30 Ukraine and Russia: EU restrictive
measures
| Committee's assessment
| Politically important |
| Committee's decision | Cleared from scrutiny
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| Document details | Restrictive measures on investment in Crimea or Sevastopol (36260), (36261)
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| Legal base | Article 29 TEU; unanimity and Article 215 TFEU; QMV
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| Department | Business, Innovation and Skills
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Summary and Committee's conclusions
30.1 These instruments were enacted on 30 July. They
emanate from the 21-22 March European Council meeting, which refused
to recognise the illegal referendum in Crimea, strongly condemned
the illegal annexation of Crimea and Sevastopol to the Russian
Federation, refused to recognise it, and asked the Commission
to evaluate the legal consequences of the annexation of Crimea
and to propose economic, trade and financial restrictions regarding
Crimea for rapid implementation.
30.2 The prohibitions in the Council Decision and
Council Regulation extend the prohibition on imports from Crimea
and Sevastopol (which were enacted on 23 June 2014) to also cover
investment (granting of loans or credit, the acquisition or extension
of a participation or a joint venture) by EU persons and enterprises
in enterprises established in Crimea or Sevastopol that are engaged
in the creation, acquisition or development of infrastructure
in the areas of transport, telecommunications or energy. The regulation
also bans investment in activity relating to the exploitation
of oil, gas or mineral resources in Crimea or Sevastopol.
30.3 The Minister (Lord Livingston) explains that
the ban applies to all new investments, and does not affect existing
investments or commitments in existing contracts until 28 October
2014.
30.4 This ban, he says, therefore continues to give
the clear message that the EU views the annexation as invalid
and that Crimea and Sevastopol remain part of Ukrainian sovereign
territory.
30.5 The Minister also notes that (as with the earlier
measures) the impact on the UK economy is expected to be negligible.
30.6 Given the continuing interest in the Ukraine
crisis and the EU's response to it, we are drawing the adoption
of these measures to the attention of the House. We leave it to
interested Members to pursue any questions that they feel may
arise via the many means at their disposal.
30.7 In the circumstances outlined by him and
on this occasion, we do not object to the Minister having overridden
scrutiny, and now clear the Council Decision and Council Regulation.
Full details of the documents:
Council Regulation (EU) No. 825/2014 of 30 July 2014 amending
Regulation (EU) No. 692/2014 concerning restrictions on the import
into the Union of goods originating in Crimea or Sevastopol, in
response to the illegal annexation of Crimea and Sevastopol: (36260)
—; Council Decision 2014/507/CFSP of 30 July 2014 amending
Decision 2014/386/CFSP concerning restrictions on goods originating
in Crimea or Sevastopol, in response to the illegal annexation
of Crimea and Sevastopol: (36261) —.
Background
30.8 On 23 June 2014, the EU Council issued the following
statement:
"The Council today prohibited the import
of goods originating in Crimea or Sevastopol into the European
Union. This decision is part of the EU's non-recognition policy
regarding the illegal annexation of Crimea following the European
Council of 20/21 March, which condemned the illegal annexation
of Crimea and Sevastopol and stated that it will not recognise
it.
"As of 25 June, goods originating in Crimea
and Sevastopol may no more be imported into the European Union.
In addition, it will be prohibited to provide financial and insurance
services related to the import of such goods.
"Goods originating in Crimea or Sevastopol,
which have been granted a certificate of origin by the Ukrainian
authorities, may, however, still be imported into the EU."[130]
30.9 That decision emanated from the 21-22 March
European Council meeting, in which the Council said (in paragraph
29 of the Council Conclusions):
"The European Union remains committed to
uphold the sovereignty and territorial integrity of Ukraine. The
European Council does not recognise the illegal referendum in
Crimea, which is in clear violation of the Ukrainian Constitution.
It strongly condemns the illegal annexation of Crimea and Sevastopol
to the Russian Federation and will not recognise it. The European
Council asks the Commission to evaluate the legal consequences
of the annexation of Crimea and to propose economic, trade and
financial restrictions regarding Crimea for rapid implementation."[131]
30.10 Also relevant is Resolution 68/282 on the territorial
integrity of Ukraine, which was adopted by the UN General Assembly
on 27 March 2014, and which states:
"Noting that the referendum held in the
Autonomous Republic of Crimea and the city of Sevastopol on 16
March 2014 was not authorized by Ukraine,
"1. Affirms its commitment to the sovereignty,
political independence, unity and territorial integrity of Ukraine
within its internationally recognized borders;
"2. Calls upon all States to desist and
refrain from actions aimed at the partial or total disruption
of the national unity and territorial integrity of Ukraine, including
any attempts to modify Ukraine's borders through the threat or
use of force or other unlawful means;
"3. Urges all parties to pursue immediately
the peaceful resolution of the situation with respect to Ukraine
through direct political dialogue, to exercise restraint, to refrain
from unilateral actions and inflammatory rhetoric that may increase
tensions and to engage fully with international mediation efforts;
"4. Welcomes the efforts of the United
Nations, the Organization for Security and Cooperation in Europe
and other international and regional organizations to assist Ukraine
in protecting the rights of all persons in Ukraine, including
the rights of persons belonging to minorities;
"5. Underscores that the referendum held
in the Autonomous Republic of Crimea and the city of Sevastopol
on 16 March 2014, having no validity, cannot form the basis for
any alteration of the status of the Autonomous Republic of Crimea
or of the city of Sevastopol;
"6. Calls upon all States, international
organizations and specialized agencies not to recognize any alteration
of the status of the Autonomous Republic of Crimea and the city
of Sevastopol on the basis of the above-mentioned referendum and
to refrain from any action or dealing that might be interpreted
as recognizing any such altered status."[132]
30.11 Council Decision 2014/386/CFSP and Council
Regulation 692/2014 accordingly imposed restrictions on
goods originating in Crimea or Sevastopol and on the provision,
directly or indirectly, of financing or financial assistance,
as well as insurance and reinsurance, related to the import of
such goods, in response to the illegal annexation of Crimea and
Sevastopol.[133]
The Minister's Explanatory Memorandum of 6 August
2014
30.12 The Minister of State for Trade and Investment
at the Department for Business, Innovation and Skills (Lord Livingston)
explains that:
— the further Council Decision and Council
Regulation:
· extends the prohibition on imports to
cover investment (granting of loans or credit, the acquisition
or extension of a participation or a joint venture) by EU persons
and enterprises in enterprises established in Crimea or Sevastopol
that are engaged in the creation, acquisition or development of
infrastructure in the areas of transport, telecommunications or
energy;
· also bans investment in activity relating
to the exploitation of oil, gas or mineral resources in Crimea
or Sevastopol;
· prohibits the provision, directly or indirectly,
of technical assistance, brokering services as well as the sale
or provision of key equipment and technology related to any investment
activity or exploitation of oil, gas or mineral resources;
· list the specific items to which the ban
applies in the Regulation;
— the ban on the provision of technical
assistance, brokering services and financial assistance or financing
also applies to the provision of key equipment and technology;
— the ban applies to all new investments,
and does not affect existing investments or commitments in existing
contracts until 28 October 2014.
The Government's view
30.13 This ban, the Minister says:
"therefore continues to give the clear message
that the EU views the annexation as invalid and that Crimea and
Sevastopol remain part of Ukrainian sovereign territory."
30.14 He also notes that, at the press conference
at the close of the 21 March European Council, the Prime Minister
underlined his support for this action, stating:
"goods from Crimea have to come through
Ukraine or they're going to get very hefty penalties and tariffs
put on them."
30.15 The Minister goes on to say:
"The EU does not and will not recognise
the illegal annexation of Crimea by Russia. The Government has
been clear that it believes this violates the UN Charter and is
illegal under international law. The EU has already taken
decisions on a range of measures in order to give practical effect
to its policy of non-recognition of the annexation. It has already
sanctioned a number of companies expropriated by Russia and Russian
companies benefitting from the annexation. And it has already
imposed a ban on imports from Crimea which are not accompanied
by Ukrainian paperwork. And more measures will follow. The aim
of the "Crimea Consequences" measures is not to punish
or harm the people of Crimea, who have been subjected to an illegal
annexation. The objective is to make it more difficult for Russia
to integrate the Crimean economy and to develop it rapidly into
a showcase for its policies in Ukraine and the annexation."
30.16 With regard to the implications for the UK,
the Minister says:
"The impact on the UK economy is expected
to be negligible: OECD data shows UK investment in Ukraine to
be about £200 million in 2012, or about 0.01% of the UK's
outward stock of Foreign Direct Investment. A very small proportion
of this may be invested in Crimea and Sevastopol.
"The proposal is therefore not expected
to impact the UK significantly, given the small scale of possible
UK investment in Crimea and the potential for business with Crimea
to continue as before."
30.17 Finally, the Minister notes that this "has
been done to an expedited timetable due to the need to respond
quickly to the on-going Russia/Ukraine crisis".
Previous Committee Reports
None, but see Eighth Report HC 219-viii (2014-15),
chapter 10 (16 July 2014); also see First Report HC 219-i (2014-15),
chapter 28 (4 June 2014); and also see (35905) — and (35906)
— : Forty-seventh Report HC 83-xlii (2013-14), chapter 23
(30 April 2014) and Forty-fifth Report HC 83-xl (2013-14), chapter
5 (2 April 2014); also see (35880) — and (35881) —:
Forty-fourth Report HC 83-xxxix (2013-14), chapter 3 (26 March
2014) and (35848) — and (35849) —: Fortieth Report
HC 83-xxxvii (2013-14), chapter 1 (12 March 2014).
130 See http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/143342.pdf.
Back
131
See http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ec/141749.pdf.
Back
132
See http://www.un.org/en/ga/search/view_doc.asp?symbol=A/RES/68/262
for the full text of the Resolution. Back
133
See Eighth Report HC 219-viii (2014-15), chapter 10 (16 July 2014)
for full details. Back
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