Brussels, 03/12/2001 (Agence Europe) - The Ecofin Council, which met in Brussels under the presidency of the Belgian Finance Minister, Didier Reynders, is to prepare the European Summit of Laeken and seek to reach a political agreement on the "savings taxation" directive. It is also expected to tackle the issue of state coverage of airline company insurance, as well as the financing of the European satellite project, Galileo. The other discussions will be essentially devoted to the presentation of reports and information on the state of progress of work concerning taxation and financial services. During the afternoon, the ministers will meet their counterparts from the candidate countries with the governors of the central banks of these countries. The main points on the Council agenda are:
Pensions: In the context of preparations for the European Council of Laeken, the Council should approve the joint report prepared by the Economic Policy Committee (EPC) and the Social Protection Committee concerning aims and working methods in the pensions field. In compliance with the principle of subsidiarity, the report suggests using a method of coordination that would lead to the adoption of common objectives, and which would then be translated into strategies for national policy on the basis of indicators defined and approved in common.
Structural indicators: The Finance Ministers are expected to approve the EPC report as well as the conclusions on the structural indicators in the fields of the economy, economic reform and innovation and research. It is also to confirm the reduced list of indicators, approved in March, that could be consulted by the general public.
Taxation package: The Council will seek to reach a political agreement on savings taxation and will take stock of negotiations with third countries (United States, Switzerland, Liechtenstein, Andorra, Monaco and Saint-Marin) and the associated territories of the United Kingdom and the Netherlands, with a view to concluding agreements in which the latter would undertake to adopt measures equivalent to those adopted by the EU on savings taxation. It will also examine the work of the Group of Experts preparing the content of the standard form used for exchanging information in the context of the savings tax directive, and will take note of the work of the "Code of Conduct" Group on savings tax.
The resistance put up by Luxembourg, Austria and Belgium, however, remain considerable with regard to the directive on savings tax, and discussions are expected to continue during the Ecofin Council session of 13 December, in preparation for the Laeken Summit. Belgium will probably find itself being pulled two ways - between the task entrusted to the Council Presidency to reach an agreement before the end of the year, and defence of its positions as a Member State.
The Council has still to settle a series of issues and above all that of entry into force of information-sharing between Member States and the transposition of the directive on savings tax. The central problem is that regarding the date for beginning application of the seven-year transition period granted to Austria, Belgium and Luxembourg, before these States are forced to take part in the information-sharing between Member States. The Presidency proposed that the transition period should begin when the directive has been transposed into national law, on 1 January 2004, but the three States concerned link the end of this derogation to the conclusion of agreements with third countries. According to these States, the Council should also decide by unanimity whether the measures taken by the third countries are in fact "equivalent". At the same time, Austria and Luxembourg, supported by Belgium, also link the date for transposition of the directive to the conclusion of agreements with third countries. The twelve other Member States are opposed to this double locking.
Financial services: The Belgian Presidency will present a progress report on the "prospectus" directive relating to information to be provided by the companies quoted and the directive on "financial conglomerates". Work made good headway during the Belgian Presidency on several aspects of the prospectus directive, mainly on the definition of public bids, exemptions, the binding nature of registration documents, the preparation of mutual recognition clauses, linguistic systems, etc. Work on the "financial conglomerates" directive has still some way to go concerning: scope, the status of the supervisory authorities and the changes in the existing sector-specific directives with regards to holding companies.
Galileo: At the request of the United Kingdom, the Council will take stock of the situation regarding the financing of Galileo, the European satellite positioning system. The United Kingdom, it seems, intends to place emphasis on the negative aspects of a report by Price WaterhouseCoopers, which shows the long-term economic viability of Galileo but also the uncertainties that remain on participation of the private sector, which takes it to the conclusion that public funding should be extended beyond the date foreseen by the Commission.
The Transport Council is expected to decide on the launch of the development phase of GALILEO on 7 December (see EUROPE of 30 November, p.7 and 22 November, p.13).
Aviation industry crisis. The Council will discuss the scheme for public underwriting of the "terrorism and war risks" insurance for airlines that was instigated after the 11 September attacks. On Wednesday, the Commission will propose to extend on a monthly basis (for a total of 3 months) the emergency aid scheme outlined at the informal ECOFIN Council in Liège in September (see EUROPE of 29 November, p.9). Most Member States want the scheme to be extended until the beginning of March 2002 in order to bring it into line with airline aid in the United States and Japan, but Luxembourg, Sweden and the Netherlands are calling for a quicker return to normal market rules. Germany is reported to want the Council to adopt conclusions to clarify the criteria for granting aid to airlines. The main issue is the premiums that airlines will have to pay the relevant country in return for being covered for insurance purposes. The ad hoc air transport group that was set up after the 11 September attacks has issued guidelines setting the size of premiums and details of the insurance cover (see EUROPE of 29 November, p.9).
Meetings with candidate countries. In the morning the Council will define its negotiating position for the ministerial meeting to be held over lunch and into the afternoon with the candidate countries. The discussions will take place at high ranking working group level (of members of the Economic and Financial Committee and high ranking officials from the candidate countries' Finance Ministries and Central Banks) on the basis of Commission notes concerning the pre-accession economic programmes for 2002, real convergence between candidate countries and how macroeconomic stability is to be assessed. The basic aim of the meeting is to outline procedures for improving dialogue and co-operation with candidate countries' Finance Ministries and Central Banks in terms of standardising pre-accession economic programmes; how to draw up macroeconomic reports; financial stability; and statistics.
Conference on funding development. The Council is expected to define a common position for the United Nations conference on funding development that will be held in Monterey (Mexico) on 18/22 March 2002. It will focus on the volume of public aid, global public property and innovative finance sources. The Development Council on 8 November 2001 adopted conclusions which were a compromise between those countries that wanted to set a timetable for hitting the 0.7% GDP target for development aid and those that preferred to leave the issue for finance ministers to decide (FR, ES, UK and DE - see EUROPE of 9 November, p.8). The General Affairs Council will decide on this at its February 2002 meeting.
Lamfalussy Financial Services Package. On France's request, Commissioner Frits Bolkestein will report back on the negotiations with the European Parliament on the implementation of the measures and methods formulated by the Lamfalussy Group, particularly the call back clause demanded by the EP to monitor legislation before it is formally adopted (see below).
EIB loans to EFTA: The Council is expected to be addressed by the three Member States that have not yet agreed (under the EIB's Governing Council's written procedure) to the new EFTA mechanism worth EUR 500 million.
Gender equality. The Council may adopt conclusions on the integration of gender mainstreaming in the Union's and the Member States' Broad Economic Policy Guidelines.
Court of Auditors report. The Council will take note of the 2000 Court of Auditors report.
VAT invoices - agreement likely
The ECOFIN Council is expected to agree without discussion on Tuesday on a draft directive harmonising VAT invoicing rules, setting a single series of rules for all Member States obliging them to recognise the legality of electronic invoices (to promote e-commerce). The directive lists general indications that must appear on VAT invoices (invoice date, name and address of purchaser and seller, description of goods or service, rate and amount of VAT charges) and simplifies the VAT system for small salespeople or small invoices. It will also make it possible to outsource invoicing to a third party or to the client and gives free rein in terms of how and where invoices have to be stored (under certain conditions). The directive also covers the option of sending invoices electronically as along as an electronic signature scheme is used to guarantee authenticity and data integrity. The seller has a free choice of technology as long as security conditions are guaranteed. Operators no longer have to get tax authority permission for using electronic invoices and this should cut billing costs (EUR 1.4 on average per paper invoice and EUR 0.4 for electronic invoices, according to Commission figures).
Council to adopt UCITS directives
On Tuesday, the ECOFIN Council is likely to adopt without discussion a couple of directives harmonising savings and assets (undertakings for collective investment in transferable securities or UCITS) thereby updating Directive 85/611 to create a "European passport" to allow investment bodies to operate throughout the EU (the way banks, investment and insurance companies already do). It sets market access rules for all types of management company; criteria for setting up in business and prudential safeguard measures. The "products" directive extends the range of assets that can be offered by investment fund managers beyond bonds and shares and enhances consumer protection. In October 2001, Parliament considered the draft directive on second reading but did not make any significant amendments to the Council's common position.