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Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels, 12 and 13 November 2007

European Commission - MEMO/07/456   12/11/2007

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MEMO/07/456

Brussels, 12 November 2007

Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels, 12 and 13 November 2007

EUROGROUP (AT)

Eurogroup ministers will meet at 17:30 hrs on Monday 12 November. Joaquín Almunia, Commissioner responsible for Economic and Monetary Affairs will attend as will European Central Bank Governor Jean-Claude Trichet. A press conference is expected to take place after the meeting.

Ministers will be debriefed on the outcome of the G7 meetings, last month, in Washington. They will also get a presentation by Commissioner Almunia of the Autumn economic forecasts (see IP/07/1666 -http://ec.europa.eu/economy_finance/publications/european_economy/forecasts_en.htm

Ministers will have an exchange of views on wage developments in the euro area. Wage developments are crucial elements for price and cost competitiveness in the context of monetary union. Overall, aggregate wage increases in the euro area over the past years have been moderate, which contributed to job creation. Nominal unit labour costs were also supportive of the goal of price stability. However, there are important differences between Member States. In light of DG ECFIN's recent Annual Research Conference on "Growth and Income distribution in an integrated Europe", Commissioner Almunia intends also to share some observations about recent trends in wage shares.
For background see the Commission's annual report on the Labour Market and Wage Developments in 2006 of September 2007 on:
http://ec.europa.eu/economy_finance/publications/european_economy/labour_mkt_wage2007_en.htm.

The report examines labour market developments in 2006 from a macroeconomic perspective, shedding light on the interaction of employment trends with other macroeconomic developments such as GDP and productivity growth. It presents the main findings on recent trends and prospects on both the quantity side (employment, participation, unemployment) and the labour cost side (wage and labour cost developments

For the latest considerations on the evolution of the euro area's labour market and of wages see pages 37-40 ("Continued strength of the labour market") of the Autumn economic forecasts (weblink above)

ECOFIN COUNCIL

The Council of Economics and Finance Ministers will start at 10.00 hrs on Tuesday 13 November. The European Commission will be represented by Economic and Monetary Affairs Commissioner Joaquín Almunia, Vice President for Administrative Affairs, Audit and Anti-Fraud Siim Kallas and Taxation and customs union Laszlo Kovacz. A press conference is expected to take place after the meeting.

Ministeriall Dialogue with EFTA countries - Climate and Energy policy

Ecofin ministers will meet their counterparts from the European Free Trade Association (EFTA) (Switzerland, Norway, Liechtenstein and Iceland) for their annual gathering which this year will focus on climate and energy policy). Without active policies, global energy use and greenhouse gas emissions will continue to grow strongly in the coming years. As much of the additional energy demand will be met by fossil fuels, supply of which is likely to be increasingly concentrated in geopolitically unstable regions, this also raises concerns about the security of energy supplies. Meeting these challenges will have potentially significant economic implications. Market-based instruments – such as emission trading, and carbon or energy taxes – have a crucial role to play in delivering the goals of energy and climate policy in a rational and cost-effective way, and this gives Finance and Economy Ministers a central role.

Lisbon Strategy : the new three-year cycle

The Lisbon Strategy for Growth and Jobs is the backbone of Europe's efforts to address the challenges of ageing and globalisation by tackling structural weaknesses that hold back job creation, discourage innovative activity, and slow the adoption of technological progress. The Strategy is approaching the end of its first three-year cycle. At the Spring European Council in March 2008, agreement is needed on reform priorities for the next three year cycle. The key issue is the need for a proposal for the revision of the Integrated Guidelines, an instrument at the heart of the Lisbon Strategy that aims to foster coherent, consistent Member State and Community reform measures. The Commission set out its position on this issue in its Vision Paper (see IP/07/1433), an interim communication on Lisbon adopted on 3 October this year and prepared in response to a request from the 2007 Spring European Council. In the Commission's view, "the Integrated Guidelines are fulfilling their role; they do not require major revision".

ECOFIN now has to consider its position on the priorities for reform over the next three year Lisbon Strategy cycle and, in particular, the key issue of the Integrated Guidelines

On 11 December, the Commission will adopt a Strategic Report that assesses the implementation of reforms by Member States over the last year, assesses their implementation over the first 3 year cycle of the Lisbon strategy, and makes formal proposals for an update of the Integrated Guidelines and a new Community Lisbon Programme.

Globalisation : Capital and labour flows

Based on a report by the Commission, ECOFIN Ministers will exchange views on the main determinants and economic aspects of migration into the EU. The Commission report highlights a number of positive economic aspects as well as policy challenges.

Immigration has become the predominant source of population growth in the EU. In 2006, the overall increase in the EU27 population (4.3% or about 2.1 million people) was mostly accounted for by the increase in net migration flows (+3.2%, about 1.6 million people). Immigration has largely contributed to the strong employment growth in most EU Member States over the last decade. However, there remains an unused employment potential among immigrants, who have much higher unemployment rates than the native-born in many Member States. The successful integration of the immigrant population into the labour market is key for their successful integration in the societies of the host countries and essential for reaping the full benefits of migration. As immigrants tend to be more mobile than natives this may also help countries – particularly in the euro area – adjust to shocks, compensating for the low intra-regional mobility of the local population. Ageing populations and increasing participation of women in the labour market will require more workers in labour-intensive occupations, as household and care services become more important.

The Commission attaches high importance to the improvement of the management of legal migration in the EU and has embarked on a number of initiatives. In accordance with the December 2005 Commission Policy Plan on Legal Migration (COM(2005)669), two legislative proposals in the area of legal migration were adopted on 23.10.2007[1]. The first proposal concerns a Directive on a single application procedure for a single residence and work permit for third-country nationals for the purpose of highly qualified employment in the EU, creating the EU Blue Card. The second proposal seeks to simplify procedures for all potential immigrants applying to reside and work in a Member State. Furthermore, it aims to ensure a common set of rights to all third-country workers already admitted and legally working in a Member State, comparable to those of EU citizens. More about these proposals can be found at:

Taxation (MA)

  • VAT package

The Portuguese Presidency will seek political guidance from the Council on the change of the place B2C (Business to Consumers) supplies for telecom, radio and television broadcasting and electronic services. Clear political guidance in this area will pave the way for adoption of the whole VAT package at the next ECOFIN in December. The VAT package is composed of interlocking elements intended to establish clear cut rules for determining the place of taxation for services and minimizing regulatory burdens on business engaged in cross border trade.

  • two elements of the "VAT simplification proposal", namely the one stop shop (which aims to provide a simplified system for registration and declaration of VAT in Member States where a business is not established) and the simplified rules for the refund of value added tax to taxable persons not established in the territory of the country but established in another Member State;
  • the proposals concerning the place of supply of B2B (Business to Business) and B2C (Business to Consumers) services.
  • Passenger car taxation

The Portuguese Presidency will seek political guidance from the Council on two elements of the 2005 Commission's proposal on passenger car taxation (IP/05/839):

  • The introduction of a refund mechanism for both registration and annual circulation taxes that would prevent double taxation in case a passenger car that is registered in one Member State is subsequently exported or permanently transferred to another Member State.
  • The introduction of a CO2 element into the tax base of both annual circulation taxes and registration taxes.
  • Reduced VAT rates

The Portuguese Presidency will seek a political agreement from the Council on the extension of certain derogations for reduced rates expiring at the end of 2007 or in 2008 and granted to Member States which joined the EU after 1 January 1995 (see IP/07/1017). Furthermore, the Council is expected to have an informal discussion, during lunch, on the methodology to be adopted on the debate for a comprehensive reform of the VAT reduced rates system (see also IP/07/1017).

Galileo : financing aspects (MC)

Ministers will have an exchange of views on the financins aspects of the Global Navigation Satellite System (Galileo).

Financial Management (VR)

Mr Weber, President of the Court of Auditors, will present to the Ministers of Finance the Court's annual report on the implementation of the 2006 EU budget, and Commission Vice-President Kallas will address the Council.


[1] COM/2007/637: Proposal for a Council directive on the conditions of entry and residence of third-country nationals for the purposes of highly qualified employment. http://ec.europa.eu/justice_home/doc_centre/criminal/eurojust/doc/com_2007_637_en.pdf

COM/2007/638: Proposal for a Council directive on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State.

http://ec.europa.eu/justice_home/doc_centre/criminal/eurojust/doc/com_2007_638_en.pdf


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