Author (Person) | Casey, Jean-Pierre |
---|---|
Series Title | European Voice |
Series Details | Vol.11, No.23, 16.6.05 |
Publication Date | 16/06/2005 |
Content Type | News |
By Jean-Pierre Casey Date: 16/06/05 The practice of national politicians blaming Brussels for whatever political or economic ills beset their countries appears to revive whenever the only viable alternative is domestic reform. This was evident in the French debate over the EU constitutional treaty: the notion of liberalising trade in services within the EU was anathema to the French voter. And yet, as a pillar of the 1957 Rome Treaty, the principle of free trade in goods and services represented a cornerstone of the drive for deeper integration in the past fifty years. In the aftermath of the 1992 Maastricht Treaty, services liberalisation - the Achilles heel of the single market - was to be pursued with renewed vigour. As national administrations fight off intra-EU competition, paradoxically seen to be the enemy of national 'competitiveness', while trying to condition the EU into becoming a heavyweight on the international scene, the Lisbon Agenda rests in the graveyard of unfulfilled promises. Is a similar fate awaiting the bold undertaking, launched in 1999, to create a single market in financial services? Phase one of the Financial Services Action Plan (FSAP) is now drawing to a close. Thirty-nine out of the 42 measures originally planned have been adopted. The three remaining ones are the 3rd Capital Adequacy Directive and the 10th and 14th Company Law Directives. Although the Commission achieved 93% of the legislative programme before the promised mid-2004 deadline, a single market is not created from EU legislative initiatives alone. More important still is the ability and willingness of member states to implement the legislation and above all to enforce it. So far, the FSAP record is at best mixed. As shown on the DG Internal Market website, the rate of transposition of FSAP directives at national level remains pitifully low. With a view to buttressing the Lisbon Agenda with a vibrant single market, the Commission had set a target transposition rate of 98.5%. But in May 2005, the best performers (Austria, Denmark, Germany and Ireland) were barely over 80%. On the other hand, the efforts of some other member states can be characterised as miserable, led by the Netherlands and Greece (40%). Many new member states are struggling, although one must appreciate the enormity of the task that lies before them to implement the existing acquis as well as to keep up to date on the latest FSAP measures. Some directives have been plagued with horrid transposition rates. According to Commission tables, not a single state notified the Commission about the Conglomerates Directive; the Accounting Provisions of Company Law and Market Abuse Directives (MAD) achieved implementation of 5% and 10% at the time of the transposition deadline. Only one country, Lithuania, had complied with the October 2004 deadline set in the MAD. The directives on winding up of credit institutions and fair value accounting fared better (40% and just below 50%), but were still not implemented by a majority of member states. At this stage, a parallel can be drawn with the effort to create a single market in the run-up to Maastricht. Armed with the principle of mutual recognition, Jacques Delors and Lord Cockfield pushed through 282 directives and regulations to dismantle non-tariff barriers to trade. By the target date of 31 December 1992, more than 90% of the planned legislation had been passed and 80% of it had been transposed at member state level. But the creation of a single market in goods and services remains an ongoing project. The liberalisation of financial services is rendered especially difficult by the large spaces carved out from the freedom of movement/establishment principles by generous interpretations of the 'general good' clause. National regulators, perhaps prodded by dominant firms in their jurisdictions, have trouble believing that their counterparts in other member states can achieve the same level of investor protection for their citizens and ensure the same degree of systemic stability in their home jurisdictions. As such, the general good clause represents a major non-tariff barrier to trade in financial services. The new Lamfalussy committee structure should help to pare down protectionist abuses by fostering trust-building exercises, although one cannot expect a sea-change overnight. As the dust from the legislative efforts of recent years settles, a consensus view has emerged on how to proceed with the single market for financial services. First, it is too early to judge whether or not the FSAP has been a success, since enforcement is the key. Second, a greater emphasis must be placed on external competitiveness. Third, close international co-operation is vital. Fourth, new legislation must remain limited to a few targeted fields, guaranteeing that no FSAP II will follow. Regulatory impact assessments will be a litmus test for new legislative initiatives and greater use of non-legislative instruments is expected. Foremost among these is competition policy. Commissioner Neelie Kroes announced this week the launch of a broad sectoral investigation into financial services in the near future. Since the stakes are so high, the Commission must react vigorously to flagrant treaty violations. The Kok Report on revamping the Lisbon Agenda has suggested that the Commission respond aggressively to a lack of co-operation on the part of member states in exercising their responsibilities vis-à-vis the single market by 'naming and shaming' the sinners. Commission President José Manuel Barroso signalled that he prefers less confrontational tactics. Nevertheless, free-riders must not be allowed to carry on, as they cost the EU valuable points in terms of lost economic growth. Close co-operation between various of the Commission's departments, especially DGs Trade, Internal Market and Competition, will be vital to ensuring coherence. Continued inter-institutional rivalries and the jealous guarding of sovereignty that was already ceded to the EU must not be allowed to strangle the single market. But motivating the member states to exercise ownership was, and will remain, the outstanding challenge with regard to creating a single market for financial services in the EU and to realising the unexploited potential of this powerful engine for economic growth.
Article takes a look at the state of affairs concerning the integration of EU financial services markets, criticising slow transposition and implementation in the Member States. |
|
Source Link | http://www.european-voice.com/ |
Related Links |
|
Subject Categories | Business and Industry, Internal Markets |
Countries / Regions | Europe |
![](https://www.europeansources.info/wp-content/uploads/esologo2.png)