Voorbereidingen Ecofin en Eurogroup: Parmalat, integratie financiële markten en het Rapport-Kok (en)
Eurogroup Finance Ministers are due to meet in Brussels at 19h00 on Monday 19th of January. A press conference is due at the end of the Eurogroup meeting. The European Union's Council of Economics and Finance Ministers will take place on Tuesday 20th of January at 10h00. The European Commission will be represented at the Council by Economic and Monetary Affairs Commissioner Pedro Solbes and Internal Market and Taxation Commissioner Frits Bolkestein.
Eurogroup (GT)
The Eurogroup will start with a presentation of the Irish Presidency Eurogroup working programme. Minister will then go on to discuss the economic situation and policy stance. At the beginning of the meeting Michael Deppler from the IMF will present the Fund's latest views on economic and monetary conditions in the euro area based on the IMF's staff visit in December 2003. This is the follow-up to the Article IV opinion published last September. There is no IMF opinion to be published as a result of this regular follow-up excessive. On substance there is broad agreement between the Commission and IMF staff about the euro area economic outlook. Ministers will then go on to exchange views on the key messages to be delivered at the G7 Finance Ministers' meeting that will take place on 6-7 Ferbuary in Boca Raton, USA. Recent exchange rate developments are expected to be discussed as part of this point on the agenda. Finally, based on an introduction by Commissioner Solbes, are expected to discuss overall budgetary developments in the euro area and in particular the stability programme assessments of Austria and Finland.
Council of Economics and Finance Ministers
Irish Presidency work programme (GT)
The Commission fully shares the priorities of the Irish Presidency. Making success of enlargement and reviving growth are the key challenges for the first semester of 2004. The following points are expected to be raised by the Commission:
Economic governance
The Commission and the Council will continue their surveillance work under the Stability and Growth Pact. All Member States have submitted stability or convergence programmes and the Commission has or will provide its assessments and recommendations for Council opinions on the appropriateness of the budgetary strategy.
These opinions will be considered in the Council in the first three months of the year.
Recent events have shown that the present system of economic governance and in particular the coordination of budgetary policies does not work well. Therefore, the Commission has announced that it will prepare in the weeks to come an initiative aimed at improving the framework for economic governance in the Union.
Preparing the Spring European Council and Growth Initiative
Preparing the Spring European Council, which is focused on economic questions and which is supposed to bring forward the implementation of the Lisbon reform agenda, is a key task for the first three months of this year. The Commission will submit on 21 January its contributions: the Spring report and the implementation package, i.e. reports on how Member States have implemented the BEPGs and the Employment Guidelines.
The Commission will also further pursue the implementation of the Growth Initiative, in particular its regulatory and financial actions.
Integrating the acceding countries into economic surveillance
A major milestone of accession will be achieved on 1 May. By then, ten new Member States will join the Union. Immediately thereafter the regular Community policy coordination and budgetary coordination procedures will be applied in full to those new Member States.
For fiscal surveillance this implies that acceding countries will have to submit convergence reports by mid-May 2004. The Commission will thereafter provide its assessments and make recommendations for Council opinions. Moreover, the Commission will submit in April draft policy recommendations for acceding countries in the framework of the BEPGs and prepare, later in the year, a convergence report to assess the state of play with regard to compliance with the convergence criteria set out in the Treaty.
Financial Market Integration
On financial services, the Commission's first priority will be to secure adoption of outstanding measures under the Financial Services Action Plan. The Commission hopes, in this regard, that the Irish Presidency will help securing agreements on the Investment Services and Transparency Directives. The Commission also hopes that significant progress will be achieved on the proposal for a Directive establishing a new committee structure for Financial Services. The Commission is already reflecting on the lessons that need to be drawn from the 'Parmalat' financial scandal and will be presenting the results of its work during the course of the Irish Presidency. Finally, the Commission will continue to promote the emergence of an agreement between all stakeholders on International Accounting Standards.
On taxation, Commissioner Bolkestein will welcome the fact that the Presidency attaches a high priority to finalising the agreements with third countries on savings taxation. He will also welcome the Presidency's wish to give priority to discussions on the proposal to amend the Mergers Directive (see IP/03/1418), to the proposal for changes to the place of supply of services for VAT purposes (see IP/03/1808) and to the proposal concerning mutual assistance in the field of excise duties (see IP/04/28).
He will express the hope that progress will also be possible on the other tax issues on the Council table that the Commission also regards as of considerable importance and will assure the Presidency of the strong support of the Commission in completing its programme.
Discussion of the Wim Kok Report on creating more employment in Europe (GT)
The Ministers will discuss the Wim Kok report on the basis of an issues note prepared by the Economic Policy Committee (EPC). The Commission shares the analysis and the messages of the report.
The report sends a clear warning: the EU is set to miss the interim employment rate targets for 2005 and a failure to reach the Lisbon employment targets for 2010 is now a distinct and growing possibility. This disappointing outcome is not only due to the poor economic climate. It is largely caused by the continued existence of deep structural problems in European labour markets. Although higher growth would lead to more employment, it would not solve the structural unemployment problem. Accelerated and ambitious reforms provide the only real prospect of making progress towards the employment targets. The Kok report also concludes that increasing employment is an objective consistent with sound and sustainable public finances.
Assessment of stability and convergence programmes (GT)
The Council will adopt Opinions on the stability programme updates of Austria and Finland and the convergence programme updates of Sweden and Denmark. Recommendations for such Opinions were adopted by the Commission on 7 January 2004 (Finland IP/04/10, Sweden IP/04/11, Denmark IP/04/12, Austria IP/04/13). As part of its efforts to increase transparency and steer public debate, the Commission assessments for the updated programmes were published on the day of the Commission decision. The Commission will also publish on 20 January the detailed Commission DG ECFIN services analysis of each programme.
See following link :
http://europa.eu.int/comm/economy_finance/about/activities/sgp/year/year20032004_en.htm
Parmalat affair potential impact on EU policies (JT)
Commissioner Bolkestein is due to make a presentation to Ministers on this issue over lunch. Mr Bolkestein will say that it is clear the Parmalat scandal will have a significant impact on a range of EU policies for years to come. He will summarise measures, already in hand and forthcoming, which will help boost Europe's defences against corporate malpractice.
Those measures build further on the wide ranging programme set out in the Commission's Action Plans on company law and corporate governance and statutory audit, which took into account the lessons of Enron and other scandals. Mr Bolkestein made clear immediately the Enron affair came to light that scandals of a similar scale could also occur in Europe (see for example SPEECH02/240) and the informal meeting of Ministers in Oviedo in April 2002 gave its political backing to a Commission paper outlining necessary action, much of which had already been put in train well before Enron (see IP/02/584 and MEMO/02/72).
Mr Bolkestein also made clear at that stage as he will again to the Council that hasty and ill-considered legislation could add to rather than solve regulatory problems highlighted by high-profile cases such as Enron and Parmalat.
First, on the rules for statutory auditors, the Commission is finalising its proposals to revise the 8th Company Law Directive. This revision was announced in the Action Plan on Statutory Audit which the Commission adopted in May 2003 (see IP/03/715). The proposal, due to be presented in March, will inter alia tighten the oversight of auditors, will establish rules on audit quality assurance, will specify the rules on independence and on ethics and will impose the use of high quality auditing standards for all statutory audits. It will introduce the principle that the group auditor is fully responsible for the audit report in relation with the consolidated accounts of a group of companies. It will also seek to ensure that there are independent audit committees in all listed companies, to strengthen sanctions for malpractice and to enhance cooperation of oversight bodies at European level. Finally, it will aim to develop a cooperative working model with third country regulators, which Mr Bolkestein has been exploring with the US Public Company Accounting Oversight Board(PCAOB). This is essential to prevent - and detect and sanction where they nonetheless occur - multi-faceted fraudulent operations covering several jurisdictions, a key feature of the Parmelat case. Second, in so far as corporate governance is concerned, the Parmalat case highlights certain aspects as particularly urgent. Work needs to be accelerated on requiring all Directors to be collectively responsible for company accounts; and on ensuring complete information and disclosure with regard to a group's structure and intra-group relations.
Third, with regard to supervisory and regulatory structures, the overall exposure of European banks to Parmalat does not give rise to systemic concerns. However, in view of possible supervisory failures, Mr Bolkestein will emphasise the need to make sure that the competent authorities within the EU fully cooperate, implement and exercise the powers already given to them. On offshore tax havens and special purpose vehicles, the Commissioner will draw attention to the necessity of further work at global level (financial stability forum, G7) as well as within the EU. He will express his belief that all these types of special operations should be listed in company accounts, with their purpose explained, and that the group auditor must be responsible for checking that this is done.
Fourth, on credit rating agencies Mr Bolkestein will tell the Council that the Commission will consider, as the US SEC is doing, whether further action is necessary.
Fifth, the role of investment banks in the Parmalat affair is not yet clear. Italian judicial authorities and the SEC are currently investigating their role in sales of Parmalat bonds to investors on the basis of false information. It is too early to reach a conclusion on whether additional legislation might be needed.
Finally, the Commissioner will stress the importance of swift and complete implementation of new rules under the Market Abuse Directive (due to be implemented in October 2004), and subsequently under the Prospectus Directive (due to be implemented mid-2005) and the forthcoming Transparency Directive. All of these Directives address issues which have arisen in the Parmalat affair.
Value Added Tax (VAT) reduced rates (JT)
The Council is due to continue discussions of a Commission proposal of July 2003 for simplifying the rules on reduced rates of VAT (see IP/03/1024 and MEMO/03/149). The Commission's aim is to seek a balanced approach for the whole of the European Union. This requires going beyond a review of the restrictive list of goods and services to which a reduced VAT rate may be applied (Annex H to the Sixth VAT Directive) and examining the various specific derogations available to some Member States (e.g. in respect of restaurant services, housing, domestic care services and the supply of gas and electricity), with a view to avoiding potential distortions of competition that have given rise to numerous complaints from traders. The proposal also includes appropriate measures for a final decision on the VAT rate applicable to labour-intensive services. It does not call into question the optional nature of reduced VAT rates: no Member State would be obliged to introduce new reduced VAT rates.
Commissioner Bolkestein will acknowledge the concerns of Member States on this issue and the calls for more subsidiarity for Member States to allow them to decide individually on goods and services to which reduced rates of VAT should be applied. However, he will point out that the Commission's proposal, which would broaden the list of goods and services to which Member States could choose to apply a reduced rate while not involving a radical extension of Annex H, would be perfectly in line with the principle of subsidiarity while taking into account the interests of the Union as a whole rather than individual Member States. The Commission opted for an approach which represented the middle-ground between all Member States. Nevertheless, he will emphasise that the Commission is ready to examine, with an open mind, any compromise that the Council can reach on this basis.
Tobacco taxation (JT)
Under other business, France has requested that the Council discuss a French request to the Commission to present proposals for increases in the Community-wide minimum rates of tobacco taxation. Commissioner Bolkestein will state that, while the Commission fully shares the concerns about the health consequences of tobacco taxation, a proposal to increase the minimum rates of tobacco taxation would be unlikely to be endorsed by the Council given that increases were only agreed in 2002 (see IP/02/233) and will only come fully into effect in 2006. He will add that the Commission is obliged to present regular reports on tobacco taxation and that the next one, which has to be submitted to the Council in 2006, could address some of the concerns raised by France such as why pre-tax prices differ so widely between Member States.