Brussels, 04/06/2010 (Agence Europe) - EU27 finance ministers will be meeting in Luxembourg on Tuesday 8 June for an ECOFIN Council to prepare for the upcoming European summit. At the Monday 7 June 2010 Eurogroup meeting, eurozone finance ministers will fine-tune the Financial Stabilisation Mechanism devised on 9 May (see EUROPE 10137), deciding on various issues which remained under discussion (see EUROPE 10141). A discussion will then be held on economic governance at the taskforce chaired by Herman Van Rompuy.
Eurogroup and economic governance. At a conference in Luxembourg on Thursday 3 June, Jean-Claude Juncker, the chair of the Eurogroup (eurozone finance ministers) said that the finance mechanism to be set up in Luxembourg on Monday would be provisional and deal with the needs of the current crisis for eurozone countries, reports AFP. Two areas seem to be have been clarified by experts, namely the role of national parliaments in the process (whether they should give their approval to any new loan, as requested by Germany, the Netherlands and Finland); and the interest rate of any loan (should there be a joint guarantee of all the money lent so that an average interest rate can be set using the Special Purpose Vehicle (SPV) or should each country only guarantee the section of the loan which will be repaid to it, with lending being divided into several sections and with interest rates decided in line with each country's situation. The ministers will then gather over dinner for a meeting the economic governance taskforce chaired by the president of the European Council, a taskforce comprising representatives of all 27 EU member states (see EUROPE 10145).
Preparing for the European summit. Much of Tuesday's ECOFIN Council will be spent preparing for the upcoming European summit (17-18 June 2010). The ministers will endorse a recommendation about the Broad Economic Policy Guidelines (BEPG) that will then be submitted to the EU heads of state in the form of a report. The heads of state will in turn endorse the document and it will be formally decided upon by the EU Council of Ministers on 13 July 2010. Together, the employment guidelines and the BEPG are “joined-up guidelines” for the implementation of the new EU 2020 strategy. The member states will then decide on their own detailed reform and action programmes.
The ministers will approve a report from the Council's Economic and Finance Committee (EFC) on the review of the EU's financial regulations in the light of the 2008 economic crisis. The report raises the question of a bank tax (on banks and possibly other financial bodies that impact on financial stability) to ensure they pay the cost of the economic crisis. The EFC believes that if there is the political will to introduce a tax very quickly, then the easiest option might be to opt initially for a standard rate or a very simple sliding scale and then apply a raft of important non-capital financial commitments and guaranteed commitments. In the light of the changes to be made to banks' capital requirements, this approach might then be altered with a sliding scale of charges depending on the nature of the risk in question. The draft Council report mentions progress in the following areas: financial industry exit strategy, market supervision, crisis management and financial market infrastructure (sovereign debt credit default swap sales contracts, derivatives and credit rating agencies).
The ministers will issue a special conclusions document on the new EU 2020 strategy, pointing out that it should make it easier to rapidly implement exit strategies for short-term aid. In another report to be submitted to the EU27's leaders, the ECOFIN Council will examine progress in removing the state support measures taken to deal with the financial crisis.
In the light of the outcome of the 4-5 June summit of G20 finance ministers in Busan, the ministers will fine-tune the EU's negotiating mandate for the Toronto G20 summit (26-27 June 2010).
Ministers will endorse a recommendation to member states in the eurozone that Estonia should be allowed to join the euro. The European Commission and the European Central Bank say that Estonia meets all the criteria to join the eurozone as at 1 January 2011 (see EUROPE 10139) but the final decision will be taken at the 13 July 2010 ECOFIN Council meeting once it has been endorsed by the European summit (the EU27's leaders) and the European Parliament.
Stability and Growth Pact. The Council will publish its opinion on Cyprus' updated Stability Programme and will discuss budget correction measures in Spain and Portugal, measures the two countries submitted to the previous ECOFIN Council.
Taxation Three tax decisions will be taken: (a) agreement in principle on the draft legislation to amend EU Regulation 1798/2003/EC on administrative cooperation to combat value-added tax VAT fraud (see EUROPE 9958). Alongside the creation of the Eurofisc information exchange network, the draft legislation would allow member states access to information like overall turnover and VAT registration details from other member states' VAT databases; (b) a conclusions document on company taxation, in which the Council will call on the Commission to enter dialogue with Liechtenstein and Switzerland on the application of the European Code of Conduct identifying damaging tax competition; and (c) a non-binding resolution to better coordinate national anti-tax fraud policies. The resolution includes a non-exhaustive list of indicators of fraud in controlled foreign corporations and “thin capitalisation”.
The Spanish Presidency has abandoned attempts to harmonise savings tax so the issue is not even on the agenda. In May 2010, it submitted to the member state representatives a draft compromise deal suggesting that the transition period should end on 31 December 2014 and agreeing to Austria and Luxembourg's request for the application of EU rules in their countries to be conditional upon non-EU countries and EU country dependencies applying the same measures. The compromise deal was rejected by both Luxembourg and Austria.
Other issues. Several other issues will be decided upon on Tuesday without debate, like (a) a conclusions document on the way public policies can best ensure sustainable and sufficient retirement pensions. The ministries will repeat their support for a three-pronged approach: - rapidly reducing debt levels; - increasing productivity and employment rates; and - changing pensions, healthcare and long-term care systems; (b) general guidelines on changes to the European Investment Bank's mandate for action outside the EU, as part of the mid-term review (see EUROPE 10083). The ministers will approve the activation of an optional €2 million suggested in 2006 when the total amount of EIB financing outside the EU was decided for 2007-2013. The additional €2 million will be used to tackle climate change in eligible countries. Other changes involve the Council allowing the EIB to fund projects in Iceland, Libya, Belarus, Cambodia and Iraq. The formal decision will be made by the Council of Ministers and EP in codecision; and (c) general guidelines on a draft Regulation to improve the quality of statistics used in the excessive deficit procedure, which would give Eurostat the power to audit countries' statistics. Following the European Commission's unveiling of draft legislation to this effect (see EUROPE 10078), the Council lays down the conditions for any methodological visits that might be made by Eurostat, giving examples of when they would be appropriate. The EP, which is being consulted on the issue, will state its views at the July plenary. (A.B./M.B./transl.fl)