On Monday 23 April, the committee on economic and monetary affairs (ECON) of the European Parliament examined the own-initiative report by Brian Hayes (EPP, Ireland) on relations between the European Union and third countries over the rules and supervision of financial services.
The MEPs did not play down the link between this dossier and the scheduled withdrawal of the United Kingdom from the EU. Furthermore, the draft report contains an explicit recital and several other references to Brexit.
“Whatever one's political orientation, there has to be an alignment between the Parliament’s position and the objectives of the negotiations underway outside”, Hayes explained.
“It is impossible to separate the discussion on this report from the current negotiations on the possible withdrawal of the UK from the EU”, added Jonás Fernández (S&D, Spain).
Are the current equivalence procedures, which determine whether the financial legislation of a third country is equivalent to that of the EU, appropriate or could they be improved? These are the questions the draft report asks.
A single framework. The text calls upon the Commission to set in place a single framework on which the equivalence decisions based, reiterating the call made by the Parliament in its resolution of January 2016 (see EUROPE 11470).
The report invites the Commission to adopt a legislative act establishing a clear framework for a transparent, coherent and systematic application of the equivalence procedures. It also suggests carrying out a re-examination of the decisions at least every three years and for these analyses to be published.
However, the draft report goes further and questions whether the equivalence decision is the right instrument to manage the EU’s relations with third countries.
The text stresses that in many cases, the EU’s decision to grant equivalence is unilateral and not applied reciprocally by the third countries. The rapporteur argues that international cooperation could progress further through international agreements, favouring the path of mutual recognition of rules.
This is not the path favoured by the S&D group. French Socialist Pervenche Berès warned against Hayes’ inclination to move to such a regime. She also regretted the fact that the draft report makes no reference to the Commission’s proposal for a revision of the financial supervisory architecture – on which she is Parliament's co-rapporteur – in which the role of the European supervisory authorities in equivalence matters is adapted to this new environment. (see EUROPE 11970, 11957)
Parliamentary responsibility. In a more controversial point, the draft report calls for the Parliament to have greater control over the equivalence decisions.
On this point, the rapporteur questions the logic of generally issuing equivalence decisions in the form of implementing acts. Given their political nature, he considers that these decisions should be made by delegated acts, to allow Parliament scrutiny.
The draft report refers to the highly controversial decision of the Commission of 21 December 2017 (see EUROPE 11931) to grant equivalence to Swiss share trading platforms limited to a period of 12 months, with the possibility of renewing as long as sufficient progress was made on the common institutional framework.
“This was a political decision and Parliament did not get a say in it”, Hayes regretted.
The political groups have until 3 May to table their amendments and reach their positions ahead of a vote of the ECON committee, scheduled for the end of June.
At the City Week international financial services forum in London, the European Commissioner, Valdis Dombrovskis, also tackled the question.
“Equivalence is not perfect, neither for firms nor for supervisors. But we should not let perfect be the enemy of good. Equivalence has proven to be a pragmatic solution that works in many different circumstances, and it can work for the UK after Brexit as well”, the Commissioner said. (Original version in French by Marion Fontana)