Brussels / Madrid, 21/06/2002 (Agence Europe) - In addition to the discussions on the Broad Economic Policy Guidelines (BEPG) (see previous article), the Ecofin Council examined several issues of which some will be discussed at the European Council of Seville:
Energy taxation: The Council noted the report by the ad hoc group on energy taxation to be forwarded to the European Council in Seville. During the last Ecofin Council, ministers could but note their differences on three sensitive subjects: the minimum rate of taxation of high energy intensive companies, biofuels and the duration of transition periods (see EUROPE of 6 June, p.10). "The ad hoc high level group did not reach an agreement on all the points of the dossier", noted Rodrigo Rato on Friday, hoping that the Danish Presidency would reach an agreement before the buffer date of end 2002.
Taxation of biofuels: The Council reached a political agreement on the directive that will allow Member States to exonerate or apply reduced excise rates on "green fuels". Pending the Parliament's opinion, the agreement of the Ecofin Council remains, however, linked to an agreement at the Energy Council on the aims, both indicative and binding, that will determine the proportion of biofuel in the consumption of petrol for transport. The Energy Council reached a "broad compromise" on this text on 6 June (see EUROPE of 8 June, p.9). The United Kingdom "had reservations about including taxation of biofuels in the scope of the directive on energy taxation" linked to the adoption of a decision at the Energy Council, recalled Rodrigo Rato. "These rules establish the list of fuels subject to a control regime and to particular storage regulations. The Member Sates may apply the special tax reduction on these products so that they are more competitive compared to petrol", recalled the Spanish minister. He added that "it is particularly important for countries such as Spain where there is production from sugar".
Tax package and negotiations with Switzerland: "The Ecofin Council adopted a report on the tax package and another on the state of progress of negotiations with third countries, including Swtizerland", said Rodrigo Rato. As announced in EUROPE of 20 June, p.8, the Council "regrets" in this report the fact that Switzerland refuses to negotiate automatic exchange of information with the EU on income on savings in Swtizerland by European residents. During the opening of negotiations on Tuesday, Switzerland kept to its withholding proposals, which do not bring the banking secret into question. The Council considers that this attitude "isolates" Switzerland in the international context. Under pressure from Luxembourg, Austria and Belgium, the Council, on the other hand, renounced a more threatening solution, which would have told Switzerland that its refusal endangers the "preferential relations" between the EU and the Swiss Confederation. We recall that it is Luxembourg that makes adoption of the tax package end 2002 subject to an agreement with Switzerland founded on information exchange.
Pension funds: The Council confirmed the political agreement of 4 June on the directive that will create a single market for pension funds in Europe (see EUROPE of 5 June, p.8). Belgium abstained, it is said at the cabinet of the Belgian minister responsible for this dossier, Charles Piqué. In a declaration annexed to the Council's minutes, Belgium specifies that: 1) it considers the "lack of quantitative rules does not guarantee the security of operations in the context of crossborder affiliation and does not therefore allow it to subscribe to the principle of mutual recognition that it implies"; 2) it recalls that the economic and social cost of a fund shortage will be "directly or indirectly borne by the Member States where the commitment is made and not that where the retirement institution is located"; 3) it regrets that it had been impossible to "extend the scope of the directive to the professional retirement institutions which work by repartition (Ed.: as is the case in France) or by consolidation of the liabilities of the employer balance sheet" (Ed. As is the case in Germany). At the end of the day, "the agreement was adopted by qualified majority, but with the votes of France and Germany which are not concerned, for a system that essentially concerns the United Kingdom, the Netherlands and Belgium", said one Belgian diplomat. Although it must begin reform of the company retirement scheme, the Belgian government mainly fears that the purely prudential rules defined by the Directive are not sufficient to guarantee respect of social law.
Corporate governance: The chairman of the Economic and Financial Committee (CEF), Johnny Ackerholm, presented an oral report on "corporate governance" that Ecofin had requested of it after the Enron affair. The report will be forwarded to Seville, then discussions will resume under Danish Presidency.