Finally, 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. 
This was a remarkable achievement, given that the 
six original signatories to the Treaty had been at 
war with one another a decade previously. 
 
¶3.  The 1986 Single European Act further reduced 
barriers to intra-EU investment and legislation 
adopted subsequently even created opportunities for 
companies from one Member State to receive better 
than national treatment in another Member State. 
For example, in the financial services sector, 
German universal banks can conduct securities 
business freely in other Member States, even if 
local banks are not allowed to offer these services 
domestically by their local licensing authority. 
 
¶4.  Prior to the 1992 Treaty on the European Union, 
the Community itself had virtually no role in 
determining the conditions that would affect the 
entry of investors from third countries into the 
territories of the Member States.  While the Member 
States were compelled by the Treaty to grant 
national treatment to investors from other EU 
countries, they could erect and maintain barriers to 
investors from non-EU countries, consistent with 
their international obligations.  These obligations 
include the Treaties of Friendship, Commerce and 
Navigation (FCNs) 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, as 
 
BRUSSELS 00000171  002 OF 017 
 
 
mandated under Article 43 of the EU Treaty. 
 
¶5.  The EU's ability to regulate Member State 
treatment of incoming foreign investment increased 
considerably in 1993.  In that year, an EU Treaty 
revision abolished all restrictions on the movement 
of capital (including direct investment operations), 
both between EU Member States and between Member 
States and third countries (Article 56).  However, 
EU Member State measures in force on December 31, 
1993 denying national treatment to third-country 
investors were grandfathered.  The Treaty (Article 
57) now expressly provides for the adoption of 
common regimes in these areas: "The Council may, 
acting by a qualified majority on a proposal from 
the Commission, adopt measures on the movement of 
capital to or from third countries involving direct 
investment establishment, the provision of financial 
services or the admission of securities to capital 
markets.  Unanimity shall be required for measures 
under this paragraph which constitute a step back in 
Community law as regards the liberalization of the 
movement of capital to or from third countries." 
 
¶6.  In June 1997, the European Commission issued an 
interpretative communication clarifying the scope of 
EU Treaty provisions on capital movements and the 
right of establishment.  The Commission was reacting 
to limits that certain Member States had imposed on 
the number of voting shares that 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 EU Treaty.  Nationals 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 in 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 a number of 
infringement actions by the Commission.  The Court 
has subsequently ruled against golden share cases in 
several other Member States. 
 
¶7.  In June 2007, a new EU Directive to strengthen 
investor-voting rights across borders came into 
force.  The Directive bolsters cross-border 
investment by abolishing shareholder-voting 
impediments that were then prevalent in several 
Member States, such as the inability to vote 
electronically or by proxy.  It is too soon to know 
how the Directive will be implemented by the 
affected Member States and whether the Commission 
will need to take legal action to compel 
implementation. 
 
¶8.  On November 1, 2007, the EU's Markets in 
Financial Instruments Directive (MiFID) came into 
force.  The 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.  At the Commission's 
request, and in order to identify possible areas of 
improvement, the Qmmittee of European Securities 
Regulators (CESR) is currently carrying out an 
evaluation of MiFID's impact.  The results will be 
published in the spring of 2009. 
 
¶9.  In January, 2008, the European Commission 
proposed to remove barriers to cross-border venture 
capital investment and fundraisingQ The Commission 
proposal would authorize national regulators to 
recognize venture capital funds operating in other 
EU Member States in order to help innovative small 
businesses access risk capital.  The Commission 
invited Member States, when reviewing existing or 
 
BRUSSELS 00000171  003 OF 017 
 
 
adopting new legislation, to enable cross-border 
operations and consider mutual recognition of 
venture capital funds. 
 
U.S.-EU Efforts to Promote Open Investment 
 
¶10.  On November 9, 2007, the United States and the 
European Commission under the umbrella of the 
Transatlantic Economic Council (TEC) launched the 
"U.S.QEU Investment Dialogue" to reduce barriers to 
transatlantic investment and promote open investment 
regimes globally.  The Dialogue has met several 
times, most recently in October 2008.  The Dialogue 
prepared and recommended to the TEC an Open 
Investment Statement, which was adopted at the June 
2008 U.S.-EU Summit.  The Dialogue's ongoing work 
plan includes: 1) reviewing global investment 
trends, including sovereign wealth investment; 2) 
identifying and discussing issues of concern with 
respect to bilateral investment; 3) developing lists 
of priority third country investment barriers and 
discussing ways to address them; and 4) facilitating 
progress on investment issues in the OECD.  The 
United States and the EU continue to discuss the 
EU's evolving role with respect to foreign 
investment in other fora as well. 
 
EU Responses to the Financial Crisis 
 
¶11.  In response to the global financial crisis 
hitting Europe directly in fall 2008, the Commission 
put forward a number of legislative proposals 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 financial 
institutions. 
 
Credit Rating Agencies (CRAs): On November 12, 2008, 
the Commission proposed a new Regulation that seeks 
to harmonize rules on CRAs throughout the EU, 
ensuring that ratings are not affected by conflicts 
of interest, that CRAs defend the quality of their 
ratings and rating methodology, and that they act 
transparently.  The proposal calls for all CRAs 
whose ratings are used in Europe be registered in 
the EU and subject to European supervision and that 
they submit to stringent corporate governance rules, 
and forbids financial institutions in Europe to 
trade rated instruments without that instrument 
carrying a rating from an-EU registered CRA.  The 
Commission aims for adoption before the summer of 
¶2009. 
 
Deposit Insurance: 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 will be raised to 50,000 
as of June 30, 2009, and the payout period shortened 
from the current three months to 20 days.  Coverage 
will apply to all depositors in all Member States, 
regardless whether the currency is the Euro or not. 
The threshold will be raised to 100,000 on January 
1, 2010. 
 
Hedge Funds: In 2008, the European Parliament asked 
the Commission to enhance regulation of hedge funds 
and private equity funds.  In December 2008 the 
Commission launched a public consultation to develop 
a broad definition of hedge funds and to seek 
comments on the following issues: (1) systemic risk; 
(2) market integrity and efficiency; (3) risk 
management; and (4) transparency. Results of the 
consultation are expected in February 2009.  The 
consultation will serve as the basis for EU 
legislative proposals as well as for EU input into 
parallel reflections on hedge funds by the G-20. 
 
Ownership Restrictions and Reciprocity Provisions 
 
¶12.  EU Treaty Articles 43 (establishment) and 56/57 
(capital movements) have helped the EU to create one 
of the most hospitable legal frameworks for U.S. 
investment in the world.  However, restrictions on 
 
BRUSSELS 00000171  004 OF 017 
 
 
foreign direct investment do exist and others have 
been proposed. 
 
¶13.  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 covered by these GATS commitments. 
 
¶14.  After years of discussion, in March 2004, the 
Council of Ministers approved a Directive on 
takeover bids ("Takeover Directive").  This 
Directive seeks 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 final text is ambiguous as to 
whether the reciprocity principle would apply to 
non-EU firms.  However, the preamble states that 
application of the optional measures is without 
prejudice to international agreements to which the 
EC is a party.  France has indicated its intent to 
apply reciprocity to third countries.  Some other 
Member States appear to be leaning in the same 
direction. 
 
¶15.  The Takeover Directive was due to be 
implemented by Member States by May 20, 2006, but 
full implementation was delayed.  By February 2007, 
seventeen Member States had transposed the Directive 
or adopted necessary framework rules.  Belgium and 
the Netherlands implemented the directive in April 
and October 2007 respectively.  Other Member States 
implemented the Directive in late 2007 and 
throughout 2008. 
 
Energy Sector Liberalization 
 
¶16.  In September 2007, the European Commission 
introduced legislation intended to increase 
competition and investment in the gas and 
electricity sectors, featuring controversial plans 
to separate the production and distribution arms of 
large integrated energy firms.  After a year of 
negotiation over competing proposals, the French 
Presidency of the EU forged a political compromise 
during the EU Energy Ministers meeting of October 
10, 2008.  France and Germany successfully led a 
coalition against the Commission's plan to force 
integrated firms to sell off their transmission 
operations to keep them separate from energy 
production.  Under the agreement, French and German 
EDF, GDF, and RWE can retain ownership of their gas 
and electricity grids, although operations are meant 
to be completely independent and this is subject to 
outside supervision.  However, these monopolies 
cannot buy up transmission businesses in European 
countries where full unbundling has been introduced. 
 
¶17.  Germany also succeeded in pushing through a 
weaker version of the "third coQtry" clause whereby 
Member States would have the authority to review 
acquisitions of unbundled assets by third countries 
with a requirement that the Commission must be 
consulted to determine whether the acquisition would 
"put at risk the security of energy supply to the 
Community."   The Commission decision is only 
advisory, however.    The French led internal energy 
market compromise will now go to Parliament for 
 
BRUSSELS 00000171  005 OF 017 
 
 
approval, which could prove difficult before 
Parliamentary elections in June 2009. 
 
CONVERSION AND TRANSFER POLICIES 
-------------------------------- 
 
¶18.  Europe's single currency, the Euro, and the 
eleven 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 16 of the 27 EU Member States has 
shifted currency management and control of monetary 
policy to the European Central Bank (ECB) and the EU 
Council of Ministers.  In recent years, EU members 
Malta and Cyprus adopted the Euro on January 1, 
2008; Slovakia adopted the currency a year later, on 
January 1, 2009. 
 
¶19.  Remaining new EU Member States must join the 
Euro upon meeting specific economic convergence 
criteria although no time limit is placed for the 
application procesQo be completed.  The global 
financial crisis has led some countries outside of 
the Eurozone to consider accelerating entry into the 
zone.  The crisis has caused public opinion in 
Denmark, for example, which previously opted against 
Eurozone entry, to swing toward Euro adoption, and 
the Danish government may hold a new referendum on 
the issue.  Poland, the Czech Republic and the 
Baltic states are considering when they might be 
able to join the Eurozone. 
 
EXPROPRIATION AND COMPENSATION 
------------------------------ 
 
¶20.  The European Union does not have the authority 
to expropriate property; this remains the exclusive 
competence of the Member States. 
 
DISPUTE SETTLEMENT 
------------------ 
 
¶21.  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. 
 
PERFORMANCE REQUIREMENTS AND INCENTIVES 
--------------------------------------- 
 
¶22.  As the ten-year anniversary Q January 1, 2009 - 
of the implementation of European Economic and 
Monetary Union approached, political interest in a 
coordinated tax policy grew among some EU officials. 
However, Charlie McCreevy, Commissioner for the 
Internal Market and Services, has flatly rejected 
legislation to move toward tax harmonization across 
Member States.  A number of key Member States also 
object to proposals that would create a "common 
consolidated tax basis" across borders for European 
countries.  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" as well as 
individual Country Commercial Guides for Member 
State practices. 
 
BRUSSELS 00000171  006 OF 017 
 
 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
-------------------------------------------- 
 
¶23.  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 Member State practices. 
 
PROTECTION OF PROPERTY RIGHTS 
----------------------------- 
 
¶24.  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. 
 
¶25.  On October 23, 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.  There have been four rounds of ACTA 
negotiations, the last held in Paris in December, 
2008, with no agreement reached as of this writing. 
Talks will continue in 2009, with the next round 
scheduled for Morocco in March. 
 
¶26.  Despite overall strong support for IPR 
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 
 
¶27.  In April 2004, the EU adopted a Directive on 
the enforcement of intellectual and industrial 
property rights such as copyright and related 
rights, trademarks, designs, and patents.  This 
Directive requires Member States to apply effective 
and proportionate remedies and penalties that form a 
deterrent against those engaged in counterfeiting 
and piracy.  Member States are required to have a 
similar set of measures, procedures, and remedies 
available for right holders to defend their IPR. 
The Directive includes procedures covering evidence 
and measures such as injunctions and seizures. 
Remedies available to right holders include the 
destruction, recall, or permanent removal from the 
market of illegal goods, as well as financial 
compensation, injunctions, and damages.  There is a 
right to information allowing judges to order 
certain persons to reveal the names and addresses of 
those involved in distributing illegal goods or 
services, along with details of the quantities and 
prices involved. 
 
¶28.  Under the Directive, Member States are required 
to appoint national correspondents to cooperate and 
exchange information with other Member States and 
with the Commission.  The Directive takes on 
additional importance because of the expansion 
through EU enlargement of the EU's borders to the 
east, which moves them closer to countries such as 
Russia that have been a persistent source of pirated 
CDs and DVDs.  Member States were supposed to have 
implemented the Directive by April 2006.  At 
present, all but two states have transposed the 
legislation, with Sweden's law taking effect in 
April, 2009 and Luxembourg's to follow in May, 2009. 
 
¶29.  On January 3, 2008, the European Commission 
released a Communication on Creative Content online. 
The Commission wants to encourage the content 
industry, telecoms companies and Internet service 
 
BRUSSELS 00000171  007 OF 017 
 
 
providers to work together closely to make available 
more content online while at the same time ensuring 
a robust protection of intellectual property rights. 
It identifies legal offers and piracy as one of the 
four main challenges and suggests the promotion of 
codes of conduct between all stakeholders could be 
welcomed. 
 
¶30.  On January 29, 2008, the European Court of 
Justice (ECJ) issued an important decision 
confirming that EU rules do not require countries to 
disclose names of Internet file sharers in civil 
cases.  The 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.  This was the expected finding 
as the European Advocate General's opinion had said 
as much in July 2007.  The Court, however, said that 
Member States could Q 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. 
 
¶31.  The Commission held a High Level Conference on 
Counterfeiting and Piracy May, 15, 2008.  The 
Conference was billed as the "starting point of a 
process towards a long lasting strategy mobilizing 
both industry and public authorities to jointly 
combat counterfeiting and piracy."  A follow-up 
conference is planned for spring 2009. 
 
Criminal Enforcement 
 
¶32.  On November 23, 2005, the European Commission 
adopted a Communication outlining seven existing 
legislative acts that needed to be revised to 
include criminal sanctions in case of infringements. 
Affected areas include money laundering, 
intellectual property violations, corruption, human 
trafficking, maritime pollution, Euro 
counterfeiting, and Internet-related infringements. 
The Communication was adopted within the context of 
a European Court of Justice ruling that the 
Commission had the right to set criminal sanctions 
for breaches of legislation in policy areas where 
the EU law has primacy (i.e. first pillar), which 
Member States must then enforce.  According to the 
Communication, the Commission will establish 
criminal penalties that must be enforced by Member 
States.  Governments not enforcing them will be 
brought to the EU Court of Justice.  In light of the 
ECJ ruling, the Commission on April 26, 2006, 
reissued a proposed Directive on criminal measures 
to enforce IPR.  Since the revision, another ECJ 
case strengthened the Commission position regarding 
its competence to initiate directives on criminal 
enforcement; however, this newer case also ruled out 
mandating particular sanction levels.  The proposal 
was supported by the Council in September 2008 and 
is currently under consideration by the European 
Parliament. 
 
¶33.  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 entered into force on January 17, 
¶2007.  The Directive is meant to provide a secure 
environment for cross-border trade in copyright- 
protected goods and services, and to facilitate the 
development of electronic commerce in the field of 
new and multimedia products and services.  Authors' 
exclusive reproduction rights are guaranteed with a 
single mandatory exception for technical copies, and 
an exhaustive list of exceptions to copyrigh which 
are optional for Member States in term of including 
them in national law. 
 
¶34.  In April 2004, Directive 2004/48, designed to 
harmonize civil and administrative IP measures, 
procedures, and remedies, was adopted at the EU 
 
BRUSSELS 00000171  008 OF 017 
 
 
level.  That directive has been adopted by almost 
all member states.  Sweden implemented the Directive 
on January 1 2009, after a May 2008 European Court 
Ruling directing Sweden to do so, leaving Luxembourg 
as the only Member State not implementing.  The 
Commission released a comprehensive anti- 
counterfeiting plan, including criminal enforcement 
of IPR, which was supported by the Council in 
September 2008.  The trademark and copyright 
community would like to see the Directive succeed, 
but not if greatly weakened.  The Directive could 
facilitate cross-border enforcement. 
 
¶35.  The January 2008 Commission Communication on 
creative content online also discusses aspects of 
legal offers and piracy.  The Commission followed 
with a Communication on July 16, 2008 outlining an 
industrial property rights strategy for Europe, 
calling for development of a horizontal and 
integrated strategy across the spectrum of 
industrial property rights.  This includes the 
launch of a Commission study on patent quality, as 
well as an evaluation of the overall functioning of 
Community and Member State trademark systems.  On 
September 26, 2008, the European Union Competiveness 
Council adopted a resolution endorsing the 
Commission's approach and encouraging the Commission 
and Member States to step up the protection of 
intellectual property rights internationally and 
within the internal market. 
 
¶36.  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.  On October 1, 2004, the EC 
acceded to the World Intellectual Property 
Organization (WIPO) Madrid Protocol.  The accession 
of the EC 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 protection 
of their trademarks under the Community trademark 
system.  The link between the OHIM and the WIPO 
registration systems allows firms to profit 
simultaneously from the advantages of each, while 
also reducing costs and simplifying administrative 
requirements. 
 
¶37.  Designs: The EU adopted 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 the EU's Office for Harmonization in the 
Internal Market (OHIM) based in Alicante, Spain. 
They 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. 
 
¶38.  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 on January 1, 
¶2008.  In April, 2008, OHIM updated the guidelines 
for renewal of Registered Community Designs. 
 
BRUSSELS 00000171  009 OF 017 
 
 
 
¶39.  Patents: It is not yet possible to file for a 
single EU-wide patent that would be administered and 
enforced in all EU member states.  The most 
effective way to secure a patent across a range of 
EU national markets is to use the services of the 
European Patent Office (EPO).  EPO offers a one- 
stop-shop that enables 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.  Although the European Commission 
proposed a regulation in 2000 (COM 412) on the 
institutional framework regarding the establishment 
of a community patent, the Council has repeatedly 
failed to reach agreement on the dossier.  The main 
outstanding issues relate to the translation of 
patent claims and litigation options.  The Union has 
so far also failed to set up a streamlined system 
for the resolution of patent disputes.  The Council 
rejected a Commission request for a mandate to 
negotiate an EU patent litigation agreement in 
December 2006. 
 
¶40.  In March 2007, the Commission released a 
Communication (COM 2007/165) restating the 
Commission position that it would not abandon the 
Community patent and European Patent Litigation 
Agreement (EPLA) proposals.  In September, 2008, the 
EPO and the U.S. Patent and Trademark Office (USPTO) 
launched the Patent Prosecution Highway, a joint 
trial initiative that leverages 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 the work previously 
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 to move forward on work 
sharing and to undertake a number of projects to 
harmonize the environment for work sharing and 
eliminate unnecessary duplication of work. 
 
¶41.  Geographical Indications:  The United States 
has long had concerns that the EU's system for the 
protection of geographical indications, reflected in 
Community Regulation 1493/99 for wines and spirits 
and in previous Regulation 2081/92 for certain other 
agricultural products and foodstuffs, appears to 
fall short of what is required under the TRIPS 
Agreement. As a result of a WTO dispute launched by 
the United States, the WTO Dispute Settlement Body 
(DSB) ruled on April 20, 2005, that EC regulation of 
food-related geographical indications (GIs) was 
inconsistent with the EC's obligations under the 
TRIPS Agreement and the GATT 1994.  In its report, 
the DSB determined that the EC's GI regulation 
impermissibly discriminated against non-EC products 
and persons, and that the regulation could not 
create broad exceptions to trademark rights 
guaranteed by the TRIPS Agreement. 
 
¶42.  In response, the EC published an amended GI 
regulation in April 2006 intended to implement the 
DSB's recommendations and rulings.  The United 
States retains concerns about this amended 
regulation and is closely monitoring its 
application.  In addition, similar provisions are 
appearing in regulations governing other products, 
such as wine and spirits, and the United States will 
be carefully monitoring developments in those areas 
as well. 
 
¶43.  EU International Efforts to expand GI 
protection: The EU continues to press forward with 
its 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 as 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 
 
BRUSSELS 00000171  010 OF 017 
 
 
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. 
 
¶44.  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, there have been bi-annual 
meetings between officials and between officials and 
rights holders to continue to identify new areas for 
cooperation including capacity building, joint 
messaging and coordinated border actions.  On 
February 22, 2008, the United States and European 
Union announced the results of Operation 
Infrastructure, the first joint IPR operation 
undertaken by the U.S. Customs and Border Protection 
and the EU.  The operation resulted in the seizure 
of over 360,000 counterfeit integrated circuits and 
computer network components bearing more than 40 
different trademarks. 
 
TRANSPARENCY OF REGULATORY SYSTEM 
--------------------------------- 
 
¶45.  While generally considered transparent, in that 
all laws and regulations are published in the 
Official Journal of the European Communities, the EU 
has worked to improve transparency and simplify its 
regulatory system.  Building on the 2002 Better 
Regulation Action Plan, and the 2003 Inter- 
Institutional Agreement on Better Lawmaking, the EU 
has made both transparency and smart regulation the 
themes of its regulatory efforts since 2005. 
 
¶46.  In November 2005, the European Commission 
adopted a Communication launching a European 
Transparency initiative (ET).  The initiative 
focused on four main issues: availability of data as 
regards end-recipients of EU subsidies; ethics of 
public office holders; transparency of lobbying 
activities; and access to documents.  On EU 
subsidies, the Commission established a central web 
portal, providing links to information on end- 
recipients.  In December 2007 it released a 
comparative study of codes of conduct for public- 
office holders.  In order improve transparency in 
lobbying, the Commission set up a voluntary public 
register in 2007, followed by the establishment of a 
common code of conduct for all lobbyists in 2008. 
 
¶47.  In 2005, the Commission adopted an action plan 
for simplifying and improving existing EU 
legislation and reducing the administrative burden 
on stakeholders within the regulatory process.  The 
EU's Better Regulation policy aims at simplifying 
and improving existing regulation, to better design 
new regulation and to reinforce the respect and the 
effectiveness of the rules, while respecting the EU 
proportionality principle. 
 
¶48.  In its 2007 review of Better Regulation 
progress, the Commission presented an action program 
to measure administrative costs and cut 
administrative burdens of existing EU legislation by 
25 percent by 2012 using the EU Standard Cost Model. 
This would ultimately increase annual GDP by about 
1.5 percent, or around  150 billion.  The 
Commission set up a high level expert group on the 
reduction of administrative burdens to advise it on 
the implementation of this program. 
 
¶49.  The Commission published follow up Strategic 
Reviews of Better Regulation in the EU in 2008 and 
2009, in which it committed to continue to simplify 
legislation, further reduce administrative costs, 
increase the use of impact assessments (note: the 
 
BRUSSELS 00000171  011 OF 017 
 
 
Commission carried out over 180 impact assessments 
in 2008), and help shape global regulation.  In 
2008, the Commission also strengthened the role of 
the Impact Assessment Board, and published the 
"Second Progress Report on the Strategy for 
Simplifying the Regulatory Environment", an update 
of the EC's rolling simplification program.  The 
program currently covers around 200 regulations. 
Some of those initiatives are entirely new (15) and 
cover various policy areas such as agriculture, 
automotives, public health, environment and energy. 
For 2009, the Commission will present 33 new 
regulation simplification initiatives.  In addition, 
the European Council, under the Czech Presidency, 
will conduct a stock-taking exercise of Better 
Regulation in March 2009. 
 
U.S.-EU Regulatory Cooperation 
 
¶50.  Unnecessary regulatory divergences between the 
United States and EU are the primary source of 
friction in our bilateral trade and investment 
relationship.  As such, regulatory cooperation to 
avoid such divergence has intensified significantly 
since the December 1997 U.S.-EU Summit Agreement on 
Regulatory Cooperation Principles.  We agreed on 
joint Regulatory Cooperation Guidelines in 2002, and 
intensified regulatory cooperation in 6 sectors in 
the first "Roadmap" in 2002; by 2007 such sectoral 
regulatory cooperation covered 17 sectors.  Much of 
this work is now subsumed under the High Level 
Regulatory Cooperation Forum, established in 2005 as 
a place for regulators from many disciplines to 
exchange best practices.  The HLRCF has now met five 
times (most recently in October 2008) and reports 
regularly to the cabinet-level TEC. 
 
¶51.  Recent key highlights of our bilateral 
regulatory cooperation include: 
 
--a joint OMB-DG SANCO draft report reviewing the 
application of EU and U.S. regulatory impact 
assessment guidelines and their impact on trade and 
investment (2007).  Consequently, both sides are 
using recommendations from the review to ensure 
better analysis of and greater transparency about 
the effects of proposed regulations on international 
trade and investment. 
 
--closer cooperation between the Consumer Product 
Safety Commission (CPSC) and DG SANCO in matters of 
product safety, regulatory issues presented by 
emerging technologies, impact analysis and risk 
assessment methodologies, and the use of 
international standards in regulation (2008). 
 
--CPSC, DG Enterprise, and DG SANCO set up a toy 
safety working group to discuss toy and children's 
product import safety related matters (2008). 
 
--CPSC and DG SANCO conducted a series of joint 
outreach seminars in China on U.S. and EU safety 
requirements (2008) 
 
--the U.S. agreed to include an international flag 
in the fall 2008 U.S. Regulatory Plan and Unified 
Agenda of planned regulatory activities.  This flag 
indicates whether a USG agency expects a regulatory 
action under development to have an impact on 
international trade or investment. 
 
--OMB, the U.S. Office of Science and Technology 
Policy (OSTP) began conversations with DG SANCO to 
facilitate an international dialogue on risk 
analysis, leading to OMB-OSTP hosted risk analysis 
discussions in July, 2008 with representatives from 
the U.S., EU, and Canada participating.  With OMB 
and OSTP support, DG SANCO built on the summer 
dialogue by hosting the 1st International Conference 
on Risk Assessment in Brussels in November, 2008. 
 
--OMB has drafted a document for public comment 
elaborating how USG agencies should meet their 
obligations to analyze international effects in 
regulatory impact analyses for proposed final 
rulemaking. 
 
BRUSSELS 00000171  012 OF 017 
 
 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
--------------------------------------------- ----- 
 
¶52.  The EU Treaty specifically prohibits 
restrictions on capital movements and payments 
between the Member States and between the Member 
States and third countries. 
 
¶53.  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.  By the end of 
2008, the EU had adopted and almost fully 
implemented 43 of the 45 measures to increase market 
and regulatory efficiency and increase coordination 
among Member State supervisory and regulatory 
authorities, and has acted to implement the 
remaining two measures.  The Commission has 
commissioned a study that is expected to be released 
in early 2009 assessing implementation of the FSAP. 
 
¶54.  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) and Takeover Bids (to facilitate 
cross-border takeovers), and Capital Requirement 
(implementing the Basel II Accord). 
 
¶55.  Accounting Equivalence: On December 12 2008, 
the European Commission granted equivalence to the 
Generally Accepted Accounting Principles (GAAPs) of 
certain third countries (including the U.S.) as from 
January 2009.  As a result, foreign companies listed 
on EU markets will continue to be able to file their 
financial statements prepared in accordance with 
those GAAPs beyond the transitional period expiring 
at the end of 2008. 
 
¶56.  Review of the Prospectus and Transparency 
Directives: A Commission review of the Prospectuses 
and Transparency Directives is currently underway. 
In addition to including provisions implementing the 
US, Japan, China, Canada, South Korea and India 
GAAPs equivalence to International Financial 
Reporting Standards (IFRS) as adopted by the EU, on 
January 9 2009, the Commission submitted to public 
consultation a proposal to review Directives 
2003/71/EC and 2004/109/EC addressing: (1) the 
definition of qualified investors; (2) the revision 
of exempt offers (including employee shares 
schemes); (3) the revision of annual disclosure 
obligation; (4) the time limit for exercising the 
right of withdrawal; (5) certain thresholds of the 
Directives; (6) the effectiveness of the prospectus 
summary; (7) the disclosure requirements for offers 
with Government guarantee schemes; and (8) the 
disclosure requirements for small quoted companies 
and for rights issues. A final proposal is expected 
to be submitted to Parliament and Council during the 
summer of 2009. 
 
¶57.  Review of the Capital Requirement Directive 
(CRD): On 1 October 2008, the Commission submitted a 
proposal to amend the Capital Requirement Directive 
(CRD) by: (1) requiring banking institutions to hold 
a higher amount of capital to protect themselves 
against the risk of default; (2) creating ad-hoc 
Colleges of Supervisors that will supervise banks 
with cross-border operations; and (3) requiring 
financial institutions that originate securitized 
products to retain 5% of the securities. Inter- 
institutional negotiations are underway to achieve 
single reading adoption by April 2009. 
 
¶58.  Solvency II: In July 2007, the Commission 
proposed a Framework Directive to consolidate 
existing legislation in the insurance sector and 
broadening requirements for the financial position 
and solvency of insurance businesses in the EU 
 
BRUSSELS 00000171  013 OF 017 
 
 
(Insurance Solvency II).  This Directive contains 
some provisions that would require insurance 
companies from third countries to post higher 
capital if their home country regulatory structure 
is not deemed "equivalent" to the one created by 
Solvency II for Europe. The Directive introduces the 
principles of Group supervision, strengthening the 
powers of the home regulator, and of Group support, 
which allow branches to benefit from the support of 
the group to meet their capital requirements. The 
Commission still hopes for European Parliament and 
Council approval of Solvency II in 2009, with 
adoption of implementing measures to occur in 2010 
and transposition into national law completed by 
2012, although the two institutions are deeply 
divided on the issues of Group support and Group 
supervision, which are supported by the Parliament 
but have been rejected by the Council. 
 
¶59.  Reform of mutual funds oversight:  On 13 
January 2009 the European Parliament adopted 
legislation reforming the UCITS Directive to achieve 
a less fragmented and more efficient investment fund 
market in the EU. UCITS -- 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," Qich will make it easier and less 
expensive for investment funds to operate outside 
their state of origin.  The legislation needs now to 
be formally approved by Council, and implemented by 
Member States by 2011. 
 
¶60.  Sovereign wealth funds: The Commission outlined 
its approach to Sovereign Wealth Funds (SWFs) in its 
In February 2008 Communication.  The EU intends to 
keep markets open for foreign capital, support 
multilateral efforts (such as those which have been 
conducted by the IMF and the OECD), rely on existing 
laws, respect the EC Treaty, and ensure 
proportionality and transparency. The EU has since 
supported the IMF work stream that produced the 
Santiago principles for SWFs in October 2008, and 
the OECD parallel work stream that in June 2008 led 
to the first declaration on a framework for 
recipient countries. A final OECD report on the 
issue is expected towards the middle of 2009. 
 
¶61.  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.  In November 2005, 
the Commission issued a new Legal Framework for 
Cross-Border Payments in the EU.   In May 2007, the 
Commission issued a Green Paper laying out goals and 
launching a debate on future EU policy on retail 
financial services.  In November 2007, the 
Commission released a package of initiatives to 
modernize the EU single market, including 
initiatives to increase consumer choice of banking 
services, facilitate switching of banking accounts, 
complete the development of the Single Euro Payments 
Area (SEPA), and improve transparency of retail 
investment products.  Work in all the above areas is 
continuing as scheduled, though is no longer an 
immediate concern. 
 
¶62.  The transposition into national law of the 
Payment Services Directive, SEPA's legal basis, is 
on track, according to the Commission, and should be 
completed by 1 November 2009.  The initiative enjoys 
broad support from the industry, and the Commission 
expect that as of November 2009 the cost of a cross- 
border direct debit in euro will become the same as 
the cost of a national direct debit, as it is 
already the case with credit transfers, ATM cash 
withdrawals and card payments. 
 
¶63.  On 1 December 2008, the banking industry took 
up the Commission's invitation and adopted a set of 
'Common Principles for Bank Account Switching'. 
 
BRUSSELS 00000171  014 OF 017 
 
 
According to the Principles, if a consumer wishes to 
change bank, within the same Member State, the new 
bank will act as the primary contact point and offer 
its assistance throughout the switching process. The 
Principles will apply in each Member State beginning 
1 November 2009. 
 
Financial supervision 
 
¶64.  As a result of the current financial crisis, a 
deep international debate has started on how to 
update the current supervisory architecture in order 
to detect and prevent future crisis.  The EU is 
involved directly and indirectly through its Member 
States' participation in international bodies (G-20, 
FSF, G-8).  The Commission has proposed a number of 
regulatory measures that directly affect the way in 
which financial supervision at EU level will be 
carried out in the future (Solvency II, CRD, CRA). 
 
¶65.  Bank supervision authority and enforcement 
remains a Member State competence.  However, three 
EU-wide communities of sectoral financial 
supervisors were created to facilitate efficient and 
comparable rule making throughout the EU.  These 
are: the Committee of European Bank Supervisors 
(CEBS), composed of Member State supervisors; CESR, 
the Committee of European Securities Regulators; and 
CEIOPS, the Committee of European Insurance and 
Occupational Pensions Supervisors. Financial market 
turmoil in the second half of 2007 increased 
discussion among EU institutions of ways to 
strengthen mechanisms to coordinate financial 
supervision across the EU. 
 
¶66.  Review of the decisions setting up the 
committees of supervisors:  At the beginning of 2009 
the Commission is expected to publish its proposal 
for the revision of the Commission Decisions 
establishing CESR, CEBS and CEIOPS. The revision is 
expected to strengthen the role of the Committees 
and to include the requirement for each national 
supervisor to include in its statutes a European 
dimension, to introduce qualified majority voting 
for decision-making and to adopt annual work- 
programs to enhance the Committees' accountability 
towards EU institutions. 
 
¶67.  Banking supervision is also being addressed by 
the provisions of the proposal to review the Capital 
Requirement Directive, through its focus on 
establishing Colleges of Supervisors to oversee the 
cross-border banking institutions.  CEBS will have a 
pivotal role.  Adoption of the legislation is 
forecasted for April 2009, but negotiations between 
Council and Parliament are on-going. 
 
¶68.  The supervision of insurance groups is 
addressed in the Solvency II proposal, introducing 
the principles of Group supervision, which 
strengthen the powers of the home regulator, and of 
Group support, which allow branches to benefit from 
the support of the group to meet their capital 
requirements. There are still important differences 
between Council and Parliament, but supporters of 
the legislation hope for approval by April 2009. 
 
¶69.  De LaRosiere group:  In October 2008, EC 
President Barroso established a high-level group on 
cross border financial supervision.  The group, 
chaired by former IMF Managing Director Jacques de 
Larosiere, is expected to present its report in 
March 2009.  The aim of the panel is to suggest ways 
to restructure and reform supervision in a way which 
is adequate for the common European market, but also 
bearing in mind the need to collaborate on 
supervisory issues in the global context.  The De 
Larosiere report will likely also serve as the basis 
for the EU contribution to the G-20 meeting in 
April. 
 
¶70.  In addition, European monetary union gives the 
European Central Bank limited authority over the 
banking system in the 16-member Euro zone in certain 
areas, including the issuance of Euro currency, 
banking statistics, a smooth payments system, and 
 
BRUSSELS 00000171  015 OF 017 
 
 
advising on banking supervision. 
 
Additional information is available at: 
http://ec.europa.eu/internal_market/finances/ actionp 
lan/index_en.htm. 
 
POLITICAL VIOLENCE 
------------------ 
 
¶71.  Political violence is not unknown in the 
European Union, but it is, in general, extremely 
rare.  Such incidents are almost always regional in 
nature, and individual Country Commercial Guides 
should be consulted for more details on problems in 
specific regions. 
 
CORRUPTION 
---------- 
 
¶72.  Per EU Treaty Article 280 (5), the EU and the 
Member States are jointly responsible for the fight 
against fraud and corruption affecting the EU's 
financial interests.  A detailed overview of EU and 
Member State achievements in this regard (e.g., 
increasing EU capacity to conduct anti-fraud 
investigations, greater cooperation with 
international partners) is provided in the EU's 
Anti-Fraud Office (OLAF) most recent annual report 
(for Year 2007) on the fight against fraud. 
 
This report is available online at the EU's Anti- 
Fraud Office website: 
http://ec.europa.eu/anti_fraud/reports/olaf/2 007/en. 
pdf 
 
The report broadly outlines the developments that 
the Community has taken in terms of protecting its 
financial interests and addressing fraud.  An 
overview is given of the major developments in 2007. 
 
BILATERAL INVESTMENT AGREEMENTS 
------------------------------- 
 
¶73.  The EU does not yet have any bilateral 
investment treaties in the traditional sense, 
although virtually all Member States have extensive 
networks of such treaties with third countries. 
However, the EU's "Europe," "Association" and other 
such agreements with preferential trading partners 
often contain provisions directly addressing the 
treatment of investment, generally providing at 
least for establishment, and repatriation of capital 
and profits.  In the context of EU enlargement 
negotiations, the U.S. Government has conveyed to 
the EU its concern that U.S. bilateral investment 
treaties with accession countries should not be 
adversely affected. 
 
¶74.  Other regional or multilateral agreements 
addressing the admission of investors to which the 
Community and/or Member States have adhered include: 
 
The OECD codes of liberalization, which provide for 
non-discrimination and standstill for establishment 
and capital movements, including foreign direct 
investment; 
 
The Energy Charter Treaty (ECT), which contains a 
"best efforts" national treatment clause for the 
making of investments in the energy sector; and, The 
GATS, which contains an MFN obligation on all 
measures affecting the supply of services, including 
in relation to the mode of commercial presence. 
 
¶75.  In November 2007, the U.S. and the European 
Commission formally launched a bilateral investment 
dialogue to reduce barriers to transatlantic 
investment and promote open investment regimes 
globally (see Openness to Foreign Investment above). 
 
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
-------------------------------------------- 
 
¶76.  OPIC programs are not available in the EU, as a 
whole, although individual Member States have 
benefited from such coverage. 
 
BRUSSELS 00000171  016 OF 017 
 
 
 
LABOR 
----- 
 
¶77.  Issues such as employment, worker training, and 
social benefits remain primarily the responsibility 
of EU Member States.  However, Member States are 
coordinating ever more closely their efforts to 
increase employment through macroeconomic policy 
cooperation, guidelines for action, exchange of best 
practices, and 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. 
 
¶78.  Helpful information from the EU can be found on 
websites for the European Commission's Directorate- 
General for Employment and Social Affairs, 
(http://ec.europa.eu/dgs/employment_social/in dex_en. 
htm), and on the Eurostat website 
(http://epp.eurostat.ec.europa.eu/portal/page ?_pagei 
d=1090,30070682,1090_33076576&_dad=portal&_sc hema=PO 
RTAL). 
 
¶79.  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. 
Member States have among the highest rates of 
ratification and implementation of ILO conventions 
in the world. 
 
¶80.  There is a strong tradition of labor unionism 
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 membership in labor unions, 
several large Member States, notably Germany and the 
United Kingdom, have seen their levels of 
organization drop nearly to U.S. 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. 
 
FOREIGN-TRADE ZONES/FREE PORTS 
------------------------------ 
 
¶81.  European Union 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). 
 
¶82.  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: 
 
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; 
 
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. 
 
¶83.  The use of free trade zones varies from Member 
State to Member State. 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 
September 2007 is available online at: 
 
BRUSSELS 00000171  017 OF 017 
 
 
http://ec.europa.eu/taxation_customs/resource s/docum 
ents/customs/procedural_aspects/imports/free_ zones/l 
ist_freezones.pdf. 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
------------------------------------ 
 
¶84.  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 2007, was 
just over USD $1.38 trillion, up from $1.23 trillion 
at the end of 2006.  The United Kingdom was the 
major EU host to U.S. foreign direct investment, 
with $399 billion, followed by the Netherlands ($370 
billion), Luxembourg ($114 billion), and Germany 
($107 billion). 
 
For virtually all EU Member States, the largest 
"foreign" investors are in fact from other Member 
States.  More statistics on U.S. investment abroad 
are available at: 
http://www.bea.gov/international/datatables/u sdpos/u 
sdpos_07.htm 
 
WEB RESOURCES 
------------- 
 
Internal Market DG Q Financial Services Unit 
http://ec.europa.eu/internal_market/finances/ actionp 
lan/index_en.htm 
 
Economic and Financial Affairs DG 
http://ec.europa.eu/economy_finance/index_en. htm 
 
Employment and Social Affairs DG 
http://ec.europa.eu/dgs/employment_social/ind ex_en.h 
tm 
 
Office for Harmonization in the Internal Market 
http://oami.europa.eu/ 
 
EU Anti-Fraud Office 
http://ec.europa.eu/anti_fraud/index_en.html 
 
Eurostat Q EU Statistical Office 
http://epp.eurostat.ec.europa.eu/portal/page? _pageid 
=1090,30070682,1090_33076576&_dad=portal&_sch ema=POR 
TAL 
 
U.S. Bureau of Economic Analysis Q Department of 
Commerce 
http://www.bea.gov 
 
European Patent Office 
http://www.epo.org/index.html 
MURRAY