SVET

EVROPSKE UNIJE SL C/04/172 Luxembourg, 2. junija 2004

9779/04 (Presse 172)

Sporočilo za javnost

2587. zasedanje Sveta Ekonomske in finančne zadeve Luxembourg, 2. junija 2004

Predsednik g. Charlie McCreevy, TD Irski minister za finance

PRESS

Rue de la Loi 175 B – 1048 BRUSELJ Tel.: +32 (0)2 285 60 83 / 6319 Faks: +32 (0)2 285 8026 [email protected] http://ue.eu.int/Newsroom 9779/04 (Presse 172) 1 SL

Glavni dosežki Sveta

Svet je z zadovoljstvom sprejel sporazume, ki so bili doseženi z vsemi zadevnimi odvisnimi in pridruženimi ozemlji ter tretjimi državami glede ureditve, potrebne za uporabo direktive EU o davku na prihranke. Komisijo je zaprosil, naj vodi pogajanja glede datuma veljavnosti navedene ureditve v zvezi z davkom na prihranke, kar zadeva Švico, in naj mu poroča, tako da bo lahko pred koncem junija odločal o uporabi določb Direktive.

Svet se je odločil za postopek v zvezi s čezmernim primanjkljajem za Nizozemsko in pozval nizozemsko vlado, naj odpravi primanjkljaj najkasneje do leta 2005. Potrdil je poročilo Evropskega sveta o letošnji posodobitvi Širših smernic ekonomske politike EU in sprejel zaključke o statističnih podatkih in finančnem povezovanju.

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CONTENTS1

PARTICIPANTS 3

ITEMS DEBATED

TAXATION - SAVINGS TAX DIRECTIVE - Council conclusions 5

– External dimension/Date of application 5

– External dimension/Agreement with Switzerland 5

PREPARATION FOR THE EUROPEAN COUNCIL 5

– Broad Economic Policy Guidelines 5

STABILITY AND GROWTH PACT - IMPLEMENTATION 6

– Excessive deficit procedure for the Netherlands 6

STATISTICS - EMU INFORMATION REQUIREMENTS - Council conclusions 6

FINANCIAL INTEGRATION - Council conclusions 8

FINANCIAL SERVICES 9

– International Accounting Standards 9

– EU-US regulatory dialogue 9

– Capital requirements for banks and investment firms 9

EVENTS IN THE MARGINS OF THE COUNCIL 10

– 10

OTHER ITEMS APPROVED

ECONOMIC AND FINANCIAL AFFAIRS

European Investment Bank - revision of statutes - Bulgaria and Romania 11

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PARTICIPANTS

The Governments of the Member States and the were represented as follows:

Belgium: Mr Didier REYNDERS Minister for Finance Czech : Mr Bohuslav SOBOTKA Deputy Prime Minister and Minister for Finance : Mr Thor PEDERSEN Minister for Finance Germany: Mr Hans EICHEL Federal Minister for Finance Estonia: Mr Taavi VESKIMÄGI Minister for Finance Greece: Mr Georgios ALOGOSKOUFIS Minister for Economic Affairs and Finance : Mr Pedro SOLBES MIRA Second Deputy Prime Minister and Minister for Economic Affairs and Finance France: Mr Pierre SELLAL Permanent Representative Ireland: Mr Charlie McCREEVY Minister for Finance Italy: Mr Giulio TREMONTI Minister for Economic Affairs and Finance Cyprus: Mr Iacovos KERAVNOS Minister for Finance Latvia: Mr Oskars SPURDZIŅŠ Minister for Finance Lithuania: Ms Lina ADAKAUSKIENE Under-secretary at the Ministry of Finance Luxembourg: Mr Jean-Claude JUNCKER Prime Minister, Ministre d'Etat, Minister for Finance Mr Henri GRETHEN Minister for Economic Affairs, Minister for Transport Hungary: Mr Elemér TERTÁK Administrative State Secretary, Ministry of Finance Malta: Mr Tonio FENECH Parliamentary Secretary, Ministry of Finance Netherlands: Mr Gerrit ZALM Deputy Prime Minister, Minister for Finance Austria: Mr Karl-Heinz GRASSER Federal Minister for Finance Poland: Mr Andrzej RACZKO Minister for Finance Portugal: Ms Manuela FERREIRA LEITE Ministra de Estado, Minister for Finance

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Slovenia: Mr Dušan MRAMOR Minister for Finance Slovakia: Mr Ivan MIKLOŠ Deputy Prime Minister and Minister for Finance Finland: Mr Antti KALLIOMÄKI Deputy Prime Minister, Minister for Finance Sweden: Mr Gunnar LUND Minister for International Economic Affairs and Financial Markets United Kingdom: Ms Dawn PRIMAROLO Paymaster General

Commission: Mr Joaquín ALMUNIA AMANN Member Mr Frederik BOLKESTEIN Member Mr Member Ms Michaele SCHREYER Member

Other participants: Mr Philippe MAYSTADT President of the European Investment Bank Mr Jan Willem OOSTERWIJK Chairman of the Economic Policy Committee Mr Caio KOCH-WESER Chairman of the Economic and Financial Committee

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ITEMS DEBATED

TAXATION - SAVINGS TAX DIRECTIVE - Council conclusions – External dimension/Date of application The Council adopted the following conclusions: "The Council notes with satisfaction that agreement in principle has been reached on all matters of substance with the dependent and associated territories and with Andorra, Liechtenstein, Monaco, San Marino and Switzerland on the necessary arrangements to enable the Savings Tax Directive to be applied. The Council recognises that the decision on the date of application of the Directive needs to be taken on the basis of Article 17 by the end of June. It requests the Commission to pursue negotiations with Switzerland on this timing issue and to report back to the Permanent Representatives Committee by the end of June so that the necessary decision can be taken this month."

Background The Directive (Directive 2003/48/EC) seeks to ensure that intra-Community cross-border flows of savings income in the form of interest payments are subject to taxation. Its application as from 1 January 2005 is subject to the condition that: • the same measures are applied from that date by the three United Kingdom Crown dependencies of Guernsey, Jersey and the Isle of Man, the five UK Caribbean territories of Anguilla, Cayman Islands, Montserrat, Turks and Caicos Islands and British Virgin Islands, and the two Dutch Caribbean territories of Netherlands Antilles and Aruba. • equivalent measures are applied by Andorra, Liechtenstein, Monaco, San Marino and Switzerland. Equivalence depends on: withholding tax and revenue sharing at the rates provided for by the Directive; voluntary disclosure of information regarding interest payments; exchange of information on request in cases of tax fraud or the like; a review clause allowing the terms of the agreement to be adapted in line with international developments. – External dimension/Agreement with Switzerland The Council adopted without discussion a Decision approving the conclusion of the savings tax agreement with Switzerland and an accompanying Memorandum of Understanding. The agreement is aimed at enabling the taxation of cross-border flows of savings income in the form of interest payments.

PREPARATION FOR THE EUROPEAN COUNCIL – Broad Economic Policy Guidelines The Council approved a report, on the basis of work carried out by the Economic Policy Committee and the Economic and Financial Committee, on this year’s update of the Broad Economic Policy Guidelines (BEPGs), the EU’s guidelines on the economic policies to be followed by the Member States and the Community, for the 2003-05 period.

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The report will be submitted to the European Council at its meeting in Brussels on 17 and 18 June; on the basis of the European Council's conclusions, the Council will be called on to adopt a Recommendation updating the BEPGs at its meeting on 5 July. The Council's report confirms the priorities already set, namely: ¾ promoting sustainable growth through investment, innovation and competitiveness; ¾ increasing the flexibility of labour markets; and ¾ ensuring the sustainability of public finances. The report focuses on applying the guidelines to the EU's ten new Member States, providing country-specific recommendations. It also contains updates as concerns Germany, Greece, France, Italy, the Netherlands, Portugal and the United Kingdom to allow for adjustments in budgetary policies. As regards specific challenges for the euro area, the report calls for economic policy to focus more on sustained growth, yet in a way that does not hamper the consolidation of public finances, and for intensification of structural reform, with an appropriate timing of policy measures to as to ensure the efficient functioning of markets.

STABILITY AND GROWTH PACT - IMPLEMENTATION – Excessive deficit procedure for the Netherlands The Council adopted a Decision on the existence of an excessive government deficit in the Netherlands, and a Recommendation on action to be taken to correct it. In its Recommendation, the Council calls on the Netherlands authorities to put an end to the excessive deficit by 2005 at the latest. In addition, it urges the Netherlands authorities to ensure that budgetary consolidation towards a position close to balance or in surplus is sustained, even after the excessive deficit is corrected. According to the Commission's opinion, published on 19 May, the government deficit in the Netherlands amounted to 3.2% of Gross Domestic Product in 2003, thereby exceeding the maximum reference value of 3% provided for by the EC Treaty as well as the 1.9% observed in 2002.

STATISTICS - EMU INFORMATION REQUIREMENTS - Council conclusions The Council adopted the following conclusions: "The Council endorsed the status report by the Economic and Financial Committee (EFC) on information requirements in EMU. The report examines the status of implementation of the EMU Action Plan and more generally on progress achieved in developing EMU and EU statistics. Moreover, progress in the new Member States is investigated in respect to their separate Action Plan. The examination also takes account of the Code of Best Practice on the compilation and reporting of data in the context of the Excessive Deficit Procedure (EDP), adopted by the Council on 18 February 2003. Ministers decided that the status report would be made public. The Council welcomes that the process beginning in 1999 and accelerated by the EMU Action Plan in 2000 has stimulated substantial improvements to economic statistics. For labour market statistics and short-term business statistics, however, the process has not yet yielded the expected results and more efforts are needed.

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Given that the Action Plan ran out in December 2002, the Council urges the Member States concerned, in particular Greece and Ireland, to fill the residual requirements by June 2005 at the latest. Moreover, the outstanding measures on quarterly non-financial accounts by institutional sector should be implemented with high priority. Principal European Economic Indicators aim to match the highest international standards in terms of timeliness and other quality aspects and are scheduled to be published from 2005 onwards. In order to meet this objective, a continuing commitment by the relevant national authorities is necessary. However, the performance of statistical systems amongst competitor economies has also been improving. Timely statistics in tune with evolving needs are a constant challenge and the European Statistical System will have to benchmark itself more against the best practices in other countries. The Council invites the EFC, with the assistance of Eurostat and the ECB, to monitor closely progress. A follow-up report should be submitted in 2005. The Council also welcomes the considerations to re-establish by the Commission a training scheme for European statisticians. Reliable fiscal statistics are essential for the credibility of the excessive deficit procedure. The EDP notification of March 2004 showed a rather good compliance with the Code of Best Practice as regards the reporting deadlines. There was also a considerable improvement in the availability of detailed data on the government sub-sectors, albeit still incomplete. However, the compliance was not very satisfactory as regards the institutional arrangements in Member States and the submission of the respective inventories. In this and other respects the requirements of the Code of Best Practice remain to be fulfilled in many Member States. The Council invites the Commission to strengthen the monitoring of the quality of reported fiscal data and report back to the Council before the end of the year 2004. The Council notes that on several occasions the fiscal statistics had been revised after a new government took office. The Council considers that the compilation and reporting of statistics for the EDP must not be vulnerable to political and electoral cycles. High-quality statistics are fundamental for European policies. The Council considers that integrity, independence and accountability of data compilers, and the transparency of the compilation methods, underpinned by the appropriate institutional arrangements, are crucial to ensure such high- quality statistics. It would therefore be recommendable to develop minimum European standards for the institutional set up of statistical authorities. The Council invites the Commission to make, by June 2005, a proposal for such standards, which reinforce the independence, integrity and accountability of the Member States’ national statistical institutes. These standards should also help to address the specific concerns on the quality of fiscal statistics. In particular these standards should reinforce the integrity of the public accounting systems in the Member States. A preliminary discussion should take place before the end of the year 2004. The capacity of the statistical authorities is fraught with both large national and increasing European requirements for statistics. To preserve and improve the quality and reliability of statistics, it is important to review priorities of the statistics and to reduce (legal) requirements for areas which are now considered to be of less importance. The Council invites the EFC, with the assistance of Eurostat and the ECB to provide proposals by June 2005 on a rebalancing of priorities. The Council considers that, through the rebalancing of priorities in all areas, including the discontinuation of certain activities, sufficient resources should be made available, in the Member States and in Eurostat, to improve truly European economic statistics. A preliminary discussion should take place before the end of the year 2004."

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FINANCIAL INTEGRATION - Council conclusions The Council took note of a number of reports from the Financial Services Committee and the Commission on financial integration in the EU: ¾ FSC report on financial integration; ¾ 10th progress report by the Commission on implementation of the EU's financial services action plan; ¾ first annual report by the Commission on indicators of economic benefits of financial integration; ¾ a briefing by Commissioner Bolkestein on the review of the financial services action plan - undertaken by four independent expert groups. It adopted the following conclusions: "The Council emphasises the importance it attaches to an integrated, dynamic and competitive financial marketplace in supporting growth and job creation. The Council welcomes the report on financial integration prepared by the Financial Services Committee and endorses the conclusions the committee draws. In particular the Council: • notes the success in completing the legislative phase of the Financial Services Action Plan; • underlines that full and consistent implementation and effective enforcement of all FSAP measures must now have priority; • welcomes the extension of the Lamfalussy approach to the banking and insurance sectors and reiterates the central importance of this committee structure in ensuring effective implementation of financial services legislation and in promoting supervisory convergence and cooperation; • supports the idea that market participants, including consumers and end-users, should have a right to bring specific questions of implementation to the attention of the level 3 committees; • supports an approach to further integration based on systematic analysis of remaining obstacles and of the impact of tackling those obstacles for each market segment on a case- by-case basis. The emphasis should be on convergence of supervision and implementation. Non-legislative action should be taken where possible and appropriate, and new legislation should be introduced where necessary. Work in those areas identified by the report as priorities should be taken forward without delay; • stresses the need for Supervisors, Central Banks and Finance Ministries to work together to ensure that appropriate plans and mechanisms are in place to respond to any developing financial crisis which threatens the stability of the financial system; • stresses the importance of promoting financial stability and market integrity, through both legislative and practical initiatives and notes that the FSC is pursuing work with a view to strengthening the financial stability framework at the EU level;

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• underlines the importance of the global dimension of financial integration and relations with regulators in other jurisdictions. It stresses the importance of adoption by the EU of high quality international accounting standards, as well as their recognition by other jurisdictions; • emphasises that clearing and settlement, improving the legal framework for retail payments, reducing obstacles to electronic financial services, the UCITS directive and the integration of upstream market functions in general are areas of particular importance for financial market integration; • notes that general consumer protection, private law, competition policy and taxation are key areas for the competent Community and national bodies to consider in relation to financial services aspects; • invites the Commission to take full account of the FSC report and where appropriate specify timelines for the initiatives proposed in the report in its further work to develop the EU financial services market after the Financial Services Action Plan; and • considers that it is important to continue to improve corporate governance, audit and accounting standards, and the reform of European company law. The Council invites the Financial Services Committee to prepare a further discussion towards the end of 2004 in order to prepare for future Commission indications of its priorities for further financial integration, foreseen for early 2005."

FINANCIAL SERVICES – International Accounting Standards – EU-US regulatory dialogue – Capital requirements for banks and investment firms The Council was briefed by the Commission on work on two revised International Accounting Standards - IAS 32 on the disclosure and presentation of financial instruments and IAS 39 on the measurement and recognition of financial instruments - and held a brief exchange of views. The Council was also briefed by the Commission on developments within the EU-United States regulatory dialogue on financial services. It took note of a report, "Study on the financial and macroeconomic consequences of the draft proposed new capital requirements for banks and investment firms in the EU", that the Commission will submit to the European Council with a view to its meeting in Brussels on 17 and 18 June.

EVENTS IN THE MARGINS OF THE COUNCIL – European Investment Bank Ministers met for the annual general meeting of the European Investment Bank. * * *

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Over lunch, Ministers were informed of the outcome of the Eurogroup meeting held on 1 June. They discussed the effects of rising oil prices and agreed to the following statement: "In line with the initiative of the G8, Finance Ministers called on oil producers to provide adequate supplies so that oil prices would remain consistent with stable, sustained growth in the world economy. Ministers were also anxious that unilateral action by individual Member States arising from this situation should be avoided". Ministers were briefed by the Presidency on preparation of the EU's financial perspective for the 2007-13 period, and by the Commission on the follow–up to commitments made at Monterrey in 2002 at a UN conference on the financing of development cooperation.

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OTHER ITEMS APPROVED

ECONOMIC AND FINANCIAL AFFAIRS European Investment Bank - revision of statutes - Bulgaria and Romania The Council recalled its conclusions of 5 November 2002 on EIB Governance with a view to enlargement (9853/1/04). It agreed on the following elements for amendment of the EIB Statute in the context of the accession of Bulgaria and Romania: - the addition of Bulgaria and Romania to the list of Members of the Bank; - provision for the capital increase by defining the arrangements for the contribution to capital and reserves; - provision for two additional members of the Board of Directors and the inclusion of Bulgaria and Romania in the group of new Member States nominating three Alternate Members of the Board of Directors, subject to the review of constituencies referred to in the ECOFIN Council Conclusions of 5 November 2002. This review should be undertaken by the Board of Governors in advance of the signing of the Accession Treaty with Bulgaria and Romania.

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