27 January Ecofin

Date: 30/01/1997

DUTCH Finance Minister Gerrit Zalm began the meeting with the traditional six-monthly presentation of the programme of the presidency of the Ecofin Council. His priorities will be to complete the legal preparations for economic and monetary union in time for the Amsterdam summit in June, produce reports on ways of tackling unemployment and the misuse of structural funds, and work on how to instil real discipline into the EU budget.

EUROPEAN Commission President Jacques Santer followed Zalm with the announcement of proposals to tax energy products and extend value added tax to telephone call-back services. In his presentation to ministers, Santer said that the march towards EMU was “the guarantee of macroeconomic stability”. He called on the five member states which are due to submit updated convergence programmes to the Commission to do so as quickly as possible, while others should “seize the opportunity” to reassess their existing plans. Santer confirmed that he would soon present an “action plan” to give added impetus to the completion of the single market. He set out forthcoming proposals from the Commission in the economic sector dealing with the supervision of financial conglomerates, assessing market risk from investment firms, liquidating credit establishments and the regulatory impact of electronic purses. Anticipating the arrival of new EU members from central and eastern Europe (CEECs), Santer said that the Commission should start setting aside budgetary margins to take this into account. On this basis, the Commission would prepare the 1998 preliminary draft budget in April.

IN THE round-table talks that ensued, German Finance Minister Theo Waigel rounded on member states who, he said, were using “unfair practices” to entice taxable savings away from his country. He was joined in his complaints by French Finance Minister Jean Arthuis and Belgian and Italian counterparts Philippe Maystadt and Carlo Azeglio Ciampi. Maystadt said he hoped the high-level group on taxation chaired by Taxation Commissioner Mario Monti would look in depth into this question of “unfair fiscal competition”. He described as “scandalous” the fact that a Dutch bank could advertise in Belgium in an attempt to attract savings into a lower tax regime. Luxembourg Prime Minister Jean-Claude Juncker, whose country has been the butt of the coded criticism, condemned this “fiscal romanticism”.

MINISTERS finally agreed a long-awaited system for lending money to third countries. On the basis of a compromise drafted by the presidency, ministers agreed to guarantee 70&percent; rather than 100&percent; of investments made by the European Investment Bank and to raise lending to Mediterranean countries by 200 million ecu.

ECONOMICS Commissioner Yves-Thibault de Silguy informed ministers of the work under way to design the euro notes and coins. The Commissioner presented them with the names of the 14 jury members who will select a short list of designs for submission to an opinion poll. This jury includes experts in industrial design and the history of coins, as well as art and communications specialists. De Silguy said they would meet in March to review the work and the winning design would be announced in Amsterdam in June.

EASTERN European finance ministers joined their EU colleagues for a 'structured dialogue' on medium-term budgetary policy in the Union and the associated countries. Ministers agreed that budgetary consolidation was essential if economies were to grow sustainably. They also concluded that the CEECs' budgetary problems and targets were often similar to those in the EU and resulted from the increased social security burden created by unemployment. Union ministers reaffirmed that the pact for stability and growth agreed at the December summit in Dublin was the basis of their medium-term policies and that countries outside the pact would still be required to submit detailed budgetary proposals.

MINISTERS accepted a number of so-called 'A-points' without discussion. In a move designed to protect the environment, they agreed to authorise France, Sweden, Portugal, Greece and Spain to reduce or cancel excise duties imposed on heavy industry for the use of mineral oils, until June at least. The Council also adopted a declaration on the proposed Commission legislative programme for 1997, stressing its own priorities. Ministers extended the cooperation agreement between the EU and ASEAN - agreed 17 years ago - to Vietnam. They also adopted a common position on a draft decision adapting the EU's Fourth Framework Programme on research, in particular to finance work on vaccines and viral disease, aeronautics, educational multimedia, transport by various modes, land-mine clearance and water purity, to the sum of 100 million ecu. The Council agreed to lay down a series of guidelines on trans-European energy networks to update the lists of projects of common interest.