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COUCIL OF Brussels, 25 June 2012 THE EUROPEA UIO 11793/12 PE 293 FI 470 IST 430 OTE from : General Secretariat of the Council to : Delegations Subject: Summary of the meeting of the European Parliament's Committee on Budgets (BUDG) held in Brussels on 20 and 21 June 2012 The meeting was chaired by Mr LYON (ALDE, UK) and Ms HAUG (S&D, DE). Item 4 on the agenda MFF 2014-2020 / Own resources Rapporteurs: Mr BÖGE (EPP, DE), Mr KALFIN (S&D, BG)/ Mr DEHAENE (EPP, BE)& Ms JENSEN (ALDE, DK) • Exchange of views Mr KALFIN debriefed BUDG members on the latest developments on negotiations with the Council, the informal European Council meeting of 10 and 11 June and the last meeting of the Contact Group. Mr KALFIN indicated in particular that the DK Presidency had presented a new version of the Negotiating Box to be approved in June. He considered that the new version was not "helpful" in the view of the EP. He mentioned the suggestions for - inclusion of ITER, GALILEO and GMES within the MFF, which he said caused some difficulties; - inclusion of the fund for emergency response and the EU solidarity fund and flexibility; - discontinuing the globalisation fund. 11793/12 GC/jl 1 DRI E He also mentioned the addition of some wording ín the document which describes the budget as an instrument for investment, economic recovery and for the creation of growth and which in his view was aimed at accommodating the EP, but which he considered was not satisfactory to the EP. Referring to the last informal GAC in Denmark, he said that the EP delegation had the opportunity to convey the message that the EP would insist on its role, and noted that reactions by Council members were more positive than one would have expected. He indicated that the Council was divided on the Negotiating Box, which opened up the possibility of a postponement of the adoption of the Negotiating Box at the next European Council meeting. He then referred to the Contact group meeting of the Parliament on 19 June and to the discussion with several Committee chairs, who indicated that they were ready to start negotiations with the Council on legislative proposals, and concluded that the moment had come for these negotiations to start. M. BÖGE added that the EP would produce an interim report on progress on this issue, to be adopted at the next October plenary session of the European Parliament. This interim report would include an overview of the state of play and a roadmap for future work on this file. All intervening MEPs reiterated their positions in favour of including sufficient flexibility within the EU's long-term budget. In particular, Ms JENSEN argued for preserving what was already in the IIA and criticised the Council position requiring unanimity to revise the MFF ceilings. Ms GRÄSSLE (EPP, DE) mentioned five amendments concerning the MFF and considered that a toolbox was needed to calculate and balance the amounts. Ms GARDIAZÁBAL RUBIAL (S&D, ES) insisted that flexibility was needed to increase/change the MFF ceilings and invited the Council to consider that flexibility, whatever its source, would not apply without its agreement. Mr. DEHAENE, co-rapporteur on the own resources package and rapporteur on the VAT proposal, presented a Working Document on VAT, aiming to clarify the Commission proposal on a new VAT own resource and compare it to the existing system. A presentation by Mr LEHNER, Director of Own Resources and Financial Programming, of the Commission VAT proposal was 11793/12 GC/jl 2 DRI E followed by an exchange of views in which MEPs recalled that the EP had always strongly advocated own resources for the EU budget (Böge), criticised the current VAT resource as being too complex and not transparent and expressed the wish that the future VAT own resource as proposed by the Commission be simplified and more transparent. Mr LEHNER explained in particular that the new system would focus on a common denominator, based on items on which all consumers pay a standard rate of VAT, regardless of which Member State they are in. The common denominator would be fixed at 35-40% and this would abolish a number of adjustments and compensations. He proposed to fix the call rate at 1%, but this could be modified by the Council up to 2%. As for the time line for the completion of the procedure, he considered that this would take three to four years, as it needed to be unanimously approved by MS and ratified by National Parliaments. The effect would nevertheless be retroactive. He told Mr GODMANIS (ALDE, LV) and Mr ASHWORTH (ECR, UK) that a slice from existing revenues could not be a solution, as Member States applied different bases and different rates, so that the EU own resource would incorporate national systems, which was not acceptable. The aim was to recalculate a harmonised VAT base, given the failure of the original expectations in the 1960s of eventually reaching the same VAT base and rate in all Member States. Mr. DEHAENE concluded the debate by confirming that the EP encouraged the Commission to pursue its efforts towards a simpler, more efficient and transparent VAT own resource and that the EP would support such a reformed VAT own resource. He considered essential that the amounts collected should not transit through national budgets, as is currently the case, so as to have a genuine own resource for the EU budget which would not raise issues such as the "juste retour" and would be decoupled from the issue of national rebates. Item 5 on the agenda Innovative financial instruments in the context of the next Multiannual Financial Framework BUDG/7/08736 Rapporteur: Ms GARDIAZÁBAL RUBIAL (S&D, ES) • Exchange of views Although the exchange of views was postponed, two studies were presented, on the implications for the EU and national budget of the use of innovative financial instruments for the financing of the EU policies and objectives and on the implications for the EU and national budget of the use of EU instruments for macro-financial stability instruments. 11793/12 GC/jl 3 DRI E In his answer to Ms GRÄSSLE and Mr RÜBIG (EPP, AT), the expert considered that project bonds should be profitable and not linked to a specific project. As for the use of the money by the final beneficiary, the representative of the EIB assured Ms GRÄSSLE that the project would be stopped if banks did not pass financing over to the SMEs, but acknowledged that certain financial instruments providing for loans had to finance banks. The rapporteur stressed that scarcity of credit at times of crisis makes financial instruments necessary and considered the study helpful for her report, which should be ready by the end of July. Calendar: Exchange of views: 12 July 2012. Item 6 on the agenda Financial rules applicable to the annual budget of the Union BUDG/7/04994 Co-rapporteurs: Ms GRÄßLE (PPE, DE) and Mr RIVELLINI (PPE, IT) Ms GRÄSSLE pointed out the improvement that the new Financial Regulation (FR) would introduce in terms of transparency, better deadlines and streamlined financial procedures for all programs. Ms HAUG welcomed the results already achieved and supported Ms GRÄSSLE in the outstanding points, still being negotiated with the Council. These referred in particular to the rapporteurs' request to include in Article 56 (5) of the FR a facultative national declaration by Member States, signed at the appropriate level, an annual summary of the final audit reports and controls carried out by national authorities as well as the methodology for applying extrapolated or flat-rate corrections by the Commission to protect the financial interests of the Union (Article 77). These outstanding issues were strongly supported by Mr MULDER (ALDE, NL) and Mr GEIER, who nevertheless acknowledged some difficulties for federal States. Items 7, 8 and 9 on the agenda: - Establishment of Horizon 2020 - The Framework Programme for Research and Innovation (2014-2020) BUDG/7/08107 Rapporteur for the opinion: Mr HAGLUND (ALDE, FI) Rapporteur for the responsible committee (ITRE): Ms RIERA MADURELL (S&D) - Rules for the participation and dissemination in 'Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020)' BUDG/7/08099 Rapporteur for the responsible committee (ITRE): Mr EHLER (PPE) 11793/12 GC/jl 4 DRI E - Research and Training Programme of the European Atomic Energy Community (2014-2018) complementing Horizon 2020 – The Framework Programme for Research and Innovation BUDG/7/08092 Rapporteur for the responsible committee (ITRE): Mr SKINNER (S&D) • Exchange of views Postponed . A research study on the implications for the EU and national budgets of the use of EU instruments for macro-financial stability was presented. Calendar: Exchange of views: 12 July 2012. Item 10 on the agenda Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (2014 - 2020) BUDG/7/08067 Rapporteur: Mr RÜBIG (EPP, AT) Rapporteur for the responsible committee (ITRE): Mr CREUTZMANN (ALDE) • Exchange of views The rapporteur very briefly presented his report, insisting in particular on the importance of enhancing SME access to financing. Calendar: Amendments: 16 July, noon; Vote: 6 September 2012. Items 11, 12 and 13on the agenda - Amendment of Regulation (EC) o 294/2008 establishing the European Institute of Innovation and Technology BUDG/7/08126 Rapporteur for the opinion: Mr GODMANIS (ALDE, LV) Rapporteur for the responsible committee (ITRE): Mr LAMBERTS (Verts/ALE) - Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT): the contribution of the EIT to a more innovative Europe BUDG/7/08121 Rapporteur for the opinion: Mr GODMANIS (ALDE, LV) Rapporteur for the responsible committee (ITRE): Ms MATIAS (GUE/NGL) - Establishment of a Programme for the Environment and Climate Action (LIFE) BUDG/7/08208 apporteur for the opinion: Ms TRÜPEL (Verts/ALE, DE) apporteur for the responsible committee (ENVI): Ms HAUG (S&D) • Exchange of views Postponed .

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