News (#07-08 July-August 2019)

Biznews

M&A

Proposed Fiat and Renault merger derailed by French governments standpoint

Fiat Chrysler Automobiles N.V. (FCA) Group has withdrawn its proposal to merge with Renault. It has become clear that currently there are no political prerequisites for the successful implementation of such a merger in France, the auto group reported. Earlier, the French government said that it would not approve the FCA proposal if the latter did not guarantee to retain jobs and headquarters in France.
Another condition was a seat on the executive board.

On 27 May the Renault Group confirmed the fact that the two groups were engaged in merger negotiations. Total sales of Renault, Nissan, Mitsubishi and FCA in 2018 came to 15.6 million vehicles.

Data Protection

Facebook hit by EUR 1 million fine in Italy

The data privacy regulator in Italy imposed a fine on Facebook in the amount of EUR 1 million for violations related to the scandal over Cambridge Analytica. This is the biggest fine ever imposed on the company in relation to this case.

It was reported that 57 Italians downloaded ThisIsYourDigitalLife application used by Facebook to gather information about the user and his/her friends on the social network.

It became known that this application was used to provide data to Cambridge Analytica, the agency which used personal data to influence voters during the 2016 US presidential election.

In total, more than 200,000 Italians out of approximately 87 million Facebook users who suffered from the data scandal, provided information about themselves via the application without their knowledge or consent.

It was also reported that the information collected by the social network was not transferred to Cambridge Analytica, but such data collection does violate Italian rules on privacy.

Trade Policy

Parliament ratified Free Trade Agreement between Ukraine and Israel

On 11 July the Verkhovna Rada ratified the international Free Trade Agreement between Ukraine and Israel. Ukraine and Israel signed the Agreement on Free Trade in Goods in January 2019, which was the result of negotiations that lasted more than five years.

The new FTA stipulates for the actual total abolition of import duties on industrial goods, except for jewelry. Most duties on these goods about 80% on the part of Israel and 70% on the part of Ukraine should be abolished immediately after the agreement comes into force.

The agreement also includes a rather complex system of mutual concessions in relation to trade in agricultural products and food products.

Ukraine was one of the largest trade partners of EU in 2018

Ukraine was the 23rd largest import partners of the EU (1% of total imports outside EU) and the 20th largest in terms of exports (1% of total exports outside EU) in 2018, according to Eurostat.

The EU showed a positive trade balance with Ukraine between 2008 and 2018. This surplus was the highest in 2013 when it reached EUR 10 billion, and the lowest in 2015 when it fell to EUR 1 billion. In 2018, the surplus came to EUR 4 billion. Cars and vehicles, other industrial goods and chemicals prevailed in EU export to Ukraine, which together accounted for 78% of European exports to Ukraine. Other industrial goods, raw materials and food and beverages prevailed in EU exports going to Ukraine, which accounted for 79% of goods. Medicines were the most exported product from the EU to Ukraine, while the most imported product from Ukraine was corn. Italy was the largest importer of goods from Ukraine (EUR 3 billion) among Member States. In 2018, the largest exporter to Ukraine was Germany (EUR 5 billion).

Ukraine has used up quotas for duty-free export of nine agricultural products to EU

As of 22 July, Ukraine has used its quotas for the duty-free export of agricultural products to the EU to the full extent in relation to nine product groups.

Namely, these are the following groups: honey, sugar, cereals and flour, processed starch, processed tomatoes, grape and apple juices, wheat, corn, and butter. As of the same date last year, only 7 quotas for duty-free exports from Ukraine to the EU were closed, which is evidence of the increasing pace of quotas closing and trade intensification with the EU. Following the results of January-May of this year, the EU imported agricultural products from Ukraine to the total value of EUR 3.1 billion, which is 37% (or EUR 0.85 billion) more than for the same period last year. It is expected that by the end of the year, quotas for barley (currently used 79%), poultry meat (used share of the basic quota 75%), malt and wheat gluten (58%) and starch (53%) will be closed. Additional quotas were introduced from October 2017 on 8 product groups for a three-year period: honey, flour and groats, processed tomatoes, grape and apple juices, oat, corn, wheat, and barley.

Investment

Lviv start-up received investment from American accelerator

Newoldstamp start-up, which develops an online service for generating professional email signatures, was selected by 500 Start-ups, a well-known American accelerator, and received funding in the amount of USD 150,000 in exchange for a 6% share in the start-up.

Newoldstamp has become one of 35 participants in the program held by 500 Start-ups. In total, this year more than 2 thousand start-ups from 74 countries were presented. The newoldsamp team will spend 4 months on training in San Francisco and will receive funding from the accelerator. The start-up will use these funds for further development of its service and expanding the team. Newoldstamp is a start-up founded in 2015 with a registered office in Lviv. It develops an online service on the generation of professional email signatures. It allows creating clickable html-signatures using templates, as well as managing all of them through a single admin panel. Such signatures are used by experts in Lyft, FedEx, Vodafone, Starbucks, Nvidia, Nestle, and other well-known companies.

Automotive

Volvo recalls hundreds of thousands of vehicles due to flaw

Due to a flaw in the engine, which can lead to it igniting, Volvo has recalled 500 thousand vehicles.

In particular, Volvo recalls 37,000 vehicles in the Netherlands due to engine flaws. According to the Swedish automotive company, this defect can lead to the engine igniting. In total, around half a million vehicles were recalled. The Volvo representative in the Netherlands noted that there was no evidence of incidents related to this flaw, and owners of Volvo vehicles manufactured from 2014 to 2019 will soon receive letters with information on potential risks.

Sanctions

USA imposed sanctions on five Chinese IT organizations

The United States expanded the sanction list with 5 Chinese IT organizations that will not be allowed to buy American goods and services without special permission. The blacklist includes Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, Higon, Sugon, and Jiangnan University of ComputerScience andTechnology of the city of Wuxi. These organizations are engaged in developments in ultra-fast computing, microchip manufacturing, and software development.

The actions of these organizations have been recognized as contradicting the interests of state security and foreign policy of the United States. From now on American companies wishing to sell goods and services to them will be required to obtain a special permit.

Energy

Cabinet of Ministers agreed on merger of Energoatom with state-owned uranium mining firm

Cabinet of Ministers has approved the merger of SE Eastern Mining and Processing Plant (VostGOK) with the National Nuclear Energy Generating Company Energoatom. The merger of VostGOK with Energoatom will protect uranium mining and processing industries and will cover 100% of the needs of Ukrainian nuclear power plants. At the same time, production costs will not exceed the prices of world leaders. The corresponding association must be further agreed with the European Bank for Reconstruction and Development within the framework of the loan agreement signed with Energoatom.

VostGOK is the only enterprise producing and processing uranium ore in Ukraine and the largest such plant in Europe. Ukrainian NPPs annually consume 2,400 tons of uranium, while the plant produces about 1,000 tons. Energoatom is the operator of all four NPPs operating in Ukraine. The state enterprise maintains 15 power units with 13,835 GW total available capacity.

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