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SAVE THE DATE | Trade and the European elections: what is at stake? (April 10)

We are delighted to invite you to a debate organised by PubAffairs Bruxelles which will be held on Wednesday, 10th of April at 19.00 at the premises of The Office, rue d’Arlon, 80, Brussels.

The event will consist of a debate on how the main political groups will address the question of trade throughout their campaigns.

Although speakers and event details will be announced in the coming days, we are publishing this event now to make sure you save the date.

This event is kindly sponsored by

About the debate

Trade and its role in promoting sustainable growth and jobs is one of the key topics in the upcoming European Parliament elections. Indeed, in light of recent challenges to the international rules-based trading system and the resurgence of protectionist views in Europe and around the globe, the EU will need to find convincing arguments and new approaches to preserve its ability to formulate and to push for an ambitious, forward-looking trade policy in the years ahead.

As shown during the public debates on TTIP and CETA, such an approach will also need to take into account both the creation of effective strategies and the often critical demands of civil society. In this respect, the European Parliament has played an increasingly important role by promoting openness with regard to the global trade model, while acting as a prominent forum for voicing citizens’ concerns.

The questions of how to deal with a potential resurgence of protectionism, how to maintain open global markets while considering the perspectives of current partners, and of how to use trade as a conditionality tool will continue to feature high on the agenda of the Parliament. As a result, several commentators have raised the question of the approach of the main political families and their “Spitzenkandidaten” regarding trade policy and what the next EU’s trade agenda should be.

 

This event will be held under the Chatham House Rule. Participants are free to use the information received but neither the identity nor the affiliation of the attendees may be revealed. For this reason, unless explicitly authorised by PubAffairs Bruxelles, the filming and/or the recording of the event by any means are strictly forbidden.

 

The event will commence with a welcome drink at 7.00pm, followed by a panel debate at 7.30pm. After the panel debate there will be an opportunity for questions and discussions.


We look forward to seeing you at 7.00pm on the 10th of April at The Office, rue d’Arlon, 80, Brussels.

All our debates are followed by a drink in a convivial atmosphere.

Council greenlights rules on screening of foreign direct investments | EU Council Press

The Council today adopted a regulation establishing a framework for the screening of foreign direct investments into the EU. This is the first time that the EU is equipping itself with such a comprehensive framework, while its major trading partners already have comparable rules in place.

The EU is and will remain one of the world’s most open places to invest in. The new rules on the screening of investments will ensure that openness goes hand in hand with sensible protection of our strategic assets.

Ștefan-Radu Oprea, Minister for Business Environment, Trade and Entrepreneurship of Romania and President of the Council

The new rules on the screening of foreign direct investment will create a cooperation mechanism where member states and the Commission will be able to exchange information and raise specific concerns. Member states will nonetheless retain the power to review and potentially block foreign direct investment on security and public order grounds. The decision to set up and maintain national screening mechanisms will also remain in the hands of individual member states.

The Commission will be allowed to issue opinions in cases concerning several member states, or when an investment could affect a project or programme of interest to the whole EU, such as Horizon 2020 or Galileo.

Next steps

The regulation will be published on 21 March 2019. The new rules will enter into force twenty days later and will apply 18 months later.

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Payments in the EU: reform on reducing charges and increasing transparency adopted | EU Council Press

The EU is working towards making payments in euros cheaper. Paying or withdrawing money in euros anywhere in the EU will soon cost the same as at home.

The Council today adopted a regulation on aligning the costs of cross-border payments in euros between euro and non-euro countries and increasing the transparency of charges related to currency conversion services across the EU.

Since 2002, the same charges have applied to cross-border and national payments in euros within the euro area, while cross-border payments in euros from non-euro countries are subject to high fees.

The reform will align the charges for cross-border payments in euros for services such as credit transfers, card payments or cash withdrawals with the charges for corresponding national payments of the same value in the national currency of the Member State where the payment service provider of the payment service user is located. This measure will extend the benefits of cheap cross-border euro transfers to an additional 150 million non-euro area consumers, and a potential extra 2,5 billion transactions per year.

In addition, further transparency requirements will be introduced on charges for currency conversion services. When consumers make card payments or withdraw cash abroad, they can choose whether to pay in the local currency or their home currency. According to the new rules, consumers will be informed of applicable charges before making their choice. This will be achieved by introducing an obligation to disclose the charges applied as a percentage mark-up of all currency conversion charges over the latest available exchange rate of the ECB. This new level of transparency is intended to raise consumers’ awareness, thereby enhancing competition between different currency conversion services providers.

Text of the regulation adopted by the Council

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SAVE THE DATE | How can Europe ensure the long-term sustainability of transport infrastructure? (April 1st)

We are delighted to invite you to a debate organised by PubAffairs Bruxelles which will be held on Monday, 1st of April at 19.00 at the premises of The Office, rue d’Arlon, 80, Brussels.

The event will consist of a debate on how Europe can ensure the long-term sustainability of its transport infrastructure.

Although speakers and event details will be announced in the coming days, we are sending you this e-mail now to make sure you save the date.

This event is kindly sponsored by

About the debate

Transport is the cornerstone of regional and social cohesion, as well as of the competitiveness of the EU as a global economic actor. The sector is not only an enabler of European integration and of the smooth functioning of the EU’s internal market, but it has also proved crucial for its added value to growth and jobs as a main element of the EU’s economic activity, as well as an important industrial domain in its own right. In addition, the availability and the quality of transport services have strong implications for both European industry and the EU’s choice of trading partners. Against this backdrop, the question of transport infrastructure has become essential in view of Europe’s ageing transport network, the necessity of assuring sufficient investment at the EU level in everyday needs, and for the modernisation of the Union’s transport system: all inextricably linked to the environmental and digital transformation of economy and society. To this end, the European Commission has launched the negotiations for the next Multiannual Financial Framework for the period 2021-2027, which comes at a time of renewed dynamism and of great challenges for Europe.

The Connecting Europe Facility, the main funding instrument to implement European transport infrastructure policy, has confirmed the importance of infrastructure maintenance and modernisation by increasing funds for infrastructure-related investment and by creating specific allocations in the field of digital infrastructure. However, as highlighted by a European Commission discussion paper on the state of infrastructure maintenance: “while most EU member states had been steadily stepping up their transport infrastructure maintenance efforts, prior to the 2008 crisis, this trend was mostly reversed in the years since”. The analysis of spending trends in infrastructure maintenance has also revealed differing degrees of allocation by sector, namely road or rail, and by geographical location, as well as a volatile financial environment closely related to the interplay of financial and political factors in each member state. Furthermore, differences in approach stemming from diverging governance structures and methods of evaluating the state of infrastructure have highlighted the need for further convergence and common approaches at EU level.

As recognised by the Commission itself, the Union is compelled “to act decisively in the wake of the financial and economic crisis in order to lay solid foundations for a sustainable recovery”, while increasing the focus “on delivering efficiently and fairly on the things that really matter in the daily lives of citizen”. Within this context, and as highlighted by several commentators, the questions of transport, mobility and of the competitiveness of European industry cannot be considered unrelated if the long-term sustainability of both transport infrastructure and the EU economy is to be ensured.

This event will be held under the Chatham House Rule. Participants are free to use the information received but neither the identity nor the affiliation of the attendees may be revealed. For this reason, unless explicitly authorised by PubAffairs Bruxelles, the filming and/or the recording of the event by any means are strictly forbidden.

The event will commence with a welcome drink at 7.00pm, followed by a panel debate at 7.30pm. After the panel debate there will be an opportunity for questions and discussions.


We look forward to seeing you at 7.00pm on the 1st of April at The Office, rue d’Arlon, 80, Brussels.

All our debates are followed by a drink in a convivial atmosphere.

Facts matter: European Commission responds to Hungarian government campaign | EU Commission press

Following the College meeting, the Commissioners have decided to issue today a response following the launch by the Hungarian government of a campaign – complete with billboards, full-page newspaper advertisements and a letter from the Prime Minister addressed to all Hungarian citizens – entitled “You too have the right to know what Brussels is planning!”.

The European Commission agrees, citizens do deserve to know the truth about what the EU is doing. But we believe they deserve fact not fiction. The Hungarian government campaign distorts the truth and seeks to paint a dark picture of a secret plot to drive more migration to Europe. The Commission would therefore like to set the record straight, point by point. The Commission’s full response is available online.

Statement on the Code of Practice against disinformation: Commission asks online platforms to provide more details on progress made | EU Commission press

Today the European Commission published reports by Facebook, Google and Twitter covering the progress made in January 2019 on their commitments to fight disinformation.

These three online platforms are signatories of the Code of Practice against disinformation and have been asked to report monthly on their actions ahead of the European Parliament elections in May 2019. More specifically, the Commission asked to receive detailed information to monitor progress on the scrutiny of ad placement, transparency of political advertising, closure of fake accounts and marking systems for automated bots. Vice-President for the Digital Single Market Andrus Ansip, Commissioner for Justice, Consumers and Gender Equality Věra Jourová, Commissioner for the Security Union Julian King, and Commissioner for the Digital Economy and Society Mariya Gabriel said in a joint statement:

“The online platforms, which signed the Code of Practice, are rolling out their policies in Europe to support the integrity of elections. This includes better scrutiny of advertisement placements, transparency tools for political advertising, and measures to identify and block inauthentic behaviour on their services. However, we need to see more progress on the commitments made by online platforms to fight disinformation. Platforms have not provided enough details showing that new policies and tools are being deployed in a timely manner and with sufficient resources across all EU Member States. The reports provide too little information on the actual results of the measures already taken.”

The full statement and more information on the online platforms’ reports can be found here. A summary report on the implementation of the Code of Practice can be found here.

Tax crimes: special committee calls for a European financial police force | EU Parliament Press

Parliament’s special tax committee on Wednesday adopted a detailed roadmap towards fairer and more effective taxation, and tackling financial crimes.

The recommendations adopted by the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) range from overhauling the system for dealing with financial crimes, tax evasion and tax avoidance, notably by thoroughly improving cooperation in all areas between the multitude of authorities involved, to setting up new bodies at the EU and global level.

The numerous findings and recommendations include:

  • Commission to immediately work on a proposal for a European financial police force;
  • An EU anti-money laundering watchdog should be set up;
  • A global tax body should be established within the UN;
  • Great concern about member states’ general lack of political will in Council to tackle tax evasion/avoidance and financial crime;
  • Seven EU countries (Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and The Netherlands) display traits of a tax haven and facilitate aggressive tax planning;
  • Golden visas and passports are problematic and should be phased out;
  • The cum-ex fraud scheme clearly shows that the complexity of tax systems results in legal loopholes and that multilateral, not bilateral, tax treaties are the way forward;
  • Countermeasures should be envisaged against the US if it does not ensure FATCA’s reciprocity;
  • The Council should properly assess the situation in Switzerland in order to ensure that no harmful tax regimes are introduced;
  • ‘Tax good governance’ clauses should be systematically included in new EU agreements with non-EU countries;
  • Whistleblowers and investigative journalists must be much better protected and the US reward system for whistleblowers could be replicated in the EU;
  • Malta and Slovakia must do everything they can to identify the instigators behind the murders of two investigative journalists.

The report was adopted with 34 votes to 4 and 3 abstentions. It will now be passed on to the plenary for approval during the second session of March (25 – 28) in Strasbourg (TBC).

Quotes

The chair of the committee, Petr Ježek (ALDE, CZ), said: “The considerable amount of work achieved by this committee over its twelve-month mandate has shed light on unprecedented issues affecting the banking and financial sectors. The investigations and hearings have helped us draft stronger recommendations, notably on the need to enforce EU AML/CFT legislation better, stricter banking supervision, and enhanced information exchange among FIUs and tax authorities. It is now crucial to maintain pressure for the implementation of our recommendations to the governments and the relevant actors.”

The co-rapporteur, Luděk Niedermayer (EPP, CZ), said: “Recent money laundering cases have shown that we urgently need existing AML rules to be better enforced, dissuasive sanctions and a push for improved cooperation and coordination of relevant authorities within and between Member States as well as an active partnership with the private sector. The Committee calls on the EU to lead the global debate on finding a solution to taxing the digitalized economy and ensuring efficient, transparent and fair tax regimes, while maintaining fair and transparent tax competition.”

The co-rapporteur, Jeppe Kofod (S&D, DK), said: “Europe has a serious money laundering and tax fraud problem. We have the world’s largest, richest and most integrated single market with free movement of capital, but little to no effective cross-border supervision and 28 differing national anti-money laundering and anti-tax fraud provisions. This creates a string of loopholes, which are far too easy for criminals to abuse to launder vast amounts of money as in the Danske Bank-scandal, or design highly profitable tax theft schemes like CumEx. We need tougher EU-level regulation, harsh sanctions on banks facilitating financial crimes, and a new European financial police within Europol.”

Background

Following continued revelations over the last five years (Luxleaks, the Panama Papers, Football leaks and the Paradise papers), the European Parliament decided to establish a Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3), on 1 March 2018.

The report adopted today concludes the committee’s year-long mandate, which saw it hold 18 hearings dealing with particular topics of interest, 10 exchange of views with finance ministers and European Commissioners, and four fact-finding missions – to the US, the Isle of Man, Denmark and Estonia, and Latvia.

Investment firms: Presidency and Parliament agree on a new regulatory and supervision framework | EU Council Press

The EU will soon have in place a dedicated regulatory framework for investment firms.

The Romanian presidency of the Council and the European Parliament reached today a provisional agreement on a package of measures, composed of a regulation and a directive, setting out new prudential requirements and supervisory arrangements for investment firms. The objective of the reform is to adapt the requirements to the firms’ risk profiles and business models while preserving financial stability. The deal will now be submitted for endorsement by EU ambassadors.

Investment firms play a crucial role in facilitating savings and investment flows in the EU. If they are to play their full part in the Capital Markets Union, it is essential that the rules that apply to them are tailored to meet their specific business requirements and take into account the risks they take.

Eugen Teodorovici, minister of finance of Romania

There are about 6000 investment firms in the European Economic Area. Most of them are rather small, but a limited number of investment firms hold a significant proportion of all assets and provide a very broad range of services.

Until now, all investment firms have been subject to the same capital, liquidity and risk management rules as banks. The capital requirements regulation and directive (CRR/CRD4) are based on international standards intended for banks. Therefore, they do not fully take into account the specificities of investment firms.

On the basis of the text agreed today, investment firms will be subject to the same key measures, in particular as regards capital holdings, reporting, corporate governance and remuneration, but the set of requirements they would need to apply would be differentiated according to their size, nature and complexity.

The largest firms (“class 1”) would be subject to the full banking prudential regime and would be supervised as credit institutions:

  • Investment firms that provides “bank-like” services, such as dealing on own account or underwriting financial instruments, and whose consolidated assets exceed EUR 15 billion would automatically be subject to CRR/CRD4;
  • Investment firms engaged in “bank-like” activities with consolidated assets between EUR 5 and 15 billion could be requested to apply CRR/CRD4 by their supervisory authority, in particular if the firm’s size or activities would involve risks to financial stability.

Smaller firms that are not considered systemic would enjoy a new bespoke regime with dedicated prudential requirements. These would, in general, be different from those applicable to banks, but competent authorities could allow to continue applying banking requirements to certain firms, on a case by case basis, to avoid disrupting their business models. Such an option will be framed with a safeguard preventing regulatory arbitrage, in particular through the application of lower capital requirements under CRR/CRD4 as compared to IFR in a disproportionate manner. The text also provides for a 5-year transitional period to give companies enough time to adapt to the new regime.  

The agreement further strengthens the equivalence regime that would apply to third country investment firms. It sets out in greater detail some of the requirements for giving them access to the single market and grants additional powers to the Commission. In particular, the Commission is charged with assessing capital requirements applicable to firms providing bank-like services to make sure that those are equivalent to those applicable in the EU. In addition, in case the activities performed by third country firms are likely to be of systemic importance, the new regime allows the Commission to apply some specific operational conditions to an equivalence decision to ensure that ESMA and national competent authorities have the necessary tools to prevent regulatory arbitrage and monitor the activities of third country firms.

Finally, the text agreed by the Presidency and the Parliament complements the existing MIFID2/MIFIR framework by extending the “tick size” regime to systematic internalisers, thus  enhancing level-playing field between systematic internalisers and trading venues.

Next steps

The political agreement will now be submitted to EU ambassadors for endorsement. It will then undergo a legal linguistic revision. Parliament and Council will be called on to adopt the proposed package of measures at first reading.

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Capital markets union: political agreement reached on EU framework for covered bonds | EU Council Press

The EU is supporting lending by providing easier access to mortgage and public sector loans.

The Romanian Presidency and the European Parliament today reached a provisional agreement on a harmonised framework for covered bonds. This framework will specify a common definition to receive an EU covered bond label and benefit from preferential capital treatment. The deal will now be submitted for endorsement by EU ambassadors.

Covered bonds are financial instruments backed by a separate pool of assets – typically mortgages or public debt – to which investors have a preferential claim in case of failure of the issuer. Covered bonds are an efficient source of financing of the economy which ensure a high level of certainty for investors.

Covered bonds are an important funding tool in some member states, but they remain under-used in others. Thanks to the agreement reached today, the EU will have a framework in place which will give incentives to use these products across Europe and actively contribute to the development of the capital markets union.

Eugen Teodorovici, minister for finance of Romania

Covered bonds’ markets are particularly developed in Germany, Denmark, France, Spain, Italy, Luxembourg and Sweden, as those countries have longstanding national regimes in place. In December 2015, the outstanding volume of covered bonds issued by EU-based institutions reached €2.1 trillion and constituted 84% of the total volume at global level.

The aim of the proposed framework (composed of a directive and a regulation), put forward by the Commission in March 2018, is to set minimum harmonisation requirements that all covered bonds marketed in the EU will have to meet. This will increase security for investors and open up new opportunities, in particular where markets are less developed.

The proposed framework:

  • provides a common definition of covered bonds;
  • defines the structural features of the instrument;
  • defines the tasks and responsibilities for the supervision of covered bonds;
  • sets out the rules allowing the use of the ‘European Covered Bonds’ label;
  • strengthens the conditions for granting preferential prudential treatment to covered bonds under the capital requirement regulation.

Next steps

The political agreement on covered bonds will now be submitted to EU ambassadors for endorsement. It will then undergo a legal linguistic revision. Parliament and Council will be called on to adopt the proposed regulation and directive at first reading.

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Capital Markets Union: Council agrees position on easier access to financial markets for SMEs | EU Council Press

As part of the capital markets union, the EU is taking steps to help small and medium businesses access new sources of funding.

EU ambassadors today endorsed the Council’s position on a proposal to give an easier access to SMEs trying to list and issue securities on financial markets, while safeguarding investor protection and market integrity. The initiative concerns specifically “SME growth markets”, a recently introduced category of trading venue dedicated to small issuers. On the basis of this text, the Presidency will start negotiations with the European Parliament on 6 March.

SMEs are the largest contributor to jobs and growth in Europe. However, they greatly depend on bank loans for their funding. That’s why it is crucial to actively help SMEs diversify their financing sources and provide them with a simpler, easier access to capital markets.

Eugen Teodorovici, minister for finance of Romania

Of the 20 million SMEs in Europe, only 3,000 are currently listed on stock-exchanges. This is partially due to high compliance costs on the one hand and insufficient liquidity on the other. Therefore, the proposed rules aim to reduce the administrative burden and cut red-tape faced by smaller companies.

The proposal contains amendments to the market abuse and the prospectus regulations which make the obligations placed on SME growth market issuers more proportionate while preserving market integrity, in particular:

  • more streamlined administrative burden that maintain market integrity and information to investors, in particular as regards reporting obligations as regards persons that have access to price-sensitive information (“insiders’ lists”);
  • lighter “prospectus” more suited to SMEs that have already been listed on an SME growth market.

Next steps

The Parliament voted on its position on SME listing on 7 December 2018. Negotiations between the Council and the Parliament are therefore ready to start.

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