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Transcript of 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
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Brussels calling - 2 -
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
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Brussels calling - 3 -
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
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Brussels
Brussels
Strasbourg,France
Brussels
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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
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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
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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)
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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
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Brussels calling - 8 -
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
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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
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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
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Brussels calling - 11 -
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
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]
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