PRESS RELEASE. 2901st Council meeting. Economic and Financial Affairs. Brussels, 4 November 2008 P R E S S

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1 COU CIL OF THE EUROPEA U IO EN 15067/08 (Presse 311) (OR. fr) PRESS RELEASE 2901st Council meeting Economic and Financial Affairs Brussels, 4 November 2008 President Christine LAGARDE Minister for Economic Affairs, Industry and Employment of France P R E S S R u e d e l a L o i B B R U S S E L S T e l. : ( 0 ) / F a x : ( 0 ) press.office@consilium.europa.eu /08 (Presse 311) 1

2 Main results of the Council The Council approved a loan of EUR 6,5 billion to Hungary, in coordination with the financial assistance provided by the IMF and World Bank, to enable Hungary to deal with the country's current financial crisis. The loan will enable Hungary to cope with the heavy pressures on its financial markets and support its balance of payments in the medium term. The ministers also reached agreement in principle on increasing the ceiling for financial assistance available for EU aid to the balance of payments in the event of financial difficulty of a Member State. The Council reached agreement in principle on measures to strengthen the fight against VAT fraud, by ensuring that information on transactions is collected and exchanged between Member States more quickly, to enable more rapid detection. Broad consensus was achieved (pending the lifting of a reservation) on new general arrangements for excise duties, which will enable a computerised control system to be implemented in order to combat excise duty fraud more effectively /08 (Presse 311) 2

3 CO TTS 1 PARTICIPA TS... 5 ITEMS DEBATED INTERNATIONAL INITIATIVES IN RESPONSE TO THE FINANCIAL CRISIS... 7 REDUCED V.A.T. RATES... 8 FIGHT AGAINST V.A.T. FRAUD GENERAL ARRANGEMENTS FOR EXCISE DUTIES ANTI-FRAUD AGREEMENT WITH LIECHTENSTEIN CLIMATE CHANGE EMISSIONS TRADING SCHEME LISBON STRATEGY FOR GROWTH AND JOBS MEETINGS IN THE MARGINS OF THE COUNCIL OTHER ITEMS APPROVED ECO OMIC A D FI A CIAL AFFAIRS Support for Hungary to deal with the financial crisis EU statistics - Council conclusions Community guarantee to the EIB for projects outside the Community * JUSTICE A D HOME AFFAIRS Common Consular Instructions EXTER AL RELATIO S Relations with Morocco 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. Documents for which references are given in the text are available on the Council's Internet site ( 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 Council's Internet site or may be obtained from the Press Office /08 (Presse 311) 3

4 DEVELOPMT COOPERATIO European Development Fund - Contributions for Cotonou Agreement - Republic of Guinea RESEARCH EU/USA - Cooperation on nuclear safety issues VIRO MT Substances that deplete the ozone layer STATISTICS External trade statistics TRA SPORT EU/China - Agreement on Maritime Transport - Enlargement EGNOS and Galileo - Regulatory procedure with scrutiny APPOI TMTS Committee of the Regions /08 (Presse 311) 4

5 PARTICIPA TS The governments of the Member States and the European Commission were represented as follows: Belgium: Mr Didier REYNDERS Bulgaria: Mr Plamen Vassilev ORESHARSKI Czech Republic: Mr Miroslav KALOUSEK Denmark: Mr Lars Løkke RASMUSSEN Germany: Mr Peer STEINBRÜCK Estonia: Mr Ivari PADAR Ireland: Mr Brian LENIHAN Greece: Mr Georgios ALOGOSKOUFIS Spain: Mr Pedro SOLBES MIRA France: Ms Christine LAGARDE Italy: Mr Giulio TREMONTI Cyprus: Mr Charilaos STAVRAKIS Latvia: Mr Normunds POPENS Lithuania: Mr Rimantas ŠADŽIUS Luxembourg: Mr Jean-Claude JUNCKER Mr Jeannot KRECKÉ Hungary: Mr János VERES Malta: Mr Richard CACHIA CARUANA etherlands: Mr Wouter BOS Austria: Mr Wilhelm MOLTERER Poland: Mr Jan VINCENT-ROSTOWSKI Deputy Prime Minister and and Institutional Reforms Federal Minister for Economic Affairs and Finance Second Deputy Prime Minister and Minister for Economic Affairs and Finance Minister for Economic Affairs, Industry and Employment Minister for Economic Affairs and Finance Permanent Representative Prime Minister, Ministre d'etat, Minister for Economic Affairs and Foreign Trade, Minister for Sport Permanent Representative, Deputy Prime Minister Vice Chancellor and Federal 15067/08 (Presse 311) 5

6 Portugal: Mr Emanuel AUGUSTO SANTOS Romania: Mr Eugen TEODOROVICI Slovenia: Mr Andrej BAJUK Slovakia: Mr Peter KAŽIMÍR Finland: Mr Jyrki KATAINEN Sweden: Mr Anders BORG State Secretary for the Budget, attached to the Minister for Finance State Secretary for the Treasury and External Public Finance State Secretary, Ministry of Finance Deputy Prime Minister and United Kingdom: M. Stephen TIMMS Financial Secretary to the Treasury Commission: Mr Joaquín ALMUNIA Mr Charlie McCREEVY Mr László KÓVACS Member Member Member Other participants: Mr Lucas D. PAPADEMOS Mr Philippe MAYSTADT Mr Xavier MUSCA Mr Christian KASTROP Vice-President of the European Central Bank President of the European Investment Bank Chairman of the Economic and Financial Committee Chairman of the Economic Policy Committee 15067/08 (Presse 311) 6

7 ITEMS DEBATED I TER ATIO AL I ITIATIVES I RESPO SE TO THE FI A CIAL CRISIS The Presidency briefed the Council on the international initiatives launched in response to the financial crisis, following the European Council meeting on 15 and 16 October An exchange of views took place in advance of the summit of the main countries and institutions concerned by the crisis, to be held in Washington on 15 November to discuss reform of the international financial system. The reform envisaged would ensure that the errors which led to the current crisis are not repeated, in particular through better regulation, more effective supervision of market operators and a strengthening of institutions such as the International Monetary Fund. The global economic situation and its impact on emerging economies and developing countries are also on the agenda. The conclusions of the European Council on 15 and 16 October state: "The European Union must work with its international partners on a genuine, all-encompassing reform of the international financial system based on the principles of transparency, sound banking, responsibility, integrity and world governance. The aim is to take early decisions on transparency, global standards of regulation, cross-border supervision and crisis management, to avoid conflicts of interest and to create an early warning system, so as to engender confidence among savers and investors in every country. The Union will quickly take appropriate initiatives in consultation with its main partners and the relevant international financial institutions. These initiatives will be carefully prepared within the EU." The Council's discussion prepared the ground for an informal meeting of EU Heads of State and Government in Brussels on 7 November, with a view to the summit on 15 November. On that occasion, the Presidency will present a discussion paper, taking account of the comments made by delegations. The Council also took note of a Commission action plan to support economic activity in the context of the downturn in Europe (14938/08). The discussions on this question will continue at the Council meeting on 2 December /08 (Presse 311) 7

8 REDUCED V.A.T. RATES The Council examined a proposal for a Directive amending the rules on reduced rates of VAT (value added tax), pending an in-depth review of the rules. It requested the Permanent Representatives Committee (Coreper) to continue to examine the outstanding issues, to enable the Council to take a decision by the end of the year. The proposal is intended to allow Member States to apply reduced rates indefinitely to certain locally-provided services, including catering services, for which there is no risk of unfair competition in the internal market. The present VAT rules (Directive 2006/112/EC) require Member States to apply a normal rate of VAT to most goods and services (a normal minimum rate of 15 % is applicable until the end of 2010). Member States may apply a reduced rate (minimum 5 %) to certain goods and services, and derogations are provided for in certain cases and/or for certain Member States. These derogations include: provisional derogations for Member States which, before 1992 (when the general VAT rates system was introduced), applied rates lower than the present reduced rates; reduced rates applied on a temporary basis (until the end of 2010) to certain locally-provided services; other derogations of a limited duration, provided for in the Acts of Accession of those Member States which acceded to the EU in 2004 (applicable until the end of 2010). In 2006, the Commission was requested to commission an independent body to assess the likely impact on job creation, economic growth and the proper functioning of the internal market of reduced rates applied to locally-provided services 1. 1 The study was carried out by Copenhagen Economics ApS. The findings are set out in a communication issued by the Commission in July 2007 (11695/07 + ADD 1) /08 (Presse 311) 8

9 On the basis of that study, the Commission considered that a new framework would be needed to rationalise and simplify the rules currently in force, while leaving a degree of latitude to the Member States in the use of reduced rates. Last December, the Council agreed that in 2008 it would conduct a policy debate on the impact and usefulness of reduced rates. The Commission submitted an initial proposal in July The proposal focuses on the provisions which expire at the end of It is intended, in particular, to: guarantee equality of treatment between Member States with regard to the options offered for applying reduced VAT rates; allow all Member States to apply reduced rates indefinitely to certain locally-provided services, including catering services, for which there is no risk of unfair competition in the internal market; make technical improvements to the provisions in force and remove certain inconsistencies. Following the discussions at an informal meeting of ministers in Nice in September and at the Council on 7 October, as well as within Coreper, the Presidency presented a draft compromise which serves as a basis for the technical discussions /08 (Presse 311) 9

10 FIGHT AGAI ST V.A.T. FRAUD The Council reached agreement in principle on a general approach on proposals for a Directive and Regulation 1 to strengthen the fight against VAT (value added tax) fraud. The Directive and Regulation will be adopted at a forthcoming Council meeting, once the European Parliament has delivered its opinion. The proposals are intended to ensure that information on cross-border transactions is collected and exchanged between Member States more quickly, to enable more rapid detection of cases of fraud, and in particular of "VAT carousels". The fight against VAT fraud represents a major challenge both for the EU and for national budgets. Every year, this type of fraud costs Member States billions of euros. It most often takes the form of fraud circuits known as "VAT carousels", which target cross-border transactions. In November 2006, the Council agreed to establish a strategy to supplement at EU level the efforts being made nationally to combat fraud. In June 2007, it requested the Commission to propose legislative measures to strengthen the VAT system and decided to give those measures a high priority. The proposals, which constitute an initial response to that request, provide for a reduction in the statutory time limits imposed on operators for the declaration of transactions for VAT purposes, together with a reduction in the time limits for transmission of such information between Member States, while avoiding any increase in the administrative burden on undertakings, especially SMEs. 1 Proposals to amend Directive 2006/112/EC on the common system of VAT and Regulation 1798/2003 on administrative cooperation in the field of VAT /08 (Presse 311) 10

11 GERAL ARRA GEMTS FOR EXCISE DUTIES The Council agreed on a general approach, pending the opinion of the European Parliament and the lifting of a parliamentary reservation by one delegation, on a draft Directive adapting the current excise duty arrangements 1 in the EU and permitting the introduction of a computerised excise duty monitoring system. The computerised excise duty monitoring system will provide a simpler, paperless environment for business, and will facilitate more integrated and faster monitoring. The draft Directive is intended to simplify and modernise excise duty procedures, without compromising the quality of monitoring, and to adapt the provisions on the movement of products to the new system, which was provided for in a Decision adopted in The 2003 Decision stipulates that Member States and the Commission must establish the computerised system in the first half of 2009; the Directive must therefore be adopted by the end of 2008, to enable the computerised system to be applied from 1 April Directive 92/12/EEC on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products. Decision 1152/2003/EC on computerising the movement and surveillance of excisable products /08 (Presse 311) 11

12 A TI-FRAUD AGREEMT WITH LIECHTSTEI The Commission informed the Council of the progress of negotiations with Liechtenstein on an agreement to combat fraud. The draft agreement, negotiated by the Commission on the basis of a mandate drawn up by the Council in 2006, covers fraud relating to both indirect and direct taxation. It is important for the EU that the agreement should apply to direct taxation given the absence of a convention with Liechtenstein on the exchange of information on taxation of savings. While remaining within the framework of the acquis communautaire, the EU would like to obtain genuine administrative assistance from Liechtenstein, including as regards funds. The Council therefore invited the Commission to resume its negotiations with Liechtenstein in order to obtain improvements and additional guarantees to ensure real administrative assistance and access to information, in particular with regard to funds, and to report back at a forthcoming meeting /08 (Presse 311) 12

13 CLIMATE CHA GE EMISSIO S TRADI G SCHEME The Council took note of a statement by the Polish Minister concerning the trading scheme for CO 2 emissions proposed for the period 2012 to 2020, in particular his wish to prevent excessive volatility in the allowance prices provided under the new scheme. While recognising that the Environment Council is responsible for this dossier, the Council asked the Economic and Financial Committee to examine the issue and report to the next meetings of the Economic and Financial Affairs Council and the Environment Council. LISBO STRATEGY FOR GROWTH A D JOBS The Council noted progress on the Lisbon Strategy for Growth and Jobs /08 (Presse 311) 13

14 MEETI GS I THE MARGI S OF THE COU CIL Meeting with the European Parliament On 3 November the Presidency troika met representatives of the European Parliament's Committee on Economic and Monetary Affairs. The meeting focused on the financial crisis and the EU's economic and monetary union, ten years after its launch in Macroeconomic dialogue with the social partners On 3 November the Presidency troika held its twice-yearly macroeconomic dialogue with the social partners (representatives of European trade unions and business federations), in the presence of the Commission, the President of the Eurogroup and the President of the European Central Bank. The meeting focused on the economic situation and the most appropriate policies in response to it. Eurogroup Ministers of the euro area Member States attended a meeting of the Eurogroup on 3 November. Working breakfast to discuss the economic situation During a working breakfast, ministers discussed the economic situation, including the follow-up to national measures implemented in reaction to the financial crisis, as well as the macroeconomic situation in Hungary. Among other things, they reached an agreement in principle on increasing the ceiling for financial assistance available for EU aid to the balance of payments in the event of financial difficulty of a Member State. They were also briefed on the Eurogroup's deliberations on 3 November. Meeting with EFTA finance ministers Ministers held their annual meeting with economics and finance ministers of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland). The meeting focused on the financial crisis, particularly with regard to Iceland, and on cross-border cooperation on prudential supervision and fraud prevention. * * * The ministers had lunch with representatives of three sovereign wealth funds (from Abu Dhabi, Norway and Qatar). The discussion focused on the application by the sovereign wealth funds of the standards of the International Monetary Fund /08 (Presse 311) 14

15 OTHER ITEMS APPROVED ECO OMIC A D FI A CIAL AFFAIRS Support for Hungary to deal with the financial crisis The Council adopted a decision on the grant of a loan of EUR 6,5 billion to Hungary to enable it to deal with the financial crisis which it is currently facing. To this loan is added the EUR 12,5 billion financial assistance package from the International Monetary Fund and EUR 1 billion from the World Bank in order to support Hungary's balance of payments in the medium term. This financial support should enable Hungary to cope with the heavy pressures on its financial markets; in return, the Hungarian authorities have undertaken to apply a programme of accompanying measures, which will be included in an update of Hungary's convergence programme under the EU Stability and Growth Pact. The Hungarian authorities have pledged to accelerate the consolidation of the national budget this year and in 2009 and to reform Hungary's budgetary governance. With support from the European Central Bank, measures have also been taken to improve liquidity on the markets and to strengthen financial stability. For its part, the Hungarian Central Bank, the Magyar emzeti Bank, has raised its interest rates in order to halt the depreciation of the forint. The Council decision is based on Article 119 of the Treaty and on Regulation (EC) No 332/2002 establishing a facility providing medium-term financial assistance for Member States' balances of payments. EU statistics - Council conclusions The Council adopted the conclusions set out in 14525/08. Community guarantee to the EIB for projects outside the Community * The Council adopted a Decision on the eligibility of certain Central Asian countries for financing from the European Investment Bank (EIB) benefiting from a Community guarantee (10902/ /08 ADD 1). Through that Decision, the Council grants a Community guarantee to the EIB against losses under loans and loan guarantees for projects in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan et Uzbekistan /08 (Presse 311) 15

16 JUSTICE A D HOME AFFAIRS Common Consular Instructions The Council adopted a Decision amending Annex 3, Part I, to the Common Consular Instructions on third-country nationals subject to airport transit visa requirements (14434/08). This Annex to the Common Consular Instructions contains the joint list of third countries whose nationals are subject to airport transit visa requirements by all Member States. In response to a request by France, it has been amended in order to limit, as regards Ghanaian and Nigerian nationals, the airport transit visa requirement to persons who do not hold a valid visa issued by Member States of the EU or valid for a State party to the Agreement on the European Economic Area, Canada, Japan, Switzerland or the United States of America. The Decision will enter into force on 5 November EXTER AL RELATIO S Relations with Morocco The Council approved the position to be taken by the EU as regards the creation under the EU-Morocco Association Agreement of a customs cooperation committee and the amendment of the rules of procedure of certain subcommittees and working parties of the Association Committee (13819/08). DEVELOPMT COOPERATIO European Development Fund - Contributions for 2008 The Council adopted a Decision fixing the third instalment of the financial contributions to be paid this year by the Member States contributing to the European Development Fund (14409/08) /08 (Presse 311) 16

17 Cotonou Agreement - Republic of Guinea The Council approved a draft letter to be sent to the Prime Minister of the Republic of Guinea concerning the application to that country of Article 96 of the ACP - EU Partnership Agreement (Cotonou Agreement). In this framework, regular follow-up missions will take place to monitor political developments in the Republic of Guinea by means of dialogue with the main political and social players. RESEARCH EU/USA - Cooperation on nuclear safety issues The Council adopted a Decision authorising the Commission to negotiate an agreement between the European Atomic Energy Community (Euratom) and the US Ministry of Energy in the field of nuclear safety research and development. VIRO MT Substances that deplete the ozone layer The Council adopted a Decision authorising the Commission to participate in the negotiations on the adjustments and amendments to the Montreal Protocol on substances that deplete the ozone layer. The negotiation meetings will be held in Doha (Qatar) from 17 to 21 November STATISTICS External trade statistics The Council reached political agreement on a draft Regulation aiming to improve the system of Community statistics on external trade with third countries, and to satisfy new user requirements (14221/08). A common position will be adopted at a forthcoming Council meeting, after finalisation of the text, and will be forwarded to the European Parliament under the codecision procedure /08 (Presse 311) 17

18 TRA SPORT EU/China - Agreement on Maritime Transport - Enlargement The Council adopted a Decision concerning the signing and conclusion of a Protocol amending the Agreement on Maritime Transport with China, to take account of the accession of Bulgaria and Romania to the EU in January The agreement was signed in Brussels in December 2002 and entered into force in March 2008 (JO L 46, , p. 25.). EG OS and Galileo - Regulatory procedure with scrutiny The Council decided not to oppose the adoption by the Commission of a strategic framework for the Global Navigation Satellite System (GNSS) for the European satellite radio navigation programmes (EGNOS and Galileo) and the associated activities. Regulation (EC) No 683/ on the further implementation of the European satellite navigation programmes (EGNOS and Galileo) (JO L 196, , p. 1) provides that the Commission shall adopt a strategic framework comprising the main activities, the forecast budget and the timetable necessary for achieving the objectives defined in the Annex to the Regulation. In accordance with the EU's regulatory procedure with scrutiny, the Council can oppose the adoption of legal acts by the Commission. Consequently, unless the European Parliament objects, the Commission can adopt the strategic framework. APPOI TMTS Committee of the Regions The Council adopted a Decision appointing Ms Maria Luisa Coppola, consigliere regionale - Assessore, Regione Veneto, as a member for the remainder of the current term of office, i.e. until 25 January Regulation (EC) No 683/2008 of the European Parliament and of the Council /08 (Presse 311) 18