Finns close to deal on company statute

Date: 25/11/1999

By Simon Coss

THE Finnish presidency is on the verge of brokering a deal which would pave the way for EU firms to set themselves up as pan-European companies.

Member state diplomats say Helsinki has made significant progress in its efforts to persuade Spain to accept a compromise which would give Madrid a temporary opt-out from certain aspects of the plan to create a 'European company statute' originally drawn up by former Commissioner Etienne Davignon in 1997.

If Spain does agree to the Finnish presidency's proposal, EU social affairs ministers should be able to announce a major breakthrough on the issue when they meet in Brussels next Monday (29 November).

But diplomats warn that a formal deal is unlikely to be struck at next week's talks. "I expect ministers will say that they have made significant progress on the issue and that final political agreement will be reached during the first six months of next year under the Portuguese presidency," said one.

Spanish acceptance of the compromise would remove the last remaining obstacle to a deal, as Madrid is the only EU government which remains opposed to parts of the plan.

"The reaction from the other 14 member states has been very positive and the Spanish labour ministry has also said it is happy with the proposal," said one official. "The real test now will be to convince the foreign and finance ministries that it is a good idea."

The Finnish compromise would grant Spain a three-to-five year opt-out from rules governing the creation of Europe-wide firms through cross-border mergers. This is designed to address Madrid's concern that Spanish firms could otherwise be obliged to accept the principle of 'co-determination' - giving workers' representatives a place on company boards - if they were absorbed into larger European operations. But Madrid would have to apply the rules in full once its exemption expired. "This solution is really a political face-saving measure for the Spanish," said one diplomat.

Many EU officials believe that Spain is becoming increasingly embarrassed by its growing image as the EU's most "difficult" member state. This reputation has been fostered by its decision to block a range of important policy initiatives in recent months, both because of its continuing dispute with the UK over Gibraltar and as a tactic to ensure it continues to receive EU hand-outs when former Iron Curtain countries join the Union.

Experts suggest the Spanish would not find it all that difficult to agree to the company statute plan as firms would not be obliged to set up as pan-European operations under the initiative. They also argue that accepting the current compromise would provide a useful opportunity for Madrid to improve its tarnished image.

The Finnish Presidency is on the verge of brokering a deal which would pave the way for EU firms to set themselves up as pan-European companies.