REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the exercise of the power to adopt delegated acts conferred on the Commission pursuant to Council Regulation (EC)No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom
Date: 2018-06-19
Institutions: European Commission, Service for Foreign Policy Instruments
Subjects: EU restrictive measure, Iran, United States, application of EU law, delegated legislation, exchange of information, extra-territoriality, free movement of capital, international trade, third country

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   EUROPEAN COMMISSION  Brussels, 19.6.2018 COM(2018) 494 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the exercise of the power to adopt delegated acts conferred on the Commission pursuant to Council Regulation (EC)No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of  legislation adopted by a third country, and actions based thereon or resulting therefrom  
 
 
INTRODUCTION  

Council  Regulation  (EC)  No  2271/96  ('Regulation')  provides  protection  against  and 
counteracts  the  effects  of  the  extra-territorial  application  of  the  laws  specified  in  the 
Annex of this Regulation, including regulations and other legislative instruments, and of 
actions based thereon or resulting therefrom, where such application affects the interests 
of  persons,  referred  to  in  Article  11  of  the  Regulation,  engaging  in  international  trade 
and/or  the  movement  of  capital  and  related  commercial  activities  between  the  EU  and 
third countries. 

Article 1 of the Regulation empowers the Commission to adopt delegated acts to add to 
the  Annex  to  this  Regulation  laws,  regulations  or  other  legislative  instruments  of  third 
countries  having  extraterritorial  application  and  causing  adverse  effects  on  the  interests 
of  the  Union  and  the  interests  of  natural  and  legal  persons  exercising  rights  under  the 
Treaty on the Functioning of the European Union, and to delete laws, regulations or other 
legislative instruments when they no longer have such effects. 

LEGAL BASIS  

This report is required under Article 11a of the Regulation. Pursuant to that provision, the 
power to adopt delegated acts is conferred on the Commission for a period of five years 
from 20 February 2014 and the Commission is required to prepare a report in respect of 
the delegation of power not later than nine months before the end of the five-year period.  

EXERCISE OF THE DELEGATION  

Since  the  entry  into  force  of  the  Regulation,  the  Commission  has  made  use  of  the 
empowerment  once.  On  8  May  2018,  the  United  States  announced  they  will  no  longer 
waive their national restrictive measures relating to Iran, following their withdrawal from 
the  Joint  Comprehensive  Plan  of  Action.  Some  of  those  measures  have  extra-territorial 
application and can cause adverse effects on the interests of the Union and the interests of 
natural  and  legal  persons  exercising  rights  under  the  Treaty  on  the  Functioning  of  the 
European Union.  

In reaction to the above, on 6 June 2018 the Commission adopted a delegated act 
amending  the  Annex  to  the  Regulation  so  as  to  include  the  United  States' 
restrictive  measures  which,  once  reimposed,  would  negatively  affect  EU 
operators engaging in legitimate business with Iran. From that date, the European 
Parliament and Council have a two month non-objection period. 

The reasons which led the co-legislators to delegate the power to adopt delegated acts on 
the Commission are still valid and the Commission may indeed need to make use of the 
empowerment in the future.  

CONCLUSION  

The Commission has, over the past five years, exercised the delegated powers conferred 
to  it  under  the  Regulation  once.  The  Commission  sees  the  need  to  extend  the 
empowerment, given that the reasons which led the co-legislators to delegate the power 
to  adopt  delegated  acts  on  the  Commission  are  still  valid.  With  this  report,  the 
Commission complies with the reporting requirement under Article 11a of the Regulation 
and invites the European Parliament and the Council to take note of this report. 

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