Brussels, 03/05/2002 (Agence Europe) - The tax on energy will doubtless be the one item most discussed at the EcoFin Council, in Brussels on Tuesday, chaired by Rodrigo Rato. At this relatively short session of the Council, ministers should fairly quickly reach political agreements on the directives on insider trading and conglomerates. They will have an initial discussion on the Broad Economic Policy Guidelines (Bepgs), before the adoption of a report, on 4 June. The Council will attempt to reach unanimous political agreement on the proposal to reshape the financial regulation (see below) Over lunch, ministers will turn to risk insurance cover for airline companies and negotiations with third countries and associated territories on the tax on savings.
Here are the main items on the Council's agenda:
- Tax on energy: on this issue, there is deadlock (see yesterday's EUROPE page 7).
- Market abuse: the Council should reach a political agreement in view of a definitive agreement with the European Parliament, in June, on the directive intended to step-up the fight against market abuse and insider trading (see yesterday's EUROPE page 8).
- Financial conglomerates: here too, the Council should adopt a political agreement on the directive that is to establish common criteria for controlling financial conglomerates (active in several financial sectors, like banking and insurance). The directive sets rules and thresholds of solvency for conglomerates, so as to prevent capital being used to cover risks in the different entities of the same conglomerate. The European Parliament adopted a text on first reading, the main amendments of which were negotiated with the Council and thus a final agreement could be quickly reached. The EP had, notably, cut from 50 to 40% the threshold of the financial activity from which companies are considered as being conglomerates (see EUROPE of 16 March, p.12).
- Tax on savings: Commissioner Frits Bolkestein will brief ministers on ongoing negotiations with third countries which will have to undertake to implement "equivalent" measures on the tax on revenue from savings as those the EU should adopt at the end of the year in the framework of the "tax package". Switzerland has confirmed that it is not prepared to negotiate the "lifting of banking secrecy", and that it is only prepared to begin negotiations on the question of tax on savings if at the same time negotiations over other bilateral subjects in suspense (Schengen, fraud, etc.) begin. Because of this, it has refused to begin technical discussions over taxation.
The Council may reach an agreement in June on negotiating briefs for these other subjects proposed on 9 April by the Commission. "It would be a prowess to reach an agreement in two months, but it is possible", remarked the Spanish Presidency. Nonetheless, specifies a Spanish diplomat, although the EU is willing to open all negotiations at the same time, as Switzerland is requesting, "it cannot accept that negotiations end simultaneously".
Ministers should, moreover, define the text of a letter that will be addressed to the US Secretary to the Treasury to make negotiations move forward with the United States. A meeting at the level of high officials should be held on 15 May in Washington. The United Kingdom and the Netherlands should take stock of the negotiations with their associated territories in the Antilles and Channel Islands.
- Insurance cover for airlines. Ministers are expected to rapidly take stock, over lunch, of the situation of airline companies after expiry, on 30 May, of the exceptional regime that allows Member States to ensure public war and terrorism risk coverage for their airline companies. Commissioner Loyola de Palacio reminded Washington that the aim is to return as soon as possible to private coverage by the insurance sector (see yesterday's EUROPE, p.7). The Director General for Transport at the Commission, François Lamoureux, sent a letter three weeks ago to the Member States calling on them to provide information on the mechanisms in place to ensure that companies effectively reimburse the "premiums" for public coverage of their risk, in order to ensure that this is not tantamount to disguised State aid. The European airline companies, on their side, are preparing a system of "pooling" risks, which would be the bridge to an international fund under discussion at the International Civil Aviation Organisation (ICAO).
- Latin America. Finance Ministers are to adopt a contribution at the EU/Latin America/Caribbean Summit (17/18 May, Madrid). The contribution will not comprise a European "plan" for Argentina, as Member States intervene in this field through the IMF, stresses one Spanish diplomat.
- Broad Economic Policy Guidelines (BEPG). The Council is to hold a policy debate on the Commission's recommendation on BEPGs for 2002 (see EUROPE of 25 April, p.9). The results of the debate should determine the main guidelines and priorities to be adopted by the Economic and Finance Committee and the Committee on Economic Policy for drafting the BEPG project. The Ecofin Council of 4 June should then adopt a report on this draft text, to be presented to the Summit in Seville.
- Preliminary Draft Budget (PDB) for 2003. Commissioner Michaele Schreyer is to present to the Council the preliminary draft budget for 2003 (see EUROPE of 1 May, p.11). It is not to be ruled out that this oral presentation will be followed up by comments from Member States on certain aspects of the PDB, such as the proposal to use the flexibility instrument to face additional administrative spending and commitments in the fisheries sector (reconversion programmes for the Spanish and Portuguese fleets). Some delegations should recall, in compliance with the guidelines adopted by the Council early this year, the importance of a "moderate" increase in payment appropriations, and could criticise the fact that the current ceiling under Heading 5 of administrative spending has been exceeded.
- Recasting of financial regulation. The Council is close to a political agreement on this subject except for reservation expressed by Italy (see below). Sweden will mainly intervene at various points to ask what the follow-up will be for the results of the international conference in Monterrey on development financing.
