8-9 June Ecofin

Date: 12/06/1997

FINANCE ministers took the unusual step of beginning their monthly meeting a day early. This was done so that they could run through the technical aspects of the design of the euro coins, but also so that the new French Minister Dominique Strauss-Kahn could hold a series of bilateral meetings with his colleagues. The designs for one side of the eight coins will be kept confidential until EU leaders have seen them at next week's summit in Amsterdam. Strauss-Kahn also held meetings with Germany's Theo Waigel and the Dutch chairman Gerrit Zalm to discuss his government's attitude to the 'stability and growth pact' to enforce budgetary discipline in a monetary union.

THE full meeting got under way on Monday morning with a scheduled debate on the texts prepared for the summit on the stability and growth pact. The pact should be turned into law by the adoption of two regulations and one resolution, and these were the basis for discussion by ministers. During the French election campaign, the Socialist Party had promised to renegotiate the pact and ministers wanted to know whether Strauss-Kahn was serious about this. The French minister confirmed the new government's commitment to the timetable for economic and monetary union, which is due to start on 1 January 1999, but added that he could not give his approval to the stability and growth pact yet since he required time for further reflection.

DURING a lunch-time discussion, several ministers wanted to know how much time Strauss-Kahn wanted. He replied that he would probably need until 19 June, when the government would present its programme to the national assembly. Since the pact texts were due to be agreed by presidents and prime ministers in Amsterdam, and then come back to finance ministers for formal adoption soon afterwards, this worried several of those present.

Following meetings with Strauss-Kahn, Zalm said there were still possibilities open to him to get the pact agreed fast. Although the texts could not be touched, he claimed it would be possible to add something which would recognise the need for greater economic policy coordination - a long-standing French demand. One possibility would be to hold a special finance ministers' meeting on the eve of the summit to settle the matter.

WITH the stability pact discussions over, ministers gave a formal reading to an interim report jointly drafted by their officials and those of social affairs ministers regarding employment prospects. The report argued that member states should make further efforts to tackle unemployment. Proposed measures included enforcing wage moderation, partly through bargaining that reflected differences in staff qualifications and regional disparities.

Greater competition was needed in the EU's services sector especially in transport and energy. Ministers gave their approval to the report's conclusions and referred it to Amsterdam. They also gave their backing to an assessment by the monetary committee of the implementation of the Union's 'broad economic guidelines' for 1996 and to the new guidelines for this year. These will need to be approved by the summit in order to come into force.

FINANCE ministers failed to reach an agreement on extending derogations from the normal rules of harmonised excise duties for the use of mineral oils. Some of these 44 derogations are due to expire at the end of June and several ministers and the European Commission felt that a decision on their abolition or extension had to be taken urgently. However, a handful of the derogations could not be agreed. The main problem concerned a regime put in place by the Dutch government which allows differential rates of duty for the use of 'environmentally-friendly' oils on the Dutch-German border.

Belgian Finance Minister Philippe Maystadt argued that this was contrary to the single market and, if it continued, Belgium would probably have to introduce a similar system both on its border with Germany and that with Luxembourg. The matter has been handed back to expert negotiators in the hope of reaching a settlement by the end of the month.