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Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels 16 and 17 November 2010

Commission Européenne - MEMO/10/579   16/11/2010

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MEMO/10/579

Brussels, 15 November 2010

Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels 16 and 17 November 2010

EUROGROUP

The Eurogroup meeting will start at 17h00 on Tuesday 16 November for a discussion on financial stability developments in the euro area. It will be attended by Commissioner for Economic and Monetary Affairs, Olli Rehn. A press conference is expected to take place after the meeting.

Financial stability developments in the euro area (AAT)

As they have done in recent meetings of the Eurogroup, Ministers will take stock of the latest developments regarding the financial stability of the euro area.

Economic governance: euro area issues (AAT)

Ministers will discuss euro-area specific issues related to the reform of the EU economic governance (8h30 – 11h), based on the Commission's legislative package to reinforce EU's economic governance adopted on 29 September. In this respect, Commissioner Rehn recently said: "We have so far seen only the end of the beginning. The normal legislative process is only starting now, with qualified majority rule in the Council and co-decision with the European Parliament, based on the Commission's proposals. The Task Force [chaired by EU Council President Van Rompuy] made good progress and reached convergence towards the Commission's legislative proposals."

Competitiveness and macroeconomic imbalances (AAT)

This agenda item concerns a peer review of Germany and Italy.

ECOFIN

The Council of Economic and Finance Ministers will start at 10h30 on Wednesday 17 November 19 October. It will be attended by Commissioner for Economic and Monetary Affairs, Olli Rehn, Commissioner for Internal Market and Services, Michel Barnier and Commissioner for Taxation and Customs Union and Algirdas Semeta. A press conference is expected to take place after the meeting.

Proposal for a Directive and Council Regulation on the common system of value added tax as regards the treatment of insurance and financial services (ET)

The Council is expected to adopt policy orientations on proposals put forward by the Commission in November 2007 aimed at modernising and simplifying VAT rules applicable to financial and insurance services and securing a level playing field in the EU for these services as far as VAT is concerned. These services are generally exempt from VAT. However, the exemption dates from 1977 and the legislation has not kept abreast of developments since then. Today, the exemption is not applied uniformly by the Member States and thus frequently the European Court of Justice has been asked to fill the legislative gap and clarify the correct interpretation. The aim of the proposal is to create more certainty and security for Member States and for financial and insurance institutions by setting clear modern definitions of exempt services.

Financial Conglomerates Directive (CH)

As part of its work to create stronger safeguards in the financial system and prevent future crises, the European Commission tabled a proposal revising the Directive on Financial Conglomerates in August. The Directive will modify existing European rules on the supervision of financial conglomerates, which are financial groups active in both banking and insurance and tend to operate in more than one country. Based on lessons drawn from the recent financial crisis, the Commission proposes to extend powers to national financial supervisors to oversee the conglomerates' parent companies. The legislation would enable financial supervisors to apply banking, insurance and supplementary supervision concurrently so as to address the loopholes identified in the context of the financial crisis. In the event that a financial conglomerate finds itself in trouble, supervisors would be better informed and equipped to act quickly to intervene. The Commission hopes that significant progress can be made at the ECOFIN in order to reach a final agreement with the European Parliament that would equip national supervisors with the new powers by 2011.

Annual report of the Court of Auditors 2009 (ET)

Commissioner Semeta will make a presentation to the Council on the Court of Auditors report which was published on 9 November (see IP/10/1480). The Court noted a number of improvements in EU financial management. Significantly, in 2009, the overall error rate for EU spending fell below 5% for the first time ever, while visible progress was noted in the area of Cohesion.

Follow up to the European Council of 28-29 October (AAT)

Ministers will discuss how to take forward the Commission's legislative proposals to reinforce EU's economic governance in a "fast track" manner" with the objective of having an agreement by summer 2010. The Commission's view is that the new framework should be operational as soon as possible. The Community method has proven its value and delivered in the past. Rigorous economic governance is needed for stable and sustainable growth, which is critical for sustainable economic growth, the employment and welfare of EU citizens.

Follow up to G20 Summit in Seoul (AAT)

Ministers will have an exchange of views on the main results of the G20 Summit in Seoul.

Financing of climate change (AAT)

Ministers will discuss council conclusions covering three aspects of climate change finance: “fast start” finance for climate change, the report of the UN Secretary-General’s Advisory group on Climate Change Finance, and the “Copenhagen Green Climate Fund”.

On fast start finance, Ministers will examine a report on progress in implementing the December 2009 European Council commitment to provide €7.2 billion in “fast start” finance over 2010-2012. This is part of a total commitment from developed countries of $30 billion in fast start finance over this period. Fast start finance aims to help developing countries meet their most urgent needs related to climate change, and to prepare for increased financial flows after 2012 under an ambitious international agreement.

Discussions will include the report of the UN Secretary-General’s Advisory group on Climate Change Finance. The Advisory Group was set up by the UN Secretary-General in early 2010 to provide advice on potential sources of revenue to scale up financial flows to support action by developing countries to tackle climate change. Its members included representatives of developing and developed countries, development banks and other institutions. This report confirms many EU positions. It concludes that the goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries is challenging but feasible. Meeting this goal will need funding from a wide variety of public and private sources, and will require a clear price signal from the carbon market.

The third aspect of the debate concerns the launch of a process to set up the “Copenhagen Green Climate Fund” as part of a balanced package of decisions to be taken in Cancún. This package would include decisions on adaptation, mitigation, technology, capacity-building, reducing emissions from deforestation and forest degradation (REDD+), agriculture, monitoring, reporting and verification (MRV), finance and market-based mechanisms.

Joint Report CPE/CPS (AAT)

The Council will discuss the Joint Report on Pensions prepared by the Economic Policy Committee and the Social Protection Committee. Minsters will examine the need of further measures to enhance the long-term sustainability of public finances, in particular against the background of the strongly deteriorated fiscal positions in EU Member States, as this is the basis for continuing to deliver adequate pensions.

EU statistics (AAT)

Ministers will discuss issues related to statistical governance and are expected to adopt conclusions.

AOB - Contribution of the EIB to the European strategy for the Baltic Sea Region

The Commission welcomes the EIB progress report. It shows the Bank's increased support and contribution to the EU strategy for the Baltic Sea. This is important to the countries in the region, which were hit particularly hard by the financial crisis. The EIB has longstanding experience in the Baltic Sea Region and has played an important role in the financing of priority projects in the Region. Ministers will hold an exchange of views.


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