Brussels calling, Belgian EU Presidency, Business Newsletter, 22/11/2010, Issue 7

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Belgian EU Presidency Business Newsletter

Brussels calling

22/11/2010 • Issue 7

Collective redress : US-style class actionsshould be avoided in Europe!

The possible introduction of a collective redress mecha-

nism is currently being discussed, particularly in the area

of consumer policy and antitrust law. The European

Commission will launch a new consultation on the topic in

the coming weeks. The recently published ‘Single Market

Act’, although promoting alternative dispute resolution

systems (ADR), also refers to collective

redress. Furthermore, group actions

were at the heart of a conference

organised on November 15 by BEUC

and Test-Achats (the European and

Belgian consumers’ organization

respectively), with the support of the

Belgian Presidency.

Like any other dispute, consumer dis-putes should be settled in an appropri-

ate way. However, the FEB considers that the introduction

of judicial collective redress mechanisms is not the right

way to boost consumer confidence nor to provide com-

pensation to those who suffered harm. American-style

class actions should absolutely be avoided in Europe. One

should be aware of the devastating effects of class actions

in the United States, where they led to the bankruptcy of

a significant number of companies as well as to job losses,

not to speak about the costs on the national economy.

With the exception of lawyers, nobody benefits from this

kind of procedure, as American consumers in general

receive little compensation. Whatever the advocates of

collective redress may say, Europe is not immune to such

excesses: ‘success fees’ and ‘punitive damages’ are

already a matter of fact in the European Union.

Collective litigation is expensive and the problem of fund-

ing has to be addressed very carefully. The American

experience has sufficiently shown that litigation financing

rules can make it a profitable business to file non-meritori-

ous class actions.

Combined with the absence of the ‘loser pays’ rule, con-

tingency fees and third-party funding arrangements

(allowing outsiders to a lawsuit to provide venture capital

to fund the litigation in exchange for a share of the reco-

very) make litigation a costless exercise for American

plaintiffs. Moreover, US-style class actions give plaintiff

lawyers the opportunity to set the stakes for the defen-

dants so high that enterprises are pressured by the eco-

nomic risk to simply settle and are forced to pay, even for

meritless lawsuits.

Nor is it a good idea to introduce collective redress for

damages resulting from infringements of antitrust law.

Such a move would lead to a radical change of the com-

petition policy regarding the current legal practice in

member states. Compliance with competition rules

– which is currently guaranteed by public authorities –

would be transferred to private entities (e.g. consumer

organisations), as it is the case in the United States.

Therefore, the FEB asks that priority should be given to

the effective enforcement of existing legislation, to con-

sumer information and to the promotion of ADR mecha-

nisms such as mediation and arbitration. The latter offer

Editorial

Brussels calling - 1 -

C O N T E N T S Editorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Events & meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Economic and Financial Affairs . . . . . . . . . . . . . . . . . . . . . . . 5

G20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

In the spotlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Economic and Financial Affairs . . . . . . . . . . . . . . . . . . . . . . . 9

Links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Team presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Diane Struyven,

Director of the EuropeanDepartment of the FEB

Daily updated info on http://eupresidency.vbo-feb.be




the advantage of providing a solution which is acceptable

to all parties whilst avoiding risk of abuses.

However, should the European legislator opt for the intro-

duction of collective redress, the FEB requests that certain

conditions are fulfilled. For example, the ‘loser pays’ prin-

ciple should be fully applied. The possibility of claiming

punitive damages should be avoided and any system pro-

viding for a ‘contingency fee’ for lawyers should be

banned. Furthermore, uniform rules should be established

by the EU regarding the right of consumer organisations

to go to court. Last but not least, an ‘opt-in’ system

(which implies that the plaintiff explicitly indicates his wish

to take part in the action) is essential to avoid contraven-

ing the European Convention on Human Rights.

Extraordinary Competitiveness Council(November 10, 2010)

On November 10, an extraordinary Competitiveness

Council was held in Brussels. The meeting was chaired by Vincent Van Quickenborne, Belgian Minister of Economy.

After two previous Competitiveness Council meetings on

September 29 and October 11-12, this extraordinary

meeting constituted a new

attempt to find a political

agreement among the 27

member states on transla-

tion arrangements for a

future EU patent system.

Notwithstanding the consi-

derable efforts made by the

Presidency, it was disap-

pointing that a consensus

could not be found on the

new compromise proposal,

as a very small minority of member states was still

opposed to it, whilst unanimity is required on this issue.

“We left no stones unturned. However, in spite of progress

made, we have fallen short of unanimity by a small margin.

The Presidency will now reflect on how to capitalise on the

momentum that delegations have given us,” read the

Council’s conclusions. In the past months, the BelgianPresidency has gone to any lengths to secure a deal

regarding this very important dossier, and will continue

to do so.

Research and develop-

ment as well as innova-

tion are generally con-

sidered cornerstones of

the Europe 2020 strate-

gy for smart, sustainable

and inclusive growth. A

single EU patent sys-

tem is viewed as the

most important factor

to improve the climate for innovation in Europe. An EU

patent which is affordable and offers legal certainty is of

paramount importance for innovative products as well as

for a well functioning internal market.

Political discussions on an EU patent are not new, but have

been dragging on since the year 2000. Over the past

decade, progress has been made step by step, but two

important issues remained

on the negotiating table:

the need for a unified

patent litigation regime,

and translation arrange-

ments. The latter item is

the largest stumbling block

in the EU patent discussion.

It relates to the question

which language version(s)

of a granted patent would

be legally binding.

Currently, parties that seek patent protection in several

member states or even in the EU as a whole can only sub-

mit a ‘European patent application’ to the European

Patent Office (EPO) in München in either English, German

or French. The EPO examines the validity of the patent

application (based on novelty) and can grant the European

patent, but the latter must still be validated in each of the

designated member states. However, most member statesrequire a translation of the European patent in one of their

official languages before they validate it. It goes without

saying that the current procedure to obtain patent pro-

tection in several member states or throughout the

whole EU is very cumbersome and extremely costly

(mainly due to translation requirements). Studies have indi-

cated that European companies have to pay at least more

than 10 times as much as in the United States or Japan to

obtain protection. Moreover, because of national valida-

tion procedures, patent holders can face legal actions in

several EU countries at the same time. There is also the

risk that courts in two different member states then come

to conflicting conclusions relating to the same patent. This

leads to legal uncertainty.

Competitiveness




On July 1, 2010, anticipating the priorities of the Belgian

Presidency, the European Commission published a pro-

posal with translation arrangements for a future EU

patent. In its proposal, the Commission suggested a

three-language regime. The latter would allow compa-

nies to submit their patent application in either English,

German or French. Claims (i.e. the part of a patent (appli-

cation) defining the scope and protection granted by the

patent) would be translated into the two other official lan-

guages, and related costs would be fully reimbursed up

to fixed ceilings. After that, no further translations would

be required, and the patent – in the language in which

the application was filed – would be legally binding

throughout the EU. The proposal also provided for cost-

less machine translations, which would have no legal

value but would serve information purposes only.

A small coalition of member states, led by Spain and

Italy, resisted the Commission’s proposal. They essen-

tially claim that the proposal would not create a level

playing field between companies in different EU member

states. Therefore, they have been pushing for alternative

regimes, such as ‘English-only’. They argued that a three-

language regime including French and German as official

languages implied discrimination towards other EU lan-

guages.

In response to the above concerns, the Belgian Presiden-

cy tabled a first compromise text which was discussed

at the Competitiveness Council of October 11-12. A first

important aspect of the compromise was the timely avai-

lability of high-quality machine translations from the three

official working languages (i.e. English, German and

French) into all other EU languages in order to improveaccess to technical information on patents in local lan-

guages. A second element provided for additional com-

pensation of costs relating to the translation of a patent

application filed in a language different from the official

working languages into either English, German or French.

This would ensure equal opportunities for applications

coming from member states which don’t have one of the

official working languages as their national language. A

third concession in the text was the provision of a transi-

tion period during which English would be the only offi-

cial language for the EU patent. This transition period

would end once machine translations would be sufficient-

ly high quality. The latter translations would however only

serve information purposes, without having legal effect.

Brussels

Brussels

Brussels

Brussels

Brussels

Brussels

Strasbourg,France

Brussels

Brussels

Brussels

Brussels

Brussels

Brussels

Brussels

Brussels

Brussels

Conference (organized with thesupport of the Belgian Presidency):“Second conference of theMinisters for Labour andEmployment of the Union for theMediterranean (UfM) – Euromed”

General Affairs Council

Foreign Affairs Council

Conference (organized with thesupport of the Belgian Presidency):“Implementation of Europeandirectives”

Conference (organized with thesupport of the Belgian Presidency):“Committee meeting for seniorlabour inspectorate officials (SLIC)”

Conference (organized with the

support of the Belgian Presidency):“Investing in well being at work:addressing psychosocial risks intimes of change”

Plenary session of the EuropeanParliament

Conference (organized with thesupport of the Belgian Presidency):“10th NEEL conference environ-mental law in the EU 2020”

Conference (organized with thesupport of the Belgian Presidency):“27th SOLVIT network workshop”

Conference (organized with thesupport of the Belgian Presidency):“Occupational hazards – difficultiesin relation to exchanging informa-tion”

Conference (organized with thesupport of the Belgian Presidency):“International Conference on EMASand BE-SMARTER. Towards aresource-efficient economyInnovative approaches for smallbusinesses: from simplification to e-learning”

Competitiveness Council

Conference (organized with thesupport of the Belgian Presidency):“Towards a genuine 7thEnvironment Action Programme”

Conference (organized with thesupport of the Belgian Presidency):“Ten years of public policies foremployee ownership in Europe –past, present, future”

Conference (organized with thesupport of the Belgian Presidency):“Sharing environmental informa-tion”

Agriculture and Fisheries Council

EVENTS&MEETINGS

21-22/11/2010

22/11/2010

22/11/2010

22-23/11/2010

22-23/11/2010

22-24/11/2010

22-25/11/2010

24/11/2010

24-25/11/2010

25/11/2010

25/11/2010

25-26/11/2010

25-26/11/2010

26/11/2010

29/11/2010

29-30/11/2010






Economic and Financial Affairs Council(November 11-15, 2010)

On November 11-15, the Council and the EuropeanParliament met in the Conciliation Committee – composed

of 27 members of the Council and an equal number of

Members of the European Parliament (MEPs) – to discuss

the EU’s budget for 2011. Both parties in principle

agreed to increase the EU budget to 126,5 billion EUR.

This represents a 2,91% rise compared to 2010 and it

corresponds to 1,01% of the EU’s gross national income.

However, since the European Parliament insisted on lin-

king the budget discussions to other issues such as the

flexibility of the multiannual financial framework and extra

powers for MEPs in future negotiations on this framework,

the talks collapsed after 4 days on November 15. The

MEPs’ demands for extra powers – provided for under

the Lisbon Treaty – were rejected by the United

Kingdom, the Netherlands and Sweden as they insisted

that the 2011 budget was the only issue on the table.

Both the Dutch and the Brits argued flexibility of the mul-

tiannual framework could result in member states having

to pay more for the EU budget. In times in which many

member states are taking austerity measures, this would

be unacceptable, they added.

As the 21-day conciliation period as provided for by the

Lisbon Treaty expired on November 15, the Commission

now has to come up with a new draft budget . In case a

new budget would not be adopted at the beginning of

2011, the so-called ‘provisional twelfths scenario’ would

materialise. Concretely, this would mean that no more

than one twelfth of the budget appropriations for 2010may be spent each month. EU Budget Commissioner

Janusz Lewandowski said he “deeply regretted the fiasco”

and that a budget frozen

at 2010 levels may have

serious consequences for

a wide range of EU poli-

cies and projects. First of

all, it could affect the

funding of the European

External Action Service

and the three new finan-

cial supervision authori-

ties expected to be

launched respectively on

December 1, 2010 and

January 1, 2011. It might

also represent a setback

for the ITER project, which is aimed at building an experi-

mental fusion reactor for energy generation. Finally, it

would also put a question mark behind planned spending

increases in areas such as cohesion policy, youth mobility

and education and the Common Agricultural Policy.

On November 18, Belgian Foreign Minister Steven

Vanackere announced the Belgian Presidency will try what-

ever possible to find a solution before the year ends.

Economic and Financial Affairs

G20 Leaders Summit(November 11-12, 2010)

On November 11-12, a G20 Leaders Summit took place in

Seoul, South Korea, the country which assumed the G20

Presidency in 2010. Present were the Heads of State and

Government of the world’s 19 biggest economies, as well

as European Council President Herman Van Rompuy and

European Commission President José Manuel Barroso on

behalf of the EU. The G20 is considered as the most

important and representative global

forum for international economic

cooperation (see boxed text).

In a joint letter of Herman Van

Rompuy and José Manuel Barroso

of November 5, addressed to the

other 19 members of the G20, the EU set out its agenda

and position for the Leaders Summit in Seoul. The letter

stated that the G20 is currently at a turning point, as itnow has to shift its focus from immediate crisis response

to longer-term global economic coordination. It then put

forward the priorities of the EU for the Leaders Summit.

A first priority was the implementation of the G20 frame-

work for strong, balanced and sustainable growth. All

major economies were called upon to contribute to the

rebalancing of the world economy.

With regard to macroeconomic

imbalances (e.g. current account),

the EU proposed the use of indica-

tors to trigger an assessment and

the identification of root causes.

Concerning currency markets, the

G20




EU argued that exchange rates

should be determined in line

with market fundamentals and

competitive devaluation should

be refrained from. It called upon

all G20 members to consider the

possible effects of their respectiveeconomic policies on their G20

partners and avoid actions that

may have negative spillovers (the

so-called ‘beggar-thy-neighbour’

policies).

A second EU priority was the

completion of the reform of

international financial institutions

(IFIs). On October 23 at a meeting

of the G20 Finance Ministers and

Central Bank Governors in

Gyeongju (South Korea), an

agreement was reached on a go-

vernance and quota reform of the

International Monetary Fund

(IMF). The reform implied a shift

of power from underrepresented

emerging countries to overrepre-

sented members, notably the EU

(see ‘In the spotlight’ article in the

6th edition of this newsletter, pub-

lished on November 8, 2010).

Third, the EU warned for the loss

of momentum regarding the

financial regulatory reform agen-

da. It underlined the need to

endorse the Basel III agreement

(on new capital and liquidity stan-

dards for banks), and the policy recommendations of the

Financial Stability Board (FSB) on credit rating agencies,

systemically important financial institutions, compensation

standards, global accoun-

ting standards. The G20

should also continue its

work on effective cross-

border crisis manage-

ment, commodity deriva-

tives, market integrity and

shadow banking. The

development and estab-

lishment of a global tax

on financial transactions

should also be explored.

Other EU priorities

included the need for

strong political impulse in view of a rapid conclusion of

the Doha Round in the framework of the World Trade

Organization (WTO), the G20’s work on development and

the achievement of the Millennium Development Goals

(MDGs), a successful outcome of the United Nations

Climate Change Conference in Cancún, energy-related

issues and the fight against corruption.

The G20 Leaders Summit started on November 11 with a

dinner discussion on the global economic outlook and the

G20 framework for strong, balanced and sustainable

growth. In the morning of November 12, IFI reform, the

G20 development agenda and global safety nets were on

the agenda. During lunch, G20 leaders debated on trade

(the Doha Round inter alia ) and climate change. In the

afternoon, financial regulatory reform and the future G20agenda were discussed.

The so-called ‘Group of 20’ (G20) was established in 1999 to bring together the

world’s biggest industrialized and developing economies around key issues in the

global economy. It was specifically created in response to the financial crises of the

late 1990s as well as to the growing recognition that major emerging countries were

not sufficiently included in existing global economic fora.

The member countries of the G20 include Argentina, Australia, Brazil, Canada,

China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia,

South Africa, South Korea, Turkey, the United Kingdom and the United States. The

EU is also a G20 member. The G20 is officially composed of the respective 20

Finance Ministers and Central Bank Governors of the members mentioned above.

A G20 Leaders Summit also regularly takes place in the country holding the rotating

G20 Presidency (i.e. South Korea in 2010, France in 2011). Moreover, high represen-

tatives of international economic fora and institutions, such as the International

Monetary Fund (IMF) and the World Bank, participate in G20 meetings.

The G20’s broad membership and economic weight gives it a high degree of legiti-

macy. The G20 is generally considered to have been quite effective in formulating

policy responses to the financial and economic crisis which erupted in 2007.

The Group of 20 (G20)




Despite this broad agenda, tensions over currency devel-

opments and related imbalances in current accounts

dominated the summit. The United States and the EU

have been criticizing China for years already for keeping

the value of its currency, the yuan, artificially low vis-à-vis

the euro and the dollar in order to boost its export. The

result has been a large surplus on the Chinese currentaccount, a steep build-up of

foreign exchange reserves in

China, and alleged losses of

competitiveness in the EU

and the United States as

the latter’s exports to China

became more expensive

due to the cheap yuan. This

could impair economic

recovery and growth.

More recently however, the

United States have been strongly criticized themselves for

their so-called ‘quantitative easing’ (QE) policy, a type of

expansionary monetary policy whereby the Federal

Reserve (FED) buys United States government bonds and

as such increases money supply. On November 3, the FED

announced a second round of QE worth 600 billion USD

to mitigate the risk of deflation and further stimulate

domestic economic activity. This led to an immediate

appreciation of the euro against the dollar, eroding EU

export competitiveness compared to the United States.

The EU, and especially Germany, have expressed strongdisapproval of the FED’s policy, arguing that it was wea-

kening the dollar as a tool to gain an artificial competitive

advantage and grow the American economy. But also

other countries, including many emerging markets such as

China, Brazil or Russia, have

been saying that countries

should refrain from ‘beggar-

thy-neighbour’ policies, i.e.

domestic actions that may

have negative spillovers in

third countries. Emerging

countries fear that policies like

QE in the United States might

imply large capital inflows into

their economies, which could

lead to inflation and new bub-

bles. This month, China repor-

ted an inflation rate of 4,4%,

the highest level in 2 years.

Moreover, in the run-up to the G20 Leaders Summit, the

United States have been calling to set a target limiting

current account imbalances (both deficits and surpluses)in the future to 4%. Both China and German, two of the

world’s strongest exporters, opposed the call. The EU’s

position was that the United States’ idea was too narrow,

and that a broader set of indicators was needed. The pro-

posal of the United States underlined existing tensions

over foreign exchange rates generated by imbalances

between exporting nations rich in reserves on the one

hand and debt-burdened importers on the other hand.

Despite the broad agreement that excessive global imba-lances should be addressed

to avoid future economic

crises, fears over a global

currency war and resulting

protectionism (e.g. capital

controls) remain.

In the end, G20 leaders in

Seoul agreed on a joint

declaration with a ‘Seoul

Action Plan’. This plan

includes a commitment of

all G20 countries to “undertake macroeconomic policies,

including fiscal consolidation where necessary, to ensure

ongoing recovery and sustainable growth and enhance the

stability of financial markets, in particular moving toward

more market-determined exchange rate systems,

enhancing exchange rate flexibility to reflect underlying

economic fundamentals, and refraining from competitive

devaluation of currencies.” The plan also calls for the rein-

forcement of the ‘Mutual Assessment Process’ (MAP) to

promote external sustainability and pursue policies con-

ducive to reducing excessive imbalances and maintainingcurrent account imbalances at sustainable levels. Indicative

guidelines will be developed in the coming months by a

G20 technical working group, the IMF and other interna-

tional organizations in order to assess persistently large

imbalances in time and identify root causes. The IMF is

also called to provide an assessment on the progress

towards external sustainability and the overall consistency

of fiscal, monetary, financial sector, structural, exchange

rate and other policies.

The declaration contains some other elements of impor-

tance as well. The IMF quota and governance reform

agreed in Gyeongju is welcomed, instruments to strength-

en global financial safety nets are being developed, and

progress is made on core elements of a new financial re-

gulatory framework (including stronger bank capital and

liquidity standards). The declaration also mentions a

strong commitment to promptly bring the Doha Deve-

lopment Round to a successful, ambitious, comprehen-

sive and balanced conclusion. In this regard, 2011 is seen

as critical window of opportunity. Finally, in the coming

months and years, the G20 agreed to continue work on

inter alia macro-prudential policy frameworks, regulationand supervision of commodity derivative markets, out-

standing governance reform issues at the IMF and the




World Bank and the development of a more stable and

resilient international monetary system. Other priorities of

the future include the fight against corruption, the phase-

out of inefficient fossil fuel subsidies and the mitigation of

excessive fossil fuel price volatility. Regarding climate

change, G20 leaders say in their declaration in vague

terms that they “will spare no effort to reach abalanced and successful outcome in Cancún”.

In a statement after the G20 Leaders Summit, Herman

Van Rompuy and José Manuel Barroso said they were

satisfied with the outcome of the summit. “All major

economies have agreed to do their part to achieve reba-

lancing to tackle imbalances. Our method to use indica-

tors to trigger an assessment of macro-economic imba-

lances and their root causes was backed by the G20

leaders.” The EU representatives also welcome the

conclusions of the G20 summit regarding Cancún.

In the margin of the G20 Leaders Summit, a Seoul G20

Business Summit took place as well. This conference

brought together the heads of around 120 of the world’s

leading companies from both developed and developing

countries. They engaged in debates organized in 12

working groups, with each group focusing on a particular

topic. At the end of the Business Summit, a joint state-

ment was published with recommendations of the busi-

ness community to G20 leaders regarding inter alia

world trade, foreign direct investment, SMEs, the phasing

out of monetary and fiscal stimulus, economic growth andfinancial sector reform, infrastructure and natural resource

funding, energy efficiency, the use of renewable energy

sources, and green jobs.

Thomas Leysen, President of the Federation of

Enterprises in Belgium (FEB), participated in the G20

Business Summit in his capacity as Chairman of Umicore,

a Belgian materials technology group. He participated in

the working group on the

withdrawal of monetary and

fiscal stimulus packages. In an

interview in the Belgian news-

paper L’Echo, Thomas Leysen

commented that the business

community fears a gradual

return to protectionism.

Market Access Seminar (November 18, 2010)

On November 18, the Federation of Enterprises in Belgium

(FEB) organized, in cooperation with the Belgian Presidency, a

seminar on market access for European business. More than

150 representatives of the business community and the public

sector took part in the seminar. The opening address was given

by Rudi Thomaes (CEO of the FEB). Keynote speakers included

European Commissioner for Trade Karel De Gucht, and Belgian

Minister of Foreign Affairs Steven Vanackere. Three panel dis-

cussions were held, one on intellectual property rights in

China, a second on raw materials in Russia and China, and a

third on public procurement in China and Japan. Closing

statements were given inter alia by Philippe De Buck (Director

General of BUSINESSEUROPE), who reiterated the position of

the business community concerning current hot topics in trade.

In his opening speech, Rudi Thomaes welcomed the new EU

trade strategy which was announced by the European

Commission on November 9. Fair market access for European

companies is key in the context of the current export-driven

recovery of the European economy. He urged the business

community to inform the Commission and national embassies

abroad of any market access problems encountered in third

countries.

Minister Steven Vanackere underlined that the recent crisis

marked a shift in power and economic influence to emerging

markets. Increasing market access to these economies is of para-

mount importance, given that 90% of the global economic

growth that will be generated by 2015 will be realized out-

side Europe. He also stressed the need to strengthen the capa-

city to trade of small and medium enterprises (SMEs). Currently

only a minority of European SMEs are active outside the EU.

Trade Commissioner De Gucht outlined the main elements of

the EU’s new trade strategy for the coming years . These

include the conclusion of ongoing free trade negotiations, the

further development of strategic partnerships and the more effi-

cient use of existing instruments in this context, better market

access (e.g. in public procurement), and reinforced implementa-

tion and enforcement of commitments assumed by the EU’s

trading partners. Reciprocity will be the key principle of the

Commission’s future trade policy to ensure that the benefits of

market opening are fairly distributed.

In the spotlight

Thomas Leysen

From left to right: Karel De Gucht, Rudi Thomaes and Steven Vanackere




Eurogroup & Economic and Financial AffairsCouncil (November 16-17, 2010)

On November 16-17, the Economic and Financial Affairs

Council (ECOFIN) met in Brussels under the presidency of

the Belgian Finance Minister, Didier Reynders. In the mar-

gin of the Council, on November 16, the EU Finance

Ministers had a breakfast

meeting with their Swiss,

Icelandic, Norwegian and

Liechtensteiner colleagues

from the European Free Trade

Association (EFTA) to discuss

the consolidation of govern-

ment budgets and financialmarket regulation and supervi-

sion. On the same day, the

Belgian Presidency held the

twice-yearly macroeconomic

dialogue with employer and trade union representatives

from the EU.

Also on November 16, the members of the Eurogroup

assembled to discuss the situation in Ireland, Greece and

Portugal. Regarding Ireland, the Eurogroup hailed the

government for taking significant action to deal with

budgetary, competitiveness and financial sector chal-

lenges. Notably Ireland’s announcement to consolidate 15

billion EUR – of which 6 billion in 2011 – over the next 4

years received positive comments from the euro zone

Finance Ministers. Regarding these measures, the

Eurogroup stated: “Together with the structural reforms

that will be announced in a soon to be announced strate-

gy aimed at reducing the deficit, this budgetary adjust-

ment should allow Ireland to return to a strong and sus-

tainable growth path while safeguarding the economic

and social position of its citizens.” Nonetheless, the

Eurogroup acknowledged that the financial markets stillhave not normalised. Henceforth, the pressure remains

to undertake further action. In the light of a possible

bailout operation, the Eurogroup stated that it is ready

take all measures

necessary to safe-

guard the stability of

the euro zone.

As for Portugal, the

Eurogroup, the Eu-

ropean Commission

and the European

Central Bank

praised the

Portuguese government’s commitment to reduce the

public deficit from 9,4% in 2010 to 4,6% in 2011.

Nevertheless, Portugal was urged to step up its struc-

tural reform agenda and to focus more on removing

rigidities in the product and labour markets.

Concerning Greece, the Eurogroup welcomed the go-

vernment’s efforts to comply

with the agreed structural

adjustment programme and

stated that the country is

broadly on track with the

required adjustments due to

draconic measures taken in

the past months. In particular,efforts of the Greek authori-

ties to correct deficiencies

in the administrative and

accounting systems to comply

with European standards, received positive comments.

Even though the Greek government is strongly committed

to undertake additional measures for the 2011 budget,

the Finance Ministers stressed the need for further

expenditure reductions and deeper structural reforms.

Especially in the area of taxation, labour markets, business

environment and healthcare, more work remains to be

done.

A day later, on November 17, the ECOFIN Council gave

the go-ahead for the reform of the EU framework for

financial supervision. The Council adopted regulations

for the establishment of the European Systemic Risk

Board (ESRB), the European Banking Authority (EBA), the

European Insurance and Occupational Pensions Authority

(EIOPA) and the European Securities and Markets

Authority (ESMA) to eliminate deficiencies that were

exposed during the financial crisis. Together with the

supervisory authorities of the member states, the ESRBand the three financial supervision authorities will be part

of a European system of financial supervisors which is

expected to be operational as from January 1, 2011.

The Council also held a debate on a proposed directive

aimed at clarifying the VAT rules for insurance and

other financial services. At the moment, financial services

are exempt from VAT under EU rules. Since member

states have diverging interpretations on the application

of these rules, this has led to severe distortions of com-

petition across the EU. As a result, the implementation of

VAT exemption rules causes administrative burdens and

high compliance costs. Therefore, the Council agreed to

redefine exempt services. The Council also asked the

Economic and Financial Affairs



Brussels calling- 10 -

Commission to examine the possibility of changing the

current VAT exemption framework.

Furthermore, the

Belgian Presidency

briefed the Council

on a draft directiveon administrative

cooperation regar-

ding direct taxation

in order to combat

tax fraud. In the

light of increased

taxpayer mobility

and a growing number of cross-border transactions, the

draft directive should enable member states to better

combat tax evasion and tax fraud by fulfilling their

growing need for mutual assistance.

With regard to the October European Council, the

Council and the Presidency held an exchange of views on

the endorsement of the final report of the Task Force Van

Rompuy on economic governance and on levies and taxes

in the financial sector. With regard to economic gover-

nance, the Presidency specifically called on the Council

and the European Parliament to reach an agreement on

the necessary legislation by the summer of 2011 so that

the Task Force’s recommendations can be implemented

effectively and rapidly. In addition, Herman van Rompuy,

the President of the European Council was asked toundertake a consultation round on a limited treaty

change required to establish a permanent crisis resolu-

tion mechanism. As for levies and taxes in the financial

sector, the Council presented a report to the European

Council indicating the possible risk of competitive distor-

tions arising from the uncoordinated introduction of levies

by the member states.

Another issue on the agenda was the presentation of the

Court of Auditors’ annual report on the management of

the EU’s general budget. The report, which covers the

2009 budget, showed progress in several areas of the

budgetary management. Still, in the Court’s opinion the

legality and regularity of underlying transactions remain

unfavourable as in previous years. The Council therefore

asked the Permanent Representatives Committee to

examine the report in greater detail and urged the

management of the EU budget to persist in their efforts

to improve controls and to reduce margins of error inbudgetary payments.

Finally, the ECOFIN Council adopted conclusions on the

financial aspect of actions to be taken to combat cli-

mate change. Firstly, as agreed under the Copenhagen

Accord, the Council reaffirmed the collective commit-

ment by developed countries to provide new and addi-

tional resources amounting to 30 billion USD – 7,2 billion

should come from EU member states – for the period

2010-2012. The Council also confirmed it will present a

fast-start finance report at the United Nations Climate

Change Conference in Cancún. In this context, the

Council stated that the EU and its member states have

made considerable progress in the implementation of

their fast-start commitments for 2010. The Commission

was also asked to integrate fast-start finance in its annual

accountability and development finance report.

Furthermore, the EU’s commitment to the establishment

of a Copenhagen Green Climate Fund at the Cancun

summit was reaffirmed, and it was underlined that finan-

cial experts from both the public and the private sector

should play a role in it. The Council also confirmed that

the role of the private sector in green investmentsshould be

strengthened

and that public

finance is nee-

ded to achieve

this.

• Website of the Belgian Presidency of the Council of the European Unionhttp://www.eutrio.be

• Website of the Belgian EU Presidency of the Federation of Enterprises in Belgium (FEB)http://eupresidency.vbo-feb.be

LINKS




Presentation of the European Department of the FEB

Diane StruyvenDirector of the European Department of the FEB – Permanent Delegate to BUSINESSEUROPETel: +32 (0)2 515 08 34

[email protected]

Michael VoordeckersAdvisor at the European Department of the FEBTel: +32 (0)2 515 09 [email protected]

Arnaud ThysenDeputy Advisor at the European Department of the FEBTel: +32 (0)2 515 09 [email protected]

Michiel HumbletIntern at the European Department of the FEBTel: +32 (0)2 515 08 [email protected]

Pieter-Jan Van SteenkisteIntern at the European Department of the FEBTel: +32 (0)2 515 09 [email protected]

TEAM PRESENTATION

FEB – Federation of Enterprises in Belgium

Ravensteinstraat 4 – 1000 Brussels – Tel. 02 515 08 11 – Fax. 02 515 09 15

PUBLISHER: Olivier Joris – Wolvenbergstraat 17 – 1180 Brussels

PUBLICATION MANAGER: Stefan Maes – Tel. 02 515 08 43 – [email protected]

GRAPHIC DESIGN: Vanessa Solymosi, Landmarks – [email protected]

COPYRIGHT: Reproduction with acknowledgement of source is permitted

FEB – member of

Brussels calling, Belgian EU Presidency, Business Newsletter, 22/11/2010, Issue 7

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