EU Matters - Issue 6/2015
EUROPEAN COMMISSION NEWS
The Commission held an orientation debate on corporate taxation on 27 May as part of its plans to tackle tax avoidance under Economic and Monetary Union. The debate was held ahead of the 17 June announcement of the Action Plan for Fair and Efficient Corporate Taxation in the EU. The Commission plans to reintroduce the Common Consolidated Corporate Tax Base (CCCTB) - a system whereby a company has the option of calculating their taxable profit once for the entire EU and the tax revenue is then redistributed to the member states where that company is active – in order to tackle tax avoidance by multinationals. Plans for the CCCTB were previously rejected in 2011 after opposition from member states. The plans do not include harmonisation of tax rates but there are unconfirmed reports that Germany and France are pushing for a minimum corporation tax rate across the EU. The UK does not support tax harmonisation. The UK’s corporation tax rate of 20% and Ireland’s rate of 12.5% compare to the German rate of 30-33% and the rate in France of 33-36.6%.
EUROPEAN PARLIAMENT NEWS
Parliament President Martin Schulz postponed a vote on a resolution to approve the report prepared by the Committee on International Trade on the Parliament’s recommendations to the Commission’s negotiating team for the Transatlantic Trade and Investment Partnership (TTIP) – the EU-US trade agreement. The reason for the postponement was given as the number of amendments tabled but reports suggest it may have been due to concerns that the resolution would not be passed. The Committee will now hold an extraordinary meeting on 29 June to decide whether the 116 amendments should be put to a vote by the Parliament as a whole. 13 Committees have given their opinion on TTIP and the report includes recommendations that health services are excluded from the final TTIP agreement; that the controversial Investor-State Dispute Settlement mechanism is retained (albeit slightly reformed); that all customs tariffs are eliminated; that a list of ‘sensitive agricultural and industrial products ’ would be exempted from trade liberalisation; that the EU’s geographical indication system (e.g. for Comber potatoes, Armagh Bramley apples) would be protected; and that a safeguard clause to reserve the right to close markets for specific products in the event of import surges would be inserted.
The 10th round of negotiations between the EU and US takes place 13-17 July. The aim was to have agreement on a draft text by December but mid 2016 is now considered to be more likely.
INVESTMENT PLAN FOR EUROPE
Trilogue negotiations on the Regulation for a European Fund for Strategic Investments (EFSI) have successfully concluded. The EFSI is the core of President Juncker’s Investment Plan for Europe and aims to provide public support for projects that are economically viable but would not otherwise be supported because private investors are reluctant to provide finance due to economic uncertainty and higher risk. The EFSI assumes part of the risk in order to encourage private investors to get on board.
The Fund will now begin financing projects by September 2015. Finance Ministers are expected to approve the Regulation at the Council meeting on 19 June, with a plenary vote in the Parliament expected on 24 June. The European Investment Bank (EIB), the Commission’s strategic partner in the Investment Plan, has already announced projects to be prefinanced under the plan as reported previously. All member states have submitted a list of projects to be financed. All projects will be assessed by a specialist panel and the EIB.
Commission Vice President Jyrki Katainen visited Northern Ireland on 22 May as part of his roadshow on the Investment Plan for Europe and met business leaders, university representatives and government officials. He also held a meeting with the Minister for Finance and Personnel to discuss the Investment Plan for Europe and its complementarity with the planned Northern Ireland Investment Fund.
GREEK ECONOMIC CRISIS
Deposits held by Greek banks have fallen to their lowest levels in a decade as savers continue to withdraw capital from banks as a result of the economic crisis. Talks between the Greek government and its EU, European Central Bank (ECB) and International Monetary Fund (IMF) creditors on unlocking the remaining €7.2bn of the bailout package collapsed without agreement, with VAT and pension reform the main areas of disagreement. Greece was due to make 4 repayments to its creditors in June but has decided to bundle them together, a procedure last used by Zambia in the 1980s. A payment of €1.5bn will now be due on 30 June followed by €6.5bn due to the ECB in July and August. In the absence of a deal on the bailout, Greece has become increasingly reliant on the ECB for liquidity with the ECB pumping €118bn into the Greek banking system (equivalent to 66% of the Greek annual economy). The OECD has forecast that Greek GDP growth would be 0.1% this year, down from the forecast of 2.3% six months ago. Debt is expected to reach 180% of GDP this year. Greece ran a budgetary surplus of 1.5% in 2014, and despite the economic uncertainty is expected to run another surplus in 2015. The 18 June meeting of eurozone Finance Ministers will be attended by IMF and ECB. Failure to achieve progress on the deadlock may lead to an emergency summit of EU leaders.
HIGH LEVEL GROUP ON SIMPLIFICATION
The Commission is creating a High Level Group on simplification aimed at reducing the administrative burden of accessing funds from the European Regional Development Fund; Cohesion Fund; European Social Fund; the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund. Former Commission Vice President Siim Kallas will chair the group which will run for 3 years and focus on facilitating access to funds for SMEs; tackling ‘goldplating’; simpler reimbursement; increasing use of online procedures; and analysing community led local development.
FORUM ON FOOD SUPPLY CHAIN
The European Commission has established a new High Level Forum for a better functioning food supply chain which will start work in the autumn. This follows on from a previous Forum and this new Forum will be chaired by Elzbieta Bieńkowska, Commissioner for Internal Market, Industry, Entrepreneurship and SMEs; Phil Hogan, Commissioner for Agriculture and Rural Development; and Vytenis Andriukaitis, Commissioner for Health and Food Safety. The Commission will issue a call soon for public and private stakeholders who wish to participate in the Forum’s work and envisages around 50 Forum members in total from all member states.
Amidst continuing discussions on implementation of binding quotas for migrants in each EU member state, Italian Prime Minister Matteo Renzi has stated that if the EU does not proceed with the quotas, Italy will implement a ‘Plan B’ which would ‘hurt Europe’ by granting migrants temporary permits which would allow them to travel freely within the Schengen area in the EU. Under existing EU rules – the Dublin regulation – the country where the migrant enters the EU must process all asylum requests. 57,000 asylum seekers have reached Italy from Libya this year and Italy is struggling to process them. 1,800 migrants have died in the Mediterranean this year. As reported previously, there is resistance amongst EU states to the imposition of binding quotas for migrants.
ENERGY UNION TOUR
European Commission Vice-President Maroš Šefčovič is visiting 14 member states on an ‘Energy Union’ tour to present the Commission’s findings on each country’s energy and climate policy and to present the opportunities of Energy Union. The Commission plans to produce a report in the autumn on how member states are contributing to European energy policy. His tour began with a visit to the Netherlands on 20 May and concludes with a visit to the UK on 13 July 2015.
EU MEMBERSHIP REFERENDUM
Prime Minister David Cameron has been meeting heads of state to discuss EU reforms, planning to visit all member states in advance of the EU Summit on 25-26 June. There had been reports that some EU member states, notably France and Germany were unwilling to agree to Treaty change which would be necessary to secure some of the reforms which the UK government is seeking, however Angela Merkel in an interview said ‘If that is really necessary, then we have to think about it’ and indicated that she was willing to consider a ‘two speed Europe’ with regard to the EU principle of ever closer Union. Other member states have publicly stated that they wish the UK to remain within the EU but any treaty change could not be completed in time for a UK referendum to be held by the end of 2017.
The government has confirmed it will not hold the referendum on 5 May 2016 to avoid clashing with local government and devolved elections. The EU Referendum Bill does not include a purdah period (during which the civil service cannot make official announcements on EU matters). Spending limits for the referendum campaign will be increased by 40% with the lead campaign organisations allowed to spend up to £7m (up from £5m) and a maximum spend by all permitted participants of £35m (up from £25m). A group of Conservative MPs have formed ‘Conservatives for Britain’ which backs extensive EU reform and a ‘Labour for Britain’ group backs a UK exit from the EU in the absence of extensive reforms. The government will table amendments to the Bill in the autumn ‘to put beyond any doubt that that campaign will be conducted throughout in a manner that all sides will see as fair’.
The House of Commons Library, with contributions from the Northern Ireland Assembly Research and Information Service, Scottish Parliamentary Information Centre and National Assembly for Wales Research Service, has published a briefing paper ‘Exiting the EU: impact in key UK policy areas’
PUBLICATION OF FARMING SUBSIDIES
From 1 June 2015 national departments of agriculture must publish the details of beneficiaries of EU Common Agricultural Policy payments. The name of beneficiaries, the amount of aid given and a description of the measures for which it was awarded will be made public. Most EU governments (including the UK) have set the threshold for disclosure as payments over €1,250 (£1,045). The new regime was agreed in 2013 and will apply for the EU budget period 2014-2020. It is part of the European Commission’s drive for greater transparency on how the EU budget is spent. €56bn in subsidies was paid out in the EU in 2014, with 37,749 payments to the BT postcode area, totalling £351,400,947.24 for October 2013-October 2014.
NEW RULES ON DATA PROTECTION
The Council of the EU has agreed to new EU rules on data protection which will create an EU framework for privacy and protection of data rather than the current system of individual national watchdogs. The Commission proposed the rules 3 years ago as part of the drive for a Digital Single Market but member states struggled to agree. The proposals include limits to the ability to use data for purposes other than those for which it was collected (e.g. for profiling); a strengthened ‘right to be forgotten’; and provision for unambiguous consent for data collection and tracking. Trilogue discussions between the Council, Parliament and Commission will now begin with conclusions expected next year and the new legislation coming into effect in around 2 years.
CIRCULAR ECONOMY CONSULTATION
The Commission has launched a public consultation on developing a new approach to the circular economy and more efficient use of resources, following the controversial withdrawal of the planned legislation as reported previously. The consultation runs until 20 August 2015 and the results will feed into a new action plan to be published by the end of 2015. The Commission will also hold a stakeholder conference on 25 June 2015.
LOWER VAT FOR ‘GREEN DEAL’ IS ILLEGAL
The European Court of Justice has ruled that the UKs lower rate of VAT for installation and supply of ‘energy saving materials’ for housing is illegal. The ECJ ruled that the lower rate breaches the VAT Directive. The lower rate offered is part of the ‘Green Deal’ programme to help the UK meet its climate change targets.
ENERGY & EMISSIONS TARGETS
The European Commission’s biennial report on renewable energy suggests that the EU is on track to meet its 2020 target of 20% of energy coming from renewable sources. Countries such Sweden, Denmark and Lithuania will surpass their individual targets under the Renewable Energy Directive meaning that their performance will compensate for countries such as UK and France which will not meet their targets.
Separately, a report on a leaked document from the Commission suggests that Ireland has secured a more lenient emissions target to reflect its reliance on the agricultural economy. The EU has an overall target of a reduction of greenhouse gas emissions by 40% (on 2005 levels) by 2030. It’s suggested that Ireland has secured an exemption and will have a target of 25.5%.
OMBUDSMAN TRILOGUE INVESTIGATION
As reported previously, the European Ombudsman Emily O’Reilly has opened an investigation into the trilogue system – the negotiation process used by the European Commission, European Parliament and Council to agree legislation. The meetings take place behind closed doors and the Ombudsman wishes to address concerns about transparency which account for 21% of complaints to her office. In the past 5 years there have been 1,500 trilogue meetings. The investigation will focus on trying to map which negotiation documents exist, and then test which of these documents should be made public. The institutions have 4 months to respond to the Ombudsman’s questions.
EUROPEAN RURAL PARLIAMENT
The second session of the European Rural Parliament (ERP) will be held 4-6 November 2015 in Schärding, Austria. ERP aims to strengthen the voice of rural communities in Europe; ensure that the interests of those communities are reflected in national and European policy; and to promote common understanding and cooperation among rural communities across Europe. The ERP was co-initiated by the European Rural Community Alliance, the PREPARE Partnership for Rural Europe and the European LEADER Association for Rural Development and is co-funded through the EU’s Europe for Citizens programme. National champions support the work of the ERP and Rural Community Network is the champion for Northern Ireland. RCN is holding a series of workshops throughout June to inform discussions at an NI Rural Parliament event in October prior to the ERP 2015 event in Austria at which a European Rural Manifesto and report will be debated.
‘GREEN CARD’ IDEA ON EU LAW
A House of Lords EU Committee idea of a ‘green card’ which would allow national parliaments to suggest new EU legislation or amendments to existing laws is gaining support of other national parliaments.
The Committee has now issued its first green card – to encourage the Commission to adopt a strategic approach to the reduction of food waste as part of its proposals on the circular economy. The green card will now be sent to EU Committees in other national parliaments for agreement and/or amendment and if a sufficient number of national parliaments support the proposal, it will be sent on to Commission President Juncker for his response.
HOUSE OF COMMONS EUROPEAN SCRUTINY COMMITTEE (ESCOM)
Reappointment of the Committee in this new Parliament is expected in mid-June 2015.
HOUSE OF LORDS EU COMMITTEE
The Committee has been reappointed and Lord Boswell of Aynho has been reappointed as Chairperson.
22-23 June 2015 – European Commission: TEN-T Days 2015, Riga
25 June 2015 – Environmental Protection Agency: networking event on Horizon 2020 Societal Challenge 5, Dublin
25 June 2015 – European Commission: Circular Economy stakeholder conference, Brussels
25 June 2015 – Place & Space Research: Planning for Climate Change conference, London
30 June 2015 – Rural Community Network: Rural NI – Your Place, Your Voice, Castlewellan
20 July 2015 – Science Business Network: The Trade Papers: The Economic Impact of TTIP, Brussels
30 Sept – 2 Oct 2015 – European Network of Outdoor Sports: 3 rd Nature and Sports Euro’meet, Newcastle, Co. Down
CURRENT EUROPEAN COMMISSION CONSULTATIONS
The list below shows a selection of open consultations. The full list of open Commission consultations is here.
15.04.2015 – 08.07.2015 EU Timber Regulation Review
30.04.2015 – 24.07.2015 Public consultation as part of the Fitness Check of the EU nature legislation (Birds and Habitats Directives)
28.05.2015 – 20.08.2015 Public consultation on the Circular Economy
12.06.2015 – 04.09.2015 The functioning of Waste Markets in the European Union
27.05.2015 – 21.08.2015 Public consultation on the EU Blue Card and the EU’s labour migration policies
06.05.2015 – 29.07.2015 Public consultation on cross-border parcel delivery
24.04.2015 – 20.07.2015 Consultation on Remedies in Public Procurement
Internal Market, Taxation, Banking and finance:
17.06.2015 – 09.09.2015 Public consultation on further corporate tax transparency
Justice and Fundamental Rights:
21.04.2015 – 21.07.2015 Equality between women and men in the EU
12.06.2015 – 03.09.2015 Questionnaire on contract rules for online purchases of digital content and tangible goods
Maritime Affairs and Fisheries:
08.05.2015 – 31.07.2015 Consultation on an EU ecolabel for fisheries and aquaculture products
22.05.2015 – 11.09.2015 Consultation on a multi-annual plan for demersal fisheries in western EU waters
02.06.2015 – 01.10.2015 Consultation on Fishing Opportunities for 2016 under the Common Fisheries Policy