Ladies and gentlemen,
Honourable Members of Parliament,
I would like to thank you for the occasion to speak to you here today.
For me, a strong cooperation between the Brussels institutions and the National Parliaments is of utmost importance. And the Commission and us as Commissioners have a key role here.
We face some crucial challenges in Europe, in the area of security but also regarding our prosperity. Only by joining forces between the Member States and the European institutions and only by strengthening our dialogue and our mutual understanding will we be able to identify common ground, to find solutions and to communicate them well to the citizens who want concrete results to reassure them that they are safe and we can help improve their lives.
In this spirit I would like to focus on some of our key pending proposals and also inform you about an important upcoming one.
Let me start with the European Public Prosecutor's Office, my key priority at the moment.
We have a problem because crime does not know borders. This goes for big scope crime against EU money and for big cross border VAT fraud. Crime is harming our economies and decreasing trust of tax payers. It is our duty to fight against this crime which can be done only by joining forces. I am speaking about a pan European issue that cannot be resolved by national authorities only.
As you might know, Eurojust and OLAF are not equipped to lead criminal investigations or prosecutions, national authorities are facing limits in addressing fraud cases either for political or resources reasons. And once we enter cross-border fraud the current ad hoc structures of judicial cooperation in criminal matters via joint investigations teams for example are lengthy and not the best to create expertise and know-how.
National prosecutors work well in Germany, they prosecute cases of fraud very actively but their work is difficult whenever they have to seize an evidence abroad, whenever this investigation needs to take place very quickly and simultaneously in another Member State.
The idea of the European Public Prosecutor the way I see it is to equip us with a specialised professional body to deal on a professional and permanent basis with financial crime in the EU.
And this matters politically and economically. We need a European Public Prosecutor to deal with the alleged fraud cases we all read about in cohesion countries. But we also need it to tackle the big VAT fraud cases, especially in the cross border context. Our estimate of around 50 bio loss in revenues per year due to VAT fraud is conservative, the real figure is much higher. We need an effective answer to these negative impacts on the EU budget, but also the national budgets.
Where are we on this? We are in the final stretch of our negotiations, and the Slovak Presidency is keen to come to a political deal on this by the end of this year. This would allow us to formally adopt the EPPO Regulation in the Council early next year, followed by the consent of the European Parliament. After a gradual build-up, the EPPO could take up functions in 2019.
In the October Council we will discuss the cost and benefits of the EPPO as it looks now – after 3 years of negotiations. This is not only about establishing a new body, it is also about reorganising the process to better address the challenges.
I can assure you that the benefits of the EPPO will be higher than the costs, in particular if it is competent to deal with big VAT fraud cases. We will hopefully make a breakthrough on the issue of the EPPO's competence for big VAT fraud cases at the October Council. I am planning to address this both with the Finance and with the Justice Ministers. We would then finalise the text between October and December.
What we need is a strong, independent and efficient European Prosecution Office competent for all types of crimes affecting the EU budget. We need to ensure that the competences are clear, otherwise it will not work. Let me also stress that the procedural rights of the defence will be safeguarded in EPPO proceedings on the basis of national law and the EU acquis. This is of fundamental importance. We are still finalising the discussion on the judicial review. But it is likely to confirm the approach we proposed, ie that judicial control will be exercised by national courts as a matter of principle with a role for review by the European Court of Justice in certain situations only.
The European Public Prosecutor as specialised body for financial crime is to be seen as part of our overall structure in the European Union to combat crime effectively. It will free Eurojust from the work they currently do on financial crime against the EU budget (so called PIF cases) and allow Eurojust to become an even more important partner to Europol in the fight against terrorist threats or other crimes such as trafficking, drugs as well as in our cooperation with neighbouring countries. We are talking for instance about Eurojust liaison officers in Turkey. We need Eurojust to do more against smuggling of migrant and related crime in the context of migration, against this horrible business flourishing on the misery of people. The threats around us are serious, and we need to equip us better to deal with it. So, EPPO and Eurojust will both have their important roles in the EU response in combatting cross-border crime.
Let me now move on to one further topic related to crime and security. In the context of the Security Union and the need to address terrorist financing effectively, I also wanted to briefly mention our proposal on the revision of the Fourth Anti-Money Laundering Directive. Whilst it remains a very important instrument we saw a need to adapt it to the new challenges of fast-moving crime revealed recently by horrific terrorist attacks and by the Panama scandal. We must not let criminals be one step ahead of us.
Our updated proposal will ensure a high level of safeguards for financial flows from high-risk third countries. It will enhance the powers of EU Financial Intelligence Units and facilitate their cooperation. It will provide Financial Intelligence Units with access to information through centralised bank and payment account registers or through central data retrieval systems. It will tackle risks linked to virtual currencies and to anonymous pre-paid instruments (such as pre-paid cards). In addition, it will enhance the transparency of the owners of companies and trusts. We are also stepping up our engagement with our international partners.
This proposal will improve security for us all across the EU.
I will now turn to more commercial files linked to the Digital Single Market and the Capital Markets Union.
Following the finalisation of the Data Protection Reform our pending key contribution to the Digital Single Market are our two Digital Contracts proposals, one relating to digital content and one relating to trade in goods. Our goal is to enhance cross-border e-commerce in the EU as it is still too low both from the side of traders and from the side of the consumers. And we know that one of the barriers relate to differences in contract law across the EU. We aim at striking the right balance between the interests of traders and a high level of consumer protection.
As we speak, European companies still work with 28 different sets of consumer contract laws for online sales of goods. Businesses spend time and money to find out about and adapt to foreign consumer contract laws when selling cross-border. On average, this costs them 9000 EUR per country, this is particularly burdensome for small and medium enterprises.
Consumers also miss out on the potential of broader choice of products and better prices. Only 12% of German consumers buy online from other EU countries.
We tried at earlier occasions to deal with contract law rules in the EU, the most recent example being the European Common Sales Law. I know that you also had some reservations about this. I want to stress that we have heard you and that we have chosen a different approach.
We are not going for a European civil code. Nor are we going for optional law solutions.
We have analysed very carefully what needs to be harmonised and what not. We mainly focus on remedies as key contract law rules and leave many other aspects such as prescription rules untouched.
Our idea is to focus on targeted full harmonisation of the key parameters of a contract so that companies can – once adopted – have their model contract in all languages based on these rules.
This approach can be successful only if coupled with a high level of consumer protection and a feasible burden for sellers. Our proposals strike this balance. For the purchase of digital content such as webstreaming, software, games and apps the proposal will give consumers specific EU rights to have the problems fixed, the price reduced, or even terminate the contract and be fully reimbursed. For the purchase of goods, the proposal increases the overall EU level of consumer protection and clarifies them. For example, in Germany the reversed burden of proof would be increased from 6 months to 2 years, the legal guarantee for second hand goods would also be increased to 2 years and the possibility to terminate contracts including for minor defects would be introduced.
At the same time by removing the current legal fragmentation, around 120,000 more businesses are likely to sell online across borders, reaching out to more consumer markets. Around 8 million more consumers would buy online across borders. Germany's GDP is expected to increase by about €875 million.
Both proposals are equally important. The digital content market represents currently only a small share of the overall e-commerce, but it sees an increasing trend and it is the area with a the highest prospect for innovation. At the same time, around 90% of ecommerce is in the sales of goods. We can release the economic potential of the digital market only by lifting barriers for both sales of goods and digital content.
We have heard criticism about creating different regimes for the online and offline sales in goods. As we have said from the beginning our objective is to establish a coherent regime. Therefore, we are open to consider a widening of the scope to offline sales – as currently discussed in the European Parliament. The Slovak Presidency as well as the European Parliament want to discuss both proposals in parallel, and we support them in this endeavour.
I count on your support to help tackle these barriers to cross border online and offline commerce which is in the interest of our traders and of our consumers.
Finally, I would like to refer to a new initiative on business insolvency that we will soon adopt. It will be focused on preventive restructuring frameworks for viable companies and a second chance to making business for entrrepreneurs. 200 000 firms go bankrupt every year in the EU. This causes a loss of 1.7 million jobs each year. 49% of Europeans say they would not start a business because of fear of failure. The fear of social stigma and inability to pay off debts is stronger in Europe than in other parts of the world. Moreover, debt discharge periods are much longer in Europe.
Too many viable companies, especially those operating cross-border, are not able to restructure early enough. Data shows that preventive restructuring allows business continuity and ensures the highest recovery rates for creditors.
We have already revised the EU Insolvency Regulation that will apply from June 2017. That Regulation deals with cross-border procedural law aspects.
Our aim is to harmonise now key principles and deliver minimum standards of substantive insolvency law across the EU. This will not be a tight jacket to regulate the details of national law procedures. We leave the concrete implementation of the principles to Member States in full respect of subsidiarity.
Our initiative builds on the Recommendation of March 2014 on a new approach to business failure and insolvency. Its implementation has been patchy, even in Member States that started reforming their insolvency laws.
We have worked with Member States to improve their insolvency frameworks also under the European Semester. However, there are limits to how much can be achieved through these methods.
Converged restructuring laws would give greater legal certainty to cross-border investors in the EU. It would encourage timely restructuring of viable companies in financial distress.
In our preparatory work, we paid attention to the opinions of all stakeholders, including national parliaments.
We also assessed recent insolvency reforms undertaken in the Member States. I was pleased to see that both the objectives and methods of the insolvency law reforms carried out in Germany coincide with the ones of our upcoming EU initiative.
The amendment of the reorganisation law which entered into force in 2012 in Germany contains vital elements commonly appreciated as features of an efficient restructuring EU framework. And as in the reform in Germany, I believe that honest entrepreneurs should be discharged of their debts after a reasonable period of time.
The shorter this period is the higher the likelihood of restarting business and ensuring innovation.
Our initiative will be targeted and I count on good cooperation with you on it.
Today I have spoken to you about four key initiatives which can bring promises for the future, for economic growth, for prosperity and for security.
Thank you for your attention.