Pat Rabbitte
Question:47 Mr. Rabbitte asked the Minister for Finance if he will report on the meetings of the ECOFIN Council which he attended since 24 June 1999; and if he will make a statement on the matter. [22690/99]
Written Answers. - ECOFIN Council.
I have attended four meetings of the ECOFIN Council since 24 June 1999. These meetings were held on 12 July, 11 September – Informal ECOFIN – 8 October and 8 November 1999.
The agenda for ECOFIN on 12 July 1999 consisted of the following issues:
Work Programme of the Finnish Presidency. As is customary at the start of each semester, the Presidency outlined its priorities, particularly as regards economic policy co-ordination, taxation, financial services, and economic and financial questions related to Kosovo/Western Balkans. I joined with other Ministers in welcoming the Finnish Presidency and giving my assurance that Ireland would seek to work constructively with it in achieving progress in these areas.
Elements of a Common Strategy on the Ukraine. Ministers took note of and endorsed work done by the Economic and Financial Com mittee in preparing an ECOFIN input into the Common Strategy.
Kosovo-Western Balkans. Ministers had a substantial discussion on the position as regards Kosovo and the Western Balkans in view of a meeting of the high level steering group on 13 July. Ministers agreed that the improvement of the economic situation in the Western Balkans, and in particular in Kosovo, was very important for humanitarian and political reasons, and set out a number of principles which will ensure that financial support is based on sound economic considerations.
EIB Lending Mandate. Ministers reached agreement on the main elements of the new EIB Lending Mandate, including on a rate for the blanket guarantee and on global guaranteed amounts. It was agreed that the regional breakdown of amounts would require further examination.
VAT: Reduced Rate on Labour Intensive Services. Ministers took note of the state of work on a Commission proposal for a directive giving member states the option of reducing the rate of VAT on certain labour intensive services on a trial basis. Discussion focused on the determination of which services would be eligible under the draft directive. Ministers requested the Committee of Permanent Representatives to present to it, by the end of July, a basis for agreement, including a list of services to which a reduced rate of VAT could be applied.
Own Resources. Commissioner Liikanen gave a presentation to ECOFIN on the proposal for a new Own Resources Decision to implement the changes agreed at the Berlin European Council. The draft decision was sent for consideration by a Council working group.
Implementation of OLAF. Ministers agreed a set of conclusions emphasising the importance of establishing OLAF on an operational basis, and in particular calling for the necessary steps such as the appointment of a director, the amendment of the staff regulations for the Community institutions, and other concrete measures to be taken without delay.
Statistical Requirements in EMU. Ministers took note of and endorsed a progress report drawn up by the EFC on the implementation of the Report of Statistical Requirements in EMU.
External representation of the Euro Area. Ministers unanimously welcomed the understanding reached with the non-European members of the G7 as regards the representation of the EU in the G7 at ministerial level on EMU issues. According to this understanding, the President of the ECB and the President of the Euro-11 Group will take part in meetings of G7 Finance Ministers when the world economic situation, multilateral surveillance and exchange rate issues are being discussed.
Over lunch, the Presidency summarised discussion at the Euro-11 meeting earlier that day. Ministers took note of a presentation by the Commission on the issue of the millennium bug and discussed the nomination of the next President of the EIB.
The Informal ECOFIN took place in Turku on 11 September 1999. Informal meetings of the Council provide an opportunity for Ministers to have a general discussion on issues which will feature on the agenda of future formal Councils. As the Deputy is aware, it is not the practice for such meetings to have a formal agenda or to take formal decisions. At the meeting in Turku, we discussed a wide range of issues including economic policy co-ordination, the introduction of euro notes and coins, the year 2000 issue, and the Greek earthquake.
Ministers held an informal exchange of views on economic policy coordination, focusing in particular on the key role of the broad economic policy guidelines and the structure of the macroeconomic dialogue with the Social Partners at EU level. On the introduction of euro notes and coins, Ministers held a preliminary discussion on the question of front loading, that is, whether euro notes and coins should be made available in advance of becoming legal tender on 1 January 2002, and on the length of the dual circulation period for legal tender of both national currency and euro notes and coins. Ministers took note of a progress report from the Commission on the state of play of preparations in relation to the year 2000 issue, and expressed their sympathy to Greece in view of the earthquake that it had recently suffered at that time. Other issues raised included the situation in Kosovo, financial markets questions, including a text on international financial architecture, the HIPC initiative, East Timor, the Presidency of the EIB and EIB lending to Turkey.
The Deputy may wish to note that Ministers discussed taxation issues at Turku in an extended
Euro-11 format on 11 September 1999.
The agenda for ECOFIN on 8 October 1999 consisted of the following issues:
Priorities of the New Commission. Commissioners Solbes and Bolkestein outlined their priorities in the economic and financial area and the taxation area respectively. In addition to the publication of a number of regular reports, these priorities included an in-depth assessment of the broad economic policy guidelines, a communication on risk capital, a communication on the information policy relating to the introduction of euro notes and coins and, in the taxation area, progress on the taxation package, including energy taxation, as well as a study on company taxation and a dialogue with member states on VAT arrangements.
Taxation Issues. Ministers reached agreement on the text of a directive allowing for a reduced rate of VAT on certain labour intensive services. As regards the draft taxation of savings directive, Ministers took note of a number of reports on the position of overseas and dependent territories of member states. Ministers agreed to convene an ad hoe meeting at political/personal representa tive level in order to help resolve the outstanding difficulties in relation to the tax package. It was agreed that the Presidency would report to ECOFIN on 8 November on the outcome of that meeting.
The State of Implementation of OLAF (European Fraud Prevention Office). Ministers adopted a number of conclusions in relation to OLAF which essentially called upon those Community institutions and bodies which had not yet put in place an appropriate framework for co-operation with OLAF to do so without delay.
EIB Lending Mandate. Ministers discussed the outstanding issues in relation to the mandate and made progress as regards the breakdown into regional mandates. Some further clarification was required in relation to the final amounts before full agreement could be reached.
EIB Lending to Turkey. Ministers agreed that a 600 million euro EIB facility to assist reconstruction in Turkey following the August 1999 earthquake would be appropriate.
Employment Package. Ministers held an orientation debate on the annual employment package, comprising the Draft Joint Employment Report 1999, proposed Guidelines for Member States' Employment Policies 2000, and Commission Recommendations for Council Recommendations on the Implementation of Member States' Employment Policies. Ministers broadly welcomed the employment guidelines and the employment report. The discussion focused principally on the appropriateness, timing and possible substance of the recommendations to be addressed to member states, with some concerns being expressed as to the procedure adopted by the Commission as regards prior consultation with member states. The issue will be studied further by the EPC in co-operation with the ELC with a view to the joint ECOFIN/Social Affairs Council on 29 November 1999.
Economic Reforms. Ministers held an orientation debate on economic reforms, on the basis of a presentation by the chairman of the Economic Policy Committee. Ministers underlined the role of peer pressure in the context of country specific recommendations and indicated areas to which they attach particular importance for the further examination of progress made in economic reforms.
Common Strategy of the European Union for the Mediterranean Region. Ministers agreed on the basic elements which should underpin the ECOFIN contribution to the drawing up of a common strategy for the Mediterranean region and mandated the EFC to pursue its work in this respect.
Ministers met over lunch with their colleagues from the EFTA countries. The discussion focused on the challenges for macroeconomic stability for their countries after the introduction of the euro, and the urgent need to promote economic stability in the Balkans after the Kosovo crisis. Over coffee, the Presidency summarised discussions at the Euro-11 meeting held earlier that day, and Ministers discussed the proposed Presidency visit to Moscow on 11-12 October.
The agenda for ECOFIN on 8 November 1999 consisted of the following issues:
Taxation Package. Ministers reviewed the state of play on the three elements of the taxation package – the savings directive, the interest and royalties directive and the code of conduct. Following a full and frank discussion, a number of difficulties remain. Ministers agreed that work be pursued in relation to the remaining areas of difficulty and that this issue be returned to at the next ECOFIN.
Economic Policy Co-ordination. Ministers considered a draft report on economic policy coordination to the Helsinki European Council in December on the basis of a presentation by the chairman of the EFC which sought guidance on a number of issues. On the basis of the discussion, the EFC will finalise its draft in order to allow Ministers to approve it at the next ECOFIN.
EIB Lending Mandate. Ministers discussed the outstanding issues in relation to the mandate and these were resolved on the basis of the Presidency compromise. However, one delegation maintained a reservation on the whole package, given its position on trade issues concerning South Africa, thus preventing final agreement being reached. Formal adoption will become possible once the above reservation has been lifted and the European Parliament has given its opinion.
HIPC Initiative. The chairman of the EFC gave a presentation on the modalities of the proposal to make available some 1 billion euro from the European Development Fund to relieve the debt burden on heavily indebted poorer countries. On the basis of the work done, the Council concluded that the Commission could initiate discussions with the ACP countries.
Introduction of Euro Notes and Coins. Ministers agreed the text of a common statement prepared by the Commission on the introduction of euro notes and coins. The statement sets out that member states will do their best to ensure that the bulk of cash transactions can be made in euro by the end of two weeks from 1 January 2002; that the length of the dual circulation period will be between four and eight weeks; that banks and retailers should be given euro notes and coins before 1 January 2002 so that there will be enough in place for circulation in the first few days of January 2002, but this must not lead to euro notes and coins leaking into circulation before 1 January 2002; and that, in order to help familiarise citizens with the new coins and to facilitate the changeover, member states can envisage making limited quantities of coins available to the public, on request, notably to vulnerable groups – but not before the second half of December 2001.
Risk Capital: Implementation of the Action Plan. Ministers took note of a Commission communication on the implementation of the risk capital action plan, and requested the Commission to maintain progress in this area.
The Employment Package. Ministers took note of the work done by the ELC and the EPC following the discussion at ECOFIN on 8 October. It was agreed that the employment package will now be submitted to the ECOFIN/Social Affairs Council on 29 November, with a view to its adoption at the Helsinki European Council.
Over lunch, the Presidency summarised discussions at the Euro-11 meeting held the previous evening and informed Ministers on the outcome of its visit to Moscow on 11-12 October. Ministers also discussed a number of other issues, including the EU Budget for 2000, Kosovo, financial markets questions, and a draft directive on electronic money.