4-001€¦  · Web viewENSITTING OF THURSDAY, 15 JANUARY 2004 _____ 4-002. ENIN THE CHAIR: MR IMBENI. Vice-President (The sitting was opened

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ENSITTING OF THURSDAY, 15 JANUARY 2004

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ENIN THE CHAIR: MR IMBENI

Vice-President

(The sitting was opened at 10 a.m.)

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ENProvan (PPE-DE). – Mr President, on a point of order, yesterday some colleagues will recall that during the vote on the Herzog report I suggested that the President look at Rule 130a. We had a mass of amendments to vote on. Before that, we had voted on amendments to a report drawn up on behalf of the Committee on the Environment, Public Health and Consumer Policy. To make voting easier, however, these amendments had been arranged in blocks.

Rule 130a states quite clearly that where there is a mass of amendments, the committee involved should try to sort them out before they are put to the vote in plenary.

I would like the Bureau to have a proper look at Rule 130a so that Parliament's services can be instructed to ensure that the committees observe that Rule.

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ENPresident. – I have already been requested to consider the matter raised by you and I think that, at the appropriate time and place, I will attempt to do as you suggest.

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ENHarbour (PPE-DE). – Mr President, just to build on my colleague Mr Provan's point of order, I should like to draw the attention of all colleagues here to the fact that 215 amendments have been tabled on the Zappalà report, which we shall be debating shortly. To pick up on Mr Provan's point, under Rule 130a it is the responsibility of all of us here, between now and the vote, to simplify the voting procedure. I am sure the Mr Zappalà would agree with that. We should take note of that lesson and ensure that when this is voted in plenary in February we have a much-simplified voting list.

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ENPresident. – Thank you for that contribution, Mr Harbour.

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ENRecognition of professional qualifications

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ENPresident. –The next item is the report (A5-0470/2003) by Mr Zappalà, on behalf of the Committee on Legal Affairs and the Internal Market, on the proposal for a European Parliament and Council directive on the recognition of professional qualifications (COM(2002) 119 – C5-0113/2002 – 2002/0061(COD)).

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ENBolkestein, Commission. ( Mr President, this is a much debated and very important issue. I wish to begin by thanking the rapporteur, Mr Zappalà, for his report, which ( usefully ( completes the Commission text in some places and supports the substantial consolidation proposed.

We all know that it is a very wide-ranging proposal that covers a large variety of issues of great interest to the professions and also more generally. I should like to thank Parliament for the efforts it has made towards finding workable compromises. I should like to pay tribute to the members of the Committee on Legal Affairs and the Internal Market and other committees for their active contributions. In particular, I should like to welcome the maintenance, with some additional flexibility, of the existing levels of qualification, which have already played a central role in the operation of professional recognition at EU level.

Let me point out that we face the need to improve conditions of free movement for professionals in an enlarged Union through simpler and clearer rules, simpler and more effective management systems and clearer and simpler conditions for cross-frontier service provision.

The Commission is ready to take into account the special considerations which apply to the health-sector professions in order to find appropriate solutions within the wider context of simplification.

I shall now be pleased to listen to the debate on this crucial proposal.

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ENZappalà (PPE-DE), rapporteur. – (IT) Mr President, Commissioner, ladies and gentlemen, as the Parliament’s rapporteur I must thank the Commission and Commissioner Bolkestein for initiating this important piece of legislation.

There are tens of millions of professional persons in the Union. By virtue of the activities they perform they regulate and govern the life of every citizen. The professions are the most important productive social group in existence. Their activities embrace every aspect of cultural and educational experience, individual creativity, assertiveness, advocacy and responsibility. It is the social group most concerned with care and protection, most in need of clear-cut rules to be respected.

Each State independently and legitimately organises, in keeping with its own social and historical traditions, educational courses and lays down its own rules for entering the various professions. The Union must guarantee freedom of movement and freedom of establishment, equal rights of access to employment, competition, safety, health and freedom, whilst fully completing the internal market by providing reliable guarantees for professionals and consumers on an equal footing.

In real life there are huge differences within national legal systems and enormous discrepancies between different States. The complexity of the subject-matter coupled with the different nature of various professional activities, self-serving interests and errors of political judgement give rise to out-and-out confusion and in-fighting within the political and professional classes. The professions must learn to pursue an all-embracing unity of purpose in their own interests and in the interests of the consumers who rely upon them from day to day.

Politicians must abandon their superficial and partial view of the issue and tackle the sector as a whole. The attitude of some politicians and of certain representatives, together with ignorance coupled with the arrogance of those who deliberately confuse themselves and others, harm the professions and the community. I call on the Commission, which I thank again for having drafted the proposal, to consider Parliament’s amendments not as an obstructive act, but rather as the legislature making use of its legitimate and rightful power as a democratic representative body and, for this reason, I call for the utmost cooperation in the interests of the Union.

Professionals are atypical providers of services precisely because they are more productive in intellectual terms than in terms of specific resources. The services they provide are not the same and often cannot be compared with each other, nor can the principle of competition easily be applied to the sector because, over and above price, a professional service is primarily the result of intellectual creativity which stems from both the cultural background and a lively intellect. Not all professions are equal; the professions more at the cutting edge, such as those concerned with health, freedom and safety, are not on a par with those concerned with commercial, craft, industrial or economic activities. Access to such professions is regulated by States in accordance with local tradition and culture and is also subject to responsibilities and assurances offering minimum guarantees for consumers.

Harmonisation does not mean bland similarity. The British system should not be exported but harmonised with other systems for the purpose of achieving a level playing field within the Union. No one person represents everybody, only the legislature has general responsibility. We have the duty to legislate not in the interests of some arrogant lobbyist but in the general interest: hearing the arguments put by all sides and reaching an individual decision is the primary duty of those mandated to work on behalf of the Community. The proposal is based on the following assumptions: recognition of five levels of qualification, initial continuous training, the free movement of professional services and not of pieces of paper; consultation with the professions; the thresholds proposed by recognised bodies; compliance with authorised national structures, whether bodies, colleges or associations; pro-forma registration; equality of rights and duties; legislative certainty; the elimination of bureaucratic red tape; the mutual recognition of professions exercised in individual States and, where necessary, at levels higher than corresponding qualifications; compliance with insurance, social security and trade union rules.

Any objections are self-seeking rhetoric designed to stymie the progress of the internal market and this important sector. Any objections run the risk of being seen as a sop to self-interested lobby groups which do not act in the collective interest. The directive is important irrespective of its individual contents. I am not putting up barriers; the overall picture is more important than the detail. I hope that everyone views this from a European perspective and not from a lobbyist’s position.

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ENGlase (PPE-DE), draftsman of the opinion of the Committee on Employment and Social Affairs. – (DE) Mr President, Commissioner, the proposed directive is intended to replace 15 existing directives on the recognition of professional qualifications. The Commission has chosen a horizontal approach that carries the danger that all professional qualifications will be lumped together. That should not happen. Qualification dumping should be prevented on consumer protection grounds alone. We must ensure that training is of a high quality. The Committee is also concerned that cross-border service provision is to be facilitated by lowering the requirements for the standard of qualification of the service provider. Under the Commission’s proposal, any supplier who is lawfully established in a Member State will be allowed to provide services in another Member State on a temporary basis for 16 weeks in a year, without needing any authorisation or being subject to any controls. We were unable to agree to that.

Service providers have to fulfil their duty both to the recipient of the service and to the authorities of the host Member State. That is the only way that control and protection mechanisms can have any effect. Especially sensitive activities must be subject to controls. The citizen cannot assess the quality of doctors or tax consultants for themselves, for example. He relies on the existence of the familiar tried and tested systems of training, qualification and authorisation. The Committee on Employment and Social Affairs would also like to be sure that persons who, because of national regulations, are highly qualified professionals are not disadvantaged by comparison with those who have a low level of qualification but the same job title. It is, however, essential that the wording of the legislation does not call freedom of movement into question. We therefore welcome the fact that the Committee on Legal Affairs and the Internal Market and its rapporteur Mr Zappalà, whom I congratulate on his balanced report, have found a compromise between a horizontal and a sectoral approach, ensuring that professional organisations were able to contribute their expertise in the transposition of the directive.

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ENBowis (PPE-DE), draftsman of the opinion of the Committee on the Environment, Public Health and Consumer Policy. – Mr President, on Tuesday this week in the United Kingdom a Dr Harold Shipman committed suicide. He was not just a statistic; he was a health professional who was serving 15 life sentences for the murder of 215 of his patients. Therefore, Commissioner, when we are looking at professional qualifications and seeking ways of facilitating professional mobility, as we should, we are not just talking about job opportunity or filling vacancies, or even individual professional freedom. We should be talking about the protection of vulnerable individuals: simple procedures, yes; riskier procedures, no.

In Britain, if you go to your doctor's surgery, you expect the nice new doctor from Italy or Lithuania or wherever to be qualified, and you assume that the proper checks have been made as to his or her integrity and experience and to ensure that the name does not figure on any blacklist for professional or other malpractice. The same applies to your dentist, your nurse, your pharmacist and to other professions, too, such as the architect who has built your house. Hence, we were horrified to realise that the original proposal would have allowed any professional to go to any other EU country and practise there for 16 weeks without any authorisation, checks or vetting.

Dr Shipman could have come to a surgery near you. Having talked to British and European professional organisations, I therefore raised this in the Committee on the Environment, Public Health and Consumer Policy, which asked me to produce an opinion. This was adopted unanimously. It struck out the 16-week provision, it added Article 152 as a legal basis for the directive, and it called for the setting up of a European database of professionals who have been struck off in one Member State, so that they cannot practise in another.

These and most of our other amendments, I am happy to say, have been accepted by Mr Zappalà and the Committee on Legal Affairs and the Internal Market. We are grateful to them. More importantly, patients and our constituents in every Member State will be grateful if these safeguards are maintained.

(Applause)

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ENSbarbati (ELDR), draftsman of the opinion of the Committee on Petitions. – (IT) Mr President, the Commission has repeatedly confirmed the need to establish a knowledge-based Europe geared towards the market of European citizens, a more competitive and dynamic knowledge-based Europe which also promotes quality training and education, particularly by guaranteeing the mutual recognition of professional qualifications and diplomas as a concrete and tangible proof of European citizenship. That requires that any obstacle to the free movement of citizens, to the mobility of workers and to the professions in the single European market be eliminated. To date, however, this is subject to major difficulties which, without going into too much detail, I want to list: the lack of any real spirit of cooperation, help and understanding; the complexity of existing national legislation; the reluctance of national authorities; the preference given to educational and training criteria instead of to examinations intended to ensure that education is really equivalent for the purpose of recognising diplomas; the lack of academic recognition of diplomas and other courses of study.

Mr Zappalà’s well-balanced report, which I support, has dealt in a constructive and pragmatic way with the question of a European Union that is increasingly consensual and united wherein European citizens will play a primary role, particularly citizens with professional qualifications. There are, however, I repeat, certain outstanding matters and problems that must be resolved and, as the Committee for Petitions and I myself believe, over and above any statement of principle, effective action is required – as happened, for example, in the case of consultation – with a view to establishing effective measures to control and promote resources for the purpose of embracing the different Community provisions governing the legal systems of the Member States and maximising the potential of the Community system itself for the recognition of professional qualifications and academic diplomas, with a view to making that system more transparent, responsive and accessible to the persons concerned. In addition to this, greater attention must be paid to new information technologies in recognition of the need for permanent life-long learning. The Committee on Petitions has received a large number of petitions on the matter and this demonstrates the urgency with which this situation must be tackled in order to establish Europe effectively as an open place for culture, the professions and European citizens.

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ENHarbour (PPE-DE). – Mr President, on behalf of the PPE-DE Group and my British colleagues, I very much welcome Mr Zappalà's tremendous work on a very complex text. I am pleased that the Commissioner has welcomed many of the amendments that were made.

It is important to emphasise the crucial role that this particular piece of improved legislation will play in our overall strategy for the internal market. We witnessed the welcome launch this week, by the Commissioner himself, of proposal on the internal market for services. Clearly the cross-border delivery of professional services by people whose qualifications are mutually and unimpeachably recognised, in a manner that addresses the issues of quality and consumer protection raised by a number of my colleagues, is an absolutely indispensable part of that move forward to complete the internal market. We must be absolutely sure to see this revised proposal in that context.

In that connection, more work needs to be done on Mr Zappalà's report. I and a number of my colleagues on this side of the House feel that keeping the five distinct levels of professional qualification and the definition of them is important. We have tabled a series of amendments clarifying the package of qualifications that will enable professionals to move into each of the levels that are to be mutually recognised. I hope that colleagues across the House will recognise those particular qualifications.

The other important aspect of this proposal is that we need to encourage more professionals to set out their stall for mutual recognition and to accept a common platform proposal to work together to develop that. That is something that many professionals need to do.

At this point I declare an interest as a professional engineer. We want to develop a common platform for Europe's engineers, but the one point on which I differ with the rapporteur is that his report seeks to impose a separate regime for engineers, devised from one particular point of view. That is premature. Europe's engineers want to work on a mutual recognition platform, but they do not want one imposed by this Parliament working in one particular direction. My colleagues and I will therefore be putting together a package of amendments that allows engineers to develop their own platform. I hope that is something which will command the support of a large majority of this House.

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ENGebhardt (PSE). – (DE) Mr President, Commissioner, ladies and gentlemen, the House has before it a directive on the recognition of professional qualifications, which we welcome. It is in fact something we urgently need in order to create clarity and legal certainty throughout the European Union. The horizontal approach is a good one. It will produce uniform legislation instead of a diversity of solutions.

The work on this text has however cost a lot of time, commitment and sweat. That was because of the variety of professional fields involved and also, to be perfectly honest, the flood of requests made to us by the persons concerned and by their professional organisations. The rapporteur has worked very hard and with the help of committed colleagues on the Committee has achieved a remarkable partial success. But it is not an ideal solution. The plenary is therefore now faced with a tremendous number of amendments. I myself have tabled 50 amendments on behalf of the Group of Social Democrats and Socialists with a view to turning a good intention into a good directive.

On the one hand, our amendments are designed to encourage professional mobility and freedom of establishment within the Union. At the same time, with consumer interests in mind we want to help to ensure that high-quality services can be offered everywhere. That requires rules and conditions, which, on the other hand, we want to keep to a necessary minimum. Only if we prevent a bureaucratic jungle from growing in the first place will we create genuine freedom of movement and mobility. With these objectives in mind and wanting to reach a good outcome, I have spent a lot of time listening attentively in the last few months. We then consulted fellow Members here in the House and looked for ways to safeguard the livelihoods of the persons concerned today and to give their professions a bright future in Europe tomorrow. The result of those consultations is embodied in amendments tabled by the Group of the Party of European Socialists. All you need to do is to agree to them, and we will have a good directive on the recognition of professional qualifications.

I would just like to add a few words to Mr Harbour. We have had a lot of discussions with engineers and I have listened to them very carefully and I entirely understand your approach. Perhaps your group will be able to vote in favour of one of the amendments tabled by the Group of the Party of European Socialists, which proposes that engineers join together on a platform that will find consensus in their profession, and we might be able to include that consensus at a later date in further deliberations about the directive we are discussing today.

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ENManders (ELDR). – (NL) Mr President, I should like to thank the rapporteur, fellow MEPs and of course the Commissioner and his staff, because producing this report was a difficult business.

The intention was to simplify the 15 existing directives, which will bring more legal certainty, but, above all, more dynamism and labour mobility. I think that that is necessary in order to optimise the internal market, which is, after all, one of the European Union's cornerstones. This is still lacking, because there are still virtual borders hindering mobility. I am therefore pleased with this directive, which could possibly contribute to more labour mobility. I would also like to thank Mr Zappalá for the constructive manner in which he has tried eventually to put the complex proposals that were before us into what is, hopefully, a workable and improved shape by means of compromise amendments.

However, I, along with the Liberal Group, also have a few points of criticism. There is, for example, the time criterion. In our view, not too much consideration should be given to the duration of training, which is of less importance than its quality. We should therefore arrive at a points system that reflects the quality of training, because I can imagine that training courses leading up to a certain qualification last four years in some countries, and five or six years in others, while the quality is the same. However, according to the proposal regarding the time criterion, different levels should be awarded. I am not in favour of that and I hope that Amendment No 12, which I tabled and which is, admittedly, included in the preamble, will eventually be included in the legislative text possibly following consultation with the rapporteur.

I am also of the opinion that the rights and duties for professions with a certain liability and responsibility in public health should be tightened up. I am mainly referring to the medical and socio-medical professions. I think that those professions should be subject to mandatory registration. I am, above all, also thinking of the requirements that are prescribed in the Member State to which people move in order to work, for example compulsory liability insurance. I hope that we will find a solution for this.

I should now like to turn to an aspect that I regard as important, namely access to the labour market. The Commission proposal states that people need to have worked for two out of the past ten years. In the Committee on Legal Affairs and the Internal Market, this has been changed to two years over the past five years. I think this discriminates against a number of groups, including women who start a family, have children and then return to work. They would then have to work in a Member State for two years before they can access Europe. I would like to urge this House to keep to the Commission proposal of two years out of the past ten. I will also be asking for a roll-call vote on this.

While I welcome the fact that advisory platforms will be set up, I would ask you not to extend these to national platforms, for that would make the whole thing too complex, and any attempts at arriving at a recommendation would then be chaotic. I think that we should persevere with the Commission proposal to organise it at European level. Finally, I hope that this directive will attract a large majority, so that we can make the internal market more efficient than it already is.

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ENAlyssandrakis (GUE/NGL). – (EL) Mr President, Commissioner, ladies and gentlemen, it is clear that the purpose of the directive is to further liberalise the job market for the benefit of big business; at the same time, it strikes at the heart of the labour and vocational rights of the very few categories of workers who still have such rights. Within these frameworks, it aims to maximise the potential for companies to guarantee an abundance of skilled manpower, so that they can choose as much as they need, as and when they need it, so as to depress the price of manpower, trample the workers' rights and vested interests underfoot and, generally, enhance the exploitation of scientific manpower.

At the same time, this is an indirect but clear intervention in the education systems of the Member States, despite the provision to the contrary in the Treaty of the European Union. The distinction between vocational and academic equivalence is the means of imposing an education model which limits the breadth and depth of higher education to the minimum demands of companies; in other words, it is far below the academically acceptable level. It is an education model which downgrades higher education as a whole and creates specialised scientific manpower with no depth of knowledge and hence no demands.

As far as the content of the directive is concerned, we would point out that, on the pretext of simplifying recognition procedures, the minimum preconditions set for access to scientific professions safeguarded under the law are much lower than those which already apply in numerous countries in the European Union and in Greece. Every Member State is obliged to allow any foreign national or local to pursue their profession, provided they have a diploma accepted by another Member State for the pursuit of that profession, irrespective of the standard of the diploma. In other words, a mechanic who has graduated from a three-year course automatically acquires the same professional rights as a graduate from a five-year course at a Greek polytechnic. In addition, the directive puts all post-secondary education diplomas on the same footing, be they from a higher education institution or from a vocational school. Even vocational experience or practical exercise can, according to the directive, be equated to a three-year or five-year course.

For Greece in particular, the directive intervenes indirectly and creates faits accomplis in order to bring to a close outstanding education issues on which there is acute confrontation and controversy on the part of the interested parties. Thus, for example, Articles 12 and 13 and certain amendments impose vocational equivalence between graduates of liberal studies centres which have signed contracts with foreign universities and graduates from Greek universities, even though these studies are not recognised as higher studies in Greece. In order to implement the foregoing and circumvent any possible obstacle at national level, the directive endeavours to regulate every possible case in detail and to preclude any possible derogation. It even introduces a single specialist committee to recognise vocational qualifications and control progress in the application of the operation.

For these reasons, we are categorically opposed to the directive. We propose that academic equivalence should be the basic precondition for the recognition of vocational equivalence, which should be granted on the basis of the terms of the host country. Similarly, we call for all the laboratories or study centres which enter into agreements with foreign universities and market their diplomas to be closed and for the franchising system to be abolished entirely in the field of university education.

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ENMacCormick (Verts/ALE). – Mr President, with great respect to Mr Alyssandrakis, I have to differ with him. In common with most other colleagues who have spoken in the debate, I think this directive is going in the right direction and that we should all be pushing it as well as we can towards a conclusion.

There are points of difference between us and these are important points. The grand idea of simplification, of bringing 15 different sectoral directives together into one overall scheme, is really an extraordinarily important one, not just for the reasons which Mr Harbour and others have mentioned, because of the completion of the single market, but also because of our responsibility as a Union to supply our citizens with reasonably clear and intelligible laws. If we can bring together the whole body of law concerning recognition of professions into a single coherent package, that is in itself a good thing in terms of the quality of the laws that we produce in this Union.

It is important not to lose the particular protections that apply to different professions. It would be a very bad thing if you over-simplified, as Mr Bowis pointed out, to the point that you get rid of essential protections. For example, in relation to the provision of services in the health professions by health professionals. All of us have to confess, taking the example that he gave, that we can have very good professional qualifications and professional disciplinary tribunals and still people such as Dr Shipman can get through the net. That just shows the point, and it is a point which Mr Zappalà was making, that the relationship of professionals to other members of the community is a curious one: someone who goes to a professional for advice gives herself or himself over to the power of that person because the professional necessarily knows more about the client or patient's problem than the client or patient does or can. You would not have professions otherwise. That power relationship between professionals and citizens is one which requires regulation of the kind we have been talking about. It requires proper structures ( for example, the kind of structures that would emerge under some of the proposals from the committees and subcommittees that will deal with particular professions within the grander overall framework.

Mr Alyssandrakis said that we are engaged in an effort of levelling down. I beg to differ. As a lifelong provider of a kind of professional training, as a professor of law, I would be the last to disparage the importance of on-the-job, in-practice training as well as the importance of the kind of work that I have spent a lot of my time doing ( classroom teaching, tutorials and so on.

What is important, and Mr Harbour mentioned this, is the maintenance of the five levels that we already have. There have been some proposals to refine these yet further. I would certainly deplore that. I think we have an 'understood' set of five levels and these should be retained. They should also be clarified. Having read Amendments Nos 192 to 196 in the name of Mrs Kauppi, Mr Harbour and others, I think that does a rather elegant job and, in any event, between now and the final vote, it is up to us to try and bring it together in such a way that we get a clear, intelligible and workable package at the end of the day.

The engineering case has been mentioned. There is a point here which we all share. With great respect, it is too soon to go as far as Mr Zappalà is suggesting at this stage. It is important that we get the engineers to a better condition of mutual understanding in the different countries and that we achieve a better situation so that someone who is entitled to call themselves an engineer in Italy can feel that the same applies to a chartered engineer in the United Kingdom, and vice versa. We need to develop a common platform. Across the House there have been indications of movement towards agreement, and very important that is.

It has been said that it is important in the single market to have free movement of labour to provide services. I agree with that. Since the beginning of my time in this Parliament, I have been involved in the case of the foreign language lecturers at Italian universities who had four judgments in their favour over 14 years and who are still not guaranteed or granted adequate rights of access to employment on the same terms as Italian nationals. That is just one example of why the work we are doing is of such vital importance if we are to have equal access to work and equal opportunity to provide services, with adequate protection for citizens and consumers across the Union. I strongly support the direction in which we are going and hope we manage to get home to port at the next plenary.

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ENHatzidakis (PPE-DE). – (EL) Mr President, the purpose of the Zappalà report is very important in that, through mobility, which of course depends on the mutual recognition of qualifications, we are giving workers more opportunities within the framework of the single European market.

Of course, the precondition to the success of such an endeavour is recognition of university diplomas. In Greece, there is a particular problem in this respect. Because no private universities have yet been opened, we have the world record in student migration. Because of this situation, European universities cooperate with so-called liberal studies centres in Greece. These diplomas are not recognised by the State and the social problem of thousands of people is escalating. We have raised this matter with the Commission in the past, both I and honourable Members on the left, excluding Mr Alyssandrakis, and the European Commission was perfectly clear on it. It says that the diplomas must be recognised. The Court of Justice of the European Communities said likewise recently in the Neri case, which concerned a similar matter in Italy.

However, because the problems of the Greek education system are dragging on, I tabled an amendment which was approved in committee, so that European diplomas could be recognised as soon as possible, without needless legal obstacles and without Greece being condemned by the Court of Justice of the European Communities, and so that reputable European universities could open annexes in Greece under a regime of legal certainty, in order to raise the level of courses through competition and put a stop to student migration.

In order to avoid any misunderstanding about the level of courses, we tabled a second amendment, together with Mr Trakatellis and Mr Zappalà, which states the obvious, i.e. that the Member States are entitled to subject the various institutions cooperating with universities in other Member States to the control mechanisms which apply to their own universities. In Greece in the past few days, after the outcry which arose, the leadership of the Socialist Party changed its mind on private higher education. It makes sense in the light of this change to adopt our amendments and I hope that this will become clear, Mr President, during the vote.

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ENKoukiadis (PSE). – (EL) Mr President, we need to bear two guidelines in mind when deciding whether or not to accept the proposed amendments. The first is that it will be much easier for the liberal professions to move around than it has been to date, especially for those who exercise regulated professions. The aim here is to develop the internal market and the service sector, which is lagging behind.

The second guideline we need to lay down is quality assurance of the services provided during cross-border movements. Within this context, we need to examine the basic innovations of the proposed directive, such as distinguishing between the cross-border provision of services and cross-border establishment, the proposed levels and so on. As regards the cross-border provision of services in particular, I think that amendments which set terms and conditions in order to prevent infringements should be accepted.

On the other hand, the innovation in the directive introducing the concept of common bases should be especially welcomed, because it gives the liberalised agencies the opportunity to take an active part in strengthening their cross-border cooperation. Now there is an opening in civil society; however, if we are to safeguard consumer interests on the basis of the second guideline which we referred to earlier, we have a reasonable interest in calling on the Community legislator not to turn mobility into a pretext for undermining the level of training of the professions on the move. That is why it is important, where diplomas certifying a theoretical education are granted to diploma holders who study in various countries, that we demand as a sine qua non that their courses be held in every country by recognised education establishments and not by companies which do not fall within the official education system of the host country. We all need to agree on this if we do not want to put the product of education on the same footing as an uncontrolled industrial product.

Consequently, it is one thing for us to encourage cooperation between universities – or even, if you like, between universities and other education establishments, on which no-one can disagree – and it is quite another thing, under cover of cooperation, for us to indirectly allow units not recognised as education agencies by legislation to be recognised as such. That is why the amendment proposed by Mr Hatzidakis is a dangerous amendment.

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ENThors (ELDR). ( (SV) Mr President, we can very often be proud of the work that we – as distinct from the Council and the Member States, for example – do to turn the Lisbon agenda into a reality. We cannot, however, be particularly proud of our work on this occasion. Since the Commission put forward its proposal, it has taken us 22 months to arrive at the first reading and, just as Mr Harbour stated earlier, clarification is required to prevent those of our fellow MEPs who are less familiar with our procedures from being confused during the vote.

I wish to support a lot of what Mrs Gebhardt said in her speech. At the same time, I wish to take the opportunity to congratulate her on her birthday next week. We cannot perhaps all be with you, but I hope that you have a splendid day and that we can hear all about it.

Listening to the debate on these issues, you often get the feeling that every country has the world’s best education system. One of the biggest advantages of being here in the European Parliament is perhaps that of learning a certain humility in this respect. I have deliberately devoted a lot of time to the Committee on Petitions, which also deals with citizens’ complaints, because I agree with Mr MacCormick that there are problems for different types of teacher, something that also applies to crane operators from different countries. I myself have, for example, worked for a long time with a crane operator, Mr Holmström, from the Swedish-speaking Åland Islands. He has not succeeded in obtaining recognition in Finland for the crane operator’s examination he took in Sweden. Nyland’s worker protection district has always opposed his doing so, and I believe that many of you are surprised that there are such problems between Finland and Sweden, two countries that nonetheless have a very great deal in common with each other. This is an example of how people believe that they themselves have the best education system of all.

At the same time as wishing to thank the Commission for its proposal for a new directive in the field of the internal market and services, I wish to sound a word of warning. We must not again act in a way that makes it simpler for companies than for individuals to move across our borders. Far too often, the result of our action is that individuals are not given access to freedom of movement and the internal market in the way that we should desire. As we heard earlier, our group will support the Commission’s proposal in many respects. We also want to have a flexible directive but, unlike some of the other groups, we do not want the annexes to form part of the text. I am, however, pleased to see that regulations concerning language requirements are being introduced that are more precise than those put forward by the Commission.

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ENOreja Arburúa (PPE-DE). – (ES) Mr President, I would like firstly, of course, to congratulate the Commission on this proposal – and its team, which has had the patience to discuss each of the amendments with all of us. I believe this is laudable, because it does not happen very often and I wanted to mention it here. I would also like to congratulate Mr Zappalà on the work he has done, on having to endure the enormous number of amendments, and also on his speech in plenary, which has clarified things.

There is no question that this is an extremely important Directive in terms of making progress on free movement, and I agree with the words of Mrs Thors, who said that it cannot be easier to establish companies than it is for individuals to establish themselves when they wish to carry out a profession.

The free movement of professionals within the Union is vital, and I am delighted that we are also talking about the recognition of professional qualifications for all professions, and not just some of them. I believe that the professionals which we sometimes call intellectuals, engineers or those with a high level of qualifications, have as much right as those with lesser qualifications.

It is true that there have been many controversial points. I believe that the division between the free provision of services and freedom of establishment according to the sixteen weeks criterion was very difficult to justify. I believe that, in this regard, we should establish, as we have done in committee, a rule for each profession, since a tour guide is not the same as an engineer when they go to another country to provide a service for a few weeks.

We must find a balance between freedom of movement and guaranteeing the quality of service, as well as fair competition between the people exercising a profession within a Member State and people who come from another country to exercise it.

There are other aspects which I believe to be particularly important, such as establishing special characteristics for each of the professions and certain exceptions like the ones we have established – and I would mention the case of notaries, for example. Specifically with regard to engineers, I too, as an engineer, would like to point out that the amendments we have presented jointly with Mr Harbour – from No 192 to No 196 – clearly establish those professional levels – from one to five – and there are other amendments which I will support, together with Mr Harbour, aimed at specifically defining the profession of engineer. I believe that some of the aspects introduced by Mr Zappalà are premature, as has been said in this House, and I would ask that a common platform be established for engineers.

4-023

ENMcCarthy (PSE). – Mr President, some 15 years ago, as a young academic, I applied for and was offered a post at the Free University of Berlin. As a result of the problem of mutual recognition of qualifications, many months passed before I was able to take up my position.

This directive must, I believe, ensure that professionals do not face the same uncertainty and obstacles I encountered in exercising the right, as an EU citizen, to exercise one's profession in the single market. Moreover, if the Commissioner's new plan for a radical freeing-up of the market for cross-border services is to succeed, the free movement of skilled professionals will be vital to it.

Specific safeguards are necessary in the health care sector. I too tabled amendments to abolish the 16-week rule. I thank the rapporteur and the committee for supporting those amendments. It is true that the rule would possibly have allowed bogus health care professionals and those struck off for malpractice to work in another Member State without having to register with the host country's regulatory body.

Mr Bowis mentioned the case of Dr Shipman, a doctor in my constituency who may have murdered up to 200 patients after forcing some of them to change their wills in his favour. However, Dr Shipman was not struck off for malpractice and he was never identified as a problem by the UK's own regulatory body. Patient health and safety must be paramount, but it must not be an excuse to block the free movement of professionals. I know that Commissioner Bolkestein is sensitive to this issue. In the UK, the legacy of a Conservative government is an acute shortage of doctors. It makes no sense to have barriers to free movement, but I hope that the final directive gets the balance right between allowing and encouraging the free movement of health care professionals, plus automatic recognition of rights for more than 50 categories of medical specialist – in particular much-needed cancer specialists, and continuing to safeguard patient health and safety.

4-024

ENDoyle (PPE-DE). – Mr President, the new directive calls for a uniform, transparent and flexible regime for the recognition of professional qualifications in order to facilitate the free movement of qualified persons within the enlarged European Union. It is based on the existing general systems directives and aims to consolidate 15 directives into one streamlined and simplified piece of legislation, which hopefully will clarify issues of interpretation.

As such it is an ambitious and wide-ranging directive, very much in line with the agenda set out in the Commission's action plan for skills and mobility. However, it comes with a health warning. The promotion of liberalisation and mobility must not be achieved at the expense of public health and consumer protection. On this count I welcome the maintenance of a clear separation between the two existing regimes for the recognition of professional qualifications: the sectoral regime covering seven regulated professions and a general regime.

It is important for the more stringent set of rules to apply to the provision of services for sectoral regimes. We must highlight the areas where the degree of public risk warrants a prior check on qualifications for the first provision of services. In addition, we must ensure that the list of specialities included in the proposal is comprehensive enough to ensure due recognition and regulatory protection is accorded to emerging disciplines, such as medical oncology – the whole area of the research and treatment of cancer.

It is important for mobile professionals to realise that they must be proficient in the language of their host country since the ability to communicate is a prerequisite for practising. It is particularly important in the medical field where there are serious health and safety issues should patients be unable to communicate with the doctor in their own language.

I would like to express my support for the concept of including a new special section for the engineering profession, as introduced by the Committee on Legal Affairs and the Internal Market. As regards the architecture profession, however, I would like to draw attention to the issue of Recital 21. The Committee on Legal Affairs has voted through an amendment tabled by Lord Inglewood which would recognise surveyors as being qualified to design buildings. The problem here lies in the way the role of surveyors is interpreted across the Community. Outside the UK and Ireland they do not carry out building design. This ambiguity in the role and responsibilities of surveyors across Europe needs to be rectified in order to ensure a harmonised system and a level playing field.

My original amendment on this issue at committee stage was not adopted, but its wording could provide a solution to this major problem. It preserves the wording of the architects directive, which is part of the acquis communautaire, and would ensure continuity of understanding in the way this provision is interpreted under the new system. I share the concerns expressed by the Irish presidency and others that the timescale proposed under Articles 5 to 9 of the directive are simply not achievable.

4-025

ENLehne (PPE-DE). – (DE) Mr President, ladies and gentlemen, the original purpose of this directive was to simplify matters, to ensure as part of the ‘SLIM’ programme that the number of European legal texts should be reduced as far as possible and that they should be made easier for the citizen to understand. I have massive doubts as to whether we have really succeeded with this proposal for a directive. As we all know, the European Union has for decades had workable sectoral directives for a whole series of skilled occupations, which were developed specifically to create suitable conditions for recognition in those occupations. If we are now approaching them on the principle that they should all be lumped together and there should be one directive applying as much to master carpenters as to medical consultants and surgeons, then I am convinced that nothing sensible can come of it in the end.

That is why the majority of my group wanted to keep the sectoral directives. The fact is that most of the complaints received were not about the regulated areas but about those areas that were not regulated, that is to say, the areas not covered by the sectoral directives. We were unable to get the Committee to accept this view. The result now is obviously that there will have to be a large number of amendments taking more and more elements from the sectoral directives into the general directive. The outcome cannot be described as something that has produced a simplification of legislation in Europe, quite the opposite, it has all become more bureaucratic, more complicated, harder to understand and more inefficient, the opposite of ‘slim’, I would call the directive ‘thick’, to borrow the English word. Not to mention that I do not of course believe it is a good way of legislating to adopt a directive on medical consultants that is then not even implemented in the Member States but rescinded again and finally incorporated into this directive.

In short, the consultations were in the end about preventing something worse rather than achieving something good. What the Committee on Legal Affairs and the Internal Market has come up with has prevented something worse, but it has not done any good. We will vote in favour of this outcome given that nothing else could be achieved.

4-026

ENGargani (PPE-DE). – (IT) Mr President, I am speaking without having heard the debate because I had a prior engagement in the Bureau. Having steered the work of the committee for so long, I can say that the matter was subjected to detailed discussion and analysed in depth and underwent the procedure duly required for such an important provision, a provision that is one of the most important currently under Parliament’s scrutiny.

We started with a hearing that lasted a whole day and brought to our attention problems dealt with in depth by the rapporteur and other members of the committee – Mr Zappalà, Mr Lehne and others whom I thank – and, as a result of various debates and speeches, we reached today’s conclusion.

We have a major ambition: we want to lay down regulations governing the intellectual professions. I believe that we are effectively opening up Europe to the right of citizenship and cultural organisation so that Europe can be achieved by means not just of the single currency and all the measures we are advancing, but above all by making citizens aware of the interconnectedness of the intellectual professions: the possibility of carrying out professional activities at the highest level within the various Member States and within various European organisations.

Mr Zappalà has pushed this directive forward by finding a balance which, it must be said, differs from that of the Commission, a balance more in keeping with the demands of the professional world and of citizens, at the heart of which lies above all the quality of information. We need to ensure that the professions are qualified to the highest standards so that, within the Member States, professional persons are accepted on the basis of the qualifications they possess.

I believe that, in doing this, we are making a major contribution to Europe and providing a service for its citizens. I also believe that communications between different European countries is determined at this level: the intellectual professions have been throughout history – not just in Italy but in all countries – a major reference point in relation to a country’s standing.

Finally, I believe that the professions, once they come under a single definition within Europe, are capable of making a contribution that can be surpassed only by the Constitution, once it is ratified. Nevertheless, this is an important contribution to the Constitution and to European citizenship.

4-027

ENKaras (PPE-DE). – (DE) Mr President, Commissioner, ladies and gentlemen, in view of the Lisbon objective of becoming the most competitive, dynamic and knowledge-based society by 2010, this is not just a question of economic and industrial policy but above all a question of education and training.

Another area is the operation of the labour market and how it is changing as a matter of necessity. At the interface between the two areas lie the efforts to promote high quality training and further training and the protection of mutual cross-border recognition of professional qualifications. I therefore welcome the Commission’s proposal.

In my address today I would like to go into one aspect in particular, namely the equality, in terms of level and conditions, of the professional qualifications of service providers and for freedom of establishment. The requirements for the activity are the same, regardless of whether we are talking about a service or an establishment. The activities are no different. I cannot therefore understand why recognition of professional qualifications is provided for establishment, but no provision is made for the recognition of professional qualifications for the provision of services. I do not think this distinction is right. The present arrangement may even be contrary to Article 50 of the EC Treaty. This allows services to be provided in an EU Member State subject to the same conditions as that State prescribes for its own nationals. The conditions include equivalence of evidence of qualifications, provided such evidence is required in the host Member State. To remove this problem, I ask you to vote in favour of Amendment No 213 tabled by Mr Zappalà and myself.

4-028

ENPresident. – Before giving the floor again to the Commissioner, I note that, in order to avoid him having to spend all the time available to him reading out numbers, the integrated Minutes will contain the list of all the amendments the Commission is considering accepting in their entirety, accepting partially with certain modifications or rejecting. The list will be annexed to the Minutes so that the Commissioner will not have to read out a long list of numbers.

4-029

ENBolkestein, Commission. ( Mr President, I shall explain some of the key points that may be of interest to Members of Parliament, in particular the amendments tabled by this Parliament.

I shall summarise my reply at the end of this debate in five points. Firstly, some amendments call into question the current legislation and cannot therefore be accepted. This concerns particularly the limitation of the scope of application of the directive to liberal professions, the suppression of the recognition of formal qualifications for many crafts and trades professions, the limitation of recognition to qualifications at the same level and the several other more restrictive requirements for recognition.

My second point concerns facilitation of cross-border service provision. A real simplification of temporary and occasional service provision implies less formalities. Adequate guarantees to consumers can be provided through comprehensive information, and declarations to competent authorities and pro-forma registration can be accepted for healthcare professions. In any case, formal control of qualifications by host Member States is not compatible with a real facilitation of cross-border service provision.

Thirdly, consolidation is not the appropriate framework for the introduction of new harmonising provisions; that requires in-depth consideration by all the interested parties and a specific impact assessment.

Fourthly, enlargement justifies a simpler organisation of recognition systems. Community procedures have to be limited to Union-wide measures and this fully justifies the new approach for recognition of medical and dental specialities common to only some Member States, which will improve the likelihood of their continuing development.

Fifthly, enlargement also demands simpler management mechanisms, particularly through one single comitology committee. The Commission is willing to contribute to this goal by setting up an expert group and by introducing more open and flexible consultation mechanisms with interested parties.

The Commission's opinion on the individual amendments ( of which there are many, as we all know ( has been provided in writing and will be distributed shortly.

Furthermore, I am confident that the valuable efforts made by the European Parliament will provide a good basis for further constructive discussions.

Lastly, I should also like to congratulate Mrs Gebhardt on her birthday next week.

4-153

ENIN THE CHAIR: MRS LALUMIÈRE

Vice-President

President. – Thank you, Commissioner.

The debate is closed.

The vote will take place on 29 January 2004.

4-030

ENTaxation

4-031

ENPresident. – The next item is the joint debate on the following reports:

– (A5-0466/2003) by Mrs Kauppi, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a European Parliament and Council directive amending Directive 77/799/EEC concerning mutual assistance by the competent authorities of the Member States in the field of direct and indirect taxation (COM(2003) 446 – C5-0370/2003 – 2003/0170(COD))

– (A5-0476/2003) by Mr Purvis, on behalf of the Committee on Economic and Monetary Affairs, on the future of Hedge Funds and Derivatives (2003/2082(INI)).

4-032

ENBolkestein, Commission. ( Madam President, with regard to these two subjects, I will speak first on the Kauppi Report and then on the Purvis Report.

On the Kauppi Report on mutual assistance, the Commission made this proposal in response to the report of the Council's Ad Hoc Group on Tax Fraud. The group had indicated that the base directive, which dates from 1977, was in need of modernisation in view of the increased tendency for businesses to be organised in several Member States and for individuals to exercise their Treaty rights of free movement. Nevertheless, any tax liabilities that arise as a consequence of those rights should be capable of enforcement by the tax authorities of the Member States concerned. Practices of tax evasion and tax avoidance across frontiers violate the principle of fair taxation, are likely to result in distortions in capital movements, adversely affect conditions of competition and affect the proper functioning of the internal market.

This proposal adds to the existing tools available to tax administrations. It accelerates the procedures involved in obtaining information from other states' tax administrations. It makes it possible to carry out simultaneous tax checks in a number of countries where a multinational business operates, and it allows decisions and instruments to be notified outside the country where the tax is owed, so that enforcement proceedings may be pursued. As a measure designed to combat tax fraud and tax avoidance, I am certain that Parliament will want to support it.

Those are my initial comments on the Kauppi Report. With regard to the Purvis Report, I should like to say the following.

The Commission welcomes the decision of the European Parliament to draw up a report on the future of hedge funds and derivatives. I should like to congratulate the rapporteur on his initiative, which is very timely. These subjects, as we all know, are extremely important.

Let me first address the issue of hedge funds. As mentioned in Mr Purvis' report, various hedge fund products are already accessible to retail investors, either directly through stock exchange listings or indirectly through structured notes. Several Member States have already introduced a regulatory regime for hedge funds to encourage such undertakings to set themselves up under their jurisdiction. However, as Mr Purvis correctly mentions in his report, there is currently no European regulatory regime that is tailored to the particularities of hedge funds.

There are at least two key questions: first, how to attract on-shore investments that are mostly off-shore nowadays. Parmalat, inter alia, has shown the importance of that. Secondly, what level of protection do investors need for this specific type of financial product? On this basis, it would seem appropriate to discuss the potential benefits of an EU-wide regulatory regime for hedge funds.

As regards the second issue, derivatives, I agree that this is another crucial issue for at least three reasons.

First, this category of financial instruments is developing at an increasing rate with endless imagination in the form of new products. Secondly, most of them are traded on over-the-counter markets which, by their very nature, are less-well monitored than regulated markets by regulators and supervisors. Thirdly, the risks attached to such instruments are potentially large because of their leverage effects. However, in contrast to hedge funds, which are not covered by European legislation at the moment, derivatives are already dealt with in a number of texts in different contexts such as, for example, accounting, ICITS, market abuse, investment services or banking legislation. It would seem neither necessary nor desirable to build a specific piece of legislation for derivatives as it is a horizontal issue. The best way would be to consider updating the current different pieces of European legislation on a case-by-case basis. However, full tax consistency must be assured.

In the cases of both hedge funds and derivatives, Mr Purvis' final report is helpful guidance for the European Commission. The Commission committed itself in Oviedo in April 2002 to examine specifically the issues of derivatives and hedge funds after the Enron scandal. This commitment will be respected and Mr Purvis' report will be taken duly into account.

The European Commission will also have to take into consideration the conclusions to be drawn by the professional experts groups that we set up in late October 2003 to consider post-FSAP priorities – priorities after completion of the Financial Services Action Plan. Those experts groups may raise these two issues, among others, upon the first report scheduled for April 2004.

It is too early for the European Commission to take a final position on possible further legislative action regarding either hedge funds or derivatives.

We shall have to analyse whether the Parmalat affair resonates on these two subjects and we shall have to be attentive to the on-going debates in the United States on registration of hedge funds to ensure that there are no distortions to competition.

4-033

ENKaras (PPE-DE), deputy rapporteur. – (DE) Madam President, Commissioner, ladies and gentlemen, as you can see, I am not Mrs Kauppi, but she is the rapporteur, and I am not. She has asked me to present this report briefly for her today because a week ago she became a mother. On behalf of this House and on my own behalf I would like to offer her our warmest congratulations. She is the mother of a strapping boy, both are doing well and she would like to combine work and family as quickly as possible and resume her work in this House. Warm congratulations, Piia, and all the best!

Turning to her report on the Commission proposal, I can say that it does not criticise the Commission, neither does it raise any cause for concern as to how the Commission has proceeded, but rather as to how the Council has proceeded. Essentially, the Commission proposal seeks to achieve for direct taxation what has already been proposed elsewhere for indirect taxation. The main innovations are the introduction of the possibility for two or more Member States to carry out joint controls where a taxable person is active in more than one Member State, that is, it is a question of common sense and an orderly shaping of the single market.

A second point is the simplification of the procedure and a third the removal of ambiguities from the present text which, as we have heard, is already 25 years old and anyone with their eyes and ears open knows that a lot has been done and changed in that time.

The main problem is one of procedure. In keeping with its normal practice, the Commission has based its proposal on Article 95 of the Treaty, which means that the codecision procedure applies to this proposal. Parliament has always supported this choice of legal basis, for reasons that are easy to understand, and I would also like to say why, namely that we are of the opinion that administrative cooperation does not affect material tax law, but rather seeks to ensure that the single market works well. We therefore welcome the Commission’s legal stance and we would point out that the Council has already on several occasions decided unilaterally to change the legal basis to either Article 93 or Article 94 of the Treaty without giving any convincing reasons, in so doing removing Parliament’s right of codecision and understating the measure’s importance for the single market.

The most recent case concerned two Commission proposals on administrative cooperation in the field of VAT and an amendment to Directive 77/799/EEC, where the Council has recently re-consulted Parliament on the change in legal basis. Parliament rejected that request on 2 September 2003. Since we anticipate that the Council will also change the legal basis for the present proposal, the rapporteur sees no reason to change or re-evaluate her position at this juncture and we therefore propose that the Commission draft be approved in full as proposed on the basis of Article 95. By so doing, we will also be showing with a broad majority that we are ready, minded and determined to co-decide in this matter, because we believe it concerns the single market.

4-034

ENPurvis (PPE-DE), rapporteur. – Madam President, I would like to thank the Commissioner for his considered views and I hope, even if he defers to his expert panels, that he will take into account the fact that this area most probably deserves legislation in the future. I shall run through the main reasons for our view of this.

The first hedge fund was established back in 1949 and, as of now, assets under management globally are estimated at some EUR 600 billion. Of these, about 15%, or EUR 90 billion, are managed from Europe. Even if European investment managers manage them, most of them are still domiciled in offshore tax and regulatory havens. There has been a huge increase in interest in this type of investment in recent years, especially in the United States, where affluent and moderately affluent investors have discovered them. Many institutional investors now find it acceptable to invest in this way.

This interest has now spread to Europe, especially as many of these funds, because of their willingness to sell short and leverage their results, have performed well in absolute terms over the last three years of negative stock market performance. The media has picked up on this, and such performances are featured in the personal finance sections of the newspapers. As a result there is some concern that less and less sophisticated investors will be tempted to entrust their savings to risky offshore hedge funds by one means or another. Even if most of these are perfectly respectable, well-administered and managed, there is only very basic regulatory control. EU regulators are concerned about the risks that may be run, while the investment industry is attracted by the commercial opportunities of tapping into this trend. We consider that it is an opportune time to introduce an appropriately light-handed regime in the European Union that will attract those funds to set up within European jurisdictions. This view is further strengthened by the initiatives of certain Member States, which have introduced or are considering introducing such facilitating regimes at the national level. Ireland, Germany and Luxembourg are three such examples.

Another matter of concern in the context of our attempts to produce a single European capital and investment market, is that some Member States impose fiscal or regulatory conditions which discriminate against investment into such funds in other Member States. We therefore propose that a distinct light-handed regime be established which can accommodate the characteristics of hedge funds – and also, incidentally, other alternative investment vehicles which currently lack a suitable legal home at an EU level. We are looking for an arrangement which can provide these vehicles with an EU passport on the basis of mutual recognition. These funds invest in areas such as property, currencies and commodities. Clearly these investments are not appropriate for everyone, at least until their awareness of the risks they carry are fully understood and appreciated. For this reason, we stress the absolute necessity of education, of clear and straightforward information and of strict regulatory control of those who sell and distribute such products. There is no reason to deny European citizens access to these interesting investment opportunities, but we feel their interests will be better safeguarded if these are available within EU jurisdictions and are subject to appropriate regulation. They will also provide opportunities for our European investment professionals to enhance their skills and build high-value businesses and jobs. Capital will also be attracted to our businesses and industries here in Europe, rather than in America and other parts of the world.

A separate section of my report is devoted to derivatives. These are widely used in both mainstream business and industry and in the investment world. While they are often vilified as high-risk speculative instruments, in fact, they can just as readily be applied – and are – in order to limit and reduce risk. We have identified two main issues – Mr Bolkestein identified three – which deserve attention. Systemic risks to the world's financial system could possibly occur because we have little or no way of quantifying the full extent of exposure. This applies especially to specialised derivatives which are dealt over the counter and tend to be less liquid than more conventional derivatives. This also applies to credit derivatives, whose use has exploded, as banks offload – for capital adequacy reasons – their assets onto non-banks including, incidentally, hedge funds.

We therefore call on the Commission, and the various international institutions, to develop appropriate means to measure, monitor and control such outstandings.

4-035

ENDoyle (PPE-DE). – Madam President, I shall start with the Kauppi report – and I join in the congratulations to Mrs Kauppi on the birth of her son this week. As has been noted, the title of this proposed directive, which will overhaul the existing mutual assistance directive, is slightly misleading, given that it will only, in effect, apply to direct taxation and insurance, indirect taxation in the form of VAT and excise duties being dealt with in separate instruments. That should be clarified.

The thrust of this proposal is to prevent tax evaders from hiding in other Member States by establishing, on a voluntary basis, provisions for cooperation and mutual agreement in conducting tax controls. This will be a welcome advance. The change of legal basis from one relying on QMV – Article 95 – to one providing for unanimous voting by the Council – Articles 93 and 94 of the Treaty – is very much in line with precedent and, fortunately, with my own government's position on tax legislation. It is not possible to separate the administrative element of taxation powers, including mutual assistance provisions, from the tax raising prerogative and this should remain subject to unanimous voting.

I turn to the report by Mr Purvis. I congratulate him on a very balanced and informative report, notwithstanding the slightly odd decision to link these two topics – hedge funds and derivatives – in a single report, as trade in derivatives is already far more regulated in the EU than the area of hedge funds. As mentioned in his report, Ireland has been extremely active and successful in broadening access to hedge funds. However, a clear regulatory framework must be put in place to secure minimum protection for investors while expanding Europe's paltry 15% share of total global hedge fund assets. SAIVs – sophisticated alternative investment vehicles, or hedge funds, as they are generally known – and derivatives have benefited over the last few years from the stock market downturn, as they did from the widening of the field of investors that the stock market experienced during the booming 1990s, when areas of investment that had previously been largely confined to experienced and qualified financial experts or fund managers were democratised as individuals and smaller groups new to the market put their money into shares at that time. I agree that we need an appropriate EU-wide regulatory regime for hedge funds which will prompt them to locate in the EU, rather than offshore, and provide the benefits of a common European passport through mutual recognition. However, we need to take a suitable light-touch approach to regulation in order to provide incentives that will encourage investment in funds based in the EU rather than continue to drive them offshore. Coordination of national regulators will provide for more flexibility within the single market, which is welcome.

With regard to derivatives, I support the timely call for the Commission to present a report on their role on the capital markets.

4-036

ENGoebbels (PSE). – (FR) Madam President, the term ‘sophisticated alternative investment vehicles’ is such a sophisticated phrase that I shall replace it with the expression ‘hedge funds’.

The Socialist Group does not consider hedge funds in particular or derivatives in general to be particularly wonderful. These instruments are to some extent useful in covering certain investment risks or risks linked to international trade. Given, however, that all of these financial instruments are highly speculative – indeed with very limited leverage, phenomenal sums can be raised – one simply has to be careful. My Group supports the Commission’s prudent approach in this regard and we agree with the argument that Commissioner Bolkestein has just put forward. Enron, Parmalat and other scandals have reminded us that sophisticated products often conceal highly sophisticated financial wrongdoing.

The near-collapse of the Long Term Capital Management hedge fund revealed the scale of the risks involved. At the beginning of 1998, LTCM had USD 4.8 billion of its own funds to meet liabilities worth USD 120 billion, in other words, a leverage of 25. By 23 September 1998, LTCM’s net assets had fallen to USD 600 million, with liabilities of around USD 100 billion, or a leverage of 167. The rescue of LTCM, which entailed neither penalties nor consequences for the fund managers, avoided a chain reaction, but who can guarantee that similar events will not happen again, this time on a scale that will make any rescue impossible?

The capital with which LTCM started operating essentially came from banks which were, in theory, monitored. We must, therefore, toughen the prudential requirements set for banks when they underwrite speculative funds. Because many of these funds are domiciled in offshore centres that are unregulated or barely regulated, the simplest way of countering hedge funds that wish to remain opaque would be to make it more difficult and onerous for them to obtain refinancing from banks operating in countries covered by the Basle Accords. Bank loans could be strictly limited, in line with the amount of collateral provided by funds domiciled offshore. The Financial Stability Forum, the International Organization of Securities Commissions and the Basle Committee for Banking Supervision have all made important recommendations and suggestions on this matter, in particular in the Brok/Mayer report of January 2000. To date, none of these proposals has been translated into action.

Mr Purvis’s report seeks to arrange a comeback for hedge funds in Europe and to gradually open their products to ‘moderately affluent investors’. Personally, I am not quite sure what a moderately affluent investor is, but my group is not opposed to such a move, on the condition that there is much more transparency as regards hedge funds and that national and, in future, even European regulators authorise and monitor this process. Indeed, we must not forget that in this murky area, significant gains necessarily entail substantial risks.

I shall finish, Madam President, by thanking Mr Purvis for this report which is, on the whole, extremely constructive. I thank him for his open-mindedness and for having accepted some compromises, which will allow my group to vote in favour of his report. I will also end by addressing my personal congratulations and those of my group to Mrs Kauppi, on her report, but especially on the happy event that has just been announced.

4-037

ENSeppänen (GUE/NGL). – (FI) Madam President, I know the rapporteur, Mr Purvis. He believes in the market. If you have such a belief the best option is light‑handed regulation, and the lightest is obviously self-regulation. Mr Purvis justifies the existence of derivative markets with reference to olive production. In ancient times the price of olives was stabilised by means of agreements made beforehand. Olives in the European Union, however, are a good example of how the market functions if there is no control and only self-regulation. According to a report by the Court of Auditors, producers are falsifying production figures at their pressing plants, adding nut oil to olive oil or forwarding the same oil to the EU for payment on the basis of both the number of trees and the volume of oil.

The market functions on the terms of the greedy, as do investment and the derivative markets. The new instruments work in the way oil is pressed from olives. The stock markets are the oil pressing plants for the new market instruments, where new cash is pressed from old. The derivatives are the new lubricant greasing the wheels of the machinery in the speculators’ market.

The financial markets are supervised today in the same way as nuclear safety, something which was discussed this week in Parliament: only at national level. Those responsible for supervising nuclear plants are top‑level technical specialists, whilst those responsible for the national supervision of hedge funds and derivatives are not. Accordingly, there is no stock market safety factor in the market. There should be a stock market safety authority just as there is a nuclear safety authority or, for example, a Maritime Safety Agency.

I wish the report had examined more the role of the European Central Bank as a possible supervisory body. A lightly regulated regime and self‑regulation rely on the morals of speculators, and, as we know, speculators do not have morals. Their incentive is merely a desire for money. As a result, the pensions of employees in companies in many countries are at great risk, as they are, for example, in Mr Purvis’s country.

4-038

ENVan Dam (EDD). – (NL) Madam President, unlike the previous speaker, I will mainly be focusing on the directive for which Mrs Kauppi is the rapporteur. Tax avoidance and evasion is widely practised and there is a strong cross-border dimension to it. Cigarette smuggling, VAT carousels and undeclared bank accounts are only a few examples of the repertoire of those who do not want to give Caesar what belongs to him. In the European Union, but also, for example, in Switzerland and the Balkans, we have to look carefully for joint efforts to put effective monitoring in place particularly for taxpayers who are active in various Member States.

The options provided in this directive for joint monitoring by two or more Member States are therefore of major importance. We are particularly referring, therefore, to the improved cooperation between the fiscal authorities of each of the Member States. This is wholly in keeping with the national prerogative of legislating on tax and collecting it. Fiscal legislation is a national responsibility and should remain so, tax being more closely interrelated with social structure and culture within each of the Member States. Against this backdrop, it is extremely odd that the discussion should not revolve around an effective approach to tax fraud but around the question of what legal basis this directive should have. This Parliament has rightly accepted Article 95 as a basis in comparable cases in order for the codecision procedure to apply. This is not about the content of tax legislation but about an implementing provision with regard to administrative cooperation, which is necessary in the internal market.

What Mrs Kauppi predicted in her explanatory statement to her report has meanwhile come to pass: the Council has recently submitted a formal proposal to amend the legal basis. I would call this a knee-jerk response; the Council has once again rejected codecision without any clear arguments. Now that Parliament's position was confirmed on 2 September, this proposal too risks ending up before the Court of Justice. This would lead to unnecessary effort and expense and, above all, possibly long delays for the improved cooperation between the fiscal authorities, which is so desperately needed. I challenge the Council to jump over its own shadow. Back to basics: more effective controls of taxpayers who are active across the border. Tax-evaders move on from one base to another very quickly. The traditional exchange of information cannot possibly keep up. If a joint team of control officials from the relevant countries can establish that tax legislation has been misused and abused, a tit-for-tat approach is possible. The accession of ten new Member States will undoubtedly increase the need for transnational control teams. The open borders to countries with a still vulnerable administrative apparatus will, unfortunately, attract bounty hunters who have as few scruples in tax matters as they do in anything else. The sooner the tax authorities can fight this as one, the better.

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ENIlgenfritz (NI). – (DE) Madam President, it goes without saying that we must back the joint prosecution of tax fraud in Europe. However, the EU continues to be outsmarted by professional tax fraudsters because our systems are far too complex. We are flinging the doors open wide to such fraudsters and in so doing indirectly encouraging tax fraud. If we are to do anything effective against it, we need not only more effective controls and close cooperation, but also tax laws that are easy to understand. We urgently need a reform of our VAT system, for example. The highly complex dual VAT system where national sales are treated differently from EU sales is a major factor in billions being evaded relatively easily in the EU every year. That is why we need a simpler VAT system that is easier to understand and where all sales in Europe are treated in the same way and not differently, so that tax fraud can actually be combated effectively. Proposals have already been made to this effect; we only have to implement them. I therefore propose that we at last introduce the tax card into the VAT system and treat sales the same, not differently, so as to achieve the aims we have set by actually cutting tax fraud.

4-040

ENSantos (PSE). – (PT) Madam President, ladies and gentlemen, the main conclusion of Mrs Kauppi’s report is undoubtedly the recognition that the rules governing mutual assistance in the field of taxation must be subject to the legal basis enshrined in Article 95 of the Treaty.

In so doing, the institutional balance enshrined in this Treaty will be maintained, as will, more importantly, Parliament’s own prerogatives. Consequently, administrative cooperation does not affect material tax law, which means that it will no longer be required to be subject to the legal bases of Articles 93 and 94. What is crucial, however, is the fight against tax evasion, essential if the single market is to work well, which brings this under the remit of Article 95. I therefore endorse the Commission’s proposal.

As regards the Purvis report, which deals with defining EU rules for personal investments and covers an enormous range of financial products, it appears to be absolutely essential to plug the current gap in the legislation. Indeed, the absence of clear rules regarding such investments has led to their being domiciled off-shore. This clearly damages the EU as a whole and leads to greater risks for more vulnerable investors. Various Member States are preparing to draw up their own legal regimes for hosting this kind of investment. It is therefore absolutely essential to attempt to harmonise and coordinate such regimes forthwith, subordinating them to the greater European interest.

It should be remembered that we are speaking about innovative investment products offering highly attractive benefits, which means that they will be welcomed and encouraged by the market. Parliament has already looked into the problem of financial derivatives, highlighting the important role they currently play in capital markets, but, more importantly, spelling out the advantages and the risks involved. It therefore appears that the rapporteur is absolutely right that it is of crucial importance that we develop a regulatory regime that acts as an incentive to investors as regards hedge funds. He is also right to point out that legal uncertainty makes it very difficult to make use of derivatives markets in Member States.

The rapporteur also suggests that the lack of regulation of certain varieties of derivative, such as ‘over-the-counter’ derivatives, represents a serious threat to the markets and especially to finance companies that are increasingly using this type of investment. The amendments tabled by the Group of the Party of European Socialists, addressing these very concerns, represent a significant improvement to the draft text, by guaranteeing greater insurance against the inherent risk in such investment practice, especially by making it compulsory to pass on more detailed and more accurate information to investors. For all of these reasons, the reports by Mrs Kauppi and Mr Purvis before us today, along with the amendments by the Group of the Party of European Socialists, must be approved by this House.

4-041

ENBolkestein, Commission. ( Madam President, I shall make a few short remarks, firstly on the Kauppi report. Before I do so, however, I should like to join Parliament in congratulating Mrs Kauppi on the birth of her son.

The legal base is an important point. The Commission has founded its proposal on Article 95 because it strongly believes that this measure ought to be adopted under the codecision procedure. However, as Mrs Kauppi predicted, the Council has changed the legal base to Articles 93 and 94. That is very regrettable. It is not the first occasion that the Council has acted in this way. It did so in relation to Directive 2001/44/EC, dealing with mutual assistance on the recovery of tax claims.