COUNCIL OF
THE EUROPEAN UNION EN C/07/12
5714/07 (Presse 12)
PRESS RELEASE
2778th Council meeting Economic and Financial Affairs Brussels, 30 January 2007
President Mr Peer STEINBRÜCK Federal Minister on Finance of Germany
PRESS
Rue de la Loi 175 B – 1048 BRUSSELS Tel.: +32 (0)2 281 8716 / 6319 Fax: +32 (0)2 281 8026 [email protected] http://www.consilium.europa.eu/Newsroom 5714/07 (Presse 12) 1 EN 30.I.2007
Main Results of the Council
The Council adopted a decision closing the excessive deficit procedure it opened in 2003 with regard to France, after the French government succeeded in reducing its deficit below 3% of gross domestic product (GDP), the maximum threshold set by the EU's stability and growth pact.
The Council considered France's deficit -- which stood at 2.9% GDP in 2005, compared with 4.2% two years earlier -- to have been reduced in a credible and sustainable manner, given also that the Commission departments' autumn forecast projects the deficits for 2006, 2007 and 2008 to be reduced further.
This was the first meeting of the Ecofin Council since Slovenia joined the euro area.
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CONTENTS1
PARTICIPANTS 4
ITEMS DEBATED
PRESIDENCY WORK PROGRAMME 6
EXCESSIVE DEFICIT PROCEDURE - CLOSURE OF THE PROCEDURE FOR FRANCE 7
ECONOMIC AND MONETARY UNION - 2006 CONVERGENCE REPORTS 8
ENLARGEMENT OF THE EURO AREA - ADOPTION OF THE EURO BY SLOVENIA 9
PREPARATION OF THE SPRING MEETING OF THE EUROPEAN COUNCIL 11
– LISBON STRATEGY FOR GROWTH AND JOBS 11
– REDUCING THE ADMINISTRATIVE BURDEN ON BUSINESSES 11
MEETINGS IN THE MARGINS OF THE COUNCIL 12
OTHER ITEMS APPROVED
ECONOMIC AND FINANCIAL AFFAIRS
EU guarantee fund for external actions* 13
VAT - Romania - Repair of clothing and household linen, domestic care services 13
VAT - Denmark and Sweden - Öresund bridge 13
VAT - Estonia, Slovenia, Sweden and United Kingdom - Cash accounting scheme 14
EU budget - Technical adjustment for 2007 14
EXTERNAL RELATIONS
Terrorist list - Follow-up to court ruling in OMPI case 14
GENERAL AFFAIRS
Investment projects in Bulgaria and Romania - Council conclusions 15
RESEARCH
Euratom/Japan agreement on nuclear fusion – ITER project 16 1 Where declarations, conclusions or resolutions have been formally adopted by the Council, this is indicated in the heading for the item concerned and the text is placed between quotation marks. The documents whose references are given in the text are available on the Council's Internet site http://www.consilium.europa.eu. Acts adopted with statements for the Council minutes which may be released to the public are indicated by an asterisk; these statements are available on the abovementioned Council Internet site or may be obtained from the Press Office.
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PARTICIPANTS
The Governments of the Member States and the European Commission were represented as follows:
Belgium: Mr Didier REYNDERS Deputy Prime Minister and Minister for Finance Bulgaria: Mr Plamen Vassiler ORESHARSKI Minister for Finance Czech Republic: Mr Tomáš ŽIDEK Deputy Minister for Finance Denmark: Mr Thor PEDERSEN Minister for Finance Germany: Mr Peer STEINBRÜCK Federal Minister for Finance Mr Thomas MIROW State Secretary, Federal Ministry of Finance Estonia: Mr Aivar SÕERD Minister for Finance Ireland: Mr Brian COWEN Minister for Finance Greece: Mr Georgios ALOGOSKOUFIS Minister for Economic Affairs Spain: Mr Pedro SOLBES MIRA Second Deputy Prime Minister and Minister for Economic Affairs and Finance France: Mr Thierry BRETON Minister for Economic Affairs, Finance and Industry Italy: Mr Tommaso PADOA SCHIOPPA Minister for Economic Affairs and Finance Cyprus: Mr Michalis SARRIS Minister for Finance Latvia: Mr Oskars SPURDZIŅŠ Minister for Finance Lithuania: Mr Zigmantas BALČYTIS Minister for Finance Luxembourg: Mr Jean-Claude JUNCKER Prime Minister, "Ministre d'Etat", Minister for Finance Mr Jeannot KRECKÉ Minister for Economic Affairs and Foreign Trade, Minister for Sport Hungary: Mr János VERES Minister for Finance Malta: Mr Lawrence GONZI Prime Minister, Minister for Finance Netherlands: Mr Gerrit ZALM Deputy Prime Minister, Minister for Finance Austria: Mr Wilhelm MOLTERER Vice Chancellor and Federal Minister for Finance Poland: Ms Marta GAJĘCKA Deputy State Secretary, Ministry of Finance Portugal: Mr Emanuel AUGUSTO SANTOS State Secretary for the Budget, attached to the Minister for Finance
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Romania: Mr Sebastian Teodor Gheorghe VLĂDESCU Minister for Public Finance Slovenia: Mr Andrej BAJUK Minister for Finance Slovakia: Mr Ján POČIATEK Minister for Finance Finland: Mr Eero HEINÄLUOMA Deputy Prime Minister, Minister for Finance Mr Pertti RAUHIO Secretary of State, Ministry of Finance Sweden: Mr Anders BORG Minister for Finance United Kingdom: Mr Gordon BROWN Chancellor of the Exchequer
Commission: Mr Joaquin ALMUNIA Member
Other participants: Mr Jean-Claude TRICHET President of the European Central Bank Mr Philippe MAYSTADT President of the European Investment Bank Mr Xavier MUSCA Chairman of the Economic and Financial Committee Mr Joe GRICE President of the Economic Policy Committee
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ITEMS DEBATED
PRESIDENCY WORK PROGRAMME
The Council took note of the German presidency's presentation of a work programme for economic and financial affairs for the duration of its mandate until the end of June (17082/06) . It held a brief policy debate.
Together with its partner countries Portugal and Slovenia, which will preside over the Council during the second half of 2007 and the first half of 2008 respectively, Germany will focus the Council's work over the next 18 months on the following core issues:
– ensuring efficient and effective procedures for fiscal and economic policy coordination;
– further steps towards completion of the internal market, in particular with regard to financial services and taxation;
– improving the quality of public finances.
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EXCESSIVE DEFICIT PROCEDURE - CLOSURE OF THE PROCEDURE FOR FRANCE
The Council closed the excessive deficit procedure it opened in 2003 with regard to France, after the French government succeeded in reducing its deficit below 3% of gross domestic product (GDP), the maximum threshold set by the EU's stability and growth pact.
It adopted a decision, under article 104(12) of the Community treaty, abrogating decision 2003/487/EC on the existence of an excessive deficit in France.
The Council considered France's deficit -- which stood at 2.9% GDP in 20051, compared with 4.2% in 2003 -- to have been reduced in a credible and sustainable manner, given also that the Commission departments' autumn forecast projects the deficits for 2006, 2007 and 20082 to be further reduced further. It notes, however, that France's government debt amounted to 65.4% of GDP in the second quarter of 2006 -- above the EU's 60% reference value -- and is projected to remain at 63% in 2008.
The excessive deficit procedure was opened after France ran up a deficit in 2002 amounting to 3.2% of GDP. Decision 2003/487/EC was adopted by the Council in January 2003, under article 104(6) of the treaty, along with a recommendation under article 104(7) setting out measures to correct it.
1 According to data provided by Eurostat. 2 On a no-policy-change basis
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ECONOMIC AND MONETARY UNION - 2006 CONVERGENCE REPORTS
The Council took note of the presentation by the Commission and the European Central Bank of reports on the degree of convergence with the euro area achieved by 2006 by nine member states that are not members of the euro area (docs. 16498/06 + 16361/061).
The reports, which are issued every two years or at the request of a member state, examine: a) the compatibility of the member state's legislation with treaty provisions and with the statute of the European system of central banks; b) the fulfilment by the member state of convergence criteria, regarding inflation, government budgetary position, exchange rate stability and long-term interest rates.
Fulfilment of all criteria and all obligations by a member state is the condition for joining the euro area, as was recently the case with Slovenia, which adopted the euro as its currency on 1 January.
The reports however conclude that at the time they were assessed, the nine member states covered - - the Czech Republic, Estonia, Cyprus, Latvia, Hungary, Malta, Poland, Slovakia and Sweden -- did not fulfil all of the convergence criteria, and that there should therefore be no change in their status at this stage. Lithuania is not included in the two reports as it was assessed, at its request, in May 2006.
1 The text can be found at: http://www.ecb.int/pub/convergence/html/index.en.html
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ENLARGEMENT OF THE EURO AREA - ADOPTION OF THE EURO BY SLOVENIA
The Council was briefed by the Slovenian delegation, the Commission and the European Central Bank on experience gained so far regarding introduction of the euro in Slovenia, which adopted the euro as its currency on 1 January.
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PREPARATION OF THE SPRING MEETING OF THE EUROPEAN COUNCIL
– LISBON STRATEGY FOR GROWTH AND JOBS
The Council -- with a view to the European Council's annual review of the EU's Lisbon strategy for growth and jobs at its meeting on 8 and 9 March -- held an orientation debate focusing on:
– a draft Council key issues paper prepared by the presidency;
– the Commission's annual progress report on implementation of the Lisbon strategy;
– the 2007 update of the EU's broad economic policy guidelines for the 2005-08 period.
The Commission's report highlights encouraging progress in implementation of the Lisbon strategy, although the performance varies by member state and by policy area covered. Even if progress is not entirely satisfactory, actions are being taken across a range of policy areas and the results are starting to show.
The Council's debate in particular touched on country-specific recommendations, proposed for the first time by the Commission as a single text as regards implementation of economic and employment policies at national level.
The Economic and Financial Affairs Council is one of the main Council configurations to contribute key issues papers to the European Council; the document will be finalised at its meeting on 27 February, on the basis of a draft to be presented by the presidency.
As regards the country-specific recommendations of the BEPGs, the economic policy committee and economic and financial committee, in cooperation with the preparatory bodies for Council's other configurations, are examining the Commission's recommendations. They will prepare a text to be approved by the Council on 27 February and then sent to the European Council for endorsement, before formal adoption by the Council.
– REDUCING THE ADMINISTRATIVE BURDEN ON BUSINESSES
The Council, with a view to the European Council's meeting on 8 and 9 March, held a policy debate, in the context of the EU's better regulation initiative, on efforts to reduce the administrative burden on businesses.
It also took note of the Commission's presentation of a communication entitled "A strategic review of better regulation in the EU" and an action programme, and was briefed by the chairman of the economic policy committee (EPC) on the outcome of discussions on the communication within the EPC.
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In June 2006, the European Council called on the member states to take initiatives at national level in order to reduce the administrative burden on businesses, and requested the Commission to report on progress made at both national and Community levels by early 2007.
At its meeting on 27 February the Council is expected to adopt conclusions, to be prepared by the EPC. These will be forwarded to the European Council.
In its communication, the Commission suggests that the European Council fix a target of 25% to be achieved by 2012 for the reduction in the administrative burden resulting from European and national legislation.
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MEETINGS IN THE MARGINS OF THE COUNCIL
- Eurogroup
Ministers of the euro area member states attended a meeting of the eurogroup on 29 January.
- Ministerial meeting on the economic situation
Ministers held a breakfast meeting to discuss the economic situation in the EU, in the light of an assessment by the Commission. They were also briefed on the eurogroup meeting held on 29 January.
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OTHER ITEMS APPROVED
ECONOMIC AND FINANCIAL AFFAIRS
EU guarantee fund for external actions*
The Council adopted a regulation amending rules governing the provisioning mechanism for the EU's guarantee fund for external actions, with a view to improving efficiency in the use of budgetary resources (16570/06 and 5370/07 ADD1).
The fund's new provisioning mechanism is based on an ex-post provisioning linked to the outstanding amount of loans and guaranteed loans, i.e. on actual net disbursements (disbursements minus amortisations minus cancellations). It is applicable as from 1 January 2007.
The provisioning mechanism was until now based on an ex-ante provisioning of individual Council decisions (macro-financial assistance), individual forecasts by Commission decisions (Euratom loans) or a global annual forecast of planned loan signatures (European Investment Bank guaranteed lending).
The fund was created in 1994 so that the Community’s creditors could be reimbursed in the event of any default by the beneficiaries of loans granted or guaranteed by the Community. Its main function is to shield the EU budget from shocks due to defaults on loans. The fund is provisioned from the EU budget and has to be maintained at a certain percentage (target rate) of the outstanding amount of the loans and guaranteed loans covered.
VAT - Romania - Repair of clothing and household linen, domestic care services
The Council adopted a decision authorising Romania to apply reduced value added tax rates to minor services involving the repair of clothing and household linen and to domestic care services until 31 December 2010 (5117/07).
VAT - Denmark and Sweden - Öresund bridge
The Council adopted a decision extending, until 31 December 2013, the authorisation granted to Denmark and Sweden in order to enable taxpayers to continue recovering , from a single administration, value added tax on tolls paid for use of the Öresund bridge between the two countries (17107/06).
The special measure introduced by this decision derogates from directive 77/388/EEC on common EU laws relating to turnover taxes.
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VAT - Estonia, Slovenia, Sweden and United Kingdom - Cash accounting scheme
The Council adopted a decision authorising Estonia, Slovenia, Sweden and the United Kingdom to apply, from 1 January 2007 until 31 December 2009, an optional cash accounting scheme under which a taxable person must postpone deduction of value added tax (VAT) until the payment for goods or services has been made to the supplier (17108/06).
Under the decision, these four countries are authorised to postpone the right of deduction of the input tax of taxable persons until the input tax has been paid to their suppliers.
The taxable persons concerned must use a scheme whereby they account for the output VAT for their supplies when they have received the payments from their customers. They must have an annual turnover not higher than EUR 208 646 for Slovenia, SEK 3 000 000 for Sweden and GBP 1 350 000 for the United Kingdom, or, in the case of Estonia, they must be registered as sole proprietor.
The special measure introduced by this decision derogates from directive 2006/112/EC on the EU common system of value added tax.
EU budget - Technical adjustment for 2007
The Council established draft amending budget no. 1 to the EU's general budget for 2007 and instructed the presidency to prepare the budgetary documents to be sent to the European Parliament (5417/07).
EXTERNAL RELATIONS
Terrorist list - Follow-up to court ruling in OMPI case
The Council, following the judgment by the Court of First Instance on 12 December 2006 in the OMPI case (Organisation des Modjahedines du Peuple de l'Iran), decided to provide OMPI with a statement of reasons for keeping it on the EU's asset freeze list of persons, groups and entities involved in terrorist acts, and to give OMPI one month to present its views, together with any supporting documentation.
The Council will consider any reaction by OMPI within this period of time, before taking a final decision.
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It is recalled that on 12 December 2006, the Court of First Instance, in case T-228/02-, OMPI, v. Council, annulled Council Decision 2005/930/EC insofar as it had imposed an asset freeze on OMPI following its inclusion on the terrorist EU list. The Court found i.a. that the decision ordering the freezing of OMPI's funds had not contained a sufficient statement of reasons and that the right to a fair hearing had not been respected.
The Council therefore decided to take the necessary measures to comply with the judgment.
GENERAL AFFAIRS
Investment projects in Bulgaria and Romania - Council conclusions
The Council adopted the following conclusions:
"1. The Council has examined the Special Report No 4/2006 by the Court of Auditors. It has taken note of t he primary objective of the audit conducted by the Court, that was to conclude on the outputs and results of the investment components of Phare supported projects in Bulgaria and Romania.
2. The Council notes with satisfaction the Court's assessment that the projects audited were generally in line with the overall Phare objectives, on the one hand, and that these projects were physically in place in accordance with the conditions of the supply and works contracts. The Council would like to commend the Commission for these positive findings.
3. The Council also notes that the Court has indicated some significant shortcomings. In particular, the Court has pointed to the fact that for many of the projects audited the assets were not, or were only partially, being used for the intended purpose. In addition, the Court has taken the view that in a number of projects the sustainability was not assured. In this context, the Council notes with interest the recommendations by the Court on the ways to remedy the shortcomings observed.
4. The Council takes note of the Commission replies to the Court's Report. It particularly notes the fact that the Commission, while acknowledging the shortcomings which existed at the time of the audit, has confirmed that since then measures have been taken and significant progress has been achieved in addressing these shortcomings, in accordance with the recommendations of the Court.
5. The Council encourages the Commission to take the experience gained into account in the future management of the Community assistance to the candidate countries, in order to ensure its efficiency. This will contribute to securing full benefit from the new Instrument for Pre-Accession Assistance."
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RESEARCH
Euratom/Japan agreement on nuclear fusion – ITER project
The Council adopted a decision approving the conclusion of an agreement with Japan in the field of fusion energy research (5455/07).
The decision authorises the Commission to conclude, on behalf of the European Atomic Energy Community (Euratom), an agreement establishing a framework for specific procedures and details for the joint implementation of "broader approach activities" in support of the ITER (International Thermonuclear Experimental Reactor) project (http://www.iter.org).
The "broader approach activities" will cover the development of the following three projects:
- engineering validation and engineering design activities at the international fusion materials irradiation facility;
- the International Fusion Energy Research Centre; and - the “satellite Tokamak” programme. The "broader approach" agreement will be signed in Tokyo on 5 February.
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