Voorbereiding eurogroep: Stabiliteitspact-sancties tegen Frankrijk (en)
(Gerassimos Thomas & Jonathan Todd)
Eurogroup Finance Ministers are due to meet in Brussels at 19h00 on Monday 3rd November. A press conference is due at the end of the Eurogroup meeting. A Ministerial dialogue with candidate countries is scheduled at 10h00 on Tuesday 4th November to be followed by the European Union's Council of Economics and Finance Ministers at 11h00. 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.
The Eurogroup will start with a presentation by Commissioner Solbes of the Commission's 2003 Autumn forecast (IP/03/1471). Minister will then discuss the excessive deficit procedure for France. The Commission has adopted two recommendations for France that are pending adoption by Ecofin. The first under Article 104(8) of the Treaty establishes that France has taken no effective action in response to the Council recommendation under Article 104(7) of the 3rd of June (IP/03/1353). According to Article 4 of Council Regulation No 1467/97 of the Stability and Growth Pact any decision under Article 104(8) shall be taken immediately after the expiry of the deadline set in the recommendation under Article 104(7). The Commission adopted its recommendation on 8 October, i.e. 5 days after the expiry of the 3rd of October deadline set by the Council. The Council is expected to decide on this recommendation in its meeting of the 4th of November if it is to be consistent with the Stability and Growth Pact. The second Commission recommendation is made under Article 104(9) of the Treaty and outlines the measures that France would need to take in order to remedy the excessive deficit situation (IP/03/1420). The Commission adopted this recommendation on 21 October. According to Article 5 of Council Regulation 1467/97 of the Stability and Growth Pact, any Council decision under Article 104(9) shall be taken within one month of the Council decision under Article 104(8).
Ministerial Dialogue with Candidate Countries (GT)
For the third time, Pre-Accession Economic Programmes (PEP) have been submitted by all 13 candidate countries to the European Commission by mid-August. For the 10 acceding countries, this is also the last time; these countries will have to submit convergence reports as of May next year. The objective of this exercise is to simulate the multilateral surveillance that member states undertake within the Union with regard to budgetary and economic policies. This is an exercise looking forward over the medium term. This exercise is completely separate and different in nature from the preparation on monitoring and regular reports prepared by the Commission and which is a backward looking exercise and focuses on the "acquis".
The Commission has made an assessment of the PEPs and draft opinions for the PEPs of the 10 acceding countries have been prepared by a special meeting of the EFC Alternates and their counterparts on 15 and 16 October. The opinions on the 10 acceding countries PEPs are expected to be approved by the Joint Ministerial meeting tomorrow (this will not be not a Council decision).
Council of Economics and Finance Ministers
Implementation of the excessive deficit procedure for France (GT)
This would be a restricted session of the Council. The Commission expects a Council decision on its recommendation for France under Article 104(8) (see above). All member states may vote on Article 104(8) excluding the country concerned, i.e. France. Voting weights are as follows:
Table 1. Voting weights concerning decisions adopted until 30.04.2004 in accordance with Art. 104(8)
|Weights applied for a decision on France|
|2/3 of total votes||52|
Table 2. Voting weights concerning decisions adopted until 31.10.2004 in accordance with Art. 104(9))
|Weights applied for a decision on France|
|2/3 of total votes||40|
The Ecofin Council of May 2003 mandated the Economic Policy Committee (EPC) to carry out a report on the overall impact of ageing populations on public finances and their sustainability. The EPC has reviewed all work carried out to date and is proposing to Ministers a work programme for the execution of new, more comprehensive budgetary projections by 2005. This work follows on the EPC work on pensions published earlier this year.
Ageing populations are expected to lead to increased spending of between 3 and 7 percentage points of GDP in most member states by 2040. The bulk of these increases will be related to public spending on pensions, health care and long-term care. On the basis of current policies the public finances of at least half the member states face sustainability challenges. There is a very limited window of opportunity to run down debt levels and to advance with pension reforms.
The Commission is heavily involved in the EPC work and in the drafting of the work programme presented to Ministers. In the Commission's view common budgetary projections are crucial for the assessment of the stability and convergence programmes and in order to support the policy recommendations in the context of the Braod Economic Policy Guidelines. The focus on long-term sustainability will continue to grow in the future. The EPC is the based placed body to collect such information from member states and put together new budgetary projections by mid-2005 on the basis of common assumptions and agreed methodologies.
Moreover, the Commission fully supports the EPC idea for a study by December 2004 on the economic factors affecting the supply and demand of older workers and factors influencing the retirement decision.
Proposed Directive on transparency for listed companies (JT)
The Council will hold an "orientation debate" (preliminary discussion aimed at preparing the ground for a political agreement) on the proposed Directive on information which must be provided by companies whose securities are traded on a regulated market, such as a stock exchange (the so-called transparency Directive - see IP/03/436 and MEMO/03/68).
Commissioner Bolkestein will express the Commission's support for the efforts made by the Italian Presidency to reach early broad agreement. He will call for a constructive and pragmatic attitude from all Member States, avoiding entrenched positions, in order to make it possible for the Directive to be adopted by April 2004, the deadline set by the European Council.
The proposed Directive would introduce minimum transparency requirements for companies whose securities are traded on a regulated market. It aims to enhance investor protection, attract investors to the European market place and remove national barriers for issuers seeking access to regulated markets not only in their home Member State, but also in other Member States. The proposed Directive would thus improve the efficiency, openness and integrity of European capital markets by ensuring that investment decisions are based on sound and timely information, available to all investors, about issuers of securities. That would lead to a better allocation of capital and bring significant benefits for the European economy as a whole. The proposal includes a pragmatic mix of more detailed half-yearly financial reports and light, but reliable, quarterly financial information. The Commission believes that the transparency requirements proposed are minimum guarantees to attract more investment from more people in a modern capital market. As Mr Bolkestein said on presenting the proposal: "enlightened companies do not consider transparency as wasted effort, but as an investment in loyalty and trust."
If the April 2004 adoption target is not achieved, the Financial Services Action Plan could not be completed by 2005, given the forthcoming European Parliament elections. Failure to complete especially the transparency aspects of FSAP would send a bad political signal and would also prevent Europe's financial markets getting the full economic benefit of associated measures already adopted, such as the Market Abuse Directive (see IP/02/1789), the Regulation on International Accounting Standards (see IP/02/827) and the Prospectuses Directive (see IP/03/1018).
Registration of auditors in the US (JT)
Commissioner Bolkestein will report to Ministers over lunch on negotiations with the US over the registration of auditors under the Sarbanes-Oxley Act. He will tell the Council that the declaration it made on 3 June (see MEMO/03/123) has helped to move the negotiations forward. Over the last month, good progress has been made towards an approach based on mutual reliance to the maximum extent possible on home country oversight, inspection, investigations and sanctions of audit firms. This will minimise unnecessary duplicative regulatory burdens for audit firms, optimise the allocation of resources on regulation and oversight and improve global investor protection. Mr Bolkestein will ask Ministers for their support for continuing this cooperative approach.
International Accounting Standards (JT)
Commissioner Bolkestein will report to Ministers over lunch about his recent meeting with the Board of Trustees of the International Accounting Standards Board (IASB), chaired by Paul Volcker, which concentrated on an improvement of the accountability of the IASB and its due process and a strengthening of the European input in the work of the IASB (see MEMO/03/150). He will also inform Ministers about progress in the discussions concerning IAS 32 and 39 and his continued efforts to encourage all parties concerned to continue the dialogue. He will provide information on the discussions between the founding fathers of the European Financial Reporting Advisory Group (EFRAG, see <A onclick="popup(this.onclick="popup(this.href+'&noframes=1',0,0);return false" href+'&noframes=1',0,0);return false" HREF="http://www.iasplus.com/efrag/efrag.htm">http://www.iasplus.com/efrag/efrag.htm) aiming at a strengthening of this organisation with a view to ensuring a greater input in the international standards setting process. Mr Bolkestein will note the need for EFRAG to be organised in a more transparent, visible and efficient way, with a secure funding base possibly including Commission funding- and thus more able to set the agenda. The Commission will continue to monitor the reform process that is taking place within EFRAG.
Any other business taxation of savings (JT)
The Council will, at the request of Belgium, have a discussion on the issue of how the arrangements with the relevant dependent and associated territories of Member States on savings taxation should be implemented.
In June this year the Council agreed, as part of a package of three measures to tackle harmful tax competition (see IP/03/787), on a Council Directive to ensure taxation of savings income in the form of interest payments to individuals within the EU. The Council agreed that this Directive should be implemented into Member States' national laws by 1 January 2004 and be applied from 1 January 2005 provided certain third countries and relevant dependent or associated territories would apply equivalent or the same measures from the same date. Under the Directive, each Member State will ultimately be expected to provide information to other Member States on interest paid from that Member State to individual savers resident in those other Member States. But for a transitional period, Belgium, Luxembourg and Austria will apply a withholding tax instead of providing information, at a rate of 15% for the first three years (2005-2007), 20% for the subsequent three years (2008-2010) and 35% from 2011 onwards. EU Member States with dependent and associated territories (the United Kingdom and the Netherlands in respect of the Isle of Man, the Channel Islands and the two countries' dependent territories in the Caribbean) have committed themselves, within the framework of their constitutional arrangements, to ensuring the adoption of the same measures in those countries as those applied by the 12 countries or by Belgium, Luxembourg and Austria.
Commissioner Bolkestein will emphasise the readiness of the Commission to offer any assistance that is deemed useful in this matter given the importance of having the appropriate arrangements in place in good time.
Customs to strengthen security at external borders (JT)
The Council is expected to endorse the Commission's plans to strengthen the role of customs in managing security at the EU's external borders. These plans, set out in a Communication presented by the Commission on 24th July 2003 (see IP/03/1100), aim to improve the security checks on goods to provide the public with more effective protection from dangerous goods coming into the EU. The Communication points out that, in view of the danger of deliberate attacks, and the health, environment and public safety risks associated with dangerous and illegal goods, security checks are not sufficiently harmonised, are too diversified and sometimes too slow to enable the authorities to respond to new threats. The Council is expected to call on the Commission to present urgently all necessary proposals to implement the approach outlined.