On Monday 11 January, the MEPs of the European Parliament’s Committee on Economic and Monetary Affairs (ECON), together with the European Commission, took stock of the financial (see EUROPE 12632/9), fiscal and anti-money laundering aspects of the agreement on future relations between the European Union and the United Kingdom (see EUROPE 12628/6).
“We are now entering in a new phase with the UK [...]. We need to be conscient that it will be a long and complex phase”, said Almorò Rubin de Cervin, Head of Unit International Affairs for Financial Stability Directorate General (DG FISMA). He added, “But we remain hopeful that overtime, we will manage to have a stable and balanced relationship with the UK on financial services”.
The trade agreement covers financial services in the same way as they are generally covered in the EU’s other trade agreements with non-Member States, he said. They are further addressed in the joint declaration in which both parties agree to establish by March 2021 a memorandum of understanding (MOU) setting out the framework for structured cooperation on financial regulation.
Without saying much more about the next steps in this process, Mr Rubin de Cervin indicated that a discussion on the degree of alignment that will be necessary in each area will need to take place on a case-by-case basis. “What we know is that equivalence and divergences don’t go together”, he said.
Mr Rubin de Cervin assured MEP Stéphanie Yon-Courtin (Renew Europe, France) that the Commission’s intention was to be as transparent as possible vis-à-vis the European Parliament and the Council of the EU in the negotiating box on this MOU. The European Commissioner for Financial Services, Mairead McGuinness, will personally give more details to the MEPs on this subject once the work is a little more advanced, he specified.
As for the timetable, the Commission official considered that the deadline of March 2021 would not be difficult to reach for the MOU. “It’s not a complicated thing to negotiate”, he said, acknowledging, however, that if the UK came with excessive demands, the negotiations would indeed take longer.
Money laundering and tax evasion
During the exchange of views, several MEPs criticised the weakness of provisions to combat money laundering and tax evasion, expressing fears that the UK could become a “Singapore-upon-Thames” at the EU’s doorstep.
Mr Rubin de Cervin defended the result obtained by the Commission in this matter. “The United Kingdom had no intention of having a chapter on the fight against money laundering”, he said, adding that the provisions included in the agreement went even further than what is traditionally included in trade agreements with other non-Member States.
A particularly problematic point, according to several MEPs, is the exclusion of taxation and the fight against money laundering from the rebalancing provisions, which harmonise evolving standards.
MEP Sven Giegold (Greens/EFA, Germany) also reiterated his request to the European Commission to use the equivalence determination process for UK financial services to obtain a strong commitment from the country against tax dumping (see EUROPE 12630/9).
In the face of criticism, the Commission representative indicated that the institution had enough tools to act in this area. In particular, he confirmed that the ‘level playing field’ in the field of money laundering and taxation was indeed a condition taken into account in the process of determining equivalence.
“The United Kingdom has decided to leave the EU, it is its choice, the way it will do business, and then it will have to face the consequences”, he assured the MEPs. (Original version in French by Marion Fontana)