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20 January 2017 Elections for President of the European

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20 January 2017 Elections for President of the European The Weekly Report from Brussels, provided by the European Affairs team at the City of London, provides an update on key developments relating to financial services in the EU. 20 January 2017 Welcome to the Weekly Report, prepared by the City of London European Affairs team. This week includes: Elections for President of the European Parliament and other posts Progress on the negotiations for a Financial Transaction Tax Parliament votes to reject the Commissions Blacklist of Money Laundering States In other news Upcoming City of London events Upcoming EU Institutions events and consultations More information about the work of the City of London European Affairs team can be found here. Elections for President of the European Parliament and other posts On 17 January, the European Parliament voted on who should succeed Martin Schultz MEP (S&D, Germany) as President of the European Parliament. The President of the European Parliament chairs the plenary sittings and the Bureau of Parliament (which includes 14 Vice-Presidents), and is responsible for the application of the Rules of Procedure of Parliament. The President also oversees all the activities of Parliament and its bodies, and represents the Parliament in all legal matters. The President also addresses the European Council prior to each of its meetings, stating Parliament's viewpoint on given agenda items and represents Parliament in its international relations. Finally, the President also must sign off the EU budget after it has been approved by Parliament. Whilst the President is impartial whilst chairing debates, he retains membership of his Parliamentary grouping. There were six candidates standing to be President. In the final round, Antonio Tajani MEP (EPP, Italy) was elected with 351 votes against 282 votes for Gianni Pittella MEP (S&D, Italy). He won after receiving the support of third-place candidate, Guy Verhofstadt MEP (ALDE, Belgium), who was last year appointed lead negotiator for the European Parliament for talks on the UK’s withdrawal from the EU. Mr Verhofstadt withdrew following an agreement where ALDE MEPs would support Mr Tajani in return for the ALDE group getting control of the Conference of Committee Chairs. The next day, Parliament elected the fourteen Vice-Presidents, who will assist Mr Tajani in chairing debates in the Parliament, as well as the five Quaestors who are responsible for the financial and administrative interests of MEPs. On the same day, MEPs approved the new composition of the Parliament’s Standing Committees for the remainder of the term. The strength of each political grouping on the Committees was altered to reflect the changes in membership of each political grouping since the European Parliament elections in 2014, the most notable of which are the fall in membership of the Europe for Freedom and Direct Democracy group (which includes the UK Independence Party) and the creation of the Europe of Nations and Freedom group (which includes France’s Front National). Progress on the negotiations for a Financial Transaction Tax On 18 January, the European Parliament held a plenary debate updating MEPs on the state of play for negotiations establishing a Financial Transaction Tax (FTT). Background: In January 2013 the Council and Parliament gave authorisation for eleven Member States to develop and introduce a FTT within their own jurisdictions, based on the Commission’s initial proposal, as part of Enhanced Cooperation Procedure (ECP). These eleven Member States were Germany, France, Italy, Spain, Belgium, Greece, Portugal, Austria, Slovakia, Slovenia and Estonia. In January 2015, a joint statement was released which renewed their commitment to the tax at a political level and set out an implementation date of 1 January 2016. However, the Member States were unable to reach an agreement on the specifics of the tax, causing its implementation to be delayed. Furthermore, in December 2015 Estonia withdrew from the discussions, leaving only 10 Member States (the EU-10) participating in the FTT proposal. For the ECP to remain in force, a minimum of nine participating Member States is required. Latest Developments: Ian Borg, representing the Maltese Presidency of the Council, informed Parliament that even though Malta is not participating in the EU-10 negotiations, the Presidency would continue to support further discussions for the proposal in the Council. He stated that, in the most recent meeting of the Economic and Financial Affairs (ECOFIN) Council, evidence was presented on how to ensure that the tax can be collected in a cost-efficient way and a legislative proposal clarifying how the territorial principle is applied to the tax is expected in the coming months, although he predicted that significant additional work will be required before a final agreement can be reached. Marianne Thyssen, Commissioner for Employment, Social Affairs, Skills and Labour Mobility, said that the Commission supports the work of those participating in the ECP and welcomes the political agreement that has been reached. She re-iterated the Commission’s willingness to provide technical support in order to resolve any remaining issues with the proposal and encourages the Member States participating to set out a timetable for a final agreement to be reached by the self-imposed deadline mid-2017. Responding to the updates, Dariusz Rosati MEP (EPP, Poland) highlighted that when the tax was initially proposed the intent was to limit the scope for speculative transactions that were at the root of the financial crisis, but under the current proposal it will also target productive transactions such as equity investment and bond trading. He argued that much of the public enthusiasm for introducing an FTT had dissipated and called, that if the tax is to be implemented, for it to be carefully designed so as to minimise the risks involved, by setting the tax rate to a very low level to minimise efficiency losses and by only targeting high- frequency, speculative transactions. Udo Bullman MEP (S&D, Germany) congratulated the Commission for the work it had done to support the development of the FTT, and disputed Mr Rosati’s assertion that there was no longer the public demand to introduce the tax. He also argued that many of the concerns raised by opponents of the tax were recently addressed by Commissioner Pierre Moscovici (Commission Vice-President for Economic and Financial Affairs, Taxation and Customs), and argued that at a time when additional revenues are necessary to tackle the social problems the EU faces, it cannot oppose the estimated €35 billion the tax might generate. Ruža Tomašić MEP (ECR, Croatia) expressed concerns that the FTT could cause further economic problems for the eurozone and would have a negative impact on the functioning of debt markets by increasing borrowing and operational costs. She also criticised the impact the tax would have on Member States outside the EU-10, as it will be levied on any transaction involving shares or bonds issued by the 10 participating Member States, and therefore creates a disincentive to those investing in European securities. Next steps: Negotiations within the EU-10 will continue over the coming months, with the next discussion expected to take place in the margins of the next ECOFIN Council meeting on 27 January. It is hoped that the ECP will be able to agree on all outstanding issues – the two most significant being the impact of the FTT on the real economy and the call for an exemption for pension funds – by the end of June 2017. Parliament votes to reject the Commissions Blacklist of Money Laundering States On 19 January, the European Parliament voted to reject the Commission’s proposed list of countries with possible links to money laundering and financing of terrorism. In a resolution rejecting the blacklist, MEPs agreed with the position taken by the Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) Committees, which called for the Commission to revise the list in a joint sitting of the Committees on 8 December. Background: On 12 September 2016, the Commission presented its pre-assessment of all third-country jurisdictions for tax purposes, which sets out criteria to determine which third-countries should be listed as non-cooperative tax jurisdictions. The criteria being assessed relate to the level to which a third-country adheres to tax transparency rules; the third-country’s tax regime (in terms of tax fairness); and whether the third-country has fully implemented the OECD Base Erosion and Profit Shifting (BEPS) package recommendations. Latest Developments: MEPs voted for the resolution, which was passed by 393 votes to 67, arguing that the list is too limited (it comprises only 11 countries), and should be expanded to include territories that facilitate tax crimes. Judith Sargentini MEP (Greens/EFA, Netherlands) and co- rapporteur on the file, argued following the vote that the large margin by which the vote passed demonstrates the strength of feeling that MEPs have regarding the deficiencies of the proposed list. She said “we now hope that the Commission will be more ambitious in its revisions, so as to create a blacklist which is fit-for-purpose.” Krišjānis Karins MEP (EPP, Latvia), fellow co-rapporteur for the legislation, was one of 210 MEPs who abstained in the vote. He argued that countries should only be included on the list when there is evidence of a systematic threat of money laundering and terrorist financing and called for the Commission set up a straight-forward and transparent process for determining which countries are included on the list. The Commission blacklist consists of countries which it judges to be deficient in countering money laundering and terrorist financing, and tougher checks will be applied people and legal entities from these countries when doing business in the EU. Many MEPs were critical of the fact that whilst the list includes countries such as North Korea, Iran and Syria, it doesn’t include jurisdictions regarded as ‘tax havens’, such as Panama or the Bahamas.
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