Fabian Demicoli

European Council – Issues for business

Competitiveness Council
– Digital Single Market and Governance of the Single Market
: The Single Market plays a key role in overcoming Europe’s present economic challenges. It is crucial to make the Single Market work on the ground, including the Digital Single Market, by effectively implementing and enforcing Single Market principles and rules.

 

This requires political will and strong commitment by all stakeholders, especially European institutions, national parliaments and authorities at all levels. Furthermore, focus is needed on special national regulation. Each year more than 700 new national technical regulations are notified to the Commission. They all create barriers to the free movement, unnecessary administrative burdens and extra costs for businesses. Better governance is clearly needed, and concrete and measurable indicators should be developed as well as efficient monitoring. Effective and rapid problem solving mechanisms should be established, including online dispute solution systems. The need to complete the Digital Single Market is necessary in order to promote growth and competitiveness.

E-commerce and e-procurement should be facilitated through concrete measures. Better instruments for cloud computing, including swift approval of the draft directive on data protection and a better framework for ensuring intellectual property rights are welcome. Public Procurement The ministers are expected to discuss state of play of the negotiations on the draft directive on public procurement. They are in particular expected to discuss the deadlines for introducing e-procurement and the division of tasks between the Commission and national authorities. It is not expected that they will reach agreement on a common approach.

The Council’s work is positive in this regard and we support a swift introduction of e-procurement in EU public procurement. This can be done simply by ensuring the possibility to collect and deliver tender and bidding material electronically. But there is still a need to go further in simplifying EU’s procurement rules. In this line, DI is extremely concerned about the EP’s draft report on the directive. Foreign Affairs Council (trade) Free Trade agreement EU/Japan The ministers will discuss the state of play of the preparations to start negotiations with Japan on an FTA.

The main challenges in the preparations have been disagreements on technical trade barriers, access to public procurement markets and the juridical connection of an FTA with a political framework agreement. While government hope for a finalisation of the scoping exercise during this presidential period, the outlook for the coming month seems quite bleak. Europe must promote free trade for growth. The EU should continue to pursue bilateral free trade agreements with emerging economies and strategic partners. The demand for reciprocity must not become an argument for protectionist measures. Instead of protectionism, the ongoing scoping exercise with Japan should be a steppingstone to begin real and ambitious negotiations, as it is clear that an FTA will have positive economic effects through increased trade and creation of jobs.

Green growth / green trade liberalization

The Council will discuss a paper from the Commission on how to liberalize the international market for green products. It is expected that most Member States will support the Commission’s intensified efforts to ensure market access for climate friendly products. This discussion is encouraging, as liberalization will contribute to European export and growth.

EU/US high-level working group for jobs and growth

The ministers will discuss the state of play of the transatlantic dialogue on trade and investment relations. Progress in the transatlantic cooperation is welcomed. EU-US relations are vital, as the two economies are closely intertwined. Eliminating transatlantic tariffs alone could boost EU GDP by 0.5 pct. But the agreement must be even more ambitious and go far beyond tariffs.

The high-level working group is expected to publish an interim report on their work in June this year. By eliminating barriers within tariffs, standards, investments and regulation between the transatlantic economies, we can create a sort of transatlantic Internal Market for goods, services and knowledge, and harvest the total potential of our large economies.

Informal General Affairs Council

The Multiannual Financial Framework

Building upon the result of today’s General Affairs Council, the Council will reconvene for an informal meeting on 10-11 June to finalise the so-called ‘negotiation tool box’ for the EU’s next multiannual financial framework (MFF). Before the MFF reaches the European Council of 28-29 June, the MFF negotiations will be handed over to the finance ministers at ECOFIN who will debate the overall size of the MFF and of the individual headings.

Growth policies are on the top of the political agenda for all European leaders. However, as most leaders are fiscally constrained, due to their commitment to balanced budgets, the reform of the MFF comes at a perfect time. Reform the budget and redirect EU’s funds so that every euro cent is used to invest in growth.

The reform of the EU budget is a growth opportunity – all the EU leaders have to do is turn ‘growth talk’ into action. For the business community the priorities are clear. Use the EU budget as a long-term investment tool. This means more funds to invest in infrastructure (transport, energy and ICT). It also means investing in research, innovation and development. To do this, without increasing the EU budget, the reform of the Common Agricultural Support must be significantly accelerated.

Financial and Economic Council

New VAT strategy

Ministers of ECOFIN adopted conclusions on a new VAT strategy. Improvements in the VAT system are important due to its’ impact on day-to-day business. The changes will improve the functioning of the Single Market, thus increase growth and tax revenues. The Council supports greater involvement of businesses in developing the VAT rules. For businesses it should be as simple to conduct business in other EU Member States as it is to operate at national level. In reality, studies show that companies have abstained from doing business in another EU country due to the burdens of VAT compliance.

The EU needs a VAT-strategy that sets the path for creating a simpler and harmonised VAT system. Such a system should facilitate intra-community trade to the extent that this trade is not significantly riskier, more burdensome or complicated as compared with domestic trade. Real improvements in the VAT system require political willingness and compromises by the Member States, but the benefit for all would be increased growth – and thus increased tax revenues. We hope that the Council will continue with an even more ambitious approach and agree on a strategy setting both short and long-term goals.

Capital Requirements Directive (CRD IV)

The Ministers also reached an agreement on a general approach on the Capital Requirement Directive. Responses to the regulatory failures which led to the financial crisis are welcome. Hopefully, they can prevent similar events from occurring in the future. Despite all good intentions, tighter capital requirements in the financial sector will have a wide impact on the real economy. The new framework will require banks to reduce their lending and increase the cost of credit. Moreover, banks are likely to become more reluctant to invest in companies. Altogether, this will impair companies’ access to finance and thus their ability to prosper and create growth.

At a time when economic recovery can only be ensured by increased corporate investment, the implementation of reform measures could create an overall shortage of finance. In particular, this will affect SMEs which are highly dependent on bank lending. Policymakers must obviously deal with regulatory failures. However, they must also ensure financing conditions for companies enabling them to create growth and jobs in Europe.

Forthcoming Commission Proposals

30 May 2012 Growth and employment: country specific recommendations and Convergence report 2012

6 June 2012 Single Market: communication to the June Council on deepening the Single Market for services and communication on strengthening its governance Energy: communication on renewable energy strategy Digital agenda: Regulation on electronic transactions in the internal market

12 June 2012 (in Strasbourg) Communication on the new integrated strategy against human trafficking

20 June 2012 Legislative proposal on the protection of financial interests of the EU including by criminal law

11 July 2012 Revision of directive on clinical trials in the pharmaceutical sector

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